As the negotiations between the Holyrood and Westminster governments over the fiscal settlement for Scotland continue and inch closer to some kind of deal, leading independent economist, Jim Cuthbert, argues there are ways to avoid Scotland falling into the ‘fiscal trap’ in a new policy paper for the Jimmy Reid Foundation called ‘Adjusting the Scottish Government’s Block Grant: taking a wider perspective’.
In noting the possibility of Scotland falling into ‘fiscal trap’, Cuthbert critiques the recent IFS report, ‘Adjusting Scotland’s Block Grant for Tax and welfare Powers; Assessing the Options’, and then lays outs the strategic alternative options.
Each option varies in its nature of method of indexation used for the block grant adjustment and outcomes of taxpayer fairness (see Appendix 1). The four options are Option A – Tax Revenue automatic; Option B – Tax Base manual; Option C – Fixed increment manual; and Option D – Fixed increment hybrid. For the purposes of comparison, Option A was based on the aforementioned IFS report.
Although not without their challenges, Cuthbert argues that Options C and D are by far the more meritorious. Option C indexes the block grant adjustment by a fixed low real percentage each year but faces potential problems of future, on-going adjustments. Option D goes a step further, addressing the problem of Scotland losing control over its own income tax rate when Westminster changes rUK income tax to fund reserved services. Thus, Option D restricts Westminster so that it could only change income tax in relation to ‘devolved’ services.
Turning to the political terrain for implementing either options C or D, Cuthbert argues
‘While Option D solves the problem of Scotland losing control of its income tax rate in the event rUK changes income tax to fund devolved services, mechanisms for implementing Option D would involve something akin to federalism. Consequently, there would need to be an over-arching chamber setting a block grant for each of the parts of the UK, and making decisions on reserved services. Westminster (or that part of it which would be akin to an English parliament) would be responsible for topping up its block grant through income tax, and other devolved taxes, to fund its spending on ‘devolved’ services. This would obviously be a major constitutional step’.
Concluding the paper, Cuthbert states:
‘Options A and B are unacceptable, on the grounds that both options involve Scotland engaging in an economic race with rUK, when the risks and penalties are out of kilter with the limited economic powers available to Scotland. They are unacceptable to those Scots interested in implementing a more progressive tax system, now we know that elements on the unionist side regard these options as requiring Scotland to do precisely the opposite, and introduce more regressive taxation. Option D is probably a step too far, given public attitudes in England – which means there may be room for compromise around Option C’.
Download the Policy Paper JRFCuthbertSmithpaper Jan 2016
In a significant new policy paper entitled ‘Increased trade and economic growth won’t happen in Scotland until we sort out our ports’, Alf Baird warns the Scottish Government that its hopes of growing the Scottish economy to provide for increased employment and a higher tax base from which to fund public spending will will come too little without resolving the chronic crisis affecting Scotland’s major privately owned ports. The paper can be downloaded here Economic growth & Scottish Ports
The paper argues that increasingly obsolete sea transportation facilities and links (docks, ports, shipping services) in Scotland mean existing international trade flows are weak and are becoming ever weaker as the Scottish economy continues to lose competitiveness. Indeed, much of Scotland’s traded goods have to be sent to and from ports in England, raising costs. The effect is that the amount of trade going through Scotland’s container ports is the same as that going though Iceland’s Reykjavik container port (when Iceland’s population is just 329,000). The obsolescence results from chronic lack of investment over decades by private equity port owners in new technologies, infrastructure and facilities as well as from the privatisation of the port authority role.
On this basis the paper contends that as ports in Scotland are a devolved responsibility, there is nothing to stop the Scottish Government formulating its own ‘ports policy’, preferably as part of a wider maritime transport and trade policy. Such a policy should seek to estimate the port capacity that is needed in future, and to then provide that capacity to enable trade to expand and thereby ensure the economy can grow, and to plan and facilitate ongoing investment in essential port infrastructure and key international shipping connections. Moreover, the Scottish Government should also seek to return the statutory regulatory ‘port authority’ roles and functions which are currently held by offshore private equity firms, to the control of public agencies, as is the case in virtually all other countries.
But critical in formulating its own ‘ports policy’, the Scottish Government thus needs to take control of the situation, not by taking existing obsolete ports into public ownership but by developing entirely new port capacity at more optimal locations. The paper argues this can be done by offering concessions to private firms to build and operate required ports and terminals as well as by an enforcement regime requiring port owners to adequately maintain and improve existing facilities, and to better regulate port charges.
Alf Baird commented: ‘No economy can sensibly depend on the offshore private equity model of port ownership and regulation to bring about trade growth. By its very nature, the private equity model limits investment in new port infrastructure, whilst continually demanding excessive profits, followed by selling on of what are ‘mature’ port assets to another ‘fund’ to do precisely the same thing over again. Ultimately, there comes a time when the nation’s port assets are so obsolete and trade is so diminished that this model is completely unstuck; given Scotland’s moribund trade position that time seems ever closer’.
Alf Baird began his working career in 1974 as a Liner Shipping Clerk at the port of Leith, then running a small packaging and freight forwarding company. After a degree in Business Studies at Napier University in Edinburgh in 1993, he was employed there first as a researcher and then as lecturer, completing a PhD on strategic management in the global container shipping industry in 1999. He was appointed Director of the Maritime Research Group at Napier in 1997, and in 2005 was appointed Professor of Maritime Transport. He has been appointed as specialist advisor on maritime transport matters by a number of select committees of Parliaments in the UK, Northern Ireland and the Isle of Man, and as advisor to various government agencies and ports including Scottish Enterprise, Highlands & Islands Enterprise, Clydeport, and Orkney Islands Council. He left Edinburgh Napier University in 2015 although he remains actively involved in international research and consultancy activity, particularly in the maritime economics/policy/business areas, and with emphasis on ferry transport, container shipping, cruise shipping, and seaport policy and design.
In a carefully constructed but sharply critical assessment of the recent Institute of Fiscal Studies (IFS) report entitled, ‘Adjusting Scotland’s Block Grant for Tax and welfare Powers; Assessing the Options’, leading independent economist, Jim Cuthbert, warns any negotiations deploying the assumptions and reasoning of the IFS report will ‘do Scotland gravely down’, and present a further twist to the present ‘fiscal trap’.
In the first of a new series of Jimmy Reid Foundation working papers entitled ‘IFS report provides inadequate basis for Scottish fiscal settlement negotiations’, Cuthbert demonstrates the IFS report by Messrs Bell, Eiser and Phillips represents ‘a very flawed assessment of the options for adjusting the Scottish government block grant and a significant danger for Scotland of falling into a ‘fiscal trap’ if the current negotiations take the IFS report seriously’.
The danger of being misled by the IFS report is significant because, while it does not recommend any specific method for adjusting the block grant and correctly identifies the difficulty of implementing the ‘no-detriment’ principles set down by Smith, the report nevertheless makes a series of incorrect decisions and assumptions about the characteristics of the block grant adjustment process.
One example is the report’s decision to use the method based on tax revenue indexation for adjusting the abatement to the block grant. This has profound implications for the types of risk to which the Scottish government’s revenues would be exposed, and for the way in which Smith’s second no-detriment principle will impact on the freedom of action of the Scottish government. The upshot is that, if the IFS report is used as a basis by which to negotiate the fiscal settlement, the decision to index on revenue, rather than tax base or some other approach, means that the Scottish government effectively loses control of its own full discretion over the income tax rates it wishes to set.
Other aspects which the IFS report either ignores, or to which it pays inadequate attention are:
- What effect does the Scottish government’s lack of economic powers have in affecting the balance between risk and potential reward in the eventual fiscal settlement.
- What are the limitations, and risks, of trying to run a monetary union on the basis of a largely formulaic approach to distributing resources.
Cuthbert’s conclusion is ‘the IFS study in effect represents a distorted assessment of the options for the post-Smith fiscal settlement. There are therefore grave dangers for Scotland if the IFS report were taken as the basis on which the fiscal settlement negotiations are conducted’.
The Reid Foundation has submitted its response to the ‘Lobbying (Scotland) Bill and has concluded that the proposed register of lobbyists is insufficient. Given that the Scottish Parliament was designed to be open, accessible and accountable, there is a need for increased transparency in lobbying activity and that includes extending freedom of information rights to increase the power of people to hold MPs and Ministers to account.
The full submission can be read here Lobbying Bill submission
24th November in the Bute Hall, University of Glasgow
The Rt. Hon. Nicola Sturgeon MSP, First Minister of Scotland, delivered the Third Annual Jimmy Reid Memorial Lecture “WORKERS’ RIGHTS ARE HUMAN RIGHTS” on Tuesday 24th November in the Bute Hall, University of Glasgow. The 1,000 strong audience included members of Jimmy Reid’s family, along with veterans of the UCS dispute.
The Lecture took place against a backdrop of engineered uncertainty on the status of trade unions and fundamental human rights in the UK: the Trade Union Bill is currently being debated at the UK parliament and its provisions seek to weaken the ability of trade unions to represent their members; the UK government wants to change the mechanism to define and protect human rights and is about to publish proposals to abolish the Human Rights Act and introduce a Bill of Rights. These developments are opposed by the Scottish Parliament.
A video which explains the issues can be found at https://youtu.be/lyPx84fiADQ
The meeting was chaired by Grahame Smith, General Secretary of the STUC. The Lecture honours workers’ leader Jimmy Reid, who delivered his inaugural address as rector of Glasgow University in the Bute Hall on 28th April 1972. Jimmy delivered his famous “The rat race is for rats” speech. His archives and those of the UCS Work-in are maintained by the University and some were on display prior to the Lecture.
Professor Gregor Gall, Director of the Reid Foundation, responding to the content of First Minister’s speech to the third annual Jimmy Reid Foundation lecture said:
‘We welcome the First Minister’s criticism of the Trade Union Bill and the actions she proposes the Scottish Government will take to blunt its impact when it becomes law.
However, and notwithstanding employment issues remain reserved matters, we urge the First Minister and the Scottish Government to go further by using their existing powers to provide regulatory underpinning to worker participation so that workers have influence over the way their workplaces are run. This could be done through public procurement and in the public sector.
It would then mean Scotland’s economy moves closer to the First Minister’s goal of emulating the Rhineland model of regulation – which still remains the most successful economic and social model in Europe. This would be the most fitting way to honour the legacy of Jimmy Reid.’
First Minister Declares “WORKERS’ RIGHTS ARE HUMAN RIGHTS”
The Rt. Hon. Nicola Sturgeon MSP, First Minister of Scotland, will deliver the Third Annual Jimmy Reid Memorial Lecture “WORKERS’ RIGHTS ARE HUMAN RIGHTS” on Tuesday 24th November at 6.30pm in the Bute Hall of University of Glasgow. All the tickets have been taken up and the 1,000 strong audience will include members of Jimmy Reid’s family, along with veterans of the UCS dispute.
People without a ticket can still watch the Lecture live at http://www.gla.ac.uk/events/reid/
The Lecture takes place against a backdrop of engineered uncertainty on the status of trade unions and fundamental human rights in the UK: the Trade Union Bill is currently being debated at the UK parliament and its provisions seek to weaken the ability of trade unions to represent their members; the UK government wants to change the mechanism to define and protect human rights and is about to publish proposals to abolish the Human Rights Act and introduce a Bill of Rights. These developments are opposed by the Scottish Parliament.
A video which explains the issues and promotes the Lecture can be found at https://youtu.be/lyPx84fiADQ
The meeting will be chaired by Grahame Smith, General Secretary of the STUC. The First Minister and guests will be welcomed by the Principal and Vice-Chancellor, Professor Anton Muscatelli. Following the speech, there will be a question and answer session. Our Director, Professor Gregor Gall, will make a short contribution on our work programme to conclude the event.
The Lecture honours workers’ leader Jimmy Reid, who delivered his inaugural address as rector of Glasgow University in the Bute Hall on 28th April 1972. Jimmy delivered his famous “The rat race is for rats” speech and a souvenir programme will be available containing the text. His archives and those of the UCS Work-in are maintained by the University and some will be on display prior to the Lecture.
Nicola Sturgeon, First Minister of Scotland said:
“When Jimmy Reid spoke here in April 1972, it was towards the end of the Upper Clyde Shipworkers dispute. The work-in which Reid helped to organise was arguably the greatest achievement of the post war union movement. It asserted the fundamental right of individuals to work. It did so through a peaceful, positive protest which captured the imagination of people around the world.
“It is a reminder that trade unions are a source of empowerment. They provide a voice for those who might otherwise go unheard. The right to strike is an essential part of that, but the real value of trade unions goes much wider. They help employers to create the safe, humane, productive working conditions which head off industrial disputes – and which build better businesses. Because of that, trade unions are a force for good in modern societies.”
Anton Muscatelli, Principal and Vice-Chancellor of the University of Glasgow, said
“I am honoured that this year’s Jimmy Reid Memorial Lecture is taking place in the Bute Hall at the University of Glasgow – the very place Jimmy Reid stood to deliver his powerful address in 1972 after being elected Rector by the student body. It also very fitting that the First Minister, a graduate of this University, will deliver the lecture. I will be delighted to welcome the First Minister, members of Jimmy Reid’s family and representatives of the Reid Foundation to the University.”
Grahame Smith, the general secretary of the STUC who is chairing the Lecture said:
“The address by the First Minister to the annual Jimmy Reid Memorial Lecture could not be more timely. The values expressed by Jimmy in his famous address espoused the importance of solidarity and basic values of decency which trade unions uphold on a daily basis.
“The Trade Union bill strikes at the very heart of democracy, at both the democratic right to assembly and representation in the workplace and at the devolution settlement itself. The Bill is an attack upon on human rights and a completely unwarranted interference in the right of government in Scotland, at all levels, to conduct industrial relations as best suits their vision of workplace democracy.
“The Trade Union Movement is committed to resisting this Bill in every way that we can. We support the view of the main political parties that it should be subject to a Legislative Consent Motion and will work with all of our colleagues in central and local government to make it unworkable if it is passed”
Professor Gregor Gall, Director of the Reid Foundation said:
“We are delighted to be working with Glasgow University to deliver the third Jimmy Reid Memorial address which is a celebration of the right to work as well as the legacy of Jimmy Reid which is to promote fairness, equally, in Scotland.”
Due to the level of interest, the STUC has arranged an overflow meeting at its centre in Woodlands Road in Glasgow and the lecture will now be streamed by Glasgow University so that people, everywhere, can watch the lecture live. So far we know that people in Switzerland, Germany and North America will be tuning in as well as in Stirling and Inverness.
The Reid Foundation is grateful to the University of Glasgow for its assistance in organising the Lecture.
- The Foundation has published a policy paper on this issue, available at our website, ‘Economic and Social Rights are Human Rights’ http://reidfoundation.org/2015/08/economic-and-social-rights-are-human-rights-2/
- On 10th November the Trade Union Bill received its third reading at the House of Commons and the UK Parliament’s Joint Committee on Human Rights announced pre-legislative scrutiny of the Bill as “some significant human rights issues may arise” http://www.parliament.uk/business/committees/committees-a-z/joint-select/human-rights-committee/news-parliament-2015/legislative-scrutiny-launch/
- The Scottish Parliament voted in favour of the Human Rights Act 1998 on 11th November 2014 “ The Parliament re-affirms and re-asserts, on behalf of all of the people of the community of Scotland, the inalienable human rights and fundamental freedoms that are the common inheritance of all members of humanity; recalls the particular importance to the Parliament, through its founding statute, its founding principles and in all aspects of its day-to-day work, of human rights in general and of the European Convention on Human Rights in particular; acknowledges the constitutional responsibility of the Parliament to uphold the principles and values expressed in the convention and to respect, protect and realise the rights and freedoms that it enumerates; further acknowledges the importance of that work not only in relation to Scotland, but also in establishing and maintaining standards of best practice, which provide a benchmark for human rights elsewhere in the world; expresses its confidence in, and support for, the Human Rights Act 1998 as a successful and effective implementation of the convention in domestic law, and believes that the principles and values that inform the convention, the rights and freedoms that it enumerates and the Acts that incorporate it into law, should be a source of unity and consensus across the whole of society and should enjoy the unequivocal backing of all who are committed to upholding human rights, democracy and the rule of law.”
- Information on the STUC parallel event, to which the Lecture will be streamed, can be found at http://www.stuc.org.uk/
- To watch the Lecture live from other locations go to http://www.gla.ac.uk/events/reid/
As part of its campaign against the Trade Union Bill, the STUC is organising an event on 24th November at 6.30pm which will livestream the First Minister’s Lecture ‘Worker’s Rights are Human Rights’ followed by a Panel Discussion. The venue is the STUC, 333 Woodlands Road, Glasgow G3 6NG.
A video which outlines the issues and promotes the lecture is now available https://youtu.be/lyPx84fiADQ
For more information and to register open STUC event
The 3rd Annual Jimmy Reid Memorial Lecture “WORKERS’ RIGHTS ARE HUMAN RIGHTS” will be delivered by Rt. Hon. Nicola Sturgeon MSP, First Minister of Scotland. The meeting will be chaired by Grahame Smith, General Secretary of the STUC.
Tuesday 24 November at 6.30pm in the University of Glasgow G12 8QQ
Doors open from 5.30pm.
Free entry is by ticket only.
The tickets had been allocated within 24 hours and a waitlist has been operating. Some more are now available online at https://www.eventbrite.co.uk/e/workers-rights-are-human-rights-nicola-sturgeon-delivers-memorial-lecture-tickets-19212546243
In honour of workers’ leader Jimmy Reid, Nicola Sturgeon will address the issue of why workers’ rights are human rights and how this can be used in defence against the Tory Government’s attacks on workers’ economic, political and social rights in Scotland. The First Minister and guests will be welcomed by the Principal and Vice-Chancellor, Professor Anton Muscatelli. Following the speech, there will be a question and answer session. Our Director; Professor Gregor Gall will make a short contribution on our work programme to conclude the event. The Foundation has just published a policy paper on this issue, available at our website.
Jimmy Reid was installed as elected Rector of the University in the Bute Hall in 1972, where he made his famous “The rat race is for rats” speech. A souvenir programme will be available containing the speech. His archives and those of the UCS Work-in are maintained by the University and some will be on display prior to the Lecture. We are grateful to the University for their assistance in organising the Lecture.
The Jimmy Reid Foundation today publishes a major new critique of government handling of the Scottish economy in terms of the critical component of trade and development.
Written by renown independent economist/statistician, Margaret Cuthbert and entitled ‘Growing the Scottish Economy: is Scotland well served on international trade and development?’, the paper casts grave doubt upon the Scottish Government’s ability to increase competitiveness and tackle inequality when the data needed to assess how well the Scottish economy is performing in trade and development is so woefully incomplete and inaccurate.
The findings of this paper are:
- There has been a fundamental failure of the UK and Scottish governments in the collection, collation, and analysis of trade statistics for Scotland.
- Existing data on trade and development is unjustifiably time-lagged, does not cover all sectors, is sketchy on sectors that are covered, and is based upon low return rates from respondents.
- It is difficult to have much confidence in the data. Yet the agencies like Scottish Enterprise and Scottish Development International present themselves as providing excellent value for money in gather this poor quality data.
- Without a timely good quality data on how well Scotland is performing on trade; without an analysis of trends; and without connections being made between trade patterns and trends in the economy, it is difficult, if not impossible, to see how any government can devise, monitor, and evaluate the trade part of an economic strategy.
- With further devolution under the Smith Commission, these matters will only become more pressing as the Scottish Government becomes more responsible for managing Scotland’s economy.
- Recommendations for change are made including the way data is gathered and when.
.Margaret Cuthbert commented: ‘Without good data, economic strategies can end up as ‘wish lists’ and can actually harm the economy. The effect of past strategies in Scotland cannot be adequately scrutinised to determine whether or why they were successful and cost efficient, or why they failed. We fool ourselves about our economic strategy without knowledge based upon analysis of the facts’.
She continued, saying ‘My conclusion is that unless there is a radical change in attitude, in systems, and in working methods by government and government agencies, Scotland will be seriously hampered in improving trade performance, and in particular, in trade helping to make substantive inroads into austerity and into improving economic growth’.
A copy of the Paper is attached. Trade and development
In this latest policy paper Carole Ewart urges us to use international human rights standards to create a fairer Scotland.
- Human rights have not realised their potential to protect individual rights e.g. respect for family life and collective rights e.g. to belong to a trade union.
- Successive governments, or part of them, have marginalised human rights which means that public support for human rights is worryingly low. Civil society, in particular unions, have an important role to play in reversing this view by identifying the relevance of human rights to workers’ everyday lives and acknowledging their importance in delivering a fair Scotland and UK. For example using human rights arguments in the public procurement process.
- The UK Government seems to be adopting an anti-human rights position in respect of trade union rights eg voting thresholds and abolishing ‘check off’. The Scottish Government, which must to apply the HRA can be more proactive with legislation and subordinate legislation, guidance etc. to actively support human rights across devolved functions.
- Upholding our human rights, contradicts the free market economic philosophy of the UK government. However our Government has inherited an undertaking to the UN, that it will ‘progressively deliver’ to the ‘maximum extent of available resources’ defined economic and social rights eg the right to an adequate standard of living. Human rights compliance should, therefore, be central to the economic strategy which businesses operate in, underpinned by a philosophy that respecting rights equates with business success. The UN’s framework on business and human rights allows our government’s economic strategy to fit a globally recognised model.
- For ‘rights holders’, there is a lot of catching up to do in terms of building the knowledge base and skill application. For example by changing the terminology from an “ask” to an assertion of specific rights to the duty bearer eg a local authority or health board. And an understanding by the duty bearer that they must act and if not there is a reasonable expectation that the human right will be enforced.
- We need to be more astute in linking human rights with policy and legislative opportunities, eg in the forthcoming social justice consultation, the Community Empowerment Act 2015 and its implementation.
- Civil society and trade unions should build the knowledge and skills of workers and empower them to assert and enforce their human rights.
- Consideration should be given as to what can be achieved within the devolved settlement to expand human rights to include worker’s rights as defined in the UN International Covenant on Economic, Social and Cultural Rights (ICESCR). This could begin immediately, include new powers via the Scotland Bill and target manifestos for the Holyrood elections in May 2016.
- Unions should offer evidence to the UN on the application of ICESCR in the UK, during the formal Hearing process 2015 – 2016, on how workers do not equally enjoy economic and social rights which results in measurable disadvantage to them and their families.
- Poverty is a menace which needs to be addressed by structural reforms in our economy and there is an opportunity to deliver that change by contributing to the Scottish Government’s baseline research on ‘business and human rights’.
The full paper is available Workers Rights are Human Rights 10th Aug 2015