Tough choices

Budget time at Holyrood is probably the most important time in the parliamentary calendar.

In setting out where the billions of pounds will be spent over the following year, it is a chance for politicians to put their money where there mouth is and back up their proposed policies with the necessary funds.

The 2014/15 budget has even more resonance, it will be the seventh time the SNP has set out its spending plans, and in a year when the nation decides its own constitutional future, the Scottish economy is of course a vital issue.

And while the SNP has committed itself to growing the economy, lifting the country out of recession and creating more jobs, it has faced constant questioning from the opposition benches in terms of how successfully its plans are working, whether its commitments are affordable and, as September’s referendum approaches, how sustainable the country’s economy is.

Last summer, 18 months after he had quit as Labour’s leader in Scotland, Iain Gray was recalled to the front bench, replacing Ken Macintosh as shadow finance secretary, in a year when scrutiny of the Government’s economic policies is, arguably, more important than ever. And, Gray says, despite the SNP’s claims to put economic growth as one of its primary aims, their policies tell a different story.
“We’re six years into an SNP administration so we are both entitled to and it’s important to look at this year’s budget not just in isolation, but to look at SNP budgets across the piece to ask ourselves to what degree they reflect the things the SNP themselves say are important to them.

“In trying to get through and then recover from the recession, I think most politicians would agree that jobs and the economy have been or should have been a priority – but in any case, for the SNP, sustainable economic growth has always been a primary purpose. It’s what they talk about.
“We’re entitled to look at that budget and in the context of the budgets which have led up to it and ask ourselves to what degree we can see a strategy to actually create economic growth in Scotland.
“The truth is, we find it extremely difficult to actually identify that.”

He speaks to Holyrood on the day that the Scottish Government announces it intends to spend £114m on expanding free school meals and childcare provision, giving free meals to all P1 to P3 children from January next year and widening access to childcare for parents, coming from the Barnett consequentials of extra funding announced in George Osborne’s Autumn Statement.
Labour was critical of the plan, and an SNP press release issued on the day said Labour should be “ashamed for refusing to help vulnerable children”.

But Gray says the issue is an example of where the choices the ruling party make are not prioritising those that underpin economic growth.

“When the SNP came to allocate the consequentials from the Autumn Statement, given a choice between implementing a seven-year-old pledge on free school meals and delivering the first stage of their own childcare “transformation” immediately and in full, they chose to prioritise free school meals even though a greater expansion of childcare would have been the choice with greatest benefit on jobs and economic growth.”

Expanding childcare provision was a key part of the Government’s White Paper on independence launched last November, but at the time, Deputy First Minister Nicola Sturgeon said the full expansion could not happen until independence.

“Free school meals for primaries 1, 2 and 3 may be a desirable policy and a number of children’s charities have argued that it is a good thing. But we are in a time where spending is about spending priorities and that often does mean making a choice between good things because we can’t allocate the resources to both.”

The SNP’s argument on its childcare proposals is that it would only be post independence that the economic benefits, with more people being able to return to the workforce and contributing tax revenue, would come directly to Scotland rather than the UK Treasury.

But Gray says: “There’s a massive contradiction between what John Swinney would say is his key priority and his logic, the logic of the independence referendum which says, actually, economic growth only really matters to Scotland post independence because the benefits in terms of tax-take will flow to us.”
It is not just on this issue that Gray questions the SNP’s commitment to economic development – an early decision in 2007 to devolve support for new and expanding businesses, through means such as Business Gateway, he says has put extra pressure on local authority spending and squeezed the amount of money available to support economic growth.

“The more we look at the SNP’s actual approach to economic development and growth since 2007, the more it amounts to hoping for the best, claiming credit when there are improvements in any of the indicators that we judge this on – whether that’s an increase in GDP or an improvement in employment figures – and blaming it on the United Kingdom Government when they see a deterioration in any of those figures.

“The fact of the matter is, no matter how much John [Swinney] might claim credit for improvements in the unemployment rate over the last year – and it’s good that it has improved – the fact is there are still 75,000 more Scots unemployed today than there were when he took office in 2007.

“We need to get them back to work because it allows them to improve their lives and the lives of their families – but we also need to get them back to work because clearly those are 75,000 people who could be making a contribution to Scotland’s economic growth.”

Labour’s insistence that the SNP has not done enough to boost employment stretches back to the previous parliament – when the SNP was a minority administration and Gray was his party’s leader.

Then, in part reacting to Labour’s questions, the SNP appointed Angela Constance as its first Youth Employment Minister.

Gray welcomes the appointment and said the initiatives that have been undertaken have “probably been driven by Angela Constance” but he says it has been a “slow process”.
A particular source of criticism is the SNP’s commitment to maintain 25,000 Modern Apprenticeships. Gray says the programme is “one of the Government’s proudest boasts” but he is not convinced.

“One of the weaknesses, I think, of the approach that the Scottish Government take to creating employment opportunities and getting young people in particular back to work, is that they have an obsession with quantity rather than quality,” he says.

Gray questions whether with a reducing budget the Government can keep up the commitment – and adds that at least half of those 25,000 MAs are short-term apprenticeships.

“The time has come to look closely not just at the quantity of that apprenticeship programme, but also the quality of it.

“The programme itself is predominantly not made up of what I think the general public understand an apprenticeship to be.

“It’s not enough, in our view, to simply look at the top lines in the economic growth to claim credit when the indicators improve. We are not doing enough detailed work about the quality of the support we provide for economic growth – and in my view, one of the reasons for that is exactly because every debate about economic growth – like everything else, is viewed entirely through the prism of the independence referendum.”

When he was Enterprise Minister under the Labour Lib Dem coalition in 2002, he said there were “constant debates” in parliament on the economy, but says much of those issues are not debated now – instead, Gray highlights a debate on the Scottish economy in their first week back after recess where the government motion was “entirely about the degree to which Scotland being independent would boost the economy.”

Gray concedes that politicians “of all colours” can be guilty of the basic top-line numbers to make political points, but he insists Labour, both in Scotland and at Westminster, has been trying to go deeper.

“John has made great play of the employment rate in Scotland and it being better than the United Kingdom average and saying it is an indication of Scotland outperforming the rest of the UK.

“That’s fair enough, I’m not going to argue that the number of people getting jobs isn’t an important objective and measure of recovery – but we also have to look at the evidence that a significant proportion of those jobs are either part time, filled by people who want to work full time or poor quality jobs, in the sense of being zero-hour contracts, so without job security and without guarantees – difficult for people to build their family life on; or they are low paid jobs.”

He adds: “The Joseph Rowntree Foundation figures last year demonstrated that for the first time ever that the majority of families in poverty were working families.”

In the previous issue of Holyrood, John Swinney said his role was as much about wider social justice aims as managing public finances.

Gray agrees, but says: “Where I take issue with John is that when he has had choices to make which could address some of these issues, the choices he and his government have made have not always been the right ones.”

The Procurement Bill now going through parliament, he says, is the perfect vehicle to address issues such as ensuring all government contracts stipulate suppliers pay their staff a living wage, but he says: “Given the choice between cautious advice from officials and being bold and doing the right thing, John in this chooses caution once again.

“We don’t need to choose caution. In Wales, they have moved public sector contracts significantly so that a far greater proportion of the contract decision is taken on the quality rather than simply the price. We could do that and whatever John might say about the importance of addressing poverty and inequality, the decisions he has taken have dodged his opportunity to try and address that.”

Shadowing the Finance Secretary in a year when the economy is taking centre stage in the independence debate, Gray says he believes it is “entirely ironic” that the economic arguments for staying in the Union are in the Government’s own White Paper – maintaining a currency union, a single banking system, a British energy market and UK-wide funding for universities.

“The White Paper itself elaborates the key platform for building economic growth in Scotland in the 21st century and the key elements of that platform are elements which the White Paper asserts will continue because it is argued they are beneficial – usually the Government argues they are beneficial to Scotland and the United Kingdom.”

In a speech at the University of St Andrews, Deputy First Minister Nicola Sturgeon called on supporters of the No campaign to set out the positive case for staying in the Union.

Gray says: “I tell you this, after a No vote, the pound, the single British energy market, a single banking and financial regulatory services across the UK and a UK-based research fund will continue.
“Actually, the argument we make is a positive one, which says the economic platform Scotland needs is best served by remaining in the United Kingdom.”

He adds: “All these things that are important and have flowed from an improvement in the economy, not just jobs but better jobs – better paid, more secure jobs – all these things flow from economic growth.

“So one of the reasons we think the whole independence prospectus is so wrong-headed is that it will damage those prospects and it will be Scottish families who pay the price.”