Private Sector Fails and the Public Sector Pays Again

Carillion’s board are accused of presiding over a “rotten corporate culture” in a report by two parliamentary committees. The company collapsed earlier this year with £1.5bn of debt leaving the public sector to pick up various public contracts. Rachel Reeves MP said the directors “drove the company off a cliff.”

The joint report, by the Work and Pensions and the Business, Energy and Industrial Strategy select committees, also criticises the UK government concluding that they lacked the decisiveness or bravery” to address the failures in regulation that allowed Carillion to become a “giant and unsustainable corporate time bomb”.

The bulk of the criticism is pointed at the company’s board who are clearly responsible for the company’s spectacular failure, despite the directors attempt to portray themselves as “victims of a maelstrom of coincidental and unforeseeable mishaps”.

The report calls out the directors’ “recklessness, hubris and greed and describes a business model that was “a relentless dash for cash, driven by acquisitions, rising debt and exploitation of suppliers”. It als suggests that their accounting practices “misrepresented the reality of the business”.
The report also raises questions for the company’s auditors: All of the big four accounting firms (KPMG, Deloitte, Ernst and Young and PWC) had done work for the company and had clearly not provide the degree of independent challenge needed to prevent the problems highlighted in teh report.

The report states that that by failing to question Carillion’s financial judgements and information KPMG complicit in the companies questionable accounting practices. They are accused of “complacently signing off its directors”. “Deloitte was paid over £10m to act as internal auditor but were either ‘unable or unwilling’ to identify ‘terminal failings’. They report also indicates that the lack of completion in the audit market creates conflicts of interests at every turn

This collapse illustrates the risks of outsourcing vital service to the private sector. The risk remains with the public sector who then have to pick up the tab for private sector failures.

Defending devolution in the EU Withdrawal Bill

The Tories and SNP may well be playing with the EU Withdrawal Bill for political reasons, but there are important reasons why those who support devolution should be concerned.

The EU Withdrawal Bill heads back to the House of Commons after some serious mauling in the House of Lords. UK headlines focus on the EEA and customs union amendments, but the Clause 11 issues, relating to devolved powers, remain unresolved. This means that Holyrood is likely to withhold consent for the Bill, leaving the UK Supreme Court to rule on the competency of the Scottish Parliament's Continuity Bill.

The dispute revolves around consent for UK frameworks on powers that come back to the UK from the EU in areas of competence that are devolved. The UK government wants to retain control over 24 areas to create UK frameworks that they claim are necessary to maintain a single UK internal market. The Scottish Government doesn't dispute the need for frameworks, but argues that these must be agreed by consent because a UK veto would undermine the principles of devolution.

The original Clause 11 was opposed by almost everyone, including the Scottish Conservatives. However, they, and others, now argue that the new clause is a reasonable compromise creating a set of procedural hoops the UK government must jump through before it gets the powers it needs to make frameworks. This also means that repatriated powers in devolved areas will go to Holyrood automatically, unless Westminster specifically reserves some for a few years through regulations.

The Welsh government has signed up to this compromise and Lord Hope, who tabled, but didn't push to a vote, some helpful amendments supported by the Scottish Government, appears to partly agree. He argues that the Scotland Act was not designed for a Brexit situation, so a more subtle, pragmatic solution is required. 

The Scottish Government argues that this is a matter of principle, while the UK government argues that the Scottish Parliament cannot have a veto on UK legislation.

I think there is an important principle at stake. This includes a defence of the hugely important Dewar amendment, which embodied the principle that all powers are devolved unless they are specifically reserved. This was not the position in Wales until the 2017 Act, so I appreciate that they may not view this matter in the same way as we do in Scotland.

However, it goes wider than that. The 24 areas that the UK government wants to have its own veto over are already clearly devolved areas. The current Clause 11 would give them the power to interfere, not just with new powers coming from the EU, but existing legislation. A particular concern for me is procurement. Scottish legislation and statutory guidance may be more timid than I would wish, but it's a lot a better than anything the UK government would support. 

If this debate appears to be a bit arcane, let me give a practical example. A care worker in Scotland should receive the Scottish Living Wage thanks to our procurement rules. This could be ended by the UK Government, using Clause 11. A pay cut is not in the slightest bit arcane! 

Then there is the 'veto' argument of the Tories which claims the Scottish Government wants to extend the powers of the Scotland Act to block UK legislation. A line reinforced by the usually more sensible Tory MSP Adam Tompkins in Scotland on Sunday. This is highly misleading. Of course it is the case that s28 of the Scotland Act 1998 gives Westminster the power to legislate on Scottish matters, but the principle in the Sewell Convention, incorporated into the 2016 Act, was that they would not normally do that. 

This is not a veto on UK legislation. It just means that UK legislation would not apply in Scotland without the consent of the Scottish Parliament. That leaves the UK government with the option of amending their legislation to get the Scottish Parliament's consent, or excluding Scotland from the geographical scope of the Bill. 

As a consequence of devolution, we don't have a single market in many areas. If you are a UK firm trading in Scotland, you already have to deal with different rules between England and the devolved administrations. Procurement is again a good example, but there are many others. In fact, some of these pre-date devolution in Scotland. New EU powers may add to these, but it isn't a new challenge. 

So, the nationalists and the unionists may pose on constitutional principles and use the dispute to further their politcal strategies. Those who support a devolved or federal model for the UK should focus on defending the devolution settlement. There is a pragmatic solution to be found that resolves differences over UK frameworks, while respecting both parliaments. What's missing is the political will.

If you want quality you have to pay for it

The Minister for Childcare made a statement to parliament this week about the extra funding for local authorities childcare expansion plans.

Disappointingly she is still boasting about guaranteeing the Living Wage as if this was a reasonable wage for a highly skilled and qualified workforce. As I said when the trade unions met with the Minister: the Living Wage is the bare minimum to live on it's not a wage that will help with the recruitment and retention challenges the sector faces.

The Minister's statement is worth watching. This week's announcement, about agreeing funding with local authorities to pay for the expansion was, I assume, prompted by Audit Scotland's report which highlighted a range of issues with the government's planning. The most headline grabbing being the difference between their and local authorities estimates of the cost. While the agreement has been reached, the funding still seems to be short of what will be needed. Particularly as they still don't seem to have got on top of the staffing issues.

There still seems to be little acknowledgement of the fact that many of the current and new staff will work part-time and that therefore the estimates of staff numbers needed are too low. Even with their own estimates the number of training places the minister states in her answers falls short of the numbers needed.

More significantly this notion that the Living Wage is an acceptable rate of pay for childcare workers is ridiculous. There is constant reference to quality being the key to closing the attainment gap, to a highly qualified workforce but no commitment to appropriate pay for those (mainly women) who they expect to deliver.

It is true that for some outwith the public sector nurseries this will mean a welcome wage rise. This is because they are shockingly underpaid. They deserve a much more substantial pay rise.

In order to deliver the aims of the policy we need a qualified workforce. You cannot expect workers to study for HNCs and then degrees for the promise of £8.75 an hour. The reality is that those who don't pay wages that reflect the skills of workers will continue to lose staff to those who pay more.

Why would you work for £8.75 an hour in a nursery when you can make the same on a supermarket checkout without the responsibility of educating young children, child protection and report writing or Glasgow City Council will pay you approx £19,000 for 38 weeks of the same work?

I know I keep repeating this but we can't have a system that keeps some women on poverty pay in order to create free childcare for others. Done properly lives will be transformed but there is a lot more to do to make sure that the result is reduced poverty and the end of the poverty related attainment gap.

Remembering Elaine

Guest post by Pam Duncan-Glancy

Saturday will be International Workers Memorial Day.  This is when we remember the dead and fight for the living.  I want to take a moment to remember Elaine McNeill.  I didn’t know Elaine, but I know a lot of people like Elaine.  People who will go that extra mile, and more, to support disabled people to do the things others take for granted.  Elaine died on her way to work in the snow.  Despite the freezing conditions, Elaine tread through ice and snow to reach the people who relied on her for care and support.

I saw the news on Facebook.  I was in the middle of trying to find a way for my own Personal Assistant (carer) to get back to her family, safely.  You see, for some people, not getting to work is the difference between life and death.  My husband and I rely on our PAs to provide round the clock support and that day was no different.  However, it should have been.  Personal Assistants, like Elaine, are overworked, underpaid, undervalued and under-appreciated.  Now, I’m not saying that more money, less work and more appreciation would have changed what happened that day, no one could know that for sure.  But what I am saying is that in some ways it was unsurprising, and is a dire testimony to the savage cuts to local services.

Perhaps if salaries were better, there could have been different travel options for Elaine that day.  Or if we valued social care work like we value other work maybe more people would be recruited into it and there would be more people, who might not have to travel so far, to provide care.  Or, what if we spread the service less thinly?  Losing one 15 minute visit is pretty catastrophic when you only have 4 of them throughout the day to help you eat, go to the toilet, get clean and go to bed.  It’s even worse if that visit was the one in 12 hours that you get to swap your 12-hour incontinence pad.  This is the sad reality for so many disabled and older people in Scotland.  Social care funding is cut to the bone.  Users of it are being denied their human rights. 

Elaine would have known this.  I suspect she, like so many like her, was a women committed to delivering the best support she could, against the odds.  As a disabled person who lives and breathes this reality, I can tell you categorically that, coupled with the harsh reality of the abuse of our own human rights, the exploitation of the care workforce bears heavy.  And I know the same true the other way around.  When the human rights of my husband and I are at risk, our PAs feel the injustice and the fear – for our future and their jobs – too.

Our fight is the same fight.  We want – no, we need – a social care system that protects and fulfils the human rights of the people who use it and the people who work in it.  One that is free at the point of need for the user and that pays the staff who deliver it, in a way that recognises their hard work and commitment. 

‘Free at the point of use and a pay increase, that’s more money all round’ I hear the astute economists among you note.  Yes.  More money is needed in the system.  Enough already with the whole ‘let’s use the money differently’ crap.  The elastic in that particular nicker is snapped.  It’s time to create a National Care Service, designed to protect and promote human rights, publically funded, free at the point of delivery and with industry leading pay and conditions.  And by the way, this is not a spending agenda, it’s an investment agenda – 7 people are in work because my husband and I get social care.  Seven more people with money to spend.  In fact, if you count my husband and I too, that’s 9 more people working, and spending because of social care!  And I haven’t started on savings through the prevention of illness (physical and mental), social isolation or benefit costs.

So on Saturday, when we remember those who have lost their lives at work, through their dedication and struggle, let us remember Elaine, and fight for every other Elaine out there.

Pam Duncan-Glancy is a UNISON member standing to be Labour’s Candidate in Glasgow North. She tweets @glasgowpam.

Why government needs to address the march of the robots

The robots are coming to take your job - or maybe not quite yet.

As the recent ScotGov/ STUC paper puts it, there are two schools of thought. Those who believe we stand on the cusp of widespread technological unemployment to those who believe the labour market will prove, as it has in the past, much more resilient. It may simply be my age, but I tend to fall into the latter category.

I can recall futurologists telling us that we would all have portfolio careers, yet in practice the amount of time we work for the same employer has actually increased. Yes, automation has resulted in fewer jobs in some sectors, but it has created new ones that we would never have thought of twenty years ago. 

I was pleased to read that my ageing instinct is supported by Danish academic robotic experts who argue that there is still a long way to go before robots will be able to match a number of fundamental human skills. They give five reasons why robots aren’t about to take over the world. These include the abilities of the human hand and manipulation that robots are nowhere to replicating. Humans also have tactile perception through sensors in our magnificent skin. Finally, robots haven't got the human interaction and reasoning skills of humans.

So, robots are a reality today in industry and they will appear in public spaces in more complex shapes. But in the next two decades, robots will not be human-like, even if they might look like humans. Instead they will remain sophisticated machines.

That doesn't mean that we shouldn't plan for the future. At the start of my career as a trade union official, we were busy negotiating 'new technology agreements'. They addressed the direct workforce implications of computerisation, but didn't always tackle the workforce planning and wider economic and social policy implications of automation.

As I said in Monday's Herald feature on the ARI report: "Proper planning and strategy is needed now, not further down the line. We should be anticipating where we are likely to see job losses and putting measures in place to ensure that we have a just transition to new types of jobs.  Industry will not do this, it's very hard to get companies to plan that far in advance, so government needs to step up to the plate."

The ARI report revealed the UK is lagging behind other countries when it comes to preparing for the changes - with education and training the main areas of concern. It lists the UK as number 8 in the world in preparing for the expected rise in robots. Education and training in schools and the workplace is a key concern. The report found that UK primary schools have not focused enough on developing critical thinking and problem solving skills.

That brings me back to the ScotGov/STUC report. It gives us a very balanced view of the evidence, without coming down on one side or the other. However, they highlight that researchers on both sides of the future of jobs debate share concerns over the potential distributional consequences of technological change. The OECD finds that; “low qualified workers are likely to bear the brunt of the adjustment costs... the likely challenge for the future lies in coping with rising inequality". There are also significant regional differences. For example, the OECD report says 33% of jobs in Slovakia are at risk, compared to only 6% in Norway.

The report points to labour market trends in Scotland, few of which have been driven by technology. The Scottish Government points to their labour market strategy and the Fair Work Convention. As well as their support for new industries and the planned Just Transition Commission.

These are all worthwhile initiatives, although they are often stronger on process than delivery. If we are to seriously address the challenges of automation it requires a radical industrial strategy coupled with much stronger Fair Work measures. We need to be more like Norway than Slovakia, otherwise automation will have significant job consequences and create an even more unequal society.

World Water Day

World Water Day, on 22 March every year, is about focusing attention on the importance of water. This year’s theme, ‘Nature for Water’, explores nature-based solutions (NBS) to the water challenges we face in the 21st century.  

Water is a human right according to the United Nations, which in 2010 declared that every man, woman and child should have access to clean drinking water and safe sanitation.  As the most precious life source the earth has to offer, without which humans cannot survive, the recognition of water’s importance to human beings as equal to their right to life and dignity goes without saying.

In Scotland, we take the provision of clean water from our taps and the safe removal of waste water for granted. Sadly, this is not the case in many parts of the world:

• 2.1 billion people lack access to safely managed drinking water services. 
• By 2050, the world’s population will have grown by an estimated 2 billion people and global water demand could be up to 30% higher than today. 
• Around 1.9 billion people live in potentially severely water-scarce areas. By 2050, this could increase to around 3 billion people. 
• 1.8 billion people use an unimproved source of drinking water with no protection against contamination from human faeces. 
• Globally, over 80% of the wastewater generated by society flows back into the environment without being treated or reused. 

This February, the European Commission published the Re-cast of the Drinking Water Directive. We have been waiting four years for this first concrete outcome of the European Citizens Initiative, following the Commission’s unambitious Communication in 2014. The proposed Directive, as the ETUC and others said at the time, is a step forward, but misses the opportunity to recognise the Human Right to Water. Now we have to mobilise allies in the European Parliament, the European Social and Economic Committee and the Committee of the Regions to push the European Union to commit to really implementing the Human Right to Water. Hopefully it will happen before Brexit, but I wouldn’t hold your breath.

In Scotland, we have the benefit of a largely public sector water service. Despite Scottish Water’s persistent reference to ‘the company’, they are in fact a public corporation. This public service delivers a quality service more cost effectively than private companies in England, despite the additional costs of managing water in Scotland. The private sector has crept into a few corners of the service through competition measures in the non-domestic market and through ruinously expensive PFI schemes. However, the core service remains in public hands. 

There is a case for greater democratic accountability and moving away from the regulation model that seeks to copy the private sector model in England and Wales. We could also do much more with water as an economic asset, something envisaged in the Hydro Nation concept. Sadly, that vision hasn’t been realised in full. I hope that is something Scottish Labour and other political parties will consider in the run up to the next Scottish Parliament election. 

The sharks are always circling around Scottish Water and we need to remain vigilant. Scotland’s water is not for sale.

The case for Just Transition

Any plan to tackle climate change has to have Just Transition and an industrial strategy at its core.

Those of us who take a close interest in climate change tend to leap into the detailed aspects of the policy. In the era of Trump and false news, we should always remember to start any discussion by making the case for tackling climate change. 

In short, we are faced with rising temperatures relating to the build up of carbon dioxide in the atmosphere. To address this, the Paris Climate Change agreement seeks 1.5°C and 2°C commitments. However, if we continue with ineffective mitigation measures, in less than 12 years current emissions will see the 1.5°C aspiration pass by, with the 2°C carbon budget exceeded by the mid 2030s. We need to put long-term planetary stewardship before short-term profit, if our generation is going to bequeath a sustainable planet to our children. 

Scotland can rightly take credit for our radical Climate Change Act, secured with cross party support. However, grand aspirations and ambitious long-term targets need to be backed up by practical action. A new Climate Change Plan should be an opportunity to set out a clear pathway for slashing emissions and building a thriving green economy. Sadly, Parliament found Plan fell remarkably short on new policy action and lacked credibility in key areas like the budget, energy efficiency, cleaner transport and agricultural emissions.

There is public support for stronger action. 99% of people who responded to the consultation want the Government to commit to net zero emissions by 2050 at the latest, and increased action in the next decade with a stronger 2030 target.

On Just Transition, we should welcome the announcement of Just Transition Commission, but again this has to be about more than just process. For example, the growth in renewables has benefited our energy mix, but Scotland has a shockingly poor record on manufacturing jobs associated with renewable energy. Workers in these industries are entitled to expect that Just Transition plans are closely linked to a new industrial strategy. Warm words and vague aspirations don't pay the rent, or put food on the table.

Just Transition plans should build in the principles that livelihoods will be maintained; and training and re-training will be funded. They must also include measures to tackle disadvantage in the labour market.

Practical action should include:

• A heat map of vulnerable industries and companies.
• Advance planning, not last minute BiFab style interventions.
• Links to a green industrial strategy and Fair Work principles.
• Investment, including the National Investment Bank and pension funds.
• Community benefit including the use of local supply chains.
• Recognising that ownership matters, including taking a stake in enterprises to ensure just transition and support for co-operatives.
• Using public sector procurement to promote transition.

There are international examples of good practice that we can call upon including; Statoil, Alberta coal and the Latrobe Valley in Australia. Canada and New Zealand are also looking to develop Just Transition commissions.

I am concerned that the Scottish Government is planning a very low key Commission model, reporting just to ministers with a short life span. The Commission needs to adopt a social dialogue model with social protections; an independent secretariat and adequate resourcing, not a rehash existing funding pots

It should also report to Parliament as well as ministers, allowing the economy and climate change committees to scrutinise its work. There is a case for putting it on statutory footing in the new Climate Change Act, but at a minimum it must have a balanced membership, with credible people, a realistic work programme and extensive worker engagement.

The Just Transition Partnership will shortly be publishing their detailed proposals for the Just Transition Commission. These proposals will argue that the focus should be on transforming Scotland’s whole economy through driving the transition to low carbon emissions, attending to jobs and job quality and the needs of workers and geographical communities. Setting out what needs to be done and how it can be done expeditiously and with a fair distribution of costs and benefits.