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.

Monday, 16 April 2018

Better pensions coverage wont be sustained unless we sort out the pensions system

The big increase in private pension coverage is very welcome, but we need to improve the adequacy of pensions and the quality of provision as well.

The impact of auto-enrolment on pension coverage has been very significant. As the Resolution Foundation chart below shows, overall workplace pension coverage has jumped from 46.5% in 2012 to 72.9% in 2017. 

This chart also shows that the proportion of employees holding defined benefit pensions has continued its longer-term decline. However, this form of quality provision still covers almost 30% of the workplace. I know from my own experience as Joint Secretary of the SLGPS, the largest pension fund in Scotland, that auto-enrolment has also increased coverage, particularly among lower paid, mostly women workers.

While the growth in pension coverage is very welcome, contribution rates are often low. The initial default minimum contribution rates was only 2% of qualifying earnings. More than half of all private sector employees with a workplace pension contributed less than 2%. The minimum contribution is now 5% (with at least 2% from the employer). This will rise to 8% next April (with at least 3% from the employer). it remains to be seen, at a time when real wages are still falling, if these increases result in higher levels of opting out, particularly amongst low paid workers. 

The growth in coverage is largely in defined contribution schemes. This type of scheme places the investment risk on the workers who are least able to sustain it. If pension coverage and adequacy is to be sustained we need to defend and grow high quality defined benefit schemes and collective defined contribution schemes that share the risks.

A recent report by MPs on the Work and Pensions Committee highlighted market failure in relation to so called pension freedoms. The committee called for the government to rethink its decision not to allow state-backed provider NEST to offer retirement products. As they say, "Concerns that allowing NEST to offer such products would hinder competition in the market would carry greater weight were there evidence of a functioning market currently."

We also need to tackle the lack of transparency over the fees charged by investment managers. This is something UNISON has campaigned on for several years - a cause that has now been taken up by the Financial Conduct Authority. Their study found that fund managers were overcharging clients for hundreds of billions of pounds worth of investments. They enjoy huge profits and salaries, but performance is frequently mediocre. If low paid workers are to be encouraged to hand over their hard earned wages in higher pension contributions, then every possible penny needs to go into their pension pots, not the pockets of fat cats, who are currently ripping them off.

Finally, we also need to ensure that our pension funds are invested wisely and help to grow the real economy and create jobs. For example, investment in fossil fuels is not only risky as the world wakes up to the threat of climate change, but they don't create jobs either as the chart below shows.

So, let's celebrate the increase in pension coverage, but at the same time recognise that we have to put our pensions system in order. We also need to improve real wages and the adequacy of incomes in retirement, if that coverage is to be sustained. 

Thursday, 22 March 2018

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.

Tuesday, 20 March 2018

The case for a credible Just Transition Commission

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. 

Monday, 12 March 2018

Why ownership matters

Ownership gets too little attention in industrial policy and in public service reform. Richard Leonard, in his first Leader's speech at the Scottish Labour Party conference, put some clear red water on ownership between him and current UK and Scottish government policy. That is the right approach because ownership does matter.

While Richard rightly highlights municipal socialism, this does not mean the adoption of a Morrisonian command and control model. I was highlighting this point at the Scottish Co-operative fringe meeting on Saturday.

This is an exciting time for the development of new thinking on economic policy and role of co-operatives. In a 2016 Red Paper publication, Richard Leonard and others set out a different industrial strategy with a strong role for cooperatives. My chapter in the same publication described how we can take a different approach, extending national policy to local economies - often described as the foundational economy.

The ideas have been built from substantial evidence based studies written by NEF, Centre for Local Economic Strategies, APSE and of course Co-op Party. Some of these ideas are being applied in practice in cities like Cleveland and Preston.

 The foundational economy is built from the activities which provide the essential goods and services for everyday life, regardless of the social status of consumers. These include, for example, infrastructure; utilities; food processing; retailing and distribution; and health, education and welfare. They are generally provided by a mixture of the state (directly or through procurement); small and medium enterprises (SME); and much larger companies such as privatised utilities or branches of mobile companies such as the major supermarkets. These larger firms often originate from outside the local economy, and all too often are the first to flee when the economic cycle shifts.

It's a complex idea, but The New Economics Foundation (NEF) in their handbook for local economies called ‘Plugging the Leaks', describe the concept like this:
"Imagine the local economy as a bucket. If someone has £5 and spends it in the local grocers, the £5 stays in the bucket. But when they pay the electricity bill, it doesn't stay in the bucket. Spending on electricity is like a leak in the bucket: the fiver leaks out as the supplier is a business outside the area. But there are usually ways of stopping all of the five pounds from leaking out. Insulating the house will cut the electricity bill, for example. If there's a local company to do the work, there'll be even more in the bucket"

This is not about local protectionism, it's about strengthening local linkages. It also generates a local multiplier - money spent locally gets spent again locally. This concept is particularly relevant in Scotland where disadvantaged communities often sit next to affluent communities. This can create an umbrella effect when money directed at poor areas too often sprays off the wealthy neighbours.

These ideas have been highlighted very recently by Shadow Chancellor John McDonnell. The Labour Party is setting up a Community Wealth Building Unit to support co-operatives and mutuals as a means of driving local economic growth. It is important to emphasise that this approach is part of economic and industrial policy, a point that has held back cooperative development in public policy for too long.

These are exciting times for those who believe that ownership matters.  As a long-standing cooperator Richard made clear his support for new cooperatives in the private sector as well as a substantial expansion of public ownership, including the railways, postal services, energy, social care, public housing and of course PFI contracts.

These are new ideas on economic policy, being applied in a practical way with a Labour Leadership in the UK and Scotland, which understands that ownership matters.

Thursday, 8 March 2018

Labour and exiting the EU

I often start a conference presentation by saying I am not going to talk about Brexit, but usually do. The subject is unavoidable as it impacts on so many aspects of public policy. As we approach the Scottish Labour Party conference this weekend, here are my thoughts on how Labour should approach the issue.

I voted Remain and my trade union campaigned for a Remain vote. However, that wasn't the outcome and we have to respect that vote. And before some folk get too excited, it was a UK referendum and subsequent polls show that people living in Scotland share similar views on issues like immigration control and they certainly want common trade rules across the UK.

I have written many UNISON submissions to parliamentary committees and elsewhere on the challenges that Brexit brings – most recently on workforce planning in the health and care sector. I have also argued that we should not just defend the rights of EU nationals to stay in Scotland but demonstrate that they continue to be welcome here. I have also made the case for devolving many aspects of immigration policy on the Quebec model and opposed the blatant disregard of the devolution settlement in the EU Withdrawal Bill.

The issue for the Scottish Labour Party this weekend is how Labour should position itself, given the chaotic mess the UK Government is in.

I start from the position that Labour is not the government and is not leading the negotiations. It is the job of opposition to scrutinise government and to indicate a broad alternative approach. Keir Starmer set out his six tests, which I believe form the basis for a Labour response to the Brexit negotiations. As Jeremy Corbyn said in his recent speech, "Our priority is to get the best deal for people’s jobs, living standards and the economy. We reject any race to the bottom in workers’ rights, environmental safeguards, consumer protections or food safety standards."

Most commentators agree that his speech provided some much-needed pragmatism - supporting a new comprehensive UK-EU customs union and strong relationship with the single market. I would argue, as have others, that it was smart politics as well.

It also seems likely, based on the Chancellor’s speech yesterday, that a transition period will be agreed of two years, which “would allow both parties to continue negotiating a free trade agreement”. It could therefore be some time before the Westminster Parliament will hold a final vote on this issue.

In this context, it seems very unwise to adopt a rigid position on the single market at this time. The options available have a variety of nuances as set out in the helpful IPPR paper ‘The Shared Market’. This chart outlines their take on the options.

I understand why those who passionately believe the referendum outcome was the wrong outcome, would want to try and replicate EU membership, if not push for a second referendum. I am more sceptical about the motives of others, who appear more focused on using this issue as a means of continuing their campaign against the leadership.

However, attempts to by-pass the referendum result also give the impression, not just to the majority Leave voters, that Labour is simply bowing to the political establishment. Just another part of the political elite that doesn’t recognise their concerns. The focus and strength of Jeremy’s campaign is that he understands those concerns and will act on them. Too many Remainers fail to grasp the impact our broken economic system has on many people in Labour’s voting base.

We also have to recognise that the Single Market is not a prefect model. The SNP government’s Single Market study is an example of an approach that lacks critical analysis. The gushing support in the paper for the Services Directive, which the Labour movement campaigned against, is one example. Wishful thinking over the Social Agenda, which has largely died since the Lisbon Treaty, is another.

The Single Market not only places actual restrictions on some of the radical policies we would wish to pursue, but it also places a ‘regulatory freeze’ on civil servants and law officers. Recent examples in Scotland include ferry tendering and procurement policy.

I accept that we may have to weigh up the economic benefits of a single market as against the restrictions it imposes, but we don’t have to do that now. We need to see which of the options set out above are practical and make a judgement on all the facts.

Andrew Harrop from the Fabian Society makes this point well when he said:

“The Labour frontbench may ultimately argue for a ‘Norway’ Brexit on EEA terms. But this will only happen if or when it is clear that no less-integrationist alternative is feasible – and when a sizeable portion of Leave voters have changed their minds to the extent that they are prepared to accept the price of soft Brexit.

Neither of those conditions applies today, which is why the Labour centre-of-gravity has not united behind the single market option. In fact it suits the Labour frontbench to be sandwiched between the single-market out-riders on its own backbenchers and the government’s impossible-ist ‘goldilocks’ position.”

For these reasons, I am comfortable with the position Jeremy Corbyn set out in his recent speech. It provides a way forward towards a soft Brexit, with clear red lines between Labour and the ‘Mad Max dystopia’ of the Tory Brexiteers. It also provides a position that has broad support across the Labour movement.

Friday, 23 February 2018

Living Wage - public sector leadership

The living wage movement is an international one. There are differences in context and approach, but the underlying principles are the same.

I have spent the last two days in Ontario, Canada, as a guest of Ontario's living wage movement to speak at their public sector leadership conference. They have a very active, community based living wage movement and they are keen to get the public sector more engaged in the campaign.

Colette Murphy from the Atkinson Foundation (plays a similar role to JRF in UK) made the case for public sector leadership because the public sector is powerful and can make a difference. She gave the City of Preston in England a mention, showing how the living wage led to the wider local economic regeneration that shadow chancellor John McDonnell has recently championed. She gave a range of examples of how various public sector leaders in Ontario had supported the living wage and other poverty reduction initiatives. This had led to statutory progress on wages and decent work.

The first panel included local government officials from Hamilton and Toronto who described what action they had taken on wages and poverty reduction, although still short of being an accredited employer. This included using procurement to ensure that they only did business with decent employers, creating a level playing field. Deanna Ogle, from Living Wage for Families, described the progress they were making in British Columbia, particularly since the election of a progressive government. Procurement is an important element of their strategy, including extending it into vulnerable sectors. All emphasised the importance of political and internal champions.

My presentation outlined the context for public sector engagement in the Scottish Living Wage and Fair Work. The focus of my presentation was on how the public sector can take the living wage forward through pay policy and encouragement including supporting accreditation. I set out in some detail how we changed the procurement rules to ensure the living wage reaches a wider workforce, particularly more vulnerable sectors like social care. 

After lunch, Melissa Cameron presented the findings of her Master's degree on the impact of the living wage. Detailed interviews with workers who benefited from the living wage showed life changing benefits in their lives. It also showed the wider public policy benefits to the local economy and health.

The next panel included three living wage employers who made the business case for the living wage, in three very different sectors. The common theme was that they had decided that the old race to the bottom model wasn't working and a new model, which included the living wage, was a better model. They made the usual arguments around productivity, turnover and reputational gain. However, they also evidenced the very clear values than ran through their approach - living the company mission statement. As one panellist put it, 'Businesses that don't stand for something, stand for nothing'. Key challenges included the importance of communicating effectively with all employees and winning trust. They also reported positive consumer and supplier responses, particularly with younger customers.

The final session was on how to influence the forthcoming provincial and municipal elections in Ontario. The focus of their campaign is to achieve a $15 minimum wage, but also to get the public sector to engage through procurement. They are building coalitions, planning campaign days, but also focusing on real people telling their stories. I particular liked the 'Adopt a Councillor' campaign, which built a relationship from policy commitment to implementation and beyond.

In the round up plenary it was obvious that there was a lot of energy in the campaign across Ontario. In a big geographical area there are obvious benefits in getting the local groups together to learn from each other. They obviously have some big political battles to fight, but they are certainly up for it!

Sunday, 18 February 2018

Labour Party National (UK) Policy Forum

The National (UK) Policy Forum gathered this weekend in Leeds. Representing the Scottish Labour Party is always a challenge at these events because devolution means that we only have a direct interest in a few reserved matters. The Scottish Policy Forum process will start this Autumn to develop policy on developed matters.

The main purpose of the weekend was to look at the draft consultation papers, which will shortly go out for views from members.

Being the Labour Party, we love a constitutional row, and the NPF managed to spend more than an hour squabbling over how the vacant chair's post should be elected. In essence, the NPF was only given a few days notice of the election and the NEC Officers ruled that there has to be at least 7 days notice. So the election is deferred. It wasn't an edifying sight with some pretty uncomradely behaviour. It is beyond me why this couldn't have been resolved beforehand. Some proper rules and standing orders for the NPF in the UK rule book might help.

Jeremy eventually got to address the meeting. He pointed to us having largest party membership in Europe as a strength and a resource of knowledge to help develop our policy offer for the next election. He didn't duck Brexit, clearly setting out Labour's position that any deal must protect jobs and workers rights. His focus was on key Labour issues like homelessness, linking that to the English council elections and the funding of local government. An issue we are also facing in Scotland.

He used the collapse of Carrillion to make the case for greater public ownership and against outsourcing in the public sector. Confirming a real Living Wage of £10 per hour. Investment in  English housing, education etc would also give Scotland's Parliament the resources to end austerity. The speech didn't break much new ground, but was well received by delegates keen to get onto the substantive business of the NPF.

I went to the 'Future of work' session, which is mostly reserved. The draft consultation is largely based on the 20 point plan on employment rights published before the 2017 manifesto. Barry Gardiner, the Shadow Trade minister identified the implications of dodgy trade deals, including a race to the bottom in workers rights and deregulation. I highlighted the impact of such deals on devolved issues, drawing on the work in Scotland on procurement and Fair Work. I felt the paper could say more about the inadequacies of the Taylor review and the U.K. Government's response. We are well past the stage of nudging bad employers into fair work practices. The paper also says nothing about how Labour should respond to the ageing workforce.

In the second breakout session I went to the work, pensions and inequality discussion. The focus of this consultation is tackling in-work poverty and working age inequalities. The last Labour government did a lot to address child and pensioner poverty, so this focus is welcome. My contribution focused on making the case for tackling inequality, something we as socialists take for granted, but is not well understood more widely. I also think we need to do more work on understanding the interaction between wages and benefits in tackling in work poverty for working families. Finally, a plea for a clear policy on occupational pensions. We need to reform the system and bring greater value into pension provision that is being ripped off by investment managers.

The final plenary session on Saturday was on health inequalities, although inevitably it was largely about the dire state of the English NHS.  John Ashworth gave a very clear exposition of the problems and the direction of travel for Labour's response. He specifically rejected a Royal Commission as a trap. If you want properly funded and publicly delivered NHS, you need to vote in a Labour government.

Sunday started with Katy Clark giving us an overview of the party democracy review. The focus for the NPF is the third stage of the review that ends on 28 June on how the party makes policy. There was a recognition that the NPF process does bring together all parts of the party and gives an opportunity to develop policy over a longer time period. However, the Party doesn't use technology well and members who do know about the process, don't often get feedback on the ideas they have submitted. We also have to recognise that the Party has to have a narrative on the issues of the day that can't wait for the conclusion of a two year process. That inevitably means that NPF members can feel marginalised. Policy Commissions have a range of practical difficulties, for example, I am on a policy commission that is 90% devolved. There was a call for more regional events and better moderation of the Your Britain website.

The third breakout session I attended was on a Greener Britain. Other than energy generation, most of these issues are devolved. But as the shadow minister Alan Whitehead pointed out, we need to join up all aspects of this policy. For example, if we don't decarbonise energy generation, we will be powering electric cars with dirty energy. Alan is also strong on linking industrial policy to environmental policy, something that the Scottish Government could be better at. BiFab being an example of crisis management, rather than linking up into a long term policy for a just transition. Large scale incineration is clearly a concern in several parts of England and somewhat dominated the discussion. The UK government is particularly weak on recycling and air pollution.

And finally, it was the Brexit plenary. Keir Starmer set out Labour's current position in opposing a hard Tory Brexit, which is not an attempt to refight the referendum, based on his six tests. In particular, no deregulation or undermining workers rights. He also understood the devolution issues, with a particular focus on Northern Ireland. 

Francis O'Grady emphasised the importance of finding a solution that brings people together, given the close referendum result. She focused on the trade impact on jobs as well as employment standards. All options should be on the table including the single market and the customs union. CETA type options leaves us open to corporate interests in rigged courts. Rebecca Long-Bailey focused on the economic implications, including jobs and skills. Barry Gardiner emphasised the risks of dodgy trade deals.

Firming up Labour's position on Brexit has practical and political challenges. Practical in the sense that the Tories are struggling to develop a coherent government negotiating position, and therefore scrutiny is challenging. Political, in the sense that Labour has to find a balance between respecting the referendum result and protecting the country from the consequences of a hard Brexit. While like most NPF members I support a soft Brexit, I believe that more policy work needs to be done on how the options for our future relations with the EU impact on our manifesto commitments.

This was my first full NPF meeting. Overall, I was impressed by the quality of the contributions from delegates and the work that had been done by the policy commissions. Even in policy areas which are devolved, it was useful to hear how these issues are being addressed in England. 

I hope this report gives a flavour of the discussions and members will be able to engage in detail with the consultation papers shortly. If I can help facilitate local discussions with affiliates or CLPs, please feel free to get in touch.

Dave Watson