Talk to the hand, Nicola, because the face ain't listening. Photo:Getty
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SNP manifesto 2015: Less of a ransom note, more of a blank cheque

The SNP's manifesto, far from a ransom note, is easily reconciliable with Labour's fiscal plans. The bigger fear is that none of the parties are planning for what happens if the economy takes a turn for the worse.

Nicola Sturgeon launched the SNP’s manifesto yesterday with a plan to end austerity, and provide an alternative to the cuts proposed by the Conservatives and Labour. The SNP says it is “the only party offering an alternative to the Westminster cuts agenda”. It wants spending by Government departments to increase by 0.5% above inflation every year after 2015-16.

Former Conservative Prime Minister John Major will warn in a speech today of the “mayhem” which could result from a Labour government reliant on the SNP in the next Parliament, including the risk that the SNP will push Labour into more spending and more borrowing.

Setting the scare mongering to one side for a moment: could Labour accommodate the SNP’s demands and still meet its own manifesto pledge for securing the public finances?  The SNP proposal to increase departmental spending by 0.5% a year would mean current departmental spending going up by around £1.7 billion a year. This would leave departmental spending around £7 billion higher a year in real terms by 2020, compared to the first year of the new Parliament.

However, tax revenues are forecast to rise by around £20 billion to £23 billion a year over the course of the next Parliament. This means that the next Government can raise departmental spending and still eliminate the current deficit (Labour’s target, which excludes investment spending) by 2020 – just. The deficit would also be falling in every year.

Admittedly, Labour would not be able to meet the mandate in the Budget Responsibility Charter, that it voted for earlier in the year. That requires the Government to be on track for the current deficit to be eliminated by the end of a three year period. Currently, that’s 2018-19. But because it’s a rolling timetable, it allows for the flexibility to change the timing of the deficit reduction programme.  And Labour makes no reference to it in its manifesto, suggesting it does not see the Charter as its primary target.

Labour has already left itself considerable room on its deficit reduction plans: because it is targeting the current deficit, that is, excluding borrowing for investment, by 2020, it could have around £30 billion extra in annual spending to play with compared to the Conservatives. It also looks like it has enough room to accommodate the SNP. There is also remarkable agreement between the two on ways of raising money to pay for extra pledges – the mansion tax, the 50p rate of income tax and the bank bonus tax make an appearance in both manifestos.

In fact, the real risk is not so much that the SNP drags a Labour government in to more spending; Labour may be pretty much already there. The bigger risk is that all parties are making plans based on a very uncertain five year forecast.

The tax revenue figures in the OBR report rely on GDP growing by 2.3% to 2.6% a year. The IMF is less sanguine, expecting UK growth to plateau at around 2.1% a year by the end of the decade. Even that forecast implies that the UK’s dismal productivity performance will pick up substantially in the next five years. Previous OBR scenario analysis shows that deficit forecasts could be out by tens of billions if productivity does not pick up, as set out in the Social Market Foundation’s A Deficit of Growth. On current plans, that would leave the Conservatives unable to meet their target too. The gamble on tax revenues to fix the public finances is one that all parties are making.

 

Nida Broughton is Senior Economist at the Social Market Foundation.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.