What Hutton actually says.....

Frances Maude, Danny Alexander and other Coalition ministers quote "former Labour Pension Secretary" Lord Hutton's report in every second sentence to justify the claim that public sector pensions are un-affordable.  Unfortunately, they have clearly never read what Hutton actually says.  Thanks to Mehdi Hassan in the New Statesman for this:

"One final point: can we, once and for all, nail the right-wing lie that public-sector pensions are "unaffordable"? The cost of public-sector pensions is set to fall in the coming decades. Don't believe me? The Hutton Report, commissioned by the coalition government and used by ministers as a justification for the "reforms" to pension contributions, states on page 22:
There have been significant reforms to the main public-service pension schemes over the last decade, including increased pension ages for new members and a change in the indexation of pensions from RPI to CPI indexation. Some of these changes have reduced projected benefit payments in the coming decades. For the interim report, the commission asked the Government Actuary's Department (GAD) to project future public-service pensions expenditure. It projected benefit payments to fall gradually to around 1.4 per cent of GDP in 2059-2060, after peaking at 1.9 per cent of gross domestic product (GDP) in 2010-11.


But, as Jon Snow's interview with the Cabinet Office Minister, Francis Maude, on Channel 4 News on Monday evening revealed, the government seems totally unaware of the contents of the report that it commissioned -- and that it now chooses to hide behind." 

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Pension Reforms

There’s a lot more right than wrong in John Hutton’s wide ranging report into how we need to adjust our assumptions and expectations about state-provided pensions. Difficult though some of his conclusions are in terms of indexing, contributions and retirement ages, we are all living longer and we need to work through the implications of that.

Treasury provided pensions in the UK exist to fund two main groups; a basic level of retirement income for all of us through the state pension in its various forms and occupational pensions for public sector workers, from bin men and classroom assistants to school heads and NHS chief execs.

The principle since the post war social contract has been that the state pension is funded from NI contributions accrued by the Treasury. In contrast, public sector occupational pensions are funded through a mix of individual contributions and employer (central or local government) contributions paid into conventional pensions funds in much the same way as private sector pensions. These latter arrangements vary widely between different working groups. School teachers’ contribution and pension rules are very different from low paid council workers. Local government workers have a completely separate (and fully funded) scheme; civil servants are part of the overall Treasury fund.

So making changes to the system is complex and needs careful negotiation to get a the right balance of fairness between new and long standing public employees on the one hand and the wider tax paying public on the other. Negotiations which have been under way between the DWP and unions representing the main public sector workers groups for some time. Despite what the tabloids rant on about, the unions have always been ready to negotiate a long term solution.

Enter Danny Alexander, Chief Secretary to the Treasury, with his speech to the IPPC last Friday. In a 20 minute, rapidly delivered monologue, Mr Alexander did huge damage to the chance of a negotiated settlement. A settlement that was there to be negotiated and which would have opened up long term solutions to the pension problem created by the success of the NHS and other social reforms in delivering a longer-living society. The Chief Secretary laid out exactly what the coalition intended to do effectively predetermining the outcome and making the negotiation sessions still to come this week and next meaningless at best.  Now Hutton himself has warned that the coalitions approach risks driving many public sector workers out of the schemes altogether.

Why did he do it? He’s been closely involved in the negotiations, so I hope it wasn’t political naivety.

So was it deliberate? A tactic in an overall strategy to provoke the public sector unions into strikes and other protests that would allow the coalition to blame the unions for undermining the economic recovery, neatly getting him and Osborne off the hook for car-crashing growth? Only this week, ONS figures highlight the growing gap between government rhetoric on spending cuts and the actual level of government borrowing.

Working out a fair, long term solution for public sector pensions needs serious – and non party political –engagement between the government and the different public sector groups affected. Its too important to be rushed, or conducted by public posturing. Danny made a well reasoned case for change in this week’s Inverness Courier. Why do his actions in London seem driven by a very different agenda?

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New Ideas for Scottish Labour....

In my last post, I argued that Scottish Labour needed to start developing policies which would fit with a distinctive Scottish agenda, but which also needed to reflect economic and social needs in different parts of the country. Here’s a first example of what I mean.

Like many Labour politicians, I’ve long argued the need for link “green“ investments to the creation of real jobs and other economic infrastructure. This wont just happen, it needs government policy, planning and pump-priming. The Highlands are at the centre of developments in off-shore wind and wave power but how do we ensure that benefits don’t just go to the developers, manufacturers elsewhere or specific communities – welcome though that would be locally - but are shared across the whole area?

The Crown Estate Commission (CEC) owns the rights to developments on the seabed for up to 12 miles offshore. In recent years, the CEC has used that right to levy charges on businesses operating offshore, first on major fishing companies and now on the offshore wind and wave developers, most of whom are operating on sea-beds off the Highland coastline. The potential revenues are growing rapidly as the scale of offshore development ramps up.

At present, all that money goes to the UK Treasury.

Highland Council, HIE and others have long argued that a slice of this revenue should be earmarked for economic and social development in the Highlands and Islands, in the same way as the Shetland Oil Fund was used back in the 1970s.

The LibDems used to support just such a policy but seem to have abandoned it now. No doubt vetoed by Chief Secretary to the Treasury Danny Alexander as part of the same deal which saw the LibDems sell out on Student Fees, VAT and the Cuts. The SNP want all the CEC’s powers and revenues transferred to Scottish Control. There’s a strong case for that, but there need to be assurances about how such powers will be used to benefit specific regions and not just fund favoured projects elsewhere.

We promised a Scottish Crown Estate Commissioner in our 2011 Scottish Manifesto. Should Scottish Labour seize the initiative and make the case for a Highlands Renewables Fund - kick-started from a share of CEC Revenues – which could be used to benefit the region socially and economically?

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Where Next for Scottish Labour?



Team Labour in Culloden

 There are a lot of things you can say about last week’s election results in Scotland.

The SNP played a blinder and picked up support from a swathe of Scottish voters that crossed class, geography and traditional party allegiances. The LibDems were punished for joining so enthusiastically with the Tories, breaking promises on cuts, VAT and Student Fees in exchange for a share of power.

Scottish Labour mainly kept its share of the vote (we actually increased it in Inverness & Nairn), but lost seat after seat to the SNP as voters turned to Alex Salmond and his well respected team in even bigger numbers.

I’m not going to fall into the easy trap of blogging away about what Labour got wrong and why. I’ll leave that to others if they want to. I want to talk about what Labour needs to do about it.

There are four things I think Scottish Labour needs to do.

• we need to elect a leader with ideas based on modern Labour values but who can appeal to a broad range of voters. A leader who can enthuse the party faithful but who ordinary people can relate to when they perform in Holyrood, on TV or in a community meeting. A leader who can build a team around him or her whose collective ability, vision and values will generate trust and confidence in Labour again

• if we are serious about devolution, we need a Scottish Labour Party which is firmly part of the UK Labour movement but which can think, develop policy and campaign independently and in directions which reflect the specific social and political environment of Scotland. A federal approach if you like. And that applies across the country as well. What works for Glasgow or Edinburgh might need a different approach in the Highlands or North East. Scottish Labour needs to stop controlling and start devolving
• above all we need to talk a lot more about our political values in ways that appeal to wider cross-sections of supporters. When we talk about fairness, equal opportunity and social justice, we need to do it in ways which make sense to the lives of people in Craigmillar and Culloden as well as in Clydebank. When we get asked “what will you do for me” we need to be able to answer that with policies and ideas which the majority of Scots relate to and trust
• finally, we need a professional team at John Smith House(Labour HQ in Scotland for those outside the bubble) who can plan and run campaigns effectively and drive a media agenda whilst engaging with (that means listening) and enthusing party activists across the country.

None of the above will be easy. But the sooner we start looking forward and talking positively about what we need to do, the sooner we will return to being a political party that people in Scotland trust to stand up for them again.

For myself, I’m looking forward to helping make that happen.

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Yes to AV

Deciding how to vote in the AV referendum on 5th May has been a challenge.

Those of you who know me as a long standing supporter of proportional representation may be surprised by that. What’s complicated my thinking is the limited “proportional” nature of AV and its significance as a key plank underpinning the Tory-LibDem coalition. Its awfully tempting to vote NO to make political life even worse for Clegg and the LibDems (whilst they make real life worse for most of us).

In the end , however, AV, for all its limitations is a change to the voting system which may just help to restore a little bit of the public trust in our political system. A change that makes it looks less like MPs are trying to protect their own interests by keeping the system as it is. Unfair though that charge may be, that’s how a lot of people see it. And if that results in more people coming out to vote then that must be a good thing. A step in the right direction is better than no step at all.

AV has the potential to build a progressive, centre-left political majority at Westminster. The Tories oppose it for just that reason. Another good thing about it then.

Whilst I’m campaigning to elect Dave Stewart as MSP for Inverness & Nairn, there will be much more important issues to discuss. But on this one I’m clear.

Its time to say YES to AV.

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EMA Cuts Tell Us All We Need to Know

EMA (Education Maintenance Allowances) don't apply in Scotland.

In England, it gives up to £30 a week to 16-18 year olds from low income families attending further education courses.  A Labour Policy, its about paying for kids books, travel and subsistence.  To make getting a higher qualification just a bit easier.

Today, the Coalition cut it.

The same week as they are saying its OK for students to build up £36,000 of debt for a four year degree, they pull away the step ladder for the rest.  £30 a week really matters, when your folks' can't pay.

Tells us all we need to know about the real agenda.

Cameron and Clegg both come from a highly privileged background.  Its showing...

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Some Economic Facts & Figures

The rightful hiatus over student fees has rather obscured some startling detail in last weeks report from the Coalition's very own Office of Budget Responsibility, the OBR. 

Thanks to the New Statesman for highlighting the following:

• economic growth will be higher than forecast this year (at 1.8% rather than 1.2%).  Impressive in the first 12 months after a savage recession.  Since there is an accepted lag between policy and effect, this is mostly due to Alistair Darling's fiscal stimulus
• growth next year and the year after has been revised down to 2.1% and 2.6% respectively.  Slower growth predicted as a result of Osborne economics.....
• whilst there is predicted drop in public sector job cuts from 490,000 to 330,000 this is based on a rapidly expanding private sector creating nearly £2m jobs.  Douglas Alexander has noted that in the last post recession period (1993-1996), the private sector struggled to create just 300,000 jobs
• by 2015, we are predicted to have a budget SURPLUS of £6bn.  Good housekeeping, but why on earth is there a need, therefore, to cut £7bn from university funding over the same period?  A cut that is the direct cause of the need to raise tuition fees.  I say again that its about idealogy not economics.

Britain already spends less as a percentage of its GDP on higher education than the rest of Europe (0.7% compared to 1.2% in France, 1.4% in Sweden, 0.9% in Germany) so this has to be about a deliberate policy to shift higher education funding from the state to the individual.  They are creating a market in education, along the lines of the US model.  Equal access for all will suffer as a result.

All useful facts to have at your fingertips when (a) there is no alternative or (b) its all Labour's fault are being advanced as the reason for every coalition policy......

Conspiracy theorists will say letting the LibDems cop the flack for a week is rather a good diversionary tactic from some pretty bad economic news.  Another answer to what the LibDems are for!

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