Council charges increasing. You heard it here first!

Audit Scotland has published a report on local government charges for services. If the subject sounds familiar, it should. UNISON Scotland published its own work on the subject in May of this year, showing how charges appeared to be plugging the gap caused by the Council Tax freeze.

This report confirms that the income that councils raise from charges has risen over the last decade and is estimated at some £1.3 billion, or approximately 7% of a council’s overall expenditure. That’s equivalent to over
 50% of the amount they raise through council tax. And this doesn’t include rents or fines.

The proportion of income from charges rose from 5.6% in 2003/04 to 7.4% in 2013. The implementation of the council tax freeze in 2007/08 altered the relative proportion of councils’ income from charges as the chart below demonstrates.

Councils are facing continuing financial pressures through increasing costs and demands on services. The Scottish Government funding settlement to local authorities for 2013/14 is £9.9 billion, a decrease of about 2.25% in real terms. As a consequence there is an increasing need for councils to examine potential sources of income, including charging more for their services.

Councils do not have complete freedom to charge for services. Many council services are provided with no direct charge to the service user like children’s education and street cleaning. Councils do however have discretion to charge for other services such as planning consents and building control certificates, the use of sports facilities, licensing and burials and cremations. Councils may also offer price concessions to certain service users based on, for example, their age, employment or financial circumstances.

Councils apply charges to a wide range of services, but the biggest service area is social work, followed by roads and transport (see below)

As locally elected bodies it can be expected that councils' charging policies will differ. The report recommends that councils should be transparent about their charges and set them in the context of wider service objectives. Councils should be aware of any unexplained inconsistencies and be able to explain why their charging policy differs from other authorities, including the use of benchmarking.

As we said in May, charges are cutting deep into people’s pocket and are often regressive. Freezing the Council Tax will not reduce poverty or inequality. Councils need resources to continue providing vital services rather than impose damaging cuts or punitive charges.

How austerity is squeezing pensions

Another by product of austerity economics is the squeeze on savings for a pension. That is bad news for workers and a potentially massive burden on public services.

The annual Scottish Widows Women and Pensions Report highlighted a further drop in the amount workers are able to put aside for their pensions. In particular, the number of women saving adequately for their retirement has reached an all-time low, with just four in 10 UK women putting enough away in their pension pot - typically £1000 less per year than men. Women are on average putting £2184 away per year into a pension pot while men are saving £3120.

Older women are also more likely to be relying on their partner’s pensions and suffer in pension terms from career breaks. In the Scottish Local Government Pension Scheme (LGPS) women receive an average pension that is only half that of men (£3.5k compared to £7k), despite having similar average pensionable pay.

The report urged politicians and the industry to "work harder" to understand the obstacles to building a retirement pot faced by women, who are often forced to prioritise more immediate family needs over long- term saving.

While the focus of this report is women, men are not in a much better position. In the last few years of austerity economics less income is being squeezed, so that workers simply don't have the surplus income to put into a pension pot. In addition the loss of quality defined benefit pension schemes means more workers are relying on poor quality schemes with high costs that deliver poor returns on investment.

With a high proportion of women workers, maintaining the quality of public sector pension schemes is particularly important. Early indications are that auto-enrolment is working by getting more women, particularly older and part-time workers into the schemes. In the Scottish LGPS our audit shows that even before auto-enrolment women were entering the scheme at a higher level than you might expect given the preponderance of part-time working.

The overall gender split is 72% female to 28% male. In terms of membership of the Scottish LGPS, 26% of female members are not in the scheme compared with 21% of men. The difference is not as great as might be expected given the much larger proportion of part-time female members. For example, 40% of women not in the scheme work less than 10 hours. There is also a rough correlation between men and women in the scheme by age. The most significant outlier is actually young men aged 21-30 who are less likely to be in the scheme. It would appear young women are more sensible.

These issues have been important considerations in the negotiations over a new Scottish LGPS. Members should by now have received their ballot papers and an explanatory leaflet explaining how we have focused on keeping contributions stable, to keep as many members as possible in the scheme at this difficult time.

However, the real challenge is getting the quarter of the local government workforce into the pension scheme, along with many more in the wider workforce as highlighted by today’s report. That requires governments to understand that workers can only save for a pension if they have disposable income – and that means proper pay rises. Without that the demographic time bomb will explode with a vengeance.

Using public procurement to help create a fairer Scotland

Nearly £11bn of public money is spent each year in Scotland buying goods and services. That’s a lot of purchasing power. Government and public bodies should be using this power as an opportunity to help create a fairer Scotland.

Today I am at the SNP conference and our fringe meeting is on procurement. As the First Minister put it; “The Procurement Reform Bill has the potential to make a difference to many lives. It will provide new powers to tackle companies that do not comply with their legal obligations, including blacklisting and employment law.”

That’s fine as far as it goes, but procurement can do much more than ensure legal obligations are complied with – that should be taken as read. UNISON has joined a broad coalition of civil society organisations (STUC, SCCS, SCVO and others) who have identified ten priorities for the Bill.

Let’s take the procurement of social care as just one example. Over £400m is spent by councils alone on home care in Scotland, mostly in the private and voluntary sector. Increasing demand for services and declining local authority budgets means these services are being squeezed. The consequences are little short of a national disgrace. Home care workers, often paid little above the National Minimum Wage, employed on zero or nominal hour contracts are literally running around our communities trying to look after some of the most vulnerable members of society.

Much has been written about the 15 minute care visit. However, as one care worker said to me recently, “15minutes - that’s a luxury!” They describe a typical day as constantly trying to catch up from too many visits with inadequate travelling time, that some are not even paid for. The only way to finish the day is to cut corners in what are already inadequate care packages. The days when staff could spend some quality time with clients, looking beyond basic care needs, have long gone. Added to this is the growth of personalisation. While fine in principle, in practice it is leading to the loss of socialisation, with day centre closures leaving people isolated in their own homes.

This is no way to treat elderly people. We should specify, through procurement, decent employment standards, including the Scottish Living Wage, with no zero-hours contracts and proper training programmes. The aim should be to develop a workforce that delivers continuity of care, not workers who are desperate to find another job. Person centered procurement recognises that procuring pens, pencils and paper should be an entirely different process to buying people services such as social care.  The race to the cheapest is rarely the best approach and especially when we are procuring services for the most vulnerable in our communities.

Better employment standards not only drive up the quality of service, but are also good for the economy. Paying the Scottish Living Wage means the taxpayer is not subsidising bad employers through the benefit system. Workers with decent wages and secure contracts will have the confidence to buy goods and services that create sustainable economic growth. Studies show that firms that pay the living wage have lower absenteeism, greater commitment and continuity of the workforce. This is how to really, ‘make work pay’.

Procurement should be used as part of stronger efforts to tackle tax dodging and tax avoidance, both at home and in developing countries.  This could bring in much-needed billions of pounds for the public purse. It is entirely wrong that companies seeking to avoid paying their fair share of tax should be awarded public contracts.

The same applies to fair trade. Ethical and responsible trading policies have the potential to transform lives around the world. The opportunity to sell products for a fair price and to work in safe and decent conditions could help millions work their way out of poverty. The Procurement Bill should help Scotland cement its status as a Fair Trade Nation and to lead the way in ethical procurement.

Scotland has some of the most challenging climate change targets in the world and the legislation includes a duty upon all public bodies to contribute to meeting these emissions targets. Those companies supplying the public sector should be able to show that they are contributing to a more sustainable Scotland. They can do this by publishing an annual assessment of their carbon emissions and providing information on the carbon emissions attributable to the whole life of goods and services supplied.

Public procurement, particularly at a time of financial constraints, has the potential to do much more than just deliver goods and services. If we place sustainable and ethical considerations at the heart of the procurement process, it could promote positive social outcomes for us all.

(Our Bargaining Briefing on the Procurement Reform Bill is here)

Challenge Poverty Week

Challenge Poverty Week is an opportunity to highlight the extent of poverty in Scotland and to build support for further action.

The Poverty Alliance is coordinating Challenge Poverty Week (CPW) this week. The key messages are:

Poverty is a real problem in Scotland, affecting large and growing numbers of people;
Wide inequalities between groups and individuals damages our whole society;
Poverty is created by the decisions we make as a society;
People living on low incomes have a voice and should be heard;
Change is possible!

The Trussell Trust has revealed today that five times more Scots are turning to food banks for emergency aid than last year. Between April and September, 23,073 people were referred to the Trussell Trust for three days’ worth of food – comprising 16,465 adults and 6,608 children. That compares with 4,021 people in the same months of 2012 – 2,786 adults and 1,235 children. The Scottish figures are significantly higher than in the UK as a whole.

As TUC General Secretary Frances O’Grady put it: "One only has to look at the huge rise in foodbanks to see how little support is being given to people who fall on hard times. But instead of recognising the tremendous difficulties people are facing, ministers are blaming them for their plight. The Chancellor is talking up a recovery – but for who? These new figures show that despite trying desperately hard to make ends meet hundreds of thousands of people still can’t afford to put food on the table for their families. Welfare reforms like the Bedroom Tax have pushed more households into food poverty.”

The long term picture is no better. A study by SCVO showed that one in four Scots will be living in poverty by the end of the decade if the coalition government forges ahead with “criminal welfare reforms” that draw together a range of benefits into one universal credit.

A common myth perpetrated by the UK Government is that welfare is for skivers. In fact the biggest element of social security expenditure (42%) goes to pensioners. Then housing benefit is next, accounting for 20%, of whom one-fifth are in work. Then 15% goes on children, through child benefit and child tax credit. Some 8% goes on disability living allowance, 4% on income support mainly for single parents and carers, 4% on employment and support allowance to those who can’t work due to sickness or disability, and 2% on carer’s allowance and maternity pay. Just 3% is spent on jobseeker’s allowance.

So if we achieve only one thing this week, let's remember that poverty demeans us all and it doesn't have to happen in a rich country like ours. And if you don't like the moral argument, accept the economic case. More equal societies do better on every measure, so pure self interest should drive you to challenge poverty.

Sticking plasters on NHS Scotland's long term funding problems

Audit Scotland has published its annual report into the finances of NHS Scotland.

The key message is:

“The NHS in Scotland managed its finances well in 2012/13 but needs to focus more on long-term financial planning and sustainability to make the changes needed to meet increasing demands. In 2012/13, pressures on the NHS’ capacity became more apparent and the health service spent more on short-term measures to deal with them.”

Put another way, the NHS is putting sticking plasters on long term funding problems.

The report also indicates that demands on healthcare are rising and signs of pressure on the NHS were apparent. In particular, some boards missed waiting times targets; staff vacancies increased; and spending on bank and agency staff and private health care rose.

Agency staff and private care spending is a good example of short term spending that is hugely wasteful. The report calls for stronger long-term financial planning to address this.

The report also highlights spending of over £115 million on the top ten high-cost, low-volume (HCLV) drugs in hospitals in 2012/13. These can be a pressure on
NHS boards as spending increases at a higher rate than other costs and it can be less predictable. The top ten drugs are generally a specialist type of drug used to treat rheumatology conditions and irritable bowel conditions (anti-TNFs) and cancer drugs. Spending on HCLV drugs increased more than spending on overall hospital drugs and drugs prescribed in general practice over the past two years.

This again highlights the importance of addressing drug costs in NHS Scotland.

Councils and the Scottish Budget

I was giving evidence to the Scottish Parliament Local Government Committee today on the draft Scottish Government budget for the next financial year.

Our key concern is that local government is bearing the brunt of the UK government cuts in Scotland. £637m since 2008/9 and as a consequence over 30,000 jobs have been lost.

This is having a significant impact on jobs, services and in particular, the living standards of council and voluntary sector staff through job losses and cuts to pay and conditions. The General Resource Grant to councils is being cut from £7.189m this year to £6.971m next year and £6.809m the year after. In real terms the cut is even larger - £6.841m and £6.564m. We also highlight the shift from revenue to capital spend and the potential equalities considerations that don't appear in any government budget assessment.

The limited budget also comes with strings, the new form of ring fencing that was supposed to be abolished under this administration. Teacher numbers, small business bonus, and until this year, the absurd police officer target that has led to police officers being taken off the beat to substitute for police civilians at twice the cost. Another string is the joint working and community planning agreement. Most of this is fine, but joint working will always struggle while the partners have different accountability mechanisms. The Christie Commission identified this as an issue, but little has been done to address it.

The biggest constraint is the regressive Council Tax freeze the cost of which has now topped £2.5bn.

This is a huge sum of money that councils can ill afford to lose. We simply have to try and get a cross party agreement on local taxation, to break the policy logjam. Not just for financial reasons, but to return a degree of local democratic accountability to councils.

We also highlight the significant increase in charges that many councils are leaving to plug the gaps caused by the Council Tax freeze and other revenue reductions. Again, these are largely regressive; hitting those who need council services the most.

Most of the parliamentary committees this budget round are looking at the National Performance Framework – Scotland Performs. This was launched with high expectations that haven't been met. The data is often out of date and the format is not user friendly. There is no clear link between the Scottish Government Budget, its programme and Scotland Performs, neither physically as a web link on the site or in the discussion sections of the site. We would also like to see a move towards including the Oxfam Human Kind index in the performance framework.

Finally, we yet again draw attention to the outstanding equal pay cases. Despite helpful recommendations in the past by the Local Government Committee, progress remains slow with councils spending huge amounts of money on legal technicalities – challenges that they almost always lose. We need to move away from a compensation culture and towards an equality culture.