Fire and Rescue Service faces further cuts

Audit Scotland has published a report on the creation of a single fire and rescue service for Scotland. They conclude that the process was managed effectively, and its performance is improving.  However, a long-term financial strategy is now urgently needed to address a significant potential funding gap.

The key financial concerns are:

“Reported savings of £16.1 million in 2013/14 and planned savings of £6.6 million in 2014/15 puts the Scottish Fire and Rescue Service on track to exceed expected savings of £328 million by 2027/28. However, as a result of future cost pressures and likely reductions in funding, we estimate a potential funding gap of £42.7 million in 2019/20. The Scottish Fire and Rescue Service does not yet have a long-term (five to ten year) financial strategy. It is developing the necessary underpinning strategies.”

 

 

Staff costs amount to 79% (£207 million) of budgeted gross expenditure. The support staff represented by UNISON Scotland makes up only 9%.

On future savings, Audit Scotland calculates gross savings of £55.3 million by 31 March 2020. However these will be offset by cost increases (inflation, increase in employers' national insurance costs etc) of £32.4 million, resulting in net savings of £22.9 million. The SFRS cost plan assumes that budgets will remain at the same level as 2015/16 until 2019/20, while recognising that a decrease in funding of 5% by 2019/20 would result in a funding gap exceeding £21 million.

Audit Scotland believes that this is an optimistic assumption. Our analysis uses forecasts of UK public sector spending from the OBR to estimate future funding. They calculate a potential funding gap of £42.7 million (in cash terms) in 2019/20. A potential funding gap of £42.7 million in 2019/20 assumes that budget reductions are spread evenly across the public sector, with no protected areas. If some areas are protected, the SFRS's funding gap could exceed £42.7 million.

 

In this context they recommend a long-term financial strategy is needed for the SFRS, to show how it will close the funding gap and achieve savings by 2019/20 and beyond.

The funding shortfall is exacerbated by the SFRS’s liability for VAT. UNISON Scotland warned the Scottish Government of this risk and they were explicitly warned by the Treasury that if they chose to organise Fire and Rescue services in this way they would lose the previous VAT exemption. Sadly, Scottish Ministers ignored this warning and scarce resources are now going to the Treasury.

 

What's coming our way with a new Tory government

As the Tories form a government at Westminster what are the issues likely to face Scotland and trade unions in particular? There are many, but the key issues are likely to be public spending, welfare, employment rights and the constitution

The key issue for any devolved administration is funding. We know from the budget that the Chancellor’s plans involve slashing £30bn from UK public spending with the deepest cuts in 2016/17 and 2017/18, as this chart shows.

What does this mean for spending in Scotland? As always it's difficult to be precise because we don't know exactly where the cuts will be made in England and therefore the Barnett consequentials. The Budget stated that £13bn will come from departmental budgets, £12bn from welfare cuts and the £5bn balance from tax avoidance savings.

It's the department budgets that have the direct Barnett consequentials and that might be mitigated a bit if they deliver on the promised cash input into the English NHS. We still don't know where the welfare cuts are coming from and I suspect the tax avoidance savings are very unlikely to be delivered. Particularly as they are cutting HMRC staff! There is therefore a real risk that departmental budgets will have to take a greater share of the cuts with negative Barnett consequentials.

Cuts at this level will require more than the salami slicing approach of recent years. Will the Scottish Government continue to dump most of austerity on local government and if so where does that leave policies like the Council Tax freeze. While I have no doubt the Scottish Government will do what it can to mitigate, we all need to start thinking outside the box for some creative solutions. The Smith Commission borrowing powers, while not all we would want, may be one opportunity to look at issues like refinancing expensive debt and PPP schemes.

Closely linked to spending is pay policy. Pay restraint is likely to continue and next April there will be National Insurance contribution increases that will take a further 1.4% out of the pay packets of workers in contracted out pension schemes. That's most of the public sector. It will also hit public sector budgets as employer contributions will rise by a massive 3.4%. None of this will do much for spending power in the economy - continuing the low wage, low productivity problem that underpins much of our economic woes.

While the Tories refused to spell out where they would cut benefits to achieve their spending cuts, it is clear that they will largely come from the working poor. This will be a further attack on incomes, particularly for low paid workers with families. Some 250,000 in-work families who currently receive Child Tax Credits (CTC) and Working Tax Credits (WTC) face a potential threat of £40 per week on average being cut from their weekly incomes.

There will be a further attack on employment rights that are already some of the weakest in Europe. Industrial action thresholds are designed to undermine the right to strike and employers will be allowed to bring agency staff to scab. I fear there will unforeseen consequences of this with many more small scale disputes where the threshold is usually met, coupled with new forms of unregulated protest. Talk of deregulation from the new Business Secretary is code for further attacks on workers rights and undermining basic protections such as health and safety. On a more positive note there will be an opportunity to address the pernicious impact of Employment Tribunal fees when this is devolved under the Smith Commission proposals.

This is another reason why the Human Rights Act is under attack. The Tories don't want their legislation to be challenged. There is an interesting and developing debate on how this sits with the Scotland Act requirements and what we might be able to do to resist this. It's complex and probably the subject of a separate post, but that Tory champion of human rights, Winston Churchill, will be turning in his grave.

While there is a commitment to implement the Smith Commission proposals, that won't be the end of the constitutional story. As a Scottish Parliament committee highlighted this week, the legislative proposals fall somewhat short of the recommendations and others need more clarity. There will be additional pressure to improve on Smith as reflected in the STUC Memorandum of Understanding with the Scottish Government this week.

There will be a temptation for the UK government to call the Scottish Government's bluff on Full Fiscal Responsibility, although I suspect Treasury orthodoxy will triumph over political opportunity. We must hope so, not just because of the negative public spending consequences, but because creating a UK version of the Eurozone's fiscal and monetary policy mismatch won't help the economy.

The above demonstrates that the next few years will be pretty grim for everyone in Scotland and the rest of the UK, with the obvious exception of the rich, who will be pampered as usual. Devolution brings some opportunities to mitigate the damage in Scotland and so we all need to work together constructively to exploit that potential.

 

Work and Poverty

"Children are not private luxuries: they are a joy in themselves and a social good." CPAG

UNISON has launched a Childcare Charter calling for the provision of high quality childcare in this we also point out that Getting it Right For Every Child cannot be separated from improving how work fits into family life. As in work poverty continues to grow we need to look at the balance between hours worked, rates of pay and the need to undertake caring responsibilities in order
Almost two thirds of children living in poverty have at least one working parent we need to look at how make sure that work does indeed guarantee freedom from poverty. Child Poverty Action Group (CPAG)have published a new paper Round the Clock: in work poverty and the hours question. They pose the question “How many hours should parent work (in order not to be poor)? The research is not just about how much you can earn but how you balance working hours with looking after children. The research involves an evidence review on attitudes to parental employment, a poll asking how many hours it was reasonable for parents to work and when those hours should be, taking the polling results to focus groups and also asking more about working hours expectations for lower paid parents and finally taking the results to employers to hear their views. The report also considers the policy implications of the findings.

Choices about how and when to work are made in an economic and social context. Most people think that once you have children you will have to reduce spending in some areas because you have higher costs in others. An EHRC study on working preferences in 2009 found that 57% of high income households had a stay at home parent in contrast to only 25% of those on low incomes. As the recession has progresses average earnings have decreased and so those on low pay to work longer hours to make ends meet.

One and a half to two earner households have a very low risk of poverty, part-time work does not protect couple families or lone parents from poverty.

Children in lone parent families still have a substantial risk of poverty even if their parent works full time. Almost one third of children whose parents are self employed (a growing sector of the workforce) live in poverty

Changes to the benefits and tax system (including universal credit) incentivise those on low incomes to increase working hours while endorsing the traditional breadwinner role for the better off.

Poverty reduction strategies seem to be focused in encouraging all parents to work full time. The planned and recent expansion of childcare provision is increasingly linked to parental employment rather than child development. At the same time governments are also promoting programmes encouraging positive parenting and parents spending “quality time” with children. Running across the debate is an increasing confusion between the constraints that low incomes place on peoples’ parenting choices and actual neglect/harmful activities by parents.

Only 25% of parents were content with the balance between their home and working lives, 77% reported that work cut into the time they had available to helping children with homework, taking them to clubs and putting them to bed.
When asked how they would like to strike a better balance 27% would work less hours, more than a quarter saying they would take a pay cut to do so. 22% would give up work altogether, 22% would like to work from home some of the time and 21% would like flexible hours.

The survey went on to ask what working hours were thought to be reasonable for parents per week. Interestingly there was no clear gender social class or political persuasion link to responses. For many the one full time one part time working parent is now deemed the norm. participants thought it was reasonable for a lone parent to work more hours than “the carer” parent in a two parent household. Respondents also felt it was more reasonable for lone parents to work longer hours and by the time children were 3 very few felt it was reasonable for lone parents not be in work. They did though not expect both parents in a two parent family to be in full time work at this stage.

In focus groups it was clear that most think the balance of work/childcare is deeply personal, it was also felt that debates about working parents don’t focus enough on the needs of the child which it was widely believed should be put back in the picture. Parents frequently asked why parenting was not valued despite its “societal importance and manifold rewards” As UNISON’s charter states “While childcare should enable parents to work its focus must be on what’s best for children and their development”.

Key points from the CPAG report

Affordable quality childcare is essential, this means not just nurseries but also around school hours and summer break for older children.

Children also need relaxed quality time with parents: expanded childcare is not a substitute for this.

Vital role for tax credits in supporting those working less than full time but those in full-time work should have a living wage and not require benefits to live.

Flexible working can be a double edged sword: flexibility can be good but zero hours and short notice demands for extra or just insecure weekly hours difficult when childcare has to be booked and paid for regularly and in advance. It doesn’t mean the same thing for those at the top and bottom of the wage scale. Parents need predictable hours.

Wage progression is an essential part of a poverty reduction strategy so we need more childcare support for those undertaking training.

Working more hours helps people earn more money but cannot forget the importance of decent pay rates
Value of benefits must be restored to pre 2010 levels.

In work poverty is produced by three things: levels of pay, hours worked and level of in work benefits. Need to tackle all three and ensure that parents have the time levels of income to allow them to spend time with their own children.

UNISON’s Childcare Charter is available here

Pensions and infrastructure investment

Scottish pension funds should be used as a force for good as well as delivering high quality pensions for our members.

I was giving evidence to the Scottish Parliament Local Government Committee this morning on the use of pension funds for infrastructure investment. The Scottish Local Government Pension Scheme has some £26bn to invest. Half of this is invested in overseas equities, investment that comes with significant and often hidden management costs that are poorly understood.

In 2013 I wrote a report With assistance from the SFHA on the use of pension funds to build houses and there has been some take up of the idea in Scotland and the rest of the UK. I argued today that the same principle could apply to other forms of infrastructure investment including transport and energy generation. The best investments are those that have a low risk revenue stream.

I was asked what are the barriers to greater infrastructure investment?

The first is a small 'c' conservatism in pension funds generally. Managers prefer to invest in what they understand and don't like change. This is closely linked to a lack of expertise. They understand equities and commercial property, they don't have much experience in housing or infrastructure generally. If there is a will, there is a simple solution - recruit the in-house expertise.

Another barrier is the claimed impact of fiduciary duty. Again there is a conservative interpretation of the legal position that is holding back infrastructure investment and results in pension funds investing in wholly inappropriate and unethical investments for a public body. Our funds invest in tobacco, arms and fossil fuel companies. The LGA recently commissioned counsel opinion on this issue and this quote sums up the position well:

"the precise choice of investment may be influenced by wider social, ethical or environmental considerations, so long as that does not risk material financial detriment to the fund."

It is perfectly possible to invest in infrastructure and ethical investment within this framework and pension funds across the UK are doing this better than many Scottish local government funds. The risks involved in some of these unethical investments are not sufficiently well understood. Funds are also weak on shareholder engagement and they could use that leverage to promote trade union, government and council policies more effectively.

Another barrier is the investment regulations. I argued today that they are over prescriptive, specifying limits to specific forms of investment. A better approach might be to have a broad duty and a code of practice.

That leaves how our funds are structured. We have eleven funds in Scotland and that leads to duplication of cost and little sharing of expertise. Bigger funds are generally more effective in securing better returns on investment and would enable funds to develop greater in-house expertise. It doesn't necessarily have to mean merger, but we can and should collaborate much more.

This month sees the start of new governance arrangements for the Scottish LGPS. The new Scheme Advisory Board meets for the first time tomorrow and these issues are in the draft work plan. We also have representatives appointed to the new Pension Boards in each of the eleven funds. It will take time, but this should lead to much greater transparency and challenge to vested interests.

Pension funds are a hugely important and under used resourced in Scotland. The new governance arrangements are an opportunity to move in a new direction. But we will need to work hard to break down entrenched positions. Today's parliamentary scrutiny is helpful in moving this along.

 

Building better public services

Public service reform should be built from the bottom up through local democracy rather than centralisation. However, no reforms will be effective unless they are fully funded.

I have written a number of articles recently on the broad issue of public service reform. In this blog post I will attempt to knit them together to illustrate a theme around local democracy and fair funding.

In the journal 'Scottish Policy Now' I set out an overview of progress with the Christie Commission recommendations on the future delivery of public service. While there has been progress, I argue that on local design, preventative spending and workforce strategy; Scotland is missing out on real opportunities.

In a column in The Scotsman, I focused on a specific Christie recommendation - the importance of engaging staff and service users in the design of public services. Four years on, we still have centralisation, ring-fencing and top down targets. I also point to the systems thinking author John Seddon's latest book that clearly sets out the evidence for a different approach. If managers and politicians actually followed through a citizen's request through their systems they would be horrified. Some of these issues are also highlighted in UNISON Scotland's latest survey of staff working in transactional services.

Local government has borne the brunt of austerity in Scotland an issue I explored in an article in the Morning Star this week. Four out of five jobs lost have been in councils and ConDem austerity has been exacerbated by the regressive Council Tax freeze. While finance is vital, my main theme was that councils must act as strong local voices. All too often they are the passive administrators of cuts.

Finally, we return to funding public services. I contributed a chapter to the latest Red Paper publication on the implications of Devo-Max for Scotland's public services. I understand the case for independence, I might even have voted for it myself, but Devo-Max or Full Fiscal Accountability would be a disaster for public services in Scotland. I explain what Devo-Max is and the main criticisms of it. Put simply, devolved administrations want relatively stable income and expenditure. UNISON and other unions said this long before the oil price crash sharply illustrated the point. Since I wrote this chapter, the IFS has updated their calculations based on the SNP manifesto proposals and they would deliver huge cuts in public services and jobs. Barnett may not be perfect, but abandoning it is a huge gamble.

Having said that, this doesn't mean we should accept the limitations of the Smith Commission proposals. In the same Red Paper chapter I set out how we could improve public services with further devolution. Progressive federalism is right for Scotland and the rest of the UK. Labour should also be bolder on ending austerity.

The general election is obviously vital for public services, primarily to end Tory austerity. However, wider consideration of public service reform will not go away and most of those difficult decisions are made in Scotland.

 

Water is returning to public service delivery

Water privatisation is in retreat. Water and wastewater is returning to local authority ownership across the world.

The Public Services International Research Unit (PSIRU), Multinational Observatory, Municipal Services Project (MSP) and European Federation of Public Service Unions (EPSU) have released new research on the growing wave of cities worldwide that are taking previously privatised water supply and sanitation services back under public control, in a process called remunicipalisation.

Over the last 15 years, 235 cases of water remunicipalisation have been recorded in 37 countries, impacting on more than 100 million people. Moreover the pace of remunicipalisation is accelerating dramatically, doubling in the 2010-2015 period compared with 2000-2010.

After huge problems in the developing world, private companies have been shifting their efforts to the developed world. It is therefore interesting that recent remunicipalisation is concentrated in high-income countries, with 184 cases compared to 51 in low- and middle-income countries. The great majority have taken place in two countries: France (94), home of two of the world’s private water companies, Suez and Veolia, and the United States (58).

Transnational Institute water expert Satoko Kishimoto said: "This report shows that water privatisation, which has been promoted so heavily in recent years, is increasingly being rejected by cities worldwide after years of failed promises, poor services and high prices. The pendulum is swinging back in favour of public water, because of the strong evidence that remunicipalisation brings immediate cost savings, operational effectiveness, increased investment, higher levels of transparency and accountability."

The former Deputy Mayor of Paris Anne Le Strat, who was behind the flagship 2010 remunicipalisation of water in the French capital added; "Moreover, public water operators are now joining forces within and across countries to support and learn from each other so we can achieve the human right to water for all."

The book Our public water future: The global experience with remunicipalisation comes out as global leaders are gathering for the World Water Forum, which is dominated by private water operators and has been a key proponent of water privatisation in recent years.

The delivery of clean water and sanitation also has to be seen the context of a global water crisis with supplies running dry at an alarming rate. The world’s population continues to soar but that rise in numbers has not been matched by an accompanying increase in supplies of fresh water.

The consequences are proving to be profound. Across the globe, reports reveal huge areas in crisis today as reservoirs and aquifers dry up. More than a billion individuals, one in seven people on the planet, now lack access to safe drinking water.

We should therefore be doubly grateful that we live in a wet country with a public water service. And we want to keep it that way. Well, the public service bit at least!

 

Food safety is the priority for Scots

Scots want slaughter houses to be independently inspected by government meat safety inspectors, not handed over to the industry to regulate themselves.

UNISON has commissioned independent pollsters Ispos MORI to find out what people living in Scotland think about how we ensure the food we eat is safe. This follows a number of food scandals and the news that 73% of chickens in the UK tested positive for the presence of the campylobacter, the most common source of food poisoning.

The report shows that almost all Scots (98%) believe that official slaughter houses should be inspected to ensure they are meeting food safety and quality standards; the vast majority of Scots (95%) believe that slaughterhouses should continue to operate to official standards; three quarters of Scots also believe slaughterhouses should be inspected independently (75%), and majority of Scots (70%) also agree that standards are more likely to be met if they are carried out by government inspectors.

So that is very clear. Unsurprisingly, the overwhelming view is that independent inspection is a very good thing. Sadly, governments and the meat industry are running with a different agenda. There is continued pressure from Europe to de-regulate meat inspection with the active support of the UK Government and the Food Standards Agency. The Scottish Government went along with cutting safety standards recently when they approved the visual only inspection of pigs. This means tumours and abscesses will be minced into the sausages and pies we eat. The meat industry lobby has clearly been busy in Scotland as well!

Tim Lang, professor of food policy at City University, said the FSA had been ‘captured’ by industry interests. "This is a sad day for British food policy. A quarter of a century after the British learned of the extent of contamination of poultry, we are back again with unacceptable levels of food-borne pathogens. Then, it was salmonella. Now, it’s campylobacter."

This month meat inspectors have been transferred into a new Scottish Government Agency, Food Standards Scotland. During the horsemeat scandal Scottish Ministers were able to blame 'Westminster', even though the regulations on food safety are devolved. Now the physical inspection is managed by a devolved institution as well.

Meat inspectors deal with the food processing stage, but we rely on council environment health officers to inspect retail food operations. As a consequence of council cuts they are now thin on the ground and sampling and inspections have also been slashed

So, this report is a timely reminder to the Scottish Government that food safety is a priority for Scots. Scots believe the meat trade should be independently inspected and regulated, and they think that meat inspection should be carried out by government inspectors. This is too important to get wrong. We have been concerned about the lighter touch regulation which has been promoted across UK and EU meat trades. The Scottish Government’s new agency Food Standards Scotland must ensure we maintain a strong, well regulated, independent meat inspection regime.