On the Tory Manifesto

The Scottish Tories published their manifesto yesterday. My time is limited this morning so I really can’t do more than offer some rough and ready thoughts on the Growing the Economy and Creating Jobs section…which starts with this jaw droppingly awesome paragraph:

“With an economy heavily dependent on the financial services and public sectors, Scotland more than anywhere else has suffered from, and is experiencing the lasting effects of, the failure of the financial regulatory regime created by the last Labour Government at Westminster and the problems stored up by its overspending. Worse, Scottish businesses and jobs have been hit severely by the recession, which owing to Labour’s failure to support business and address welfare dependency, lasted longer in the UK than anywhere else in the G20”.

Let’s break this down…

‘experiencing the lasting effects of, the failure of the financial regulatory regime created by the last Labour Government at Westminster’

Didn’t the Tories have something to do with the creation of the regulatory regime? Perhaps Annabel might tell us exactly which deregulatory moves the Tories opposed? Sorry, but I can’t recall vocal Tory opposition when the FSA was handed a duty to ‘promote’ the industry it was meant to be regulating. However I can recall many occasions when Tory MPs screamed red-tape and business burdens when the Labour Government made any attempt to regulate (no matter how inadequate).

And are the Scottish Tories seriously arguing that the banking crisis was simply a consequence of poor regulation? Didn’t structure have something to do with it - the growth of ‘too big to fail’ financial conglomerates able to exert excessive influence over the economy and political system? How were such institutions ever to be effectively regulated? What about performance pay systems that incentivized risk taking? What about the abject failure of corporate governance? What about the growth of the unregulated shadow banking system? What about the role of the auditors and credit rating agencies? What about the wholly unsustainable business models pursued by people who knew they would not have to pay for systemic collapse? Scottish Tories, please remind me of your record on each of these issues!!

‘the problems stored up by its overspending’

Please no, not again.

Look, reasonable people will continue to disagree about the Labour Government’s handling of the public finances. It is an entirely respectable intellectual position (although I disagree with it) to argue that in the last years of its administration Labour should have been seeking to run a surplus. It is a preposterous position to argue that the current deficit - and the rise in stock of debt over the last couple of years -  are attributable only to the Labour Government’s mismanagement.

I have nothing more to add on this question except to pose this question: knowing what we know about the Tories at Scottish and UK level, is it reasonable to assume that, faced with the Labour Government running a surplus, their reaction would have been to applaud Labour’s sound management of the public finances? Or do you think that maybe, just maybe, they would have screamed for the money to be ‘returned’ through tax cuts? Yep, exactly.

“Scottish businesses and jobs have been hit severely by the recession, which owing to Labour’s failure to support business and address welfare dependency, lasted longer in the UK than anywhere else in the G20”

A quote from the German polymath Frederich Schiller has been doing the rounds since the banking crisis – ‘against stupidity the gods themselves contend in vain’. You can see why. I’m tempted to leave it there but I will say this:

In terms of the fall in output, it might be fair to argue that the recession lasted longer in the UK than anywhere else in the G20. However, if this statement is left to stand unchallenged, the inference is that the recession was somehow worse in the UK. This is manifestly untrue: the rise in unemployment in the US was much more rapid, steep and enduring (though this is likely to change as a result of ConDem policy). The impact in the Eurozone periphery was, and is, obviously much, much worse than what happened in the UK.

That unemployment didn’t rise to the levels anticipated given the fall in output is attributable to the policy response from the Labour Government which introduced (wholly inadequate – this is beginning to read as a defence of Labour’s economic record. It isn’t ) fiscal stimulus and active labour market interventions (Future Jobs Fund) to help people back into work. This is why growth was strong in the first half of 2010. This is why unemployment was falling. This is why the deficit fell by over £20bn between the December 2009 PBR and March 2010 Budget.

I’m baffled about the link between the ‘failure to address welfare dependency’ and the length of the recession. The recession hit harder in the UK because we were over-reliant on financial services and property sectors. End of.

Oh dear, I’ve spent all this time and we’re still on the first paragraph. Time to press on. The Tories next turn their fire on the SNP Government…

“it has not delivered fully on its pro-business rhetoric and it has failed to see the need to take some tough, “big picture” decisions, such as the need to call time on unsustainable borrowing and rebalance our economy from the public to the private sector”.

The Scottish Government doesn’t borrow. Therefore, I have to assume it’s an attack on the Scottish Government’s record in opposing ConDem cuts. If so, it reflects, once again, the nakedly ideological position of the Tories: the private sector will necessarily grow because the public sector is being cut. The evidence to support this proposition is non-existent.

The manifesto then goes on to laud the measures – cuts in corporation tax etc – being undertaken at UK level. The STUC is currently developing a paper in response to the Budget and will return to these issues at a later date. Let’s focus on the Scottish issues. Here’s a belter:

‘and in the most recent Budget, we secured £26m of stimulus for business’

Wow. Stimulus. They actually used the word. Not support. Not assistance. Stimulus. Is Annabel Goldie a closet Keynesian? Surely not…

The next section is on supporting enterprise and is concerned almost exclusively with the need to increase business start-ups. Scotland’s low rate of entrepreneurial activity is routinely cited (by all the main parties) as a primary reason for comparatively weak economic performance (if indeed you accept that our performance is comparatively weak).

This is, not to put too fine a point on it, nonsense. I’m with Ha-Joon Chang, the renowned development economist who argues,

“if effective entreprenuership ever was a purely individual thing, it has stopped being so at least for the last century. The collective ability to build and manage effective organizations and institutions is now far more important than the drives or even the talents of a nation’s individual members in determining its prosperity”.

Quite. Spending a lot of money in order to boast that the rate of business start ups has improved is utterly pointless. Building world leading, innovative, well managed organizations is much more important but also much more difficult. And the urge to pander to the small business community is something Scotland’s politicians appear unable to resist.

Interesting also that the Tories will ‘place a new duty to promote economic growth on all public agencies and require them to report on the positive – and negative – impacts that the decisions they have taken have had on economic growth’. This is plain daft on a number of levels: how can such an assessment be credible – particularly in the short-term, or even over the life of a single Parliament? The majority of growth enhancing investments made by, for instance, Scottish Enterprise are long-term. Note that the Tories are arguing that agencies must report on the impacts decisions ‘have had’ on economic growth; not ‘will have’.

Next up, we have all the usual nonsense on business rates – again, something that all parties are guilty of.

‘we will legislate to ensure that the main Business Rate poundage can be no higher than in England’

Well, to be fair, the Tories didn’t support devolution so I suppose the have the right to mock it. Suffice to say that if any of the main parties believe that Scottish businesses are being handed a genuine and sustainable advantage by cutting business rates they are living in cloud cuckoo land. The SNP’s Small Business Bonus Scheme has wasted hundreds of millions of pounds. It is not tied in any way, shape or form to job related investment. It is money that could have been invested much more productively elsewhere (Scottish Investment Bank, enterprise networks, infrastructure, education etc).

Unsurprisingly, the Tackling Red Tape section is prominent, introduced in big bold letters no doubt signaling the Tories robust approach on what they regard – in the face of all credible, international evidence – to be the biggest issue facing the Scottish economy.

The STUC has rebutted enduring myths around ‘red tape’ on many occasions over the years; most recently in our 2011 Budget Submission. I will not repeat them here.

But I can’t help being a little excited by the Tories strong – nay, overwhelming – support for the Regulatory Review Group:

• We will retain the RRG
• We will allow any voluntary, private or public sector organisatiob to refer regulations which are unduly burdensome to the RRG;
• We will take forward the RRG recommendation….
• We will strengthen Business and Regulatory Impact Assessments (overseen by RRG) etc etc

Guess what? I’m on the RRG! The Tories love me! They want to hand me more power! Or maybe they’ll kick me off…

The serious point is that the RRG will need much more resource if it is to undertake additional responsibilities. Will these resources be forthcoming at a time of austerity? And it is heartening to note that the Scottish Tories do not seem to be attracted to the risible ‘one-in, one-out’ approach to regulation being pursued by the coalition.

On Planning, the Tories propose to establish a ‘business led review’ of the system in order to raise economic growth. It is not immediately clear to me why business should lead this process; a process which is very likely to come back to bite the Tories for it is their members who are often at the nimby vanguard. Who can forget Murdo Fraser MSP striding the moors in his big green wellies whilst campaigning against Beauly-Denny?

The section on infrastructure is predictable: bring back PPP and prioritise projects of the greatest economic benefit. The proposal to tender the Calmac and Northlink routes in smaller bundles is 1) plain daft to anyone who has thought about the issues for more than 5 minutes 2) detrimental to the interests of users, workers and the communities they serve and 3) potentially very dangerous.

On Scottish Water they manage to avoid using the ‘p’ word or even the ‘m’ word (mutualisation). Instead they commit to Scottish Water becoming a ‘publicly owned Public Interest Company, free from Government control’. Get your head round that if you can. Are the Tories conceding public ownership? Or are they simply setting up an unsustainable organisation in order to privatize somewhere down the line. Voters – you decide….

Having lost the will to live, I’ll leave the public sector reform stuff to others.

Stephen Boyd - STUC

A pathetically irrelevant Budget

Spent the Budget participating in a Daily Record online forum. I was particularly taken with ‘Gasper’ who after 45 mins asked ‘if there was any news on fags?’ And the death of Liz Taylor caused a bit of a stir amongst fellow contributors. Tricky keeping up with the detail in these circumstances but it was good fun nonetheless (sorry Liz). In any case, the Chancellor’s statement is never, ever the full story (remember GB’s removal of the 10p tax rate?). Some surprising stories will undoubtedly emerge over the next few days as people work out the detail.

What did we learn from the speech?

Not much we didn’t already know. Gideon is a deregulator. Gideon doesn’t like talking about unemployment; particularly when it is high and rising as a result of his actions. Gideon couldn’t care less about vulnerable workers and the meagre protection afforded to them in the UK workplace. Gideon is an ideologue. But to the detail…

Somewhat inconveniently for a ‘Budget for Growth’ it started with a downgrade of the OBR’s growth forecast from 2.1% to 1.7% for 2011; its growth forecast for next year is 2.5% compared to the OECD’s forecast of 2.0%. The forecasts have been raised for 2013 and 2014 but, as the FT has already noted, this is a mechanical extrapolation which does not reflect anything the OBR knows about these years.

Gideon couldn’t restrain himself from repeating his usual nonsense about the public finances:

“Our country’s fiscal plans have been strongly endorsed by the IMF, by the European Commission, by the OECD, and by every reputable business body in Britain”.

We could have an interesting debate about what constitutes a reputable business body; I’m certainly intrigued to learn whether the Chancellor believes any business bodies are disreputable….step forward the Institute of Directors? Thought not…

Anyway, it’s always worth reminding folk that until very recently the IMF, OECD, employer-body axis of ignorance disparaged anyone who dared, for instance, to suggest that financial innovation might have rendered the banking system less stable. Try the IMF’s 2006 Annual Report

Directors noted that the rapid growth in recent years of credit derivative and structured credit markets had facilitated the dispersion of credit risk by banks to a broader, more diverse group of investors, making the financial system more resilient and stable’. It went on, ‘While cyclical changes could well expose weaker segments and pockets of financial markets, the Board considered that these were unlikely to pose systemic risks….regulators should place greater reliance on the self-correcting forces of financial markets’.

It gets worse. Here is the IMF on Ireland in 2006, ‘In March 2006, an IMF team visited Dublin to update the 2000 Financial sector Assessment Program (FSAP). The team found that Ireland’s financial system remained robust’.

The IMF’s view is also very inconsistent. The STUC’s Budget Submission quotes from the extensive research published in the IMF’s world outlook published in October 2010, ‘Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1% of GDP typically reduces GDP by about 0.5% within two years and raises the unemployment rate by about 0.3 percentage points. Domestic demand – consumption and investment – falls by about 1%. Hardly stands up as a ‘strong endorsement of coalition policy does it?

But by now Gideon was in full and rather unpleasant flow:

“Market interest rates in Greece are 12.5%, in Ireland they are close to 10%, in Portugal and Spain they are 7% and 5%. Today our country’s market interest rates have fallen to 3.6%. We have a higher deficit than Portugal, Greece and Spain, but we have virtually the same interest rates as Germany. This is our powerful monetary stimulus to our recovering economy.  Stability. Credibility. Lower interest rates. This is what we’ve achieved”.

Oh Lordy…how often must we rebut this claptrap. Anyone who wants to read a fuller analysis can find it here but for now let’s just focus on the five main reasons why the UK was never in danger of ‘becoming the next Greece’:

1.                  The UK is not in the Euro – we have control over fiscal and monetary policy; Sterling can (and did, by around 25%) devalue against other currencies and decisions can be taken without reference to the ECB and the Eurozone’s big players;

2.                  Yes, the deficit is high by international standards but the stock of debt is not;

3.                  As Gideon points out, the cost of servicing UK debt is much lower than in the countries he mentions; the costs of servicing UK debt will rise from 1.6% of GDP in 2007 to 3.1% in 2014 – Greece is currently spending upwards of 12% of GDP;

4.                  The structure of debt is very different: around two thirds of UK debt is held internally (for instance, by you and me through our pension funds) and the maturity of UK debt is much longer-term than for all other advanced nations. The UK’s debt ‘burden’ has been well managed; and,

5.                  The UK economy is bigger and more diverse than any of the other nations listed and investors can rely on our Budget data. In contrast to what was argued later, the UK is recognised as a good place to do business.

Gideon’s contention that low UK interest rates are a direct result of coalition policy is demonstrably false. Don’t take may word for it; here’s Martin Wolf, Chief Economics Commentator at the FT writing in September 2010:

“Markets have also been remarkably relaxed about funding these deficits: interest rates on index-linked gilts have been 1 per cent, or less, for more than a year; the yield on 10-year gilts has remained below pre-crisis levels and is now close to 3 per cent; and spreads over German bunds have been 1 percentage point, or less, throughout the crisis”.

From repetition of the most enduring myths of the current crisis, Gideon fast forwarded to the main thrust of his speech; the Budget was about making the UK the best place in the developed world in which to  ‘start, grow and finance’ a business’. And boy did he trot out some well worn clichés…

“For this Budget confronts the hard truth that has been ignored for too long. Britain has lost ground in the world’s economy and needs to catch up. In the last decade, other nations have reduced their business tax rates, removed barriers to enterprise, improved education systems, reformed welfare and increased exports. Sadly the reverse has happened in Britain. We gambled on a debt-fuelled model of growth that failed. With the state now accounting for almost half of all income, we simply cannot to go on like this. Britain has to earn its way in the modern world… Britain has fallen behind many others in the world in the last decade. We’ve dropped from 4th to 12th place in the global competitiveness league”

It is no surprise that Gideon is so attached to the World Economic Forum’s Competitiveness index – it is the only international survey that suggests the UK has become more regulated over the past decade (actually to be fair, its more complex than that – but an analysis of this particular survey will have to wait for another day). As covered in detail in our Budget submission (linked above), the evidence is very clear: the UK is a very lightly regulated economy – the third most lightly regulated labour market in the developed world and the second most lightly regulated product market. The UK is the fourth best place in the world in which to do business according to the World Bank. All the references are in my submission. The veracity of the proposition that UK businesses are over-regulated and over-taxed rests only in its repetition.

So Government’s resources will be targeted at a non-problem. Indeed, most sane commentators, particularly those with any attachment all to the principles of fairness and equality would regard the UK as too lightly regulated. The UK was at the epicentre of the banking crisis because our product markets are so lightly regulated. To govern as if any oversight of the business community represents an unwarranted ‘burden’ is to ignore the lessons of economic history as well as principles of sound governance.

“In the last decade, countries like Germany, Denmark, Finland and the Netherlands have all overtaken us in the international rankings of competitiveness”.

If this is true (and we’re back to that one survey again) it isn’t because they’ve deregulated. Germany, Finland and the Netherlands all have far more interventionist economies than the UK. Denmark’s flexicurity system is an interesting comparator – yes, Denmark has similar levels of regulation to the UK but backed up by an impressively generous welfare state e.g. redundant workers entitled to 60% of earnings for two years. Can’t imagine Gideon seeking to replicate that one…

The specific policies Gideon announced hardly conflate into a coherent and credible growth strategy:

·                    £350m worth of specific regulations will go – including the Equality Act’s costly dual discrimination rules;

·                    Lord Young’s recommendations on health and safety laws will be implemented in full;

·                    The no-win no-fee legal services that prey on employers will be restricted;

·                    existing regulation will be scrutinised by the public.

Is this it?! Is this a strategy for growth that will build a ‘more balanced economy by encouraging exports and investment’? Pitiful.

I’m going to leave an analysis of the various tax measures announced because 1) the TUC and Tax Research UK will do it better and 2) I want home for my tea. But it’s clear that plans are still being developed on the assumption that cuts in corporation tax will boost growth. Never a convincing strategy it’s become irredeemably tarnished by the Irish experience. Any benefits to low and medium paid workers through the cut in fuel duty and the increase in income tax personal allowances will be more than offset by other tax changes such as January’s VAT rise and the NI rise from next month.

The resources supposedly targeted at evasion and avoidance are wholly insufficient to deal with the scale of the challenge.  Despite the bullish rhetoric, current policy is actually handing firms more opportunities to avoid and evade; key examples being enterprise zones (will just shift existing activity – no mention of the ‘deadweight’ issues that are always raised with active labour market interventions) proposals on foreign owned companies.  

A couple of points on the green agenda. The full impact of the carbon floor price will only become apparent once the Government announces its intentions in other key areas of electricity market reform such as the Emissions Performance Standard, the replacement of the Renewables Obligation with Feed in Tarriffs (plus contracts for difference) and the Review of Ofgem’s role and remit. I can’t see how Gideon can conclude that this measure alone will ‘provide the incentive for billions of pounds of new investment in our energy infrastructure’.

The additional two billion pounds of funding for the Green Investment Bank is welcome but it is disappointing that it will be unable to borrow before 2015. The GIB’s resources are almost insignificant when set against the levels of investment required to achieve a genuinely low carbon economy. Even Gideon knows the market isn’t going to deliver on this one.

All in all, the Budget sidestepped the sustainable growth and jobs challenge. The FT’s influential Lex column has noted that, -

“While the political packaging makes sense, it points the arrow of causation the wrong way. Rather than a Budget for growth, it is a Budget that depends on growth…. If the expected growth does not arrive (as many economists currently fear), then lower tax receipts will limit the government’s ability to forment any fresh growth. What then can stimulate the economy?”

Gideon has no answers. My view is that he genuinely believes his scorched earth policy on regulation will produce the desired effect. The evidence suggests otherwise. Yes, there is a theoretical rationale for what he is attempting but most normal people thought the theory had died with the banking crisis. It is now abundantly clear that bad economic theory doesn’t die; indeed it seems that coalition policy is formulated only on the basis of zombie economics: deregulation, privatisation, trickle down and the Laffer Curve.

The UK Budget is very unlikely to grow more strongly as a result of this Budget. But we can be very confident that the UK workplace will become an ever more unwelcoming, even hostile, place to more and more workers. The economy will certainly become less fair and less equal. As a result it will become more unstable and more prone to systemic crisis. Now remind me again of what provoked our current economic difficulties?

Stephen Boyd - STUC 

Advocating against the Council Tax Freeze is an increasingly lonely undertaking.

The SNP has hit the public finances four years in a row. The measure now means that public services and vital community projects are being underfunded to the tune of £300 million a year.

Labour, who were hardly likely to announce an emergency budget to reverse this year’s increase have undertaken to freeze it in 2012-2013 also. 

The Tories don’t like taxes or services, and the Liberals have said they “won’t block a Council Tax Freeze” revealing a surprising optimism about the number of seats they might win in May.

The immediate problem is that, when taken alongside the small business bonus scheme (the only other tax currently devolved and available) the Scottish Government is denying itself funds of more than half a billion - enough to keep higher education free and accessible, fund major improvements in child care, create a significant and real jobs scheme for young people, and still have change left over to go towards paying the Scottish Living Wage.  Or alternatively – just keep a lot of services open.

STUC has long taken the view that the far from perfect Council Tax needs to be made more progressive through widening its banding but has tended to oppose other schemes on the basis that some element of the funding that goes to local government needs to stay local.

Year on year we are witnessing a degrading of local autonomy as the power of councils to influence their own resource levels diminishes. This not only reduces accountability but it encourages a shift away from universal service provision and increases in charging.

It is simply not sustainable to have in place a tax which no-one dares increase. The next Scottish Parliament needs to improve it, change it or make use of it.

Dave Moxham STUC

Annabel Goldie is an ‘enemy of enterprise’!!

Annabel Goldie, leader of the Scottish Tories, has this morning joined ‘bureaucrats in government departments’,’ town hall officials’ and ‘public sector procurement managers’ among the ranks of what her great leader boldly describes as the ‘enemies of enterprise’.

How so? Well, on Good Morning Scotland, she joined host Gary Robertson and Michael Grant of the Sunday Herald for a discussion on the ‘Old Firm summit’ being held this afternoon to discuss responses to last week’s game.

Annabel was in bullish mode. The clubs had to get their house in order; they should be charged with bringing forward proposals to reduce disorder; they should bear direct responsibility for domestic abuse associated with the game; rescheduling of games must be considered and so on.

Let’s break this down. Here we have the leader of the Scottish Tories explicitly arguing that businesses:

• should be held directly accountable for the adverse social consequences of the business they undertake;
• should be charged with bringing forward solutions to these problems; and,
• if refusing to tackle, or failing to tackle effectively, these adverse social consequences, should expect regulatory restraints to be placed on their ability to trade as they would wish.

The logical deduction from the above is that Annabel believes it is right and proper for businesses:

• to accept responsibility for the adverse social consequences of what they do;
• to be regulated in order to eliminate or reduce the adverse social consequences of what they do;  and,
• to suffer direct financial consequences if they refuse to tackle the adverse social consequences of what they do.

I agree but I fear this is sufficient to justify the ‘enemy of enterprise’ tag. In the interests of consistency, I look forward to hearing Annabel’s enthusiastic support for:

• structural and regulatory reform of the banks;
• minimum pricing of alcohol; and, retrospectively of course,
• the ban on the display of tobacco products in shops.

I think I’ll be in for a long wait. For in opposing every progressive measure aimed at limiting the ability of business to do what it wants, Annabel’s party has screamed ‘red-tape!’ and ‘business burdens!’ It seems that all attempts to regulate for a better society must be opposed. Unless we are talking about football. In that case, appealing to the Victorian snobbery of the Conservative base, regulating socially irresponsible businesses is the right thing to do.

Stephen Boyd - STUC

More on the 'enemies of enterprise'

I had a few words to say about Cameron's 'enemies of enterprise' Spring conference speech earlier today. A few more have pitched in; Tim and Phil at Touchstone; Chris Dillow at Investors Chronicle and Danny Blanchflower at the New Statesmen.

The PM's speech was indeed risible: offensive and provocative to public sector workers, simply wrong on the extent and impact of regulation in the UK economy, ignorant of the necessary and positive role of Government regulation in addressing a wide range of market failures (particulary climate change as Phil points out) and utterly bereft of anything approaching a serious growth strategy.

The coalition now promises a growth strategy as part of the March 23 Budget. Be scared. Be very scared.

Stephen Boyd - STUC

Setting forth to smite the ‘enemies of enterprise’

In his speech to the Conservative Spring Forum in Cardiff, David Cameron did us all a great favour by identifying the ‘enemies of enterprise’ responsible for holding back business and economic growth. The Guardian reports:

The prime minister, who said that enterprise was about morals as well as markets, listed three "enemies of enterprise' in a speech at the Conservative spring forum in Cardiff:

"The bureaucrats in government departments who concoct those ridiculous rules and regulations that make life impossible, particularly for small firms."

"The town hall officials who take for ever with those planning decisions that can be make or break for a business – and the investment and jobs that go with it."

"The public sector procurement managers who think that the answer to everything is a big contract with a big business and who shut out millions of Britain's small- and medium-sized companies from a massive potential market."

Fighting talk. It’s not too difficult to envisage Dave, resplendent in chainmail and the flag of St George, astride a trusty charger, smiting down with sword and axe the bureaucratic wretches who ravage the land with their rules and regulations. As people keep telling us, he is ‘born to do the job’. And let’s face it, the bureaucrats, planners and procurement managers deserve to face the wrath of Dave’s cold, sharp steel.

...Or do they? Surely Dave couldn’t be guilty of the most extreme exaggeration and distortion? Leaving aside the gratuitous abuse of public sector workers for the moment, let’s take each of the issues raised by the PM in turn: regulation, planning and procurement.

Regulation

Here we go again. I do get depressed endlessly rebutting spurious nonsense about red-tape. So tired in fact that I don’t intend writing anything new in response to Dave. Instead, here are some paragraphs  drawn from our 2011 Budget Submission sent to the Chancellor last Friday:

The World Bank currently rates the UK 4^th out of 183 countries in its Ease of Doing Business Rankings[i]; an index averaging each country's percentile rankings on 9 topics, made up of a variety of indicators, giving equal weight to each topic. The UK scores as follows:

• On ‘starting a business’ the UK ranks 17^th out of 183 countries; Demark ranks 27^th, Norway 33^rd and Germany 88^th; and,
• On ‘paying taxes’ – which considers both the level of business taxation and the administration required to comply – the UK ranks 16^th; Denmark 13^th, Norway 18^th and Germany 88^th. The United States ranks 62^nd on this measure.

The OECD indicators of employment protection measure the procedures and costs involved in dismissing individuals or groups of workers and the procedures involved in hiring workers on fixed-term or temporary work agency contracts.

Employment Protection in 2008 in OECD and selected non-OECD countries[ii]

[i] http://www.doingbusiness.org/rankings

[ii] http://www.oecd.org/document/11/0,3746,en_2649_37457_42695243_1_1_1_37457,00.html

[iii]http://stats.oecd.org/Index.aspx?DataSetCode=PMR 

---

The OECD also publishes Indicators of Product Market Regulation; a comprehensive and internationally-comparable set of indicators that measure the degree to which policies promote or inhibit competition in areas of the product market where competition is viable. The indicators cover formal regulations in the following areas: state control of business enterprises; legal and administrative barriers to entrepreneurship; barriers to international trade and investment.

The OECD’s analysis[iii] of product market regulation 2008 found that, out of the 37 countries studied, only the United States regulated its product markets less stringently than the UK.

So the UK has the third least regulated labour market and the second least regulated product market in the OECD. Square that with Dave’s hysterical rantings.

Note – full referenced Budget Submission can be found here.

Planning

Are delays in the planning process attributable only to ‘town hall officials’. Hardly. Here’s a few others:

• Democracy – people actually want a planning process that properly considers the pluses (e.g. jobs) and minuses (e.g. environmental impact) of any planning application. This takes time. Objections – hell, even from other businesses!! – are received and have to be considered. Yes, it is a reasonable aspiration for decision times to be improved but this requires action from all parties not just ‘officials’ because of...
• Poor quality applications – hold on a minute, you don’t mean that businesses might have to take a look at themselves?! Indeed I do because poor quality applications are routinely submitted. For instance, applications regularly fail to make due reference to protected areas;
• Capacity – there is a capacity issue in some local authorities and other public sector bodies. This is distinct from the deliberately obstructive approach described by the Prime Minister. But there are too few planners  - particularly those with experience in handling applications in certain fraught areas i.e. mining, quarrying, windfarms. This situation is exacerbated by the general planning skills shortage and the incentives available for planners to move to the private sector. Of course, any solution demands investment in people and skills.... and what is the Government doing?

Procurement

I think Dave boy might have created something of a hostage to fortune here.

The truth is that for a number of years, procurement officials at both Scottish and UK level have been working hard to assist small and medium sized businesses (SMEs) engage with the planning process. When the Public Sector Procurement Directive was transposed into UK and Scottish law in 2006 rigorous attempts were made to ‘reduce burdens’ on SMEs. This was done at the expense of the additional scope provided by the Directive to include employment, social and environmental clause in public sector contracts.

The trouble is, Government has been struggling to reconcile this approach with the other key imperatives for procurement policy; efficiency (value for money) which implies the aggregation of contracts thereby favouring bigger firms and to a lesser extent community benefit i.e. employment of local people, apprenticeship numbers etc. The community benefit strand can be extended to the use of procurement to drive up standards – employment and environmental – across the economy.

It is demonstrably false to claim that ‘public sector procurement managers’ have driven the efficiency agenda to the exclusion of the others. When businessman John McClelland was brought in to advise on government procurement, he stressed the (narrowly) efficient approach. SMEs are also guilty of failing to actually submit bids for projects that are within their reach.

Given that the Government has been particularly severe in slashing capital budgets it is difficult to believe that they will genuinely push a (less narrowly efficient) SME agenda at the expense of aggregating contracts.

On the basis of the evidence is it really fair to label regulators, planners and procurement officials as being ‘the enemies of enterprise’? Of course it isn’t. A more rational approach to identifying the genuine barriers that prevent companies expanding might come up with some very different answers. The financial sector perhaps which even before the crisis failed to provide growing companies with patient, committed capital? Central Government in the UK which resolutely refuses to run a credible industrial strategy when most other developed nations offer far more assistance to growing sectors and firms? The coalition government whose cuts will have a seriously detrimental impact on SMEs across the UK?

I await the Budget with rising trepidation.

Stephen Boyd - STUC

Should Firefighters Lose Health and Safety Protection

Of course they should! or at least that appears to be the view of Brian Sweeney Chief Fire Officer of Strathclyde Fire and Rescue following a bizarre pronouncement on BBC Reporting Scotland.

In an attack of the rights of firefighters he is arguing that the burden of health and safety legislation is preventing rescues from where it is felt the risk to front line fire fighters is too great.

We have fire services in Scotland that are second to none and dedicated fire fighters that put their lives at risk every time they go on shift.  It is deeply disappointing that Brian Sweeney does not feel that all reasonable precautions should be taken to protect their safety in life threatening situations.  However it should not be a surprise as Chief Fire Officers have never really accepted that firefighters should be protected by the legislation.

As a result of their efforts it was not until 1979 that they were forced to accept that the Health and Safety at Work Act (1974) did apply to their employees attending incidents.

Health and safety has never stopped, and never will stop a firefighter carrying out their job. If existing legislation is applied properly, risks are properly assessed, proper equipment is available at incidents, safe system of work are adopted and firefighters are properly trained in the use of specialised equipment then we will have a safer fire service, not only for workers but also those being rescued.

The STUC supports the view of the Fire Brigades Union that there are strong arguments in favour of a single fire service for Scotland, with a set of central standards drawing on good practice from existing services and through this delivering a more effective fire service, and a safer one for their workers.  

A single service would also allow specialised equipment and trained operators to be deployed in stations, without the restriction of borders as present, ensuring the best possible chance of having the proper equipment and the right people at incidents in good time, ready to save lives without risk to their own.

No one, apart from Brian Sweeney knows why he chose to go public on an issue that we are sure that the FBU would have been willing to have meaningful and constructive dialogue on.  What we are concerned about is that the Chief of the largest fire and rescue service in Scotland is adopting a largely narrow minded private sector, (CBI, IOD, and FSB) deregulatory approach to protecting the health, safety and welfare of their workers.

Who knows, perhaps his reasons for going public on this without the knowledge of the FBU will become clear in the coming weeks…!

Ian Tasker

STUC

Welfare reform and the end of DLA - why it matters to everyone

Guest Blog: Maggie Kelly, Policy and Campaigns Officer, Poverty Alliance

The potential impact of the Coalition Government’s welfare reforms, set out in recent Welfare Reform Bill, are huge impacting on practically every aspect of the benefit system and threaten to sweep away many of the safeguards that we all rely upon.  Disability Living Allowance  (DLA) is just one benefit which is under threat. Unless you are getting it or know someone who does, most people don’t really know why it matters – not just to those who claim it, but to everyone.  

Disabled people are far more likely to be living in poverty than others. Official figures put the proportion of disabled people living in poverty at 23.1% (as opposed to 17. 9% of the general population). Yet this is misleading because official poverty measures fail to  take into account the additional costs which disabled people incur as a result of living with a disability. When these costs are factored in estimates of the proportion of disabled people who live in poverty rise to between 40% and 60%. In other words disabled people are doubly disadvantaged by having significantly higher living costs and being at greater risk of living in poverty than others.

The key aim of DLA is to compensate disabled people for these additional costs.  It is not means tested and you can claim whether you are in or out of work.  To qualify you have to show that because of your physical or metal condition you need help with care and/or have mobility difficulties. Once you qualify you can spend the money on what you need. People spend their DLA on all sorts of things such as extra heating bills, taxis, specially adapted cars or a personal assistant to enable them to communicate at work.

The Welfare Reform Bill abolishes DLA and replaces it with a new benefit - Personal Independence Payment (PIP) which, we are told, will be less complex and better targeted at those who need it.  The truth is that it is will be neither. The main purpose of reform is to slash budgets. The June Emergency Budget set out the Government’s intention to cut expenditure on disability benefits by around 20% and the DWP’s recent impact assessment of abolishing DLA and replacing it with PIP, put expected savings at  £2.1 billion. In real terms a cut of this magnitude is likely to result in hundreds of thousands of disabled people losing entitlement.

DLA is by no means perfect. The eligibility criteria are complex and the application process is often difficult, depressing, and the outcomes sometimes inconsistent. Yet the proposed PIP doesn’t address these problems. Instead, it is likely to make them worse.

At the moment most people claim DLA based on their claim form and medical evidence from their GP, or hospital consultant etc.  Around 50 % are also required to undergo an additional assessment carried out by the multinational ATOS, on behalf of the DWP. Some categories of people with more severe disabilities are exempt from these additional DWP tests and are automatically passported on to benefit. They include for example people who are both blind and deaf or those who are quadriplegic (i.e. having no arms or legs).

Many disabled people already have very negative experiences of these assessments. Yet despite this, under the new PIP the UK Government intends to introduce mandatory testing for nearly everyone and even those with the most severe disabilities will no longer be exempt. The proposals set out so far suggest that the new test will be similar to the Work Capability Assessment (WCA) (also conducted by ATOS) which those making a claim for Employment and Support Allowance (ESA) currently undergo.

Many who have been through the WCA have described how they have been treated with a lack of dignity and respect, they were not listened to, the evidence they gave misrepresented and the interviews cursory and/or not relevant to their condition or disability. Their accounts are borne out by a growing number of independent reports  which document these problems in detail. Those who attended the recent Scottish Assembly on Tackling Poverty heard of two recent cases from Clydebank. Both people had been refused ESA on the basis that they were fit for work following a WCA and both died whilst waiting for their appeal to be heard.

So how is entitlement to disability benefit going to be restricted under the new test? The consultation paper DLA Reform suggests that the new assessment will focus on those activities that “are most essential for everyday life”. The approach appears to be one of restricting entitlement so that many current claimants, who are considered to face less serious barriers, would no longer be entitled.

UN Convention on the Rights of Persons with Disabilities sets out the rights of disabled people to engage in all areas of life, including mobility, health, education, work, recreation, cultural activities and equality before the law. In other words, it sets out the right to live a full and independent life as possible, not just to be able to engage in those activities “most essential for daily life”.

Disability benefit entitlement should be based on respect for disabled peoples right to live a full and independent life and so should be available to all disabled people, set at a rate, which is appropriate to the barriers, they face.

The UK Government claims that cuts are needed because the rising levels of expenditure on DLA are unsustainable.  Yet even from a purely financial perspective introducing massive cuts in disability and ill health benefits makes no sense. If disabled people are forced into greater poverty and social exclusion as a result of benefit cuts this will inevitably lead to greater demands on spending elsewhere, including health and social care.

If more and more people are becoming sick and disabled we need to ask why and then focus on prevention and early intervention. For example, if increasing numbers of people are suffering form mental ill health as a result of bullying at work what are we doing to improve employee’s rights at work?  Cutting benefits and harassing sick and disabled people is not the answer. Benefits are not a panacea but they are an essential part of any civilized societies approach to talking poverty and inequality.

But even if we are spending more on disability benefits is that such a bad thing? We need to reframe the debate and look upon expenditure on welfare benefits - which reduce poverty and promote equality - as something which we should be proud of as a society. Its time that we prioritised spending to support these kinds of aims, rather than squandering billions on bonuses and tax loopholes for the rich.

The provisions in the new Bill would have a very serious impact on many disabled people, plunging many more into poverty and making the lives of those already struggling to make ends meet increasingly difficult. They would restrict peoples independence and increase social exclusion. Yet while the lives of many disabled people would be make very much more difficult, it is very likely that private contractors such as ATOS, will be looking forwards to a massive increases in profits as a result of the introduction of mandatory tests.

For many the cuts are justified by vague and unsubstantiated talk of “scroungers” and the need for a new contract between those who are only too to keen to opt for life on benefits at the expense of the hard working taxpayer. The fact that there is very little evidence of systematic abuse by DLA claimants is conveniently ignored. As is the fact that many taxpayers also claim benefits, including DLA, and even those that don’t currently claim, could find that they need to rely on benefits at some point in their lives because of redundancy, sickness or disability.

These proposals undermine the key aim of DLA, namely to compensate disabled people for the additional costs of living with a disability. They also cut across the wider aim implicit in such compensation - that of promoting equality and social justice for all disabled people.  Regardless of whether or not we are currently claiming benefits we all have a big stake in this debate. What kind of society do we want to live in? One which aims to ensure that no one is left in poverty, one which values and promotes human rights and equality, or not?  Whether we are claiming benefits or not we need to speak out against these proposals, in solidarity with claimants now.

Maggie Kelly, Policy and Campaigns Officer, Poverty Alliance

Maggie.Kelly@povertyalliance.org.uk

www.povertyalliance.org.uk

The STUC is holding a rally on welfare reform at the Lib Dem conference on 5 March in Perth. For more information visit: www.thereisabetterway.org