A recent report by the Local Government Information Unit (LGIU) based on a survey of Scottish councils showed that local government finances in Scotland are in a critically poor state and confidence in their sustainability is critically low.
We are often told that things are better under the SNP in Scotland than south of the border. However, in his foreword to the report, LGIU Chief Exec, Dr Jonathan Carr-West says, “After years of despairing results from English councils, we had hoped that the Scottish survey might offer a more optimistic picture. Unfortunately, nothing could be further from the truth.”
Yet the public are generally positive about council services. A Survation poll in 2022 showed a high level of trust in public services So why is the outcry so muted when council services are cut. Especially when COVID demonstrated how essential council services are, particularly to our most vulnerable. Apart from general apathy, I wonder if it is in part because people see public services, including council services, as a drain on the economy. They think they only take money out of the economy rather than contribute. However, there is much evidence that public services are in fact a key lever for economic growth – the thing that governments purport to want. But you wouldn’t think that to hear politicians talking. Despite the fact that since the onset of austerity, council services have been cut to the bone, but economic growth has been very poor.
Despite the fact that cuts to public services have also had a knock-on impact on the private sector, especially small community based shops and businesses. Back in 2010 UNISON warned that for every public service job cut, one would go in the private sector. No one took us seriously but that’s pretty much what has happened, except good jobs in the private sector have been replaced by precarious work, low paid, insecure, zero hours contracts – including jobs like care work outsourced from the public sector.
The last decade has seen the slowest return to growth from any financial crisis. This was a predicted consequence of a policy of pay freezes, including in the public sector which eroded living standards and depressed demand.
It’s time to change the economic narrative. We know that investing in public services is a social good. Public services make civilised life possible. Most people accept that in relation to health care and the NHS is highly valued - though latterly that hasn’t protected it from real term cuts. What seems less well understood is that it is also true of council services.
What we really need to get across to the public, and in fact many of our union and party members and activists is that properly funding public services, including council services is not just good for communities, it is also good for the economy– they help generate local equity and prosperity and they promote economic growth.
For a start, public service workers pay their taxes. No chance for us to secure a hotshot tax accountant skilled in how to avoid paying taxes. Nope, even if we could afford such a thing, we Pay As We Earn. The more of us there are and the more we are paid, the higher the tax receipts. Then we spend in our local shops and businesses. We are critically important to our local economies. The international evidence is clear that lowering wage share depresses demand. Wage rises, particularly for the low paid, are more likely to be spent (and spent locally) than any other form of demand stimulus.
Given that three quarters of local government workers, the majority of whom are women, earn less (and often much less) than the average Scottish wage of £33,000 per year, that is significant.
And according to Audit Scotland, around 600,000 people work in the public sector in Scotland, which is over 20% of the total Scottish workforce. They are therefore a crucial contributor to the economy
But public services (including council services) are also a direct economic stimulus. Take the example of a council run care home. It provides a necessary service, and unlike private facilities, the public money going in is all spent on care, so there is more value for the public pound.
Additional to this, it can be a source of secure decently paid jobs. And we’ve already seen the benefits of that for the economy. Leaving care as a commodity leaves provision at the whims of a private equity firm dominated market – quite happy to cut corners, particularly on staffing to increase return – and likewise pull out or sell, dependent on returns.
Their interest is not in local communities but in profit for shareholders so money that should come back to communities is leached into offshore accounts. As I said, one of the things shown up by the pandemic is that we have seen what is, and who are, essential.
Any longer term social and economic strategy has to be built around these core services – not least because they will always need to be done, and always need to be done locally. There is more sustainability – socially, environmentally, and economically – in prioritising these areas. By core activities we mean essential goods and services like housing, utility supply, health, transport education and care. This foundational economy of branches and networks provides the infrastructure of everyday life. These serve our essential daily household needs, keeping us safe and civilised.
These can and should be at the centre of any future economic strategy. Investing in these sectors provides both longer term economic benefit and increased social resilience. Investing in these sectors will provide reliable incomes for workers, with returns that go into the community rather than offshore bank accounts. They are sectors less vulnerable to economic shocks and more reliable over the medium and long term.
The second vital reason for investing in council services is twofold. First of all is it is the right thing to do – children ought to be able to reach their full potential, everyone deserves a decent house and healthcare when they need it, libraries and parks enhance people’s lives… and having these services helps everyone – even those who are wealthy enough to decide they don’t need them.
Most people I’m sure agree with this but accept the prevailing narrative that they are unaffordable. Which brings us on to my second point - that cuts have been clearly shown to be a false economy. Not funding services properly costs more in the long run – and sometimes in the short run too. What we have seen over the past 12 years are failure costs down the line because of cuts to council services.
These are of course matters that go beyond balance sheets – but it is self evident that it costs a good deal less investing in properly funded children and youth services than it does keeping someone in jail.
The Promise was made to care experienced young people to improve the services they received to make sure that outcomes for them were better. It was based on the Independent Care Review and included a section called Follow the Money which properly counted the cost of failing to meet the needs of these young people whilst they were cared for by local authorities. They are over-represented in prisons, unemployment, early pregnancy etc and under-represented in further and higher education and what is euphemistically termed, positive destinations.
Follow the Money estimated that, quite apart from the human cost, the cost of services required by care experienced people as a result of the current ‘care system’ failures to be £875million per annum with a further £732million per annum lost as a result of the lower incomes care experienced people earn on average. Investing to make the care system fit for purpose would cost much less – a spend to save that would benefit young people enormously.
But although launched by the Scottish Government with much fanfare, the core investment needed for The Promise has never been made available, and the fund that councils can go to, to bid for money for projects to support them to keep “The Promise” has been cut by £11m in this year’s budget. So much for keeping “The Promise”.
The role of councils in mitigating the worst effects of child poverty has also been completely overlooked in the public eye and more widely. In Scotland almost one in four children live in poverty, according to the Child Poverty Action Group. Low incomes are clearly a factor in this as almost 70% live in families where someone works. Many of these parents will work in public services, so paying decent wages could have a significant impact on child poverty.
However, child poverty goes beyond family income – it is also about a lack of opportunity. Since austerity, significant cuts have been made to such things as music tuition and sports opportunities in school with some going entirely – clearly hitting the poorest pupils hardest. Cuts to services like libraries and community sports provision also affect our poorest citizens worst, and again deprive our poorest children of exercise and access to books and spaces to read and do their homework. These are the workers of the future, and this has traditionally been a route out of poverty for many - now denied them.
It says something about where the fifth richest country in the world has come to when campaigns, like the STUC Women’s Committee’s laudable free school meals campaign, are about ensuring our children have enough to eat, rather than access to the kind of opportunities more affluent children can take for granted.
There are many other areas where decent investment in council services (and indeed public services as a whole) would mean a spend to save. Decent primary care keeps people out of hospital; social care provision, publicly delivered, would get many older people out of hospital and into the community. That’s what we hoped a National Care Service would achieve but without significant investment and a commitment to take profit out of care, it will just be empty rhetoric.
Proper workforce planning in the NHS and councils would mean less reliance on agency staff, a direct spend to save that could see financial benefits, as well as improved services in the short-term.
I am aware that I am preaching to the converted here. We all understand both the challenges and the solutions: we get that investment in public services is essential for a civilised society and that far from being a drain on the economy, council services are a key lever for economic development and growth in the economy; we get that the money is there to do it – if we can wage wars we can provide decent funding to public services. The UK is the fifth richest country in the world.
We also know that proper investment at an early stage, whether for roads maintenance or children’s services, leads to savings down the line, but also improves wellbeing of communities and the lives of individuals and their families and we know that in Scotland, progressive taxation is one way to fund investment in public services.
The Scottish Government’s cynical and ill-thought through freeze on council tax has tied councils’ hands behind their backs and as Stephen Low has said in his article in ROSE magazine, it is being “"fully funded" in much the same way that the Titanic was “unsinkable.”
We are well past time for the review of council tax promised by the Scottish Government - yet another promise not delivered. It needs to be far more progressive to make sure that those who can afford it pay the most. Instead, despite the rhetoric, a simple freeze puts a higher burden on the poorest and a terrible burden on many councils.
The proposals to increase higher rates of taxation is welcome but has received much criticism in the media and from political opponents. Unfortunately, in the mind of the general public, we have lost the link between taxation and public services.
Back when I was a child I remember my dad, who was paying almost one third of his income in tax at that point, telling me that he didn’t grudge a penny because he knew that his children would get the medical treatment we needed, that we would get free education and his family would get one of the many council houses being built; and that he would be supported if he fell on hard times.
It was a social contract and one he was proud of, but that is long gone. People think that they do better paying less tax. It’s not true, but it is the prevailing narrative and itis one that we must also challenge. And of course the STUC proposals go much further than income tax, pointing out there are many opportunities to raise significant income through other taxes
So, what can we do to get these messages across? How can we work together on the left across our constitutional differences, whether on independence or the EU, to campaign together for well funded universally available public services within the context of resisting austerity and fighting for democratic control of the Scottish economy? How can we change the prevailing economic narrative on public services in the minds of our communities?
My own view is that on public services at least we need some simple key messages that everyone on the left can give at every opportunity and in every context.
It would be great if ROSE as an organisation and a magazine could champion these key messages as part of our overall political project. There are probably better ways to put these but the themes I have identified are:
- This country can afford decent public if everyone pays their share
- Investing in public services not only contributes to community wellbeing but creates economic growth
- Cuts to public services are a false economy that cost more down the line.
Because I think that all of us, whatever position we have on independence or the EU, can agree that change is needed now, change is possible now. And even with the Tory “big boys” in power south of the border, Scotland can and should be doing better.
This article is based on a speech given to the AGM of Radical Options for Scotland and Europe (ROSE). Kate Ramsden is the editor of ROSE magazine.