Showing posts with label tory. Show all posts
Showing posts with label tory. Show all posts

Wednesday, 21 December 2016

Impact of UK Austerity on Scotland's 2017-18 Budget

When Finance Secretary Derek Mackay announced his party’s Budget last week, he came under pressure for many reasons, not least because buried in the detail was the fact that the SNP are imposing a £327m cut in central Government support to local government services1.

Mr Mackay defended his budget by saying "Let me be clear, I will not pass the costs of UK austerity on to the household budgets of the lowest-income taxpayers"2 and in the budget document itself stated “The UK Government’s approach to public spending is having a significant detrimental effect in Scotland”3.

The problem here is that - as so often with the SNP - the rhetoric is plainly at odds with the facts. I’ve taken the time to study the actual figures in some detail, and it’s clear that attempting to blame UK Government austerity for cuts in Scotland’s 2017-18 budget is nothing short of blatant deception.

All you need to understand to realise that Mr Mackay is trying to pull the wool over our eyes is this simple graph showing the Total Scottish Budget in real (inflation adjusted) terms over the last 10 years. [Note y-axis does not start at zero]


I expect a lot of people in Scotland will find this graph hard to believe. After all, we hear so much from the SNP about Tory austerity that few would expect the real-terms trend in Scotland’s budget to be upwards over the last four years – but that is the reality. In fact, if you look carefully at the graph, you’ll see that Scotland’s Budget is now (just) higher in real terms than it was in 2009-10 before austerity cuts started to bite.

How come this plain reality isn’t common knowledge? Well the simple fact is that the SNP have gone out of their way to hide this information. If you take the time to look up last week’s budget report, you’ll find the summary tables they include show data for 2010-11 but then just miss out the four intervening years to 2014-155. That’s the first step they take to disguise the reality of the rising budget trend.

The second step they take is to bury this Total Budget information deep in an Appendix on page 169 of the report. They use the up-front summary tables to instead focus on a few sub-totals that exclude things like Annually Managed Expenditure (AME) which, for example, pays for NHS and teachers’ pensions4.

In some highlighted figures they even exclude Capital Borrowing4. This is a devolved power that enables Scotland to spend more by taking on further debt in addition to that we share with the rest of the UK. It’s a critical and growing source of funding for Scotland and it’s hugely misleading to focus on figures that omit it.

The third step they take is to distract from the budget year that’s actually being announced by providing a pretty meaningless longer term forecast. The longer term forecast they made last year has already been shown to be far too pessimistic6. To illustrate how flaky their latest forecast is, despite the clear commitment from the SNP to deliver a 50 per cent reduction in the “overall tax burden of APD” (Air Passenger Duty), their forecast makes no allowance for this £171m headline revenue loss4.


As an aside, it’s also the case that by the end of their forecast period the Scottish Government will control roughly half of the revenue raising powers involved. So when they forecast a real terms decline in “Fiscal DEL” (a subset of the total budget that excludes among other things, AME and capital borrowing), the Scottish Government appears to be forecasting that their own economic strategy will fail.


So by missing out intervening years, focusing on a measure which excludes very significant sources of revenue and stretching to an unrealistically pessimistic forecast year, the SNP are able to engineer a figure which appears to suggest “Westminster austerity” is causing the budget to decline. In fact, as the graph clearly shows, the opposite is true.

The reality of our fiscal framework agreement with the rest of the UK is such that the SNP is lucky enough to preside over a spending budget that’s rising in real terms.

The fact that the SNP are cutting Central Government funding to local government is their choice, not something that’s forced upon them - just as the fact that the SNP don’t use their income tax and benefits top-up powers to reduce tax for low-earners, redistribute wealth and address inequality is their choice.

Next time you hear UK austerity being blamed for specific Scottish budget cuts, remember this simple fact: over the four years from 2013-14 to 2017-18, the Total Scottish Budget has been increased in real terms by £1.9bn or 5.4% . 

It really is long past time the SNP stopped blaming Westminster for their own failings.



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Notes
1. Table 9.02: Local Government and Central Government Grants to Local Authorities

3. page 2 of Budget Report
4. I provide a full audit-trailed explanation of the various figures on an historical like-for-like basis here: this table shows the sources I needed to access to create it (it was hard work)

5. See Tables 1.01 and 1.02 pages 3 and 4

6. See Spinning the Scottish Budget: Part II



Saturday, 8 October 2016

Listing Foreign Worker Numbers

Last week the Conservative Party floated a policy proposal to make companies report how many foreign workers they employ and - if press reports are to be believed - "shame" companies judged to employ too many.

The media reaction this proposal generated showed that I wasn't alone in instinctively finding this idea morally repugnant - but then YouGov published a poll that suggested the majority of voters instinctively approve of the idea ("By more than two to one the public support government proposals to make businesses publish how many foreign workers they employ");


So why does a proposal that appals many of us appear to find favour with the majority?

First we should try and be clear what the proposal actually is (even if those answering the YouGov question may not have been). This is not as straight-forward as you might imagine.

The headlines seemed clear enough: "Firms must list foreign workers - plans to shame companies..."


Interestingly you won't find any of these words in Amber Rudd's conference speech (> full text of Amber Rudd's conference speech) - the only relevant words I could find are:
we will shortly be consulting on the next steps needed to control immigration [...] examining whether we should tighten the test companies have to take before recruiting from abroad [...] The test should ensure people coming here are filling gaps in the labour market, not taking jobs British people could do. [...] So I want us to look again at whether our immigration system provides the right incentives for businesses to invest in British workers
Fairly run-of-the-mill stuff. I could argue with the phrase "jobs British people could do", but there's certainly no mention of  lists of foreign workers or shaming companies. So where do those words come from? I can't find any formal government announcement (> Gov.uk/announcements) and nothing from the Conservative Press office (> press.conservatives), so it seems we have to rely on papers' interpretations of press briefings.

I make no apology for being forensic about this. When reactions to the proposal include claims of xenophobia and racism, we should be clear about who has said what and to whom.

The independent helpfully quotes directly from "a briefing sent afterwards" (emphasis is mine)
In a briefing sent afterwards, it was made clear that other measures to be considered would be, “whether employers should have to set out the steps they have taken to foster a pool of local candidates, set out the impact on the local labour force of their foreign recruitment and be clear about the proportion of their workforce which is international, as is the case in the US."
That same independent article states
Businesses may even be “named and shamed” by being forced to publish what proportion of their workforce comes from overseas. 
Those quotation marks really matter: we must surely infer that either in the written or spoken briefing from the Conservative press office, those words were used?

The Times article doesn't explicitly refer to the briefing but clearly theirs is the same source (again emphasis is mine)
Under the proposals, to be included in a consultation paper, businesses would have to “be clear about the proportion of their workforce which is international”. It is understood that this would apply to non-EU workers initially but could be extended to all non- British workers after Brexit.
Businesses would be expected to publish the figures for each site where workers were based. Details such as whether the rules would apply only to companies employing a certain number of staff have yet to be finalised.
The Times article goes on to say;
Hitting back at critics in an interview with Today [..] Ms Rudd said she had been careful to ensure her speech did not to fall into the “trap” of stoking racial tensions.
Ms Rudd has a point insofar as it's clear that the words that caused the biggest headlines and most outrage were not in her conference speech; but it's also clear that the official press briefings given were much less circumspect.

The fact that the independent places "named and shamed" in quotation marks and that the Times refers to plans to "shame companies" suggests that this language was used in the briefing.

[The "must list foreign workers" in the Times headline looks like the work of a sub-editor to me, because revealing how many are employed is technically not the same as listing them.]

Enough of the forensics: Amber Rudd may have been careful not to deliver the inflammatory words herself, but she (her department, her party) are clearly responsible for getting the "name and shame" idea out there, along with the basic proposal that companies declare the proportion of their workforce which is international.

Of course all of the nuance above is lost by the time you get to public perception and the YouGov poll question to which the majority appear to agree1: "do you support or oppose government proposals to make companies report how many foreign workers they employ "

Now let me explain why I think this is a really awful idea.

I've made the point that the "list employees" headline is misleading, but the process for getting to the proportion figures requires employers like me to create real lists with real names of real people on them. Under these proposals I will be required to create lists of non-British employees. You don't have to be the keenest student of history to see why this is a deeply unsettling thing to be asked to do.

References have variously been made to "foreign recruitment", "international workers", "foreign workers", "comes from overseas" and "non-British workers". Each of these terms is open to interpretation and raise questions which - frankly - I don't think we should be having to ask (e.g. UK Home Office won't say if Irish people will be exempt from controversial list of foreign workers).

It's important to note that it is of course already illegal to discriminate at work on the basis of nationality (or race, religion, gender, age etc.) - companies can't pay non-British workers on a different pay-scale to British workers.  We already have a visa system which controls who can and cannot work in the UK and for how long. If a government wants to change those rules, they should do so explicitly, not via some dodgy back-door shaming exercise (which by the way appears to encourage discrimination).

Under these proposals we would be asked to segregate our employees into two categories: British and non-British. We would be explicitly encouraged to discriminate between these two categories - having "too many" non-British employees is something we are to be ashamed of, apparently.

This focus is clearly meant to be on hiring decisions, as ilustrated by the supplementary YouGov question (which 60% of respondents agreed with):


There's a major flaw with this question of course: unless we start cloning people, "all else about two candidates for a job" will never be equal. What this is really suggesting is if you're struggling to choose, don't bother thinking harder and forming your judgement based on the candidates' qualifications and your perception of their ability to do the job, judge them instead based on whether they're British or not. Whether the respondents realised it or not (anybody involved in recruitment knows the premis of the question is flawed), this is simply encouraging discrimination based on nationality.

But if we're to "name and shame" companies for employing "too many" non-British people, would the impact stop at recruitment? When performing staff reviews or facing difficult redundancy decisions, how can employers not be expected to be influenced by the consideration that having "too many" non-British employees is considered a source of shame for the company?


True Story: As an employer I've had to go through the extraordinarily difficult and soul-sapping process of making people redundant. When you go through that process you have to work out the objective selection criteria on which you decide who stays and who goes (tenure, attendance, performance reviews, disciplinary record, etc.). I hope I don't need to say we didn't have "British or non-British" as criteria on our list. I remember clearly how a Polish warehouse worker with an outstanding employment record wept when she was told she wan't going to made redundant - she told me she just assumed that the non-British workers would be first to go. I was shocked that she'd think that. It sickens me to think that the prejudice she feared would exist may be edging its way toward being encouraged through government policy.


Aside from the moral arguments, there are solid practical reasons why any actions that discourage migrant workers are a bad idea (and knowing you're on a list of an employer's non-British employees certainly doesn't seem like an employment perk). As this blog has covered before:
  • As people live longer, the proportion of our lives when we aren't contributing to the state but are instead benefiting from it increases (> Two Types of People)
  • The strong weight of evidence is that immigration has a positive impact on public finances, that immigrants make a positive fiscal contribution (> Immigration and the EU referendum)
Politicians are generally shy about saying this (although to the SNP's credit, they're not): we need to encourage foreign workers to come here, to work and to generate taxes (to help the state look after our increasing older population).

But these practical considerations shouldn't distract us from the core issue here: context.

These proposals are made in the context of a winning Brexit campaign that shamelessly played to the xenophobes among us. I'm certainly not suggesting that most Brexit voters were xenophobic, but you can be pretty sure that all xenophobes were Brexit voters. To pretend that the EU referendum hasn't stoked the flames of narrow-minded nationalism would be disingenuous; to make proposals to appease those who seek to stigmatise non-British workers is downright irresponsible. And passing the inflammatory sound-bites to the press by holding them in a large pair of tweezers doesn't absolve Amber Rudd of responsibility either.

That this could be argued to be building on previous ill-judged sound-bites like Gordon Brown's "British Jobs for British workers" is no defence - two wrongs don't make a right.

My Scottish nationalist friends really hate me making this point, but the rise of nationalism in its various guises is a common theme here. Ironically this point was made by the SNP's erstwhile spin-doctor-in-chief, Kevin Pringle, when he tweeted "we're certainly living in a Nationalist state now"
Nobody likes to be spooked by their own reflection, so it's perhaps understandable that Mr Pringle acts as if the flavour of nationalism that drives these proposals bears no relationship to his beloved Scottish Nationalism. I was even told on Twitter that "at least Scottish nationalism is pure", which to be honest didn't comfort me greatly.

The two brands of nationalism we've been witnessing in the UK over the last few years are different, but they share a common, grubby thread. They both focus on"othering" - narrowing the definition of us and seeking to define a them to blame for all our woes.

Of course the source of Pringle's barely concealed glee is that this plays into the hands of the Scottish Nationalists. Continued grievance rhetoric from the SNP fuels an English back-lash that runs from calls for English Votes for English Laws (EVEL) to a rise in the mirror of Scottish Nationalism, English Nationalism. The gap between us grows and the SNP's dream of separation from "them" seems closer day by day.

But if the SNP are reaching for the YouGov poll to show how different we are when it comes to attitudes to foreign workers, they'll be disappointed. With all the usual opinion poll caveats required1, SNP supporters are if anything more likely to argue for prioritising British workers than Labour or Lib Dem voters;


From the same source, SNP voters also appear more likely to strongly support the proposal than either Labour or Lib Dem voters


So it seems Mr Pringle may have to swallow the fact that those who favour Scottish independence are - on this thorny issue at least - not so different from the rest of the UK, they're just different from Tory and UKIP voters (which, despite some of the more simple-minded protestations you might hear, isn't the same thing at all).

One last cross-cut of that YouGov data shows 50% support for the proposal in Scotland (vs. 59% UK-wide). I don't think a 50:50 split in Scotland really justifies the virtue-signalling on this issue that we've been hearing from the usual SNP suspects.


So Vive la similarité?  Well no, not in this case. I'd rather we were bound by a clear shared desire to welcome and treat foreign workers as we do any others, rather than roughly half of us having an apparent shared desire to discriminate against them.

Is it too much to hope that when people think this through a little further, the consensus will shift to condemning this as being a truly awful ideas?

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1. YouGov base their surveys on a large online panel - these specific results are from a survey of 5,875 respondents. To illustrate the sample size implications, if split proportionately by party the implied coverage of SNP supporters is therefore likely to be c.240 (50% of 8.2% of the UK population). My twitter friends suggest therefore a standard error of +/-4% on those figures. Of course we are relying on YouGov's weightings to adjust from the online sample to a representative UK profile - I don't think anybody needs reminding these days that all opinion polls be treated with caution. That said, the result is so striking its impossible to ignore.






Sunday, 22 March 2015

SNP/Tory Coalition - Think It Through

Back in February there was an intriguing tweet from Lord Ashcroft (erstwhile Deputy Chairman of the Conservative Party and provocative pollster) saying that "Of course there could be a Tory/SNP coalition #thinkitthough"


I tend to focus on economic facts in this blog but I also like a challenge so - having discussed this with a few people who know a lot more about the realities of political deal making than I do - here's my attempt to think it through;

What would the SNP do if they were offered Full Fiscal Autonomy (FFA) in return for supporting a Tory government in Westminster?

Why would the Tories offer that deal?  If it comes with a commitment from the SNP on English Votes for English Laws (EVEL) and keeps the Tories in power why not? It's economically beneficial to the rest of the UK (to the tune of £7-8bn on current figures) and the hardship that would result in Scotland isn't going to affect any Tory seats. From Cameron's perspective - a man surely now starting to consider how history will remember him - he can claim saving the Union as his legacy.

Why would the SNP accept such a deal?  It's true that Nicola Sturgeon has stated unequivocally that the SNP wouldn't support a Tory government but she has also made clear the SNP's desire for FFA. Remember that with Full Fiscal Autonomy we get to keep "our oil" and have total control over tax and spend (with only defence and foreign affairs remaining reserved). It's not a massive leap to see Sturgeon arguing that saving Scotland from the Tories and achieving FFA in return for supporting a Tory Westminster government is an acceptable political compromise.

Surely though the SNP know that FFA would cause economic hardship for the Scottish people?  Here we have to remember that the SNP's raison d'etre is not improving the lot of the Scottish people. It is - as defined in the SNP's constitution - independence for Scotland.  They don't actually say "at any cost" in their constitution but it's implicit; no caveats are given.



So how does FFA serve that over-riding objective?  Again let's think it through.

With FFA the Barnett Formula is scrapped.  Scotland no longer experiences the benefit of economic shocks being smoothed out across the UK.  We get to keep "our oil" (which may or may not prove to be a massive economic boon again some day) but in return we accept we will not benefit from any similar geographic windfalls that may lie elsewhere in the UK.  If - for example - the Home Counties turns out to be the source of a shale gas boom, under FFA Scotland would not share in any of the spoils.

The GERS numbers show us that in the short term Scotland would certainly be worse off under FFA. Indeed unless there's another oil boom it's hard to see why we wouldn't continue to be worse off for at least many decades to come.  Most of the benefits of Union would have been discarded but we would still be under some fiscal constraints (due to our shared currency) and decisions around defence spending and international affairs would still give the SNP plenty of reason to still complain about those bastards at Westminster.  We would have many of the downsides of independence without the full freedom that independence would offer. Under that scenario it's fairly easy to see how the SNP could still argue for independence. By then - frankly - what would we have left to lose? All the SNP would need to do is succeed in continuing to blame Westminster for our woes (anybody who has watched how the SNP operate knows that even with FFA that wouldn't be beyond them) and come up with a credible currency solution.

It seems to me that if - as Lord Ashcroft advises - you think it through, the SNP might be delighted to support the Tories at Westminster if FFA is the "prize".  Not because they believe this in itself would benefit the Scottish people - you would need to be an economic illiterate or a border-line certifiable optimist to believe that - but because they would see this as a step on the road to full independence.

Many believe independence for Scotland is the right answer no matter what the short, medium or long-term economic cost and they should of course be voting for the SNP.  But anybody thinking of voting for the SNP believing they are voting for an SNP influenced Labour government might be taking a bigger gamble than they realise.


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24/03/2015: Addendum (for the doubters)
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For those who (perhaps understandably) scoff at my hypothesising: since I wrote this post there have been a few mainstream commentators taking a similar line


Iain Martin (political journalist with the Telegraph) seemed to like this logic


Even Guido Fawkes seemed to think I was on to something