Work, Employment, Skills and Training: Where Next for Scotland?

Labour market issues have been given very little attention in the independence debate. So today’s launch of an ESRC funded research report on ‘Work, Employment, Skills and Training: Where Next for Scotland?’ is very welcome.

I was interviewed along with 67 other stakeholders as part of the research, so I was particularly interested in the report’s findings. The complexity of the issue is illustrated by the multi-level governance with the EU, UK and Scottish Government all having a role, or in some cases shared responsibility. Given the shocking levels of productivity in the UK, it is surprising that skills utilisation in particular has not been given more attention.

Education, training and skills is probably the field least impacted by independence, because most is already devolved and Scotland has a very different system from the rest of the UK and England in particular. Professor Ewart Keep highlighted the structural focus on youth unemployment in Scotland, while in England there is little more than hand wringing. Advice and guidance services have collapsed in England, although I would argue they have been devalued in Scotland with too greater reliance on web based services. College regionalisation has come with significant cuts and it is too soon to judge its efficacy. The research also showed something of a disconnect on workforce development, particularly in ‘unsexy’ sectors like retail and social care. What the Scottish approach does provide is an ability to think collectively, rather than everything being left to the vagaries of the market.

Welfare to work and employability has similar challenges to the rest of the UK, with the concentration of disadvantage in geographical areas and amongst young people. While there was some support for the principles of welfare reform, the impact was actually adding to the barriers to getting people into work – not just getting them off benefits. The pressure is simply handed down to local services. There was a clear consensus in Scotland that there are problems at the bottom end of the labour market that will not be solved with benefit sanctions.

The research highlighted the importance of linking employability and health, strengthening employer engagement and more evidence of what works. There is a need to join up fragmented UK and Scottish provision and labour markets – a strong argument in my view for devolving many of these services. Not just to Holyrood, but also down to local level – recognising the risk of fragmentation of service and the loss of economy of scale. There is also a debate about how to incentivise employers either through the tax system or regulation.

On employment and the workplace, the report sets out the challenges including low pay, gender segregation and economic growth. The strength of the report is the focus on creating good jobs through job quality and design – with an understanding that employees are a source of innovation. There may be less clarity about how to make this happen, but options include using government as an exemplar and the use of procurement.

There is limited capacity in HR and organisational development and a less than cohesive employer voice, essential if the proposed social partnership model is to work effectively. Employer concerns about greater regulation and partnership in the research were more pragmatic than ideological. However, the White Paper model also requires a different model of capitalism in Scotland and there is little indication that the Scottish Government is ready for that radical journey. While there may be insufficient action on these issues in Scotland, none of this has even reached the UK government agenda! The research found that debates on the workforce in Scotland occupy a very different ideological space.

One conclusion is that whatever the outcome of the vote, much of the Scottish direction of travel is already fixed and unlikely to change. As the report says, “the new model is now on the table”, even if the detailed road map is missing. The Mather Commission may fill in some of the gaps.  It therefore remains open to debate if the proposals in the White Paper or greater devolution will remove the remaining barriers to progressive change.

Scottish Labour Devolution Commission

Scottish Labour’s Devolution Commission and the accompanying policy paper provides what has been long missing from the No campaign – a fresh vision for devolution. A vision that provides new powers, but just as important, a start towards setting the agenda for what Scottish Labour would do with new powers – powers for a purpose.

Two thirds of voters want more responsibility for Holyrood and that includes many of those who might vote for independence in September. It would be a disaster for the No campaign if it became a vote between independence and the status quo. However, a failure to reflect the views of most Scots on more devolved powers will be equally damaging if Scotland does vote No in September.

Those who have condemned the report generally support independence and so will never be satisfied with anything short of that. Others, like Reform Scotland, produced proposals that are either unworkable or addressing a right wing agenda that Scottish Labour wants no part of.

Probably the most important recommendations cover devolving additional powers that match existing responsibilities, enabling joined up policy approaches. This includes responsibility for work programmes, housing benefit and attendance allowance. The latter will resolve the loss of revenue to Scotland from free care for the elderly and enable us to address the challenges of an ageing population. Housing benefit would allow the Scottish Parliament to abolish the Bedroom Tax.

Equally welcome are proposals which would allow Holyrood to run the domestic rail network and put a much needed focus on health and safety. The administration of Employment Tribunals would enable us to address the shocking 79% reduction in cases since the introduction of fees that denies justice to thousands. Consumer advocacy is also a sensible devolution as is the enforcement of equalities legislation, something that is being undermined by the current UK government. Moving skills and careers from a poorly performing quango to local authorities is precisely what UNISON recommended at the last reorganisation.

There are other powers that UNISON will continue to argue could be devolved under the principle of subsidiarity and to enable joined up government, including energy, some immigration powers and public service pensions. However, strengthening the Calman proposal on partnership working between parliaments where there is shared responsibility is a sensible move.

Scottish Labour has rightly opposed full fiscal autonomy, particularly business taxes that will lead to a race to the bottom that will only benefit tax dodging companies. Assigning taxes such as VAT is pointless if parliament has no control over the level of tax. Raising 40% of the budget from own resources is not insignificant, particularly when you look at sub-central governments across Europe and the wider OECD. It will put Scotland higher than the Nordic nations, Germany and the USA.

The weakest part of the paper is around income tax. Varying the top rate is a neat political point, but the Scottish Parliament should have the power to adjust thresholds to better reflect the income spread in Scotland. Partly because we should use tax to redistribute income, but also to protect Scotland from the Tory plan to dismantle public services in England.

There is rightly a big recognition in the report of the constitutional role of local government. Devolution should not stop at Holyrood and the Scottish Government has presided over a growing centralisation of public services. ‘Scotland is our local’ may be the view of some in the SNP, but it should not be the approach followed by Scottish Labour. Some of the proposals in the paper need a bit more work, not to say clarity. However, that is rightly the role of the Scottish Policy Forum as they develop a new policy programme, informing the manifesto for 2016.

The report presented to today’s Scottish Labour Conference doesn’t go as far with new powers as I would go. It’s a similar compromise to the White Paper or any other political party proposals. However, it is much more radical on non-fiscal powers than many commentators have noticed. Of course, we should also remember that powers are only part of the story. There has to be the political vision to use them to create a fairer Scotland. The ‘Together We Can’ paper is a good start on that political journey. It’s even become known as the ‘Red Paper’ and has many of our ideas in it.

If nothing else, we now have a positive case for further devolution to measure against the case for independence.

IPPR report on welfare and the devolution offensive

In the midst of a political offensive on devolution, the IPPR paper on devolution of welfare is well worth a read. Not least because it reflects trade union and Red Paper Collective arguments on this issue!

The big beasts of Westminster have been queuing up in recent weeks – to at least appear to urge Labour to be bold on devolution. All while the Devolution Commission haggles over the fine detail of their report to be presented to conference next week.

Douglas Alexander entreated his colleagues in the devolution commission to, “range widely and to act boldly. That means in considering taxation, employment and skills policy, the responsibilities of the Crown Estate, the running of elections.”

Then Jim Murphy, not known as an enthusiast for greater devolution, made a speech saying, “further meaningful devolution to Scotland is compulsory”. All the more surprising after his sidekick, Ken Macintosh MSP, condemned further tax raising powers, claiming an income tax deal could lead to ‘independence by default’.

Then the biggest political beast of them all, Gordon Brown, weighed in this week with six changes including tax powers, he said:

“I believe there are six constitutional changes we have got to make for a better relationship between Scotland and the rest of the United Kingdom, to turn what I would call a unitary and centralised state of the past into a partnership of equals and one where there is power-sharing across the United Kingdom.”

I would also give an honourable mention to Menzies Campbell and the second report of the Lib Dem’s own devolution commission. I don’t agree with it all, but it is a positive contribution to the debate.

The IPPR report is interesting because welfare rarely gets much of a mention in the devolution debate. The key elements of their report include:

  • There is no strong argument for devolving those benefits which are core to the UK’s social union, including job seeker’s allowance, employment support allowance and the state old age pension.
  • Devolution of some aspects of welfare would not just supplement the powers of devolved governments, but would also improve social and economic outcomes in the devolved nations and enable the formulation of more joined- up public policy.
  • Housing benefit should be devolved, given how closely it is linked to other aspects of social housing.
  • The Work Programme should be devolved to enable a joined up approach to job creation.
  • Devolution of the childcare element of the working tax-credit is an option that would also boost the expansion of childcare provision.
  • Benefits that have a direct interface with devolved social services should also be devolved. This particularly applies to attendance allowance.
  • Devolved governments should be given a general power to supplement UK levels of welfare, so that they can use cash payments as well as other policy levers to deliver social policy.

Of course all of this is fine and dandy, but powers have to be for a purpose. As I put it in my Scotsman article on procurement this week, “So far so good. However, the real question is what’s the point in spending two years debating which powers should lie where, when we are not even brave enough to use the ones we have to build the progressive country we all say we want?”