Welcome to my Blog

It mostly covers my work as UNISON Scotland's Head of Policy and Public Affairs although views are my own. For full coverage of UNISON Scotland's policy and campaigns please visit our web site. You can also follow me on Twitter. I hope you find this blog interesting and I would welcome your comments.

Thursday, 11 January 2018

Protecting our pensions and saving the planet

Pensions are meant to safeguard our future, but that future is threatened by the burning of carbon in fossil fuels like coal, oil and gas. It's also a poor investment, which is why there is a growing movement to divest our pensions from fossil fuel investments.

I was in London yesterday for our UK annual pensions conference, which included the launch of UNISON’s new guide on this issue. It is designed to help members of local government pension schemes push for changes in the investment of their funds. The aim is to explore alternative investment opportunities, allowing funds to sell their shares and bonds in fossil fuels and to go carbon-free.

This is an issue that UNISON Scotland has championed for several years with our ReIvest campaign partners, FoE and Common Weal. Scottish Local Government Pension Scheme funds have some £1.8bn invested in fossil fuel companies - that figure grows to £16bn across the UK.


New government regulations for fossil fuels have raised the costs of high-polluting industries and reduced their investment appeal. Equally, emerging clean and green technology has created new and lucrative business opportunities for funds. The UK government is also consulting on allowing pension schemes to dump fossil fuel investments by dropping ‘best returns’ legal rules.

In Scotland, all local authorities, including those who administer the local SLGPS funds, have a statutory duty to reduce emissions in accordance with the Climate Change (Scotland) Act. That is an additional reason for challenging investment proposals to invest in fossil fuels.

One of the strengths of this new guide is to challenge the conventional wisdom that fiduciary duty is a barrier to divestment. The law is actually quite clear, pension funds should consider any factors that have a  financial impact on the performance of their investments, including social, environmental and corporate governance factors. Trustees can take account of non- financial factors where they have good reason to think that scheme members share their view, and there is no risk of major financial harm to the fund.

The guide also sets out a range of actions anyone who is concerned about this issue can take - not just our union branches and members.


By investing in fossil fuel extraction, our local councils are attempting to take a short term profit from climate change. As public bodies, councils have a responsibility to work for the public good,  they shouldn’t be financially and politically supporting the most destructive industry on the planet. Fossil fuel investments undermine existing Scottish and local authority climate change mitigation and adaptation strategies.

Let's protect our hard earned pensions and leave a planet fit for future generations.

Monday, 1 January 2018

Happy New Year!

Happy New Year!

A brisk walk along the beach to clear my head from the excesses of last night, leads to reflections on 2017 and thoughts for the year ahead.


The UK general election was obviously one of two dominant issues last year. Jeremy Corbyn led a recovery in Labour's position that few predicted, based on radical policies that tuned into the concerns of the many, not the few. The other was Brexit, which continues to polarise opinion and distract from the huge challenges we face as a society. I would add the Scottish Labour leadership election which, through the election of Richard Leonard, sets a new direction for the party in Scotland.

Looking back on my blog statistics for last year, posts on local government finance topped the number of reads. While the reason and content varied, the substance was the same - Tory austerity has largely been dumped on local government in Scotland.  Partly because it is one step removed from ministers, but also because we haven't done enough to make the case for local democracy and services. It is something we need to focus more effort on in 2018.

The next most popular batch of posts was, perhaps surprisingly, on health and safety themes. In particular, research I did on shift working and before that the ageing workforce, clearly tapped into a wider audience. The impact of technology, automation and life expectancy are workplace issues we should give more consideration to. The basic income pilots in Scotland are one response and I suspect I will be spending considerable time on our pension schemes in 2018.

Election posts and the Scottish Labour leadership election came a close third. We must always be prepared for another UK general election in 2018. The Scottish Labour leadership contest means we are a bit behind organisationally, and we will need to catch up early in the new year. However, being a truly mass membership party is a good starting point and the party needs to change to reflect that new reality. The review led by Katy Clark should help to focus minds on the key issues, although it is a matter for the Scottish Labour Party to take forward change here.

The potential of a break in the annual cycle of elections in Scotland is an opportunity to be more creative in policy development. Public service reform is likely to be high on the agenda this year and I hope to find time to develop the ideas I outlined in my Reid Foundation paper on this issue. I will also be doing some work on the local governance review, which is an opportunity to breathe some new life into local democracy. The Scottish Parliament was created 20 years ago and while I am not going to join those who denigrate its achievements, I agree that it is time for our parliament to be bolder, particularly over tackling inequality.

The early part of the year will be dominated by the budget and austerity will continue to blight our economy and public services. Local government and pay will be our focus. On pay, the new government pay policy, while progress in the right direction, still falls short of what we were looking for. Equally important, a paper policy is of little use if it is not fully funded.

I fear the rest of the year will be dominated by Brexit as the UK government attempts to balance their internal conflicts and the hugely difficult negotiations, without any sense of direction. Something that even the newest shop steward understands is a vital element of any negotiation.

I have no time for those who want to dance on a pin in defining Labour's position, or use it as a proxy for attacking the leadership. However, the consequences for Scotland of Brexit are potentially severe and probably not yet fully understood. We should also not forget the opportunities for Scotland, both in terms of devolved powers and in those areas were EU regulation has been a barrier. All this requires some very tricky balancing acts.

Some of my personal goals for 2017 were not achieved - not least I am no lighter and Fulham's performances on the football pitch mirror inconsistency in other areas of public life. However, I am if nothing an optimist, in my view the essential quality every socialist needs.

So here's wishing everyone a prosperous 2018 - I hope a year in which we make further strides in creating a society that works for the many not the few.




Friday, 22 December 2017

Councils are not getting a 'good deal'

The Cabinet Secretary for Finance Derek Mackay says he has delivered a “good deal” for Scottish councils in the local government budget settlement. Well that’s a relief! Or it would be if it was true.

Lots of numbers are bandied about in relation to the local government budget. I dealt with the most common confusion over a ‘real terms’ increase in a previous blog post. So, let’s try and decipher what’s going on in local government.

Let’s start with the trends over recent years. Looking at the comparable, post police and fire transfer, years between 2013-14 and 2017-18, the local government revenue budget fell by 6.9%, whereas the Scottish government Revenue Budget fell by only 1.6%. This chart shows the trend in detail:



The most damming statistic relates to jobs. If local government has had such a ‘good deal’ then why are nine out of ten austerity job losses in councils?

For the coming year the allocation of £9.63 billion is a “flat cash” settlement, but it isn’t a like for like comparison with the previous year. Next year’s funding includes new Scottish Government policy commitments such as starting to implement the expansion of Early Years and Childcare and ring fencing teachers’ pay and classroom ratios. These add up to a total of £153 million and once they are deducted from the “flat cash” settlement, there is a cut of £153 million for core local government services. 

This table shows how this is calculated. 


Even if every council raised the Council Tax by 3%, it only raises £77m. Certainly not enough to plug this gap. The finance minister’s claim that this would deliver a real terms increase, does not stack up.

We focus on revenue because that’s what pays for core services and of course pay. SPICe has estimated that, if local authorities were to match the Scottish Government's pay policy, this would cost around £150m (gross) in 2018-19. I think this is a little on the low side, but it’s difficult to be precise because of poor workforce data. In fairness, in real terms councils have 1% factored in for pay, so the gap is around £90m. 

We should also remember that because of the allocation formula the pain is not equally spread across councils. This chart shows the variations.



The bottom line is that the finance minister has been told to protect half the budget. That means that the other half takes a disproportionate hit. Most of that is local government, so however you try and spin it, councils are not getting a ‘good deal’.

Friday, 15 December 2017

Budget hangover

To use a seasonal analogy, some of us may be feeling the after effects of the office party. Well, the Scottish budget could have a similar effect on public finances later next year.

I have outlined the main impact of the budget on UNISON members in my budget briefing. One of the queries I often get from members is why there are different figures for the same budget or service. Public finance is confusing enough, even for budget geeks like me, without the added confusion.

The first reason is political spin. Politicians will conflate budgets to make their point, and sometimes, even count the same cash twice. The ring-fenced education budgets are an example of the former and social care the latter.

Another reason, and a legitimate one, is the presentation of a budget in 'cash' and 'real' terms. Cash is fairly straightforward. It's usually the amount on the cheque the public body will get from the Scottish Government - a bit like our own household budgets.

Presenting a budget in 'real' terms is an attempt to reflect the impact of inflation. To show if a budget is being increased or reduced to reflect policy priorities or a change in service level. Inflation is the increase in the cost of living, usually measured by an index. The main ones are the Consumer Price Index (CPI) which excludes housing costs, and the Retail Price Index (RPI) which includes them. Wage negotiations tend to focus on the RPI because most workers have housing costs of some sort.

The next complication is that when setting a budget the government is not looking at today's inflation rate, they are looking at forecasts for the next financial year (April 2018 to April 2019). This is done by the Office of Budget Responsibility (OBR) at UK level and the Scottish Fiscal Commission (SFC) in Scotland. The OBR has forecast that the CPI will be 2.4% next year and the RPI 3.3%.

However, there is another inflation rate called the 'GDP deflator' which government's use to present budgets in 'real' terms. This uses a different basket of goods and services from the better known CPI and RPI measures. The OBR forecasts that this will be 1.4% next year. So, when a budget line is described by Scottish ministers as a 'real term' increase, they mean only if inflation keeps at or below 1.4%.

Now, I personally think the OBR forecasts for CPI are optimistic, but I am pretty certain that 1.4% is not going to cover public service inflation in Scotland next year. For a starter, the Scottish Government pay policy is going to cost just short of 3% and that's 55% of the Scottish Budget. The NHS makes up a third of the budget and health inflation is always much higher than the standard measures. Then we have demographic change, which for social care requires a 2% increase just to standstill. I could go on, but you get the point. 

And let's not forget that local government isn't getting even this kid on real terms increase - they are getting a flat cash revenue settlement. In real terms the local government budget is cut by £135m, COSLA thinks it is closer to £154m. If you apply the points I make above, it's probably even bigger than that. To give some context, a 1% pay rise costs councils around £70m.

The concept of a 'real terms' pay increase also comes in here , given the Scottish Government pay policy. Even if RPI falls to 3.3% next year that still leaves those earning below £30k, who are promised 3%, out of pocket. Much more of a loss for those above £30k, who are only promised 2%.

In summary, I fear that if we swallow this draft Scottish Budget we will be left with something of a delayed hangover later next year. 

Monday, 11 December 2017

Eliminating fuel poverty requires more than a process

As the statutory target to eliminate fuel poverty in Scotland has come and gone, will a new strategy do any better?

The Scottish Government has published a consultation paper on a new fuel poverty strategy for Scotland. The consultation looks at the existing approach and legislative framework and sets out proposals for a new Fuel Poverty Strategy in Spring next year. Targets will be enshrined in a Warm Homes Bill later in 2018.

The number of households in fuel poverty fell slightly in the latest Scottish House Condition survey thanks to falling fuel prices. However, still almost one third of homes suffer under the current definition and the numbers are likely to rise again with the latest fuel price increases. 


 The new definition excludes housing costs and is intended to focus attention on low income households, rather than the 47% of the current fuel poor who are not income poor. There will still be challenges in reaching the standard heating regime because households self-disconnect, due to low incomes. Cuts in social security will exacerbate this. While the new definition is certainly more complex, it does target efforts on the right group. Although with insecure work, varied incomes are more common and many households are likely to fall in and out of the definition.

There are three main elements to tackling fuel poverty - the price of fuel, energy efficiency/use and household income. The first is largely reserved, although energy policy is a factor. Energy efficiency is devolved and household income has devolved and reserved elements, including social security.

This means the strategy rightly has a focus on energy efficiency. Ambitions are fine, but investment is better. The Scottish Government cut funding to £45m in 2007/08; largely because they thought the problem had been resolved. It has now recovered to £129m, although this is well below the £200m Energy Action Scotland warned was needed to meet the 2016 target.

There are some particular challenges in Scotland. Not only are we a cold country, but fuel costs in rural areas are significantly higher. Typically, £2,200 in remote rural areas, compared to £1,400 in the UK as a whole. There are particular challenges in island communities. We also have large areas off the gas grid, which matters for heating. 

It is also important that we retain efficient area based schemes that strengthen communities, rather than just micro targeting individual households. The proxies used to identify fuel poor households generally work, but need to be flexibly applied to reflect local needs.

The consultation paper is again strong on ambition. Objectives like 'Households are able to enjoy a warm home' is hard to disagree with. Achieving this apparently requires plenty of partnership working and linking in to other strategies. While this is probably true, it does feel rather process driven - hard targets, programmes and investment are in short supply.

A number of the organisations currently working in 'partnership' complain about short term funding. They build up expertise and services and then the funding comes to an end. Publicity, online and telephone services have their place, but for hard to reach households it requires an advisor in the household. There has been an improvement in skilling staff like social workers and community nurses, since some of the early schemes UNISON did with the Keeping Scotland Warm partnership. However, we could do more in signposting people towards specialist advice. Local authority services are under particular pressure due to cuts.

The new statutory target is to eliminate fuel poverty (new definition) by 2040, with a review at 2030. There is considerable scepticism of the description of this as 'ambitious', given the long timescale. We should have learned a thing or two during the past 16 years, to make another 23 year target a bit excessive.


The problem is that achieving this target depends on a range of variables, particularly fuel prices and incomes. None of these are likely to be addressed without a serious political commitment to eliminate poverty more generally. 


Friday, 24 November 2017

UK Budget fall out

I set out our immediate reaction to the UK Budget in Briefing 91 on Wednesday. In the light of day, the numbers are if anything slightly worse, although a real terms revenue cut of £199m, remains the bottom line.


The SPICe briefing calculates that the DEL Resource figures (that’s revenue or day to day spending) have increased by £347m over the period to 2020 compared with the plans set out in March. DEL Capital plans have increased by £509m over the period to 2021 compared with March plans. £1,115m in Barnett consequentials derive from Financial Transactions, which must ultimately be repaid to HM Treasury.


Overall, the DEL Resource budget will increase in cash terms in 2018-19 by 0.7%, which represents a real terms fall of 0.8%. This real terms figure is also based on a pretty optimistic view of inflation and the GDP Deflator in the OBR report. With CPI currently at 3%, getting down to 1.5-2%% next year looks overly ambitious.


We can also see who gains the most from this budget and it’s not the working poor. As JRF put it:
“Today’s announcement will help to ease the initial problems that many people face when moving over to Universal Credit, but the Government has decided to push ahead with big cuts to the amount of money people will receive. By failing to end the benefits freeze, the Government will oversee almost half a million extra people in poverty by the end of this Parliament. The Government’s big spending commitments for stamp duty giveaways and tax cuts prioritised higher earning households, with little support for people who need it most”


And it looks like any pay increase will have to be funded from existing budgets.


On public spending the IFS calculates that day to day spending on public services outside of the NHS is due to fall by yet another 7% over the next five years. Even the NHS is being squeezed as this table shows.


And no, austerity isn't coming to an end any time soon. The Chancellor clearly hasn't heard of the adage, 'when in a hole stop digging!'




The one positive from the UK Budget is the VAT exemption for police and fire services that provides around £37m extra for those services, but no backdating. There was an entertaining spat between the SNP and the Tories on this issue in the Scottish Parliament, but the truth is that neither of them have much to shout about.


In short, it was UNISON that first highlighted the risk of losing this exemption when national services were first proposed. The faces and frantic scribbling at the meeting, showed that few if any officials had considered this.


We were then told it would be sorted with HMRC and the Treasury. After some time and no response, we used Freedom of Information requests to tease out what was going on. It turned out that not only had the Treasury said that the s33 exemption would not apply, but the Scottish Government had been told that before they issued the final consultation.


We then proposed a way of structuring national services, which would have retained the exemption. However, that was also ignored by both the Scottish Government and the Tories who voted the Bill through.


As I said at the FBU lobby of parliament yesterday - the result is the loss of some £140m of revenue that could be used to keep emergency services going and award our members a decent pay rise.


So, the UK Budget wash up remains pretty grim - over to the finance secretary for the draft Scottish Budget on 14 December. Not an easy task as I explain in the Scotsman, and not made any easier by Wednesday’s smoke and mirrors.

Monday, 20 November 2017

Brexit impact on real wages

A new analysis published today by the LSE Centre for Economic Performance shows that real wages have taken a hit since Brexit and Scotland is amongst the hardest hit areas of the UK.

The EU referendum outcome increased prices by 1.7%, which means that real wages in June 2017 were 1.7% lower than they otherwise would have been. This decline is equivalent to a £448 cut in annual pay for the average worker.

Put another way, this means the increase in inflation due to the Brexit vote has cost the average worker almost one week’s wages (4.4 working days’ wages, to be precise). Unless Brexit increases real wages in future years, this pay cut will be permanent. 


Households’ overall import exposure is similar throughout the income distribution. Poorer households spend relatively more on food and drinks, which have high import shares, but also on rent, which has a very low import share. Likewise, richer households spend relatively more on some high import share products such as fuels, but also spend a higher proportion of their budget on domestically produced services such as hotels and restaurant meals. 

Although the inflation effect differs little across income deciles, there are stark differences across regions. In general, the north of England is harder hit than the south. Scotland, Wales, and Northern Ireland are the worst affected areas. Compared with the UK average, the increase in inflation due to the vote is 0.18 percentage points higher in Scotland, 0.21 percentage points higher in Wales and 0.47 percentage points higher in Northern Ireland. 


This reinforces the need for the Chancellor on Wednesday to ensure that Scotland, and the UK, gets a pay rise.