Britain - What has devolution changed for Scottish workers?

Jan/Feb 2007

When the Scottish Parliament opened on 12th May 1999, Scottish Ministers pledged to "shape Scottish solutions to Scottish needs", to promote prosperity and fight poverty. All the new Members of the Scottish Parliament were agreed on the prospect of a better future for the Scottish people, pledging that the new Parliament would be open and accountable to the population.

At the next elections this coming May, the Scottish electorate will have had seven years to weigh up the results of having its own parliament with home-grown politicians. It remains to be seen what its verdict will be. But one thing is certain - these elections will not just be a judgement on the Labour/Lib-Dem coalition which has been in government since the beginning, but also on the record of the Parliament itself. So what is the balance sheet of devolution so far?

Devolution - an escape route from Tory policies?

The first referendum on devolution which was held in 1979 failed to get the support of the required 40% of the Scottish electorate. But after 1979, the balance of opinion tilted in favour of devolution, thanks to the long period in power of the Tory party. Throughout this period, Labour held a large majority in Scotland. The feeling that Scotland was not represented by the government in Westminster (in common with most English inner cities) was exacerbated when the poll tax was "tried out" in Scotland before being introduced in the rest of the country.

In the 1997 election, for the first time ever, there were no Tory MPs elected in Scottish constituencies at all. The illusion that having a Parliament of their "own" would be a way out of the impasse for the Scottish population was strengthened. Surely a Parliament which was not as remote as that in Westminster would be more responsive to their needs and concerns?

This ignored the fact that a Scottish Parliament, with more or less the same political parties as its southern counterpart, would be just as much pliable to business interests. Also, if they wanted proof of the contrary, they need look no further than Scottish local government. Not only had Labour-run councils not resisted the cuts imposed on local government by the Tories, but certain councils, like Paisley, which had been dominated by the Labour party for decades, had become bywords for rottenness and corruption. Nevertheless, despite people's cynicism for political parties and politicians, some enthusiasm was generated for the devolution experiment.

Labour's pre-1997 commitment to Scottish devolution was, above all, a populist move. One of Blair's first acts after Labour came into power was to hold referendums on the question. In Scotland, this time round, there was a 74.3% majority for creating a Scottish Parliament (44.87% of the electorate) and a 63.5% majority (38.24% of the electorate) for giving this new Parliament tax-raising powers. This was hailed as a triumph for the Blair administration in "democratising" British politics. Blair, never one to miss an opportunity for grandiose statements, declared that devolution would be the "salvation" of the UK.

But judging by the turnout in the 1999 elections for the first Parliament, the Scottish electorate was not entirely convinced of the potential benefits of devolution even then. The 2.3 million Scots who voted amounted to only 58% of the electorate - less than the 60% who had voted in the devolution referendum and considerably less than the 71% who had voted in Scottish constituencies in the 1997 general election. The lowest turnout was in Glasgow, where in six of the constituencies, less than half the eligible voters turned out to vote. So despite the hype which preceded the setting up of the new Parliament, it seems that there was a significant proportion of the Scottish electorate which did not hold out much hope for it, even before they had seen it in action.

In this first election, Labour gained 56 of the 129 seats - 9 short of an overall majority - and they have remained in control ever since, by forming a ruling coalition with the Lib-Dems.

By the time of the second elections, in May 2003, what initial enthusiasm there had been had already waned - just under half the electorate turned out to vote. Labour still held a majority with 50 seats, though both they and the SNP lost seats to smaller parties and independents. The latest opinion polls indicate that the Scottish National Party (SNP), currently the second largest party in the parliament may increase its vote - maybe even enough to overtake Labour.

Westminster in kilt

The Scottish Parliament is made up of 129 Members (MSPs), elected by a combination of the first-past-the-post system and Proportional Representation systems. Each elector gets two votes. The first is for a constituency MSP, elected on a first-past-the-post basis. The second is for a political party (or individual) standing within the region. There are seventy-three constituencies, with one MSP each, and eight regions, each represented by seven MSPs. Regional seats are allocated to parties on the basis of the number of constituency seats they win and the number of votes they receive in the second ballot. The seventy-three constituency MSPs and fifty-six regional MSPs all have equal status in the Parliament.

The Scottish Parliament has responsibility for social services and healthcare, local government, education and training, housing and transport, sport, law and order, farming and fishing, forestry and the environment, the arts and job creation. In addition it has the right to vary the level of income tax by plus or minus 3%, though these tax-varying powers have not yet been used. It has no powers to alter the rate of corporation tax, or other taxes, while defence, social security benefits, immigration and nationality, foreign policy and employment are all "reserved" for Westminster. Within its remit, the Parliament passes legislation and scrutinises the actions of the Scottish Executive, which is formed by the party (or parties) holding the majority in Parliament and is responsible for a £27bn budget, funded by general UK taxation, .

Ironically, ever since the Scottish Parliament has been in operation, the dominant party in it has been the same one as in Westminster - Labour - which just continued and extended the Tory policies which the majority of the Scottish electorate had voted against. In 1999, the SNP formed the opposition, with 35 seats, the Tories had 18 and the Greens and the Scottish Socialist Party won one seat each. The ruling coalition was not altered by the May 2003 election, although Labour lost 6 seats. Only the smaller parties made gains in this election - the Greens increased their seats to 7, the Scottish Socialist Party to 6 and the Scottish Senior Citizens Unity Party won a seat for the first time.

Despite the fact that Labour has not had an overall majority in the Scottish Parliament and was obliged to form a coalition government, it is hard to find significant differences between the legislation passed there and that passed in Westminster. The main planks of Labour's policy in the rest of the UK, no matter how unpopular, have been implemented in Scotland too - for instance, pressing ahead with privatisation in the public sector, mostly by means of PPP and PFI.

Even when the Lib Dems have tried to make political capital out of opposing Labour on an unpopular policy, it has made little difference. For instance, the Lib Dems have a clear policy against tuition fees for higher education, so this was one issue over which Labour could not expect an easy ride. But despite the "battle" over tuition fees, the Scottish Parliament did not abolish them in Scotland. Though up-front fees were abolished in 1999, Scottish universities still charge tuition fees and in 2004, legislation was passed to allow them to set the level, within limits. For Scottish students, the fees are paid by the state but, like student loans, the money has to be paid back. Other UK students who choose to study at Scottish universities have to pay the tuition fees, just as they would if they studied elsewhere in the UK. This policy obviously leaves the door open for tuition fees to be introduced for Scottish students too, some time in the future.

As for social policies, they are mostly in line with what has been happening in Westminster. Officially, since 1998/9, the number of children living in poverty in Scotland is said to have fallen by about a quarter, the same reduction claimed for most regions of England and Wales, apparently not due to any measure other than Brown's "tax credits" - the same claim made elsewhere in the UK. Likewise, Brown's Pension Credit is supposedly the reason for a similar fall in the proportion of pensioners living in poverty. However, among working-age adults in Scotland, without dependent children, the poverty rate has risen from around 15% in the mid-90s to 18%, despite the fact that official unemployment is supposed to have gone down.

In 2005-6, 56,811 households made homeless applications to their local Scottish councils, which was a rise of 5.3% on the previous year. In fact, the number of households accepted by councils as homeless or potentially homeless has risen by 22.8% since 1997-8. In 2003, legislation was passed which will oblige local authorities to house every homeless household by 2012, instead of only those in "priority need". However, the way in which they intend to increase the supply of affordable housing and to prevent homelessness in the first place, which will be vital if the 2012 target is to be met, has not been made clear by the Executive.

The only major difference with Westminster, was the introduction of free personal care for the elderly. Whereas elsewhere in Britain, "personal" care for the elderly was separated from medical care, and became chargeable, in Scotland, legislation was passed in 2002 to entitle everyone over 65 to free personal care, if they were assessed as needing it. What the Executive failed to do, however, when passing this legislation, was to give local councils, who were responsible for providing this service, the extra money to do it. The result was that there were waiting lists in half of local authorities - elderly people were left waiting for months for an assessment, or, having had an assessment, had to wait for the service to actually be provided. In March 2006, there were 5000 people awaiting the free personal care they needed. Besides, the formulation used in the legislation is so open to interpretation that there have been cases of local authorities assessing people as not needing help, who clearly do, and discrepancies between one authority and another over exactly what is and is not covered.

Even when politicians attempt to bolster their images with a pinch of nationalism, by some new Scottish statute, they do not even manage to make it worthwhile for Scottish workers. So, on 29 November last year, the Scottish Parliament legislated to turn St Andrew's day, November 30, into a "national celebration of Scottish identity and culture" and November 30 was added to the bank holiday schedule. However, it was left completely open to employers whether or not to grant their workers a holiday - and if they do make it a holiday, they are free to make an existing bank holiday a working day in return!

From MSPs turned property speculators... to "Follyrood"

The use value of the Scottish institutions may not be obvious, but their cost is very real. The Edinburgh Evening News calculated that political personnel (including councillors, MSPs, MEPs and community councillors) cost the inhabitants of the city £3.8m per year. For Liverpool, the English city closest in population to Edinburgh, the figure is £1.5m.

Most of the extra cost is down to Edinburgh's MSPs - and no wonder, because they do not come cheap. When deciding what MSPs should be paid, the Senior Salaries Review Board (which sets the pay of senior civil servants and MPs) concocted an assessment which concluded that MSPs were "worth" 86.5% (later upped to 87.5%) of their Westminster counterparts. The salary of an MSP worked out, in 1999, to £40,092 a year. It has since risen to £52,743 - but the various positions on offer have even higher rewards - from £129,145 for the First Minister's salary down to £77,568 for junior ministers.

To most people, this would seem more than generous. But apparently MSPs thought they could not possibly manage on their basic salaries alone. It took no time at all before the brand new Scottish Parliament displayed the characteristics of its more mature counterparts.

The first thing MSPs decided was that prayers would be said before each plenary session. And straight after that, they got down to real business. On June 8th 1999, even before the official opening on July 1st, they discussed the issue most pressing to them, if not to their constituents - the thorny question of their allowances. So much for the hopes that the "Scottish-ness" of this parliament would somehow make it different from any other! They agreed that MSPs who lived more than 90 miles from Edinburgh could claim an allowance for staying there.

This has been a running sore ever since, with some MSPs, including ministers in the executive, Labour and Lib-Dem, claiming the maximum allowances (nearly £10,000 per year) towards mortgages on swanky properties in the smartest areas of Edinburgh and then speculating on rising property prices by selling on and buying up. There was also the case of the MSP who bought a house in Edinburgh in his son's name and then claimed the allowance for "renting" it.

As for pensions, MSPs enjoy the same generous arrangements as MPs. And, just like their counterparts in Westminster, they had no qualms at all about down-grading the benefits of the local government pension scheme, while never dreaming of applying the same ruthlessness to their own scheme.

Another financial scandal which has dogged the Scottish Parliament is that of the new Parliament building at Holyrood - or "Follyrood" as it was dubbed by the political opposition. When MSPs voted (narrowly) to fund a brand new building in the centre of Edinburgh to house the Parliament, the cost was estimated (thanks to some sleight of hand) at £50m and it was supposed to be operational by 2001. As delay followed delay, the cost increased exponentially. When it finally opened in 2004, the price tag was £431m.

MSPs must have hoped this would be the end to the embarrassment but there was to be another episode to this farce. In March 2006, a beam in the debating chamber came loose while the Parliament was in session. The building had to be evacuated and given a thorough structural check before the MSPs would venture back inside.

Business as usual

That politics in the brand new Parliament was going to be carried on in the same old way was shown within a few months, when an undercover Observer reporter exposed the lobbying activities of PR firm Beattie Media.

Before the Scottish elections took place, Beattie Media had employed Jack McConnell, then General Secretary of the Scottish Labour Party, to set up its lobbying arm, in the confident expectation that he would not only be selected for a safe Labour seat in the new Parliament but would get an Executive position. Sure enough, McConnell became Finance Minister in the first Executive. His parliamentary assistant, Christina Marshall, daughter of a Labour MSP, was also a former Beattie employee, and, for good measure, they also employed the son of George Robertson, who at that time was Blair's Defence Secretary. McConnell himself took the precaution of leaving his job with Beattie 6 months before he was elected and was replaced by Kevin Reid, who had no previous lobbying experience but did have the advantage of being the son of the then Secretary of State for Scotland, John Reid (who, of course, has now risen to become Home Secretary).

When the Observer journalist, pretending to represent an American firm interested in contracts in health and education, caught Kevin Reid and senior Beattie executive, Alex Barr, on film, boasting about their privileged access to Labour Ministers, it caused something of a scandal - dubbed "Lobbygate". There was an investigation in Parliament but, eventually, all the ministers named by the lobbyists were absolved by the then First Minister, Donald Dewar.

Despite the stir at the time, none of the parties involved suffered setbacks in their businesses or careers. Jack McConnell became First Minister in 2001, a post he has held ever since. And both the BIG partnership, which includes Alex Barr among its directors, and Beattie Media itself have been major winners in the scramble for lucrative PR contracts handed out by Scottish Enterprise and other Scottish public bodies since.

Bureaucracy rampant

The Parliament itself is only the tip of the iceberg, as far as the bureaucracy which has accompanied devolution goes. A large chunk of the British Civil Service has always been devoted to Scotland and the Scottish Office (which currently employs around 49,000 civil servants) had been moved to Edinburgh, as a gesture by the Tories to the Scottish middle class, before the Parliament came to existence. But the creation of the Parliament has led to many more job opportunities for professionals. The number of civil servants working for the Scottish Executive is 4,400 and in addition to this, there are 11,400 staff working for Executive Agencies (ie quangos) - a total of 15,800 (and an increase of 4,300 since 1999).

Scottish quangos pre-dated the Parliament too, of course, but since it was set up, they have grown and grown - despite ministers continually vowing to reduce them. In 2002-3, quangos accounted for £7.8 bn of public spending in Scotland. In 2007-8, this figure is set to rise to £12.3 bn, meaning they will out-strip by far spending by the Scottish local authorities (£8.1 billion) and health spending in Scotland (£10.3 billion).

In the early days, Henry McLeish (former First Minister) famously pledged a "bonfire of the quangos". Maybe the Executive is still building this bonfire, since the number of quangos which now come under it has risen to 144, from 38 in 1999. Sitting on top of this mountain are 790 "quangocrats" - appointed to the boards of these bodies, sometimes at substantial salaries. When the Parliament was set up, Scots were encouraged to "Play a Part in Changing Scotland" - the idea being that a broad spectrum of people, not just the usual suspects with the right connections, would run the various quangos. In the event, it was cronyism and business interests which played the main parts, unsurprisingly.

There is a long list of current and former Labour councillors and Parliamentary candidates sitting on quangos - including one who, between himself and his wife, managed to get part-time quango posts worth nearly £86,000 a year in total. And, to pick another example, Campbell Christie, former head of the Scottish TUC, picks up £22,000 a year from sitting on two quangos. No wonder the STUC is such a firm supporter of the Scottish Parliament - even if the main achievement of their "partnership" over the last six years is, apparently, the legislation banning smoking in public places...

Enterprising at helping themselves

Scottish Enterprise, the largest quango, is a case in point. Its brief is to promote economic development in Scotland - aiming to create, in the Scottish Executive's "vision", a "Smart, Successful Scotland". It existed before the Parliament was opened and was always a political battleground, thanks to the funds it commanded. Now, with an annual budget of £500 million and 2,000 staff, it is even more so. As one insider described it: "For some people, we're just a big jam jar with £500 million in it, and they can't wait to dip their hands in".

The current chair of Scottish Enterprise, Sir John Ward (who is paid a salary of £38,055 for one and a half days a week), is chair of the board of Dunfermline Building Society and of European Assets Trust NV. In the past, he has been head of CBI Scotland, the bosses' organisation, as has Scottish Enterprise's chief executive, Jack Perry. John Ward has also chaired other quangos, like Scottish Homes, the Scottish Qualifications Agency and the Quality Scotland Foundation and is currently a Trustee of the National Museums of Scotland. Last year, Scottish Enterprise, which is supposed to advise businesses on "best practice", caused a scandal when it overspent its own budget by £34m. Despite this, and despite vociferous public criticism from the SNP, John Ward was recently reappointed for another two years.

Scottish Enterprise Glasgow (SEG), an arm of Scottish Enterprise, used to be chaired by a senior vice-president of Thales International, a French company, which is also the UK's second largest defence contractor. Now it is chaired by William Haughey, owner of a Glasgow firm called City Refrigeration Holdings (CRH) and a major Labour Party donor. The headquarters of CRH happened to be in the path of the M74 extension. Haughey was paid around £14 million for the land on which it stands, despite being told initially that he was entitled to only £7.5 million in compensation. He also got a Regional Selective Assistance grant of £2.4 million, supposedly to keep the company in Glasgow. Then SEG, the body he chairs, awarded him £970,000 to acquire land for a new HQ. The £1 million he has donated to the Labour Party since 2003 seems like money well spent!

Smart, successful state parasites

But what of Scottish Enterprise's stated purpose - Scotland's economic development? While the claimant count has gone down in Scotland in recent years, it still remains higher than in the rest of the UK: 6%, as opposed to 5%. And in some areas of Scotland, it is much worse. Glasgow is the worst of all. The employment rate there in 2005 was only 66%, compared with 75% for the rest of Scotland. And wages remain low, relative to most areas of the UK. In three Scottish regions - Dumfries and Galloway, Clackmannanshire and Moray - more than 30% of all employees are paid less than £6.50 per hour.

Much of what Scottish Enterprise does is, done in the name of creating jobs in Scotland. When in 2001, BAE Systems, Europe's largest aerospace and military company and owner of the two remaining upper Clyde shipyards, Govan and Scotstoun, announced 1000 compulsory redundancies, out of a 3000-strong workforce, the Scottish Executive responded immediately. The Clyde Shipyards Task Force was set up, bringing together representatives of the company, the trade unions, the Executive, Scottish Enterprise, Glasgow council and other "partners". This body claimed the credit for having "persuaded" BAE to halve the number of redundancies to "only" 500, which it hailed as a success story for Clydeside.

It was certainly a success story for BAE. It was awarded the role of lead contractor, responsible for project and ship-building management, in a £10 billion contract to build and maintain two gigantic new aircraft carriers - the largest naval contract ever awarded by the MoD. Though the contract was divided between several defence suppliers (French defence giant Thales was chosen to provide the design, building was shared between BAE, Vosper Thorneycroft and Swan Hunter and final assembly will be carried out at Rosyth shipyard, owned by Babcock BES), BAE obviously did very well out of the deal. Their profits have since climbed spectacularly - to £1.1 billion last year. Babcock, though a much smaller player, is also doing well. They increased their profits by a quarter last year, to £44.6 million - not that this stopped them from cutting jobs. Around 1700 jobs - over half the workforce - have been cut at Rosyth since 1997, including 300 in 2005 and a further 92 last year.

Scottish Enterprise also hoped that nursing an expanding electronics industry would make up for the decline in the older manufacturing sector. However, the so-called "Silicon Glen" has suffered the same fate as traditional areas of Scottish industry. The export output of Silicon Glen peaked at £11.2bn in 2000 but had declined to £6.2bn by 2004. Thousands of jobs in electronics manufacturing were lost over this period. Last year too, the job losses were heavy. Sanmina-SCI, which took over some of IBM's manufacturing, closed its Greenock factory which employed 300, having closed its Irvine factory, with 200 workers, in 2002. Inventec stopped producing servers at its plant near Glasgow with the loss of 370 jobs and HP cut 200 jobs at its Erskine factory in September. Even worse, Lexmark closed its inkjet cartridge factory in Rosyth, with the loss of 700 jobs. Lexmark had received nearly £12 m in state subsidy over 10 years and decided to shut up shop shortly after the funding incentives ran out, rubbing salt in the wound by announcing a quarterly profit of £46m on the same day as it announced the closure of the factory.

But there are still some growth areas - like call centres, attracted to Scotland not just by the availability of cheap labour but also by generous Regional Selective Assistance grants, handed out by Scottish Enterprise. By the beginning of 2006, there were more than 300 call centres in Scotland, employing over 60,000 workers (2.3% of the total workforce). But as well as paying poor wages, they do not exactly provide secure long-term employment either. The overall number of call centres has continued to grow but many have been closed as well. Undeterred, last year alone, Scottish Enterprise doled out £7.5 million to Dell to establish a call centre employing 850 people, £7 million to O2 for a call centre which would employ 1,522 people and £1.8 million to Response Handling Ltd, for an expansion to its existing call centre, creating 500 extra jobs. But they failed to prevent travel company Thomson deciding to close their call centre, with the loss of 450 jobs - just 2 months after their £1.4 million funding deal finished.

An extra cover for capitalism

The devolved institutions have been undoubtedly successful at creating jobs for the privileged layers of Scottish society. Devolution has provided a layer of the Scottish middle classes with many more lucrative positions than they enjoyed before, and many more opportunities for lining their own pockets (all the more important in a country where the majority of jobs are in the public sector). Plus it has given business another avenue for accessing the funds of the state. But for the majority of the population, and in particular for the working class, it has brought no protection from the profit system - nor was it meant to, of course.

Not that decentralisation in itself is a bad thing. Quite the opposite. No effective control can be exercised by the working population over political or economic matters, without a large degree of decentralisation in the operation of society, not just at the level of a region like Scotland, but also down to the level of a small town or a suburb.

However, reproducing a mirror image of the corrupt Westminster establishment and institutions, as devolution has done in Scotland, and as it is all too often the case in local authorities, does not allow such a control. The population's control can only be effective if it is exercised collectively and democratically, directly whenever it is possible, or, when it is not, through elected representatives recallable by voters at any time if they so wish.

The problem with Scottish devolution, though, does not lie only with the institutions themselves but rather with the profit system, which means that their function can only be to hide the real workings of profit from the scrutiny of the population. No decentralisation, in this context, can put the population in the driving seat. Nor can it make politicians more accountable, as long as their first priority is to serve business interests. Rather, the various institutional layers created by devolution act as a kind of Russian doll system, one within the other, which makes it more and more difficult for the population even to know what is really happening, never mind to exercise any control. Because under capitalism, this is precisely the purpose of the state machinery and its bureaucracy.