Some Shock Treatment

There was a book that came out by the Canadian author Naomi Klein a couple of years ago, “The Shock Doctrine”, where Klein argues that free market “reforms” have been pushed through while countries have been reacting to events, disasters.  It is hinted in the book that the Falkland's War was such an event (though it wasn’t the war itself that led to the reforms, more the 140+ majority in the following years election).  Countries reacting to extreme events having to undertake unpopular “reforms”, hmmmm…

It was this which came to mind last week with the publication of the Independent Budget Report, the panel was led by Crawford Beverage the former Scottish Enterprise chief executive.  The review, which has been compared to the original Beverage Report which recommended what became known as the Welfare State, even quotes the original by saying “The first principle is that any proposals for the future … should not be restricted by
consideration of sectoral interests.”.  Yet I think that this is exactly what this report does.

Lets take for example the future of Scottish Water.  The Scottish Futures Trust have been lobbying the government hard for the privatisation, mutualisation or otherwise of Scottish Water.  The report states, dryly, “…we are of the opinion that alternative models should still be considered…  which should permit the release of significant capital to the Scottish Government for other projects while allowing the attraction of private investment and the return of any surplus to the public benefit”.  As an exercise in looking at how government is expected to get through the recession, is fair enough.  As a report into how the country is to get through, those paragraphs are pitifully inadequate, and does not explain why normal Scottish people should put up with increases in their water bill and a decrease in the quality of service just to fill a hole in the finances.  We might not be able to afford not to shift Scottish Water from the public finances but we cannot afford to de-nationalise Scottish Water.  In this respect, it will be interesting to see if it is still New Labour policy to keep Scottish Water nationalised.

Another issue where action is as unaffordable as no action is the current Council Tax freeze.  It is noticeable that the councils and the council’s organisation COSLA has been lobbying hard for the abolition of the Council Tax freeze, saying that council services have been suffering because of the freeze.  The real reason for the council’s lack of money will be the PFI bills for all of the schools built & renovated  between 2003 and 2007, the report estimates that councils will spent £800 million alone on PFI/PPP re-payments for this year .  Council’s have not necessarily made the best choices over the past couple of years either, whether it’s the £278,000 pay offs to former employees or giving inflation busting pay rises to heads of service or even the £40 million councils pay to consultants, councils are hardly in a position to be pleading poverty.  It is noted in the report that Band D tax rates in Scotland are 20% lower than in England (£1,149 versus £1,439)  one hopes that this figure doesn’t catch the eye of COSLA.  A council tax hike of 20% will pit even more people into financial trouble.

The lessons here though are give an economist a centimetre and they will give you the cost of everything, but the value of nothing.  Almost every item has been costed, and with the exception of Care for the elderly and the proposal to reform the free transport, the value to the general public has been looked into.  With every proposal, only the monetary cost has been researched, with the knock on effects of cuts to public services, changes in the status of Scottish Water etc…  With private companies lining up to take over public services down south, this report sees the possibility of the same thing happening here.  There are cuts that can be made to public services.  Unfortunately, this report follows the lead of Osborne and goes for the cut which will harm those that are not wealthy.