WIG call public meeting to debate council budget crisis

Local campaigners the Womens Internation Group (WIG) are to hold a public meeting to discuss the city council’s budget crisis. The event will take place in Royston Wardieburn Community Centre tomorrow (Tuesday 9 December) at 6.30pm. All welcome.

Council Cancels Christmas flyers 4

Full details of the event will follow when we have them, but here’s some background to where we are and why the local meeting has been called:

Last week public spending watchdog the Accounts Commission expressed concern over Edinburgh’s budget control – the city council must find savings of of £138m by 2017.

The Accounts Commission said Edinburgh needs to develop a comprehensive strategy for managing its staff – and on Friday it was revealed that city councillors are to discuss radical new proposals for service provision at Thursday’s full council meeting.

The council’s last major internal reorganisation in the 2000s saw the creation of ‘super departments’ – Education and Social Work were merged to become Children and Families, while roads and pavements, environmental services, housing, refuse collection and trading standards all became part of the remit of a huge new Services for Communities department.

As well as delivering a ‘joined-up’ approach, those new structures were introduced to devolve more power and decision-making to front-line staff to address new community planning arrangements.

Now, following a comprehensive review and facing severe budget pressure, Chief Executive Sue Bruce has produced a new blueprint to restructure the Council’s operations and it’s thought that hundreds of middle manager posts could be under threat as part of the proposed reorganisation.

Councillors will debate the proposals on Thursday before they go out to consultation with unions – the council currently operates a policy of no compulsory redundancies.

Council Leader Councillor Andrew Burns said: “It’s essential that we transform how we deliver council services to an ever growing number of residents, focusing more on their priorities while addressing the significant financial challenges we face.

“A further report from the Chief Executive makes the case for delivering services through four ‘localities’, or neighbourhoods, giving front-line staff the ability to make decisions more suited to the local community and their particular needs. It also outlines a proposal for creating a ‘Business and Customer Services’ corporate centre which would provide the necessary guidance and support.

“Councillors will be asked to select one from three models outlined in the report, following which consultation with staff, Trades Unions and relevant partners will begin.”

Councillor Burns also urged citizens to have their say on Edinburgh’s budget. He said: “Over the past two months, we’ve been inviting views on how we invest and save money. The consultation has attracted significant attention, with over 1,400 people completing our budget planner online, and a further 300 submitting comments by post and email. This is already more than four times the number of responses we received last year.

“Last week, attention turned to our Question Time event, giving members of the public the opportunity to quiz our panel of senior councillors on the budget proposals that mattered to them. It was a lively debate with the Chair, Evening News editor Frank O’Donnell, taking contributions from the floor and from those watching at home. Archive footage of the event is available to view on our website.

“Please take the time to have your say on the proposals, if you haven’t already. The consultation period runs until 19 December, and we will consider all feedback prior to setting the final 2015/16 Budget in February.”

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For better or worse? Mixed views on Autumn Statement

Predictably mixed opinions over the Westminster government’s Autumn Statement yesterday. Scottish Secretary Alistair Carmichael says Scotland is strengthened by the announcements but the Holyrood government says Scotland’s poor will pay the price for further austerity measures.

The Scottish Government will benefit from additional funding of £213 million through to 2015-16 as a result of spending decisions taken by the UK Government at this Autumn Statement, bringing the total amount of additional spending power granted to the Scottish Government since 2010 to over £2.3 billion.

That’s good news for Scotland, said Scottish Secretary Alistair Carmichael MP. Speaking after the Chancellor’s announcement, Mr Carmichael said: “This Autumn Statement sets out the next steps in the UK Government’s long term economic plan to secure a sustained recovery and a more resilient economy. By backing businesses, helping more people into work and supporting families in communities across the country Scotland is benefitting from the action we are taking to help our economy grow.

“These measures will give the Scottish Government an extra £213 million of spending, taking the total of additional spending power to over £2.3 billion since we came to office. This means they can crack on and spend more money such as on funding for the NHS, more childcare places or more funding for schools or colleges.

“Scotland chose to retain a shared currency, pensions, single market and the economic stability and security that comes from being part of the UK. With more funding provided to the Scottish Government today and more powers and great responsibility for the Scottish Parliament on the way, Scotland is strengthened by today’s Autumn Statement.”

Not so, according to Holyrood’s Finance Secretary John Swinney. The Deputy First Minister said today that Scotland is continuing to pay the price of UK Government’s austerity agenda .

In his autumn budget address Chancellor George Osborne admitted to the House of Commons that the Government had missed key targets on economic recovery. In the last substantial finance statement before next year’s General Election, the Chancellor confirmed that his forecasts on deficit reduction were off target, with borrowing higher and tax revenues lower than expected. More austerity, to ensure future prosperity, was the government message.

Finance Secretary John Swinney warned that the Chancellor’s decisions were continuing to hit the poorest in our society hardest with the Treasury confirming that those in the lowest 20% will face some of the hardest impacts of the austerity plan.

The majority of spending announcements simply recycle existing money meaning the Scottish Government will receive around £200m in Barnett consequentials. This makes up only 8% of the £2.7bn of real terms cuts that have been removed from Scotland’s budget since 2010 and have taken 25% of Scotland’s capital budget.

Commenting on the Autumn budget statement, John Swinney said: “The Scottish Government is focused on securing economic growth, tackling inequality and protecting our public services. The Chancellor’s budget fails to pass the test on all of these measures.

“Today’s budget shows the failure of the UK Government’s austerity policy and it is clear that we in Scotland are paying the price. In 2010 the Chancellor embarked on his austerity programme and instead of putting the finances on a sound footing we are seeing borrowing this year of over £50bn higher than expected, lower tax revenues and austerity extended by atleast a further two years.

“Just last week I wrote to the UK Government to ask them to use the Autumn statement as an opportunity to ensure that the benefits of economic growth are not only sustained but are made accessible to all. The Chancellor has not listened.

“The lowest earning households in Scotland will be among the hardest hit by the UK Government cuts.

“And while the Chancellor gives Northern Ireland the power to cut corporation tax his government is continuing to block the job creating powers Scotland needs.

Commenting on the Barnett consequentials which will come to Scotland as a result of today’s announcements, the Finance Secretary said: “Additional spending for Scotland is always welcome but the consequentials of around £200m we have received today cannot compensate for the £2.7bn of real terms cuts we have faced since 2010. And with a further £25bn of cuts in the future the Westminster Government is locking Scotland into austerity against our wishes.

“The £125m of consequentials we have received from frontline NHS spending in England will be passed to Scotland’s NHS as they have been in every year of this parliament.”

One-stop money advice service portal launched

Credit Unions play key role in tackling debt

A new Financial Health Service offering a one-stop-shop for money advice services has been launched by Business Minister Fergus Ewing. Scotland’s Financial Health Service website provides links to a range of organisations offering information and advice on debt, managing money, housing, homelessness and ethical lending.

A key part of the new website is a Financial Education module which aims to help people to manage their money to stop any future problems.

The website also allows users to search for their local credit unions and find out about the products offered by them, and to search for approved money advisers.

A new law, the Bankruptcy and Debt Advice (Scotland) Act, which comes into force in April 2015, ensures appropriate debt relief and management and includes mandatory provision of money advice.

Launching Scotland’s Financial Health Service in Edinburgh yesterday Mr Ewing said:

“It is important that we take action to help those people in Scotland who are struggling under the burden of debt. We have developed Scotland’s Financial Health Service because we must ensure that people who need to access debt and budgeting advice, do so easily with credible sources.

“Last year, the Accountant in Bankruptcy’s ‘12 Days of Debtmas’ campaign targeted people who may get into financial trouble over the festive period by using high interest, short-term credit.

“During the six months between October 2013 and March 2014 – during which time the ‘12 days of Debtmas’ and ‘Helping Hand with debt’ campaigns ran – 14,307 new members joined credit unions in Scotland. This is a 4.2 per cent increase in total membership.

“People across Scotland can join credit unions – all sorts of people from all walks of life use credit unions to save and borrow responsibly, and the most successful attract a diverse membership.”

Welcoming the launch Paul Walsh, CEO of CUNA Mutual said: “With the ever widening protection gap continuing to spread – leaving 86 per cent of Scottish residents in trouble if their income was lost – it is vital that the right support is provided to those who become financially vulnerable.

Initiatives like this government website, supporting those shouldering the burden of debt, are imperative alongside the practical credit and protection solutions offered by credit unions throughout Scotland. “The credit union movement in Scotland both funds and protects thousands of Scottish residents and has become a solid part of the Scottish financial community.”

ABCUL Scotland Policy Manager Frank McKillop said: “Since Scotland’s first credit union was founded in 1970, generations of volunteers, directors and staff have been focused on helping people in their communities and workplaces to get on top of – and stay in control of – their finances.

“By encouraging a responsible approach to saving, borrowing and budgeting, Scotland’s credit unions are well placed to play their part in building the nation’s financial health.”

The Edinburgh Budget Crisis

Balancing Edinburgh’s budget isn’t a game, writes Granton and District Community Council secretary DAVE MACNAB:

The council is on record that it needs to save £67 million from the budget over the next three years.

Whilst they have been encouraging citizens to complete the ‘budget challenge’ – the real information is not in the ‘playing’ of the budget game (this just shows that difficult decisions are sometimes needed) but within the proposals that are on the ‘table’.

This is where the reality sits. This is what could be in store for the citizens of Edinburgh if we sit back and wait for it to happen.

The cuts are real.

There will be reductions in the service. Things will stop being done.

A brief glimpse at what could happen – based on information taken from the Council budget web site and meetings:

Education Welfare Officers cut from 18 to 16 (jobs lost)
Community Centres – the budget proposals states:

“redesign the service to meet local needs using co-production models”.

Now you may be wondering just what that means.

At a meeting for Community Centre management boards on 20 November we were told that this could mean setting up social enterprise models that need to make a profit, owned and managed by the community or other self-financing models.

Do the current management boards have the capacity and capability to undertake these roles? The audience at the meeting was not convinced.

There is no point talking about empowerment if there is no investment in the people within the communities who will be asked to undertake this type of ‘work’. And it is work – it is no longer volunteering – it becomes a business model that needs accountancy skills so that the books are balanced, people who know employment law if they are to employ staff directly, business managers to project plan the activities.

What would be the role of the current staff in the Centres if it was decided to go down a particular business model route? I don’t know – so many unanswered questions.

Leisure Centres (e.g. Ainslie Park) the report highlights “It is likely that the scale of the reductions identified may lead to facility closure”.
Staff – there is a hope to reduce sickness absence across the council workforce. There is an irony here. As posts are not filled and a recruitment freeze – this of course puts pressure on those in jobs, thus increasing their levels of stress and of course increasing levels of sickness absence!
Parking charges – increase in permit and on street charges
Increase in charges for allotments
Close public toilets – Granton Square to close?
“Proposed to accelerate and extend the development of the ‘Living Landscapes’ approach” – or put another way – let grass areas grow wild.
“Five libraries recategorised leading to a reduction in opening hours in Piershill, Corstorphine (from 51 to 42 hours) and Sighthill, Granton and Kirkliston (from 42 hours to 32 hours).” Cut in library hours.

This is the reality of the situation.

Spending on public services in Britain is set to fall to the lowest share of national income since 1938 which is a sign of how dramatically the UK government’s austerity programme is reshaping the state. The Child Poverty Action Group stated in August of this year that “more people are income-deprived in Edinburgh than in any other local authority area except Glasgow and North Lanarkshire”.

Two-fifths of adults aged 45 to 64 with below-average incomes have a limiting long- term illness, more than twice the rate for adults of the same age with above-average incomes in areas of economic deprivation – of which north Edinburgh has its share.

To mitigate some of the worst excesses of the impact of poverty and exclusion the council advocates that Community Learning and Development (CLD) will play a “pivotal role” (a direct quote from a council paper). Yet at the same time this part of the organisation is hit with a budget cut of over £2million. So how do you square this with the intention towards getting rid of poverty?

It is all very well suggesting that there can be an increase in volunteering opportunities – but do the volunteers have the necessary skills to deal with and help break down social isolation amongst adults and young people – it’s not just a case of turning up.

We need to be clear on what we want to save. What is worth preserving.

We can sit back, have fun playing the ‘budget’ game and hope for the best. Or decide that these services are our services. That the libraries are our libraries. The Community Centres and Leisure Centres are ours. That we will do something about it.

We will be campaigning to raise awareness on what is at stake and giving you an opportunity of having your say. Tell your councillor. Go to your respective Community Council meetings, go to public meetings and get your voice heard.

Dave Macnab

Community Councillor – Granton and District Community Council

www.grantonanddistrictcommunitycouncil.com

Contact nabs89@blueyonder.co.uk

Homebuyers could be in for Swinney budget boost

A new tax to replace stamp duty could be a bonus for homebuyers when Finance Secretary John Swinney sets out the Draft Scottish Budget for 2015/16 today. He is expected to focus on polices which will help to make Scotland a more prosperous country, tackle inequality and protect public services.

Scotland’s economy has returned to pre-recession levels, but the Scottish government says today’s budget will be set against the context of Westminster cuts by around 10 per cent in real terms over five years and capital spending cuts of over 25 per cent.

The budget will also include proposed tax rates and publish tax receipts forecasts for the first time, ahead of the Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT) coming into force on April 1, 2015.

Speaking ahead of his statement – in which he will indicate that Scotland is in a new phase of economic and political debate – Mr Swinney said: “We have seen a strengthening of Scotland’s economic performance over the last two years and currently have record levels of employment.

“However, major challenges in the economy still remain, compounded by the fact the public finances are under such pressure by the UK austerity programme.

“This budget follows unprecedented levels of political engagement not only on Scotland’s constitutional future but the wider priorities of the people of Scotland.

“What will lie at the heart of the budget will be a determination to make Scotland a prosperous and fairer country where the benefits of economic growth are not only maintained but are shared by everyone.

“Many of these aspirations will be taken forward within the budget and also within the setting of tax rates. The Land and Buildings Transaction Tax is the first tax created by the Scottish Parliament since before the 1707 union.

“The budget is a major landmark in taking forward the Government’s programme and is also a historic opportunity to set new tax rates for Scotland.”

Pensions: millions to benefit from impartial advice

Millions of people will benefit from a right to free and impartial guidance on how to make the most of the new pensions choices that come into effect in April 2015, Chancellor of the Exchequer George Osborne announced today. This follows the Westminster government’s consultation on how best to deliver the radical changes to how people access their pensions announced at the Budget.

In total 18 million people will be able to benefit from the changes to pensions should they wish to do so.

From April 2015 300,000 individuals a year with defined contribution pension savings will be able to access them as they wish when they turn 55 – subject to their marginal rate of tax.

This is the biggest change to how people access their pensions in almost a century, removing the effective requirement for many to purchase an annuity.

The consultation since the Budget has shown that these changes have been overwhelmingly well received, with individuals supporting greater freedom and choice, and the pensions and insurance industry ready for the challenge of creating new, flexible products, which better suit individuals’ needs.

The government’s response to the consultation today confirmed that:

the guaranteed guidance on pensions choices will be provided by independent organisations rather than pensions schemes or providers
even more people will be able to benefit from the new pensions flexibilities as the government will continue to allow individuals to transfer from private sector defined benefit schemes to defined contribution pension schemes – subject to two important new safeguards
a new override will be introduced so that pensions schemes are able to offer individuals flexible access to their savings and the pensions tax rules will be amended to allow providers to develop new retirement income products that are tailored to the needs of individual consumers

Chancellor of the Exchequer, George Osborne, said: “It’s right to support hard working people that have taken the long-term decision to save for their future and I’m pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive.

“We’re making sure that people have the right support to make their own choice about how best to finance their retirement and I’m pleased to confirm that everyone with defined contribution pension savings reaching pension age will get free and impartial guidance on their range of available choices at retirement.”

The government wants to ensure that guidance is trusted by consumers, and the vast majority, including most of the financial services industry who responded, said that consumers would not trust guidance given by a person or organisation with a vested interest in selling a financial product or service. It will bring together a range of delivery partners, including the Pensions Advisory Service (TPAS) and the Money Advice Service (MAS), which already provide guidance and support to consumers.

People with private sector defined benefit savings will continue to be able to transfer to defined contribution schemes (excluding pensions that are already in payment), alongside two new safeguards to protect both pension schemes and the individuals transferring out.

Guidance will be offered through a broad range of channels, including web-based, phone-based as well as face-to-face, and to remain free to the consumer will be funded by a levy on regulated financial services firms.

The Financial Conduct Authority (FCA) have also today published a paper which consults on the elements of the guidance guarantee for which the FCA will be responsible: setting and monitoring the standards with which guidance providers will have to comply, making and enforcing rules on how contract-based schemes signpost to the guidance services, and adjusting the FCA’s existing conduct rules to support the introduction of the guidance guarantee and in response to the new flexibilities.

Two new safeguards are being introduced to protect both individuals and pension schemes in relation to defined benefit to defined contribution transfers: a new requirement for an individual to take advice from an impartial financial adviser regulated by the FCA before a transfer can be accepted; and, new guidance for trustees on the use of their existing powers to delay transfer payments and take account of scheme funding levels when deciding on transfer values.

HM Treasury also published the following guide today:

Pension Reforms: Eight things you should know

Understanding the pension system can be complex sometimes. We’ve explained how the new system will work and what it means for you.

1. We’re completely overhauling the system so you can take your pension how you like

In order to create greater choice and flexibility for people who have saved hard for their pension, we announced at Budget 2014 a series of changes to how people access their pension.

From April 2015, no matter how much you decide to take out from your pension after retirement, you will be charged the normal rate of income tax you pay on your salary (so either 0%, 20%, 40% or 45%) rather than the previous tax charge of 55% for full withdrawal.

2. 25% of your pension pot will remain completely tax-free, as it was before

You’ll be able to access 25% of your pot in one go without paying any tax.

3. We previously announced this would apply just to people with ‘defined contribution’ pensions

This is a type of pension also known as a ‘money purchase’ scheme.

This is when the money you and your employer pay in is invested by a pension provider chosen by your employers. The amount you get when you retire usually depends on how much has been paid in and how well the investment has done.

4. We’ve now announced that people who have a ‘defined benefit’ scheme will benefit too

A ‘defined benefit’ pension is typically a promise of a certain level of pension in retirement which is linked to your salary.

We’ve now announced that people in the private sector or in a funded public sector scheme will still be able to transfer from a defined benefit pension scheme to a defined contribution one if they want to, meaning they can benefit from the changes.

This means that around 18 million people will ultimately be able to withdraw their pension flexibly should they wish to do so.

5. Everyone who will be able to take advantage of the new reforms will be able to access free and impartial guidance

This will help people make confident and informed choices on how they put their pension savings to best use.

This guidance will be available through a number of different channels – via an online tool, over the phone, or face to face. Individuals will be able to choose the channel, or mix of channels, that they find most convenient.

It will be entirely impartial, so won’t be given by anyone who could be trying to sell you a product.

6. Your pension provider or scheme will be required to tell you about the guidance and how to access it

Accessing the guidance will be arranged by your pension provider, who will be required to tell you about it.

7. The changes will come into effect from April 2015

If you are over the age of 55, or will be from April 2015, you will be able to take advantage of the new system from then.

If you’re younger than 55 then you will be able to take advantage of the new system when you do reach 55.

8. You don’t need to do anything until then

If you’re thinking about retiring soon, you don’t need to do anything in the meantime, but we’ve also made other changes to help you save until then, such as our reforms to ISAs.

You can find more information about the pension reforms by reading our factsheet we published at Budget explaining the differences between the new changes and the old system, or more details on our response to the consultation.

‘Common sense’ to prevail over mortgage lending

‘Only borrow what you can afford to pay back’. That seems obvious enough now, but during the property boom the sky was the limit and credit was easy – with disastrous consequences. Lessons have been learned, and new rules come into force tomorrow (26 April) to protect borrowers and ensure a ‘common sense approach’ is taken for every lending decision.

The rules – known as the Mortgage Market Review (MMR) – were drawn up by the Financial Conduct Authority (FCA) as a result of the recent financial crisis and are designed to protect consumers from the kind of reckless mortgage lending that would leave them unable to make repayments.

To ensure that people only get a mortgage they can afford, and to prevent a recurrence of the irresponsible lending practices of the recent past, every borrower will now have to prove that they can afford the repayments both now and in the future. The new scheme will include a new affordability check that will see applicants interviewed by a lender and asked about their income and outgoings.

The FCA has produced a short guide that explains the changes, and around half a million copies will be given out to prospective borrowers in branches of high street lenders, mortgage advisers and estate agents.

Martin Wheatley, the FCA’s chief executive, said: “In the past too many people got a mortgage by simply telling their lender they would have no problem repaying their debt, and that was that. Getting a mortgage can be one of the biggest financial decisions people will ever make, so it needs careful consideration. Our new rules will hard-wire common sense into mortgage lending, and the guide we have created will help explain those changes to borrowers.”

The mortgage industry has been busy getting ready for the changes for about 18 months and many firms are using the new approach already, so some borrowers will not notice the difference.

The FCA has also updated its consumer information pages on its website, at: www.fca.org.uk

Carmichael welcomes income tax changes to help ‘hard working Scots’

Scottish Secretary Alistair Carmichael has welcomed changes to income tax that will see thousands of Scots workers taking more of their pay home. Mr Carmichael said Scotland is benefiting from being part of the ‘fastest growing economy on the world’.

From this weekend, 242,000 people in Scotland will be taken out of income tax altogether thanks to UK Government policy which sees the tax free personal allowance increase to £10,000 in 2014-15 – and that means that from overnight on Sunday an extra 19,000 Scots will no longer pay any income tax.

Scottish Secretary Alistair Carmichael said: “I am extremely proud to be part of a Government that has ensured that every hard working Scot will not pay any income tax on everything they earn up to £10,000. This is a key measure in our long term economic plan and one which every single Scot will be able to see and benefit from in their pay packet this month.

“Scotland is doing well because it’s part of the UK. We are benefiting from one of the fastest growing economies in the world which is creating jobs and ensuring certainty and security for families and individuals across the country.”

Over one million women in Scotland will directly benefit from this increase which comes as Scottish female employment levels reach near record highs.

This year’s Budget also confirmed that the personal allowance will increase again to £10,500 from next year helping even more Scottish families.

Across the UK, Government measures are cutting tax for over 26 million people. This includes taking over three million out of paying any income tax at all – 200,000 of these from this week.

The Sunday 6 April changes also mean that:

Someone working full-time on the October 2014 minimum wage (£6.50/h at 35hrs a week) will pay over 50 per cent less income tax in 2014-15 than a than someone on the national minimum wage in 2010.
Someone working for just under 30 hours a week on the October 2014 minimum wage will not pay any income tax at all.

Taxing times: Osborne ready to deliver Budget

It’s Budget Day, and there’s no shortage of advice for Chancellor George Osborne ahead of today’s financial statement. The TUC says the Budget must address the UK’s growing investment gap, while Holyrood Finance Secretary John Swinney says Osborne’s ‘last chance’ Budget will mean more cuts in Scotland.

The TUC says the gap between current investment levels (14.5 per cent of GDP) and those originally forecast by the Office for Budget Responsibility (17.8 per cent) has grown to £12.4bn a quarter – a gap of almost £50bn. They maintain this has held back the UK economy and, unless addressed, could cause permanent damage to its economic prospects. The TUC’s Budget submission calls for a number of changes to boost investment, including:

Increasing the scope of the UK Guarantees scheme to match the scale of Help to Buy (which could also be scaled back by being limited to first-time buyers)
Bringing forward infrastructure projects scheduled for the next Parliament so projects could start in the next year or two, and;
Cancelling scheduled cuts to corporation tax and reinvesting the money into capital allowances to promote business investment.

TUC General Secretary Frances O’Grady said: “For decades our economy has suffered from over-consumption and under-investment. The Chancellor promised to address this failure but instead has presided over a growing investment gap that has held back growth and which risks causing permanent economic damage. He now has the chance to put things right.

“George Osborne can start to undo the damage caused by slashing capital spending by giving greater financial guarantees to infrastructure projects. This should encourage firms to crack on with the construction of much-needed homes, schools and transport routes.

“The Chancellor should also admit that the billions given away in corporation tax cuts have failed to spur investment. Future cuts should be cancelled and reinvested in more generous capital allowances. After four years of ineffective initiatives, now is the time to start making good on the government’s promise to rebalance the economy.”

With working people still suffering the longest real wage squeeze in over a century, the TUC Budget submission also calls on the Chancellor to halt the squeeze on working families and encourage firms to give their staff a pay rise. The TUC argues that the Chancellor should abandon shifting the personal allowance and higher rate tax thresholds and instead reverse cuts to tax credits and universal credit that are hitting working families on low and middle incomes.

Frances O’Grady went on: “The Chancellor has made Britain’s living standards crisis even worse for working families by cutting vital tax credits and child benefit at the same time as time as wages have shrunk in real terms.

“He has shown contempt for public sector workers by prolonging their wage squeeze even as the economy recovers. Damaging welfare cuts are also adding to the financial woes of hard-pressed working families and must be reversed.
“The one thing guaranteed to cheer working people would be a bigger salary. The Chancellor must do all he can this week to encourage firms to give Britain a pay rise. One way of doing this would be to encourage greater take-up of the living wage.”

This is the last UK Budget before the referendum on Scottish independence, and Scottish Finance Secretary John Swinney said: “This is Westminster’s last chance to seriously tackle inequality and turn away from a budget of continued cuts and austerity before Scotland votes in the referendum.

“Scotland is a wealthy country and we can more than afford to be independent. In each of the last 33 years Scotland has paid more in tax per head than the UK and in the last five years Scotland would be £1600 per head better off than the UK – money that could have been invested in the economy, in public services and reducing debts.

“Instead under Westminster we have seen capital spending cut by almost 27% and our overall discretionary spending power cut by 11% in real terms over the five years to 2015-16.

“We know that we are not even halfway through the cuts planned by Westminster, and that the Chancellor plans a further £12bn of cuts to welfare after the next election. It is also clear that if Scotland sticks with the UK system we could see the scrapping of the Barnett Formula which could result in a further £4bn cut specifically from Scotland’s public services.

“In just under six months’ time the people of Scotland will vote to decide whether budget decisions should continue to be made by Westminster governments Scotland didn’t elect or whether decisions about spending, taxes and public services in Scotland would be better made by the people and parliament of Scotland. Following a vote for independence we can end Westminster’s austerity agenda, tackle the economic challenges Scotland faces and build a fairer more prosperous country.”

Will George Osborne be listening? All will become clear – well, maybe clearer – when the Chancellor delivers his fifth Budget speech at 12.30 today.

Gloves come off over currency union

A currency union in the event of a vote for independence ‘would not be in the interests of either the people of Scotland or the remaining UK’, Chancellor of the Exchequer George Osborne told an Edinburgh audience on Thursday. Unsurprisingly his claims have been rubbished by supporters of independence, but while the two sides disagree over currency union, one thing is clear – the gloves are well and truly off …

Mr Osborne’s speech follows official Treasury advice that in the event of independence they would not recommend a currency union to the Government of the continuing UK, and in an unusual departure from procedure he also published the advice he received from the Treasury Permanent Secretary on whether to join a currency union should Scotland become independent.

Speaking at the Point Hotel on Thursday, the Chancellor said: “I hope passionately that the people of Scotland choose to stay within our family of nations in the United Kingdom. I want Scotland to keep the pound and the economic security that it brings. But it is clear to me I could not as Chancellor recommend that we could share the pound with an independent Scotland. The evidence shows it wouldn’t work. It would cost jobs and cost money and wouldn’t provide economic security for Scotland or for the rest of the UK.I don’t think any other Chancellor of the Exchequer would come to a different view.

“The Scottish government says that if Scotland becomes independent there will be a currency union and Scotland will share the pound. People need to know – that is not going to happen.”

The Treasury also published the detailed analysis on the economics of a currency union which underpins its advice to the Chancellor. The paper states that while the United Kingdom is one of the most successful monetary, fiscal and political unions in history, the fiscal and financial risks of entering into a currency union with a separate Scottish state would be too great.

The analysis states:

UK is a successful union because taxation, spending, monetary policy and financial stability policy are coordinated across the whole UK, with risks pooled and clear political accountability

Scotland’s economy would be more exposed in the event of independence, with greater risks from shocks in the financial and energy sectors
in a currency union, the continuing UK would be exposed to much greater risk from a separate Scotland, with the possibility of continuing UK taxpayers being asked to support that state in the event of a fiscal or financial shock
if people in Scotland vote for independence, the Treasury would advise the continuing UK Government against entering into a currency union with an independent Scotland

The Chancellor’s view was supported by the finance spokespersons of both the other main Westminster parties.

The announcement was also welcomed by the Better Together campaign. Former Chancellor Alistair Darling, who leads the campaign, said: “If we vote to leave the UK in September, Scotland will not be able to keep the pound. That is the message Scotland must keep in mind when deciding how to vote. This was the day on which Alex Salmond’s bluff and bluster about independence came face to face with reality.

“Why would taxpayers in England want to bail out the banks of what would be a foreign country? Why would a continuing UK Treasury accept a veto from what would be a foreign government over tax, spending and borrowing?

“And why would Scotland agree to have its budget subject to a veto by the rest of the UK? That’s how a currency union works. You only have to look at the problems of the eurozone to see that. It makes little sense. Yet everything about the First Minister’s case for breaking up the UK rests on keeping the pound. The jobs of thousands of Scots in our financial services industry depend on using the pound. Without the pound, all of these are at risk. That is a big gamble we simply don’t have to take.”

The Better Together campaign called on Yes Scotland to explain what currency Scotland would use if we vote to leave the UK – would we join the euro, or maybe even set up a new, separate currency? Put simply, if yer no’ gettin’ the pound, what’s your Plan B?

Calling for clarity, Better Together campaign director Blair McDougall said:

“The nationalists have been in chaos on currency over the last few days. Alex Salmond is a man without a plan. First he says we will keep the Pound, even though it is now clearly off the table. Now Yes Scotland tell us we can keep the Pound without a formal agreement, even though the SNP’s own Fiscal Commission Working Group ruled this out. And Patrick Harvie, a Yes Scotland board member, today said that Alex Salmond needs to set out an alternative to the Pound.

“It is time they got their line straight. If Plan B really is the Panama plan that would mean if something like the collapse of RBS happened again a crisis would become a disaster in an independent Scotland.

“Leaving the UK and losing the Pound would mean higher mortgage repayments, more expensive credit card bills and a big risk to thousands of jobs in our financial services industry. Alex Salmond is gambling with the livelihoods of the people of Scotland.

“The message from those of us who support Scotland remaining in the UK is very simple – a vote for separation is a vote to lose the Pound. The only way to keep the Pound is to stay in the UK.”

However, supporters of independence have cast doubt on the Chancellor’s assertions. First Minister Alex Salmond accused Mr Osborne of ‘bluff, bluster and bullying’ and former Labour Scottish First Minister Henry McLeish also expressed concern over Osborne’s ‘misguided’ intervention, saying the Chancellor’s heavy-handed tactics could push more Scots into voting Yes.

Mr McLeish said: “He is basically saying vote yes and we won’t allow you to join a currency union. We will withdraw any goodwill and sacrifice the best interests of Scotland, England, Northern Ireland and Wales.

“Do we really believe that would be the response if Scotland voted to exit the Union? I don’t think so. Wisdom and sanity would return. It would help if the Union would spell out their vision, provide an alternative to independence and offer a bit more carrot and less stick to Scots voters.

“Let’s remember that Osborne’s party want to take us out of the EU. It is the Union that is on trial, not Scotland. Creating a currency union is first and foremost a political decision, not a financial or technical one.

The UK and Scotland would have to settle the politics of this in their respective parliaments or at the polls, so the people of England, Wales and Northern Ireland could have a say in this significant decision.”

Scottish Finance Secretary John Swinney maintains that an independent Scotland will continue to use the pound as it is in the best interests of Scotland and the rest of the UK .

Responding to the Chancellor’s comments on a currency union, the Finance Secretary said that the Treasury analysis has been developed without any discussion with the Scottish Government – and without acknowledging the independent expert work of the Fiscal Commission Working Group (FCWG).

The Scottish Government last year published comprehensive analysis of the different currency options available to an independent Scotland. This analysis by the Fiscal Commission Working Group, consisting of four pre-eminent economists including two Nobel laureates, considered the full range of options and concluded that a monetary union would be in the best interests of Scotland and the rest of the UK.

The Fiscal Commission provided advice on:

Banking union
Risk sharing
Monetary and exchange rate policy
Duration of a currency union

The HM Treasury has had no discussion with the Scottish Government on any of these points.

Responding to the Chancellor’s comments, Mr Swinney said:

“We welcome the opportunity to continue the debate with the Chancellor on the merits of our proposals on a currency union.

“However the Chancellor made clear his conclusions on currency union were based on the advice of Treasury officials. That advice is incomplete and with regard to the size of the Scottish financial sector and operation of monetary unions is backward looking and takes no account of the comprehensive evidence provided by the independent economic experts of the Fiscal Commission, including two Nobel laureates, Professor James Mirrlees and Professor Joseph Stiglitz.

“On every one of the four points the Chancellor rehearsed today, the FCWG have already published comprehensive advice and analysis and their proposed macroeconomic framework is a workable model that would ensure financial stability and allow both governments autonomy over economic and social policies, including fiscal policy. In addition the Governor of the Bank of England has confirmed the Bank will deliver a currency union if agreed by both Governments.

“On the banking union: no country should have to bail out banks again. Across the EU and UK recent regulation has been designed to break the link between taxpayers and banks. The Treasury hugely overstates the size of the banking sector in Scotland which is in line with the rest of the UK. It is the City of London which is hugely reliant on the financial services sector, accounting for 50 per cent of UK financial services GVA. A banking union with an independent Scotland is in the interests of the rest of the UK as the sector benefits from integrated trade.

“On fiscal risk sharing: Scotland’s fiscal position is stronger than that of the UK. An independent Scotland would have had the opportunity to spend more, tax less, invest in an oil fund and still borrow proportionally less than the UK. The Fiscal Commission proposition ensures a harmonised system for financial regulation and resolution of banks. Scotland would take its fair share of responsibility recognising that ‘both Scotland and the UK have a shared interest in ensuring financial stability’.

“On monetary and exchange rate policy: Scotland would have full fiscal and economic freedom to set taxes and economic policy, as has been shown by many countries in the different currency unions which have operated internationally.

“And on permanence; all Sovereign states have the ability to determine currency arrangements that are appropriate for their circumstances. That is not a barrier to successful currency unions.

“The model proposed by the Fiscal Commission Working Group has not been considered and the Chancellor’s statement today is political and completely counter to the spirit of the Edinburgh Agreement, which commits both Governments to working in the best interests of both countries whatever the result of the referendum.

“If the UK Government is to honour its commitment to the terms of the Edinburgh Agreement, the discussion that the Chancellor has entered into today must be informed by the best evidence available. The Fiscal Commission have recommended early engagement between the Scottish and UK Government to properly address these critical issues. The gaps in the Chancellor’s analysis demonstrates the force of that recommendation.”

So there you have the two sides of the currency union divide. The Unionists say it can’t and won’t happen, the Nationalists say it can and it will. Political panic over narrowing poll leads, or a pie in the sky economic gamble?

You pays your money, you takes your choice. For now at least, that money is sterling.