ALTHOUGH I share the Morning Star’s scepticism about whether Labour’s manifesto commitment, A New Deal for Working People, will ever become a reality, I have to admit a little frisson of delight when I read: “Boosting people’s incomes is not just the right thing for them — it is the right thing for the economy.”

Why? Because I have been banging on for many years now, to anyone who will listen, about the need to change the economic narrative — both around workers’ pay and public services. It is still the case that despite years of austerity, many of our members and much of the general public, while increasingly more sympathetic, see pay rises for our members, and especially those in the public sector, as a drain on the economy and therefore unaffordable.

Similarly, although the public are generally positive about public services — a Survation poll in 2022 showed a high level of trust in public services — they can’t get their head around the fact that, rather than a drain, public services are a key lever for economic growth. Because that is not the prevailing narrative. It’s not what this UK government of the rich wants us to see.

This is increasingly important as Scottish councils begin to set their budgets. Although it’s fashionable to view Scotland as not quite so bad as England and Wales, we mustn’t forget that the Scottish government has passed on more cuts to council services than were handed down from Westminster. So it’s clear that they don’t get the link between investment in public services and economic growth either. 

Yet it’s no coincidence that the last decade has seen the slowest return to growth from any financial crisis — a predicted consequence of a policy of pay freezes, including in the public sector which eroded living standards and depressed demand. 

So what we really need to get across to the public, and in fact many of our union members and political activists, is that properly funding public services, including council services, is not just good for communities, it’s also good for the economy — it helps generate local equity and prosperity and promotes economic growth.

For a start, public service workers pay their taxes. The more of them there are and the more they are paid, the higher the tax receipts. The international evidence is clear that lowering wage share depresses demand. Wage rises, particularly for the low paid, are more likely to be spent (and spent locally) than any other form of demand stimulus. 

Given that three-quarters of local government workers earn less (often much less) than the average Scottish wage of around £35,000 per year, that is significant. And according to Audit Scotland, around 600,000 people work in the public sector in Scotland, which is over 20 per cent of the total Scottish workforce. They are therefore a crucial contributor to the economy. 

Unison Scotland has posited for some time that a long-term social and economic strategy has to be built around public services — not least because they will always need to be done, and always need to be done here. There is more sustainability — socially, environmentally and economically — in prioritising these areas.

It called for core activities like housing, utility supply, health, transport education and care, to be at the centre of any future economic strategy because investing in these sectors provides reliable incomes for workers, with returns that go into the community rather than offshore bank accounts. They are also sectors less vulnerable to economic shocks and more reliable over the medium and long term.

A report published in January 2023 by the Scottish Women’s Budget Group (SWBG) further demonstrates the wider economic benefits of investing in public services. Looking specifically at care services in Scotland, it recognises the historical low wages and low status in this sector, with its overwhelmingly female workforce, and models the costs of increased rates of pay for staff alongside the costs of a larger workforce. 

It shows that paying care workers an average of £15.21 per hour (equivalent to 75 per cent of nurses’ wages and consistent with what many unions have called for) while increasing access to free care by those with moderate needs, to relieve informal care burdens on unpaid carers and eliminate unmet needs, would require investment of £6,822 million per year, almost double the current level of investment. 

However, it also estimates that 75,000 new jobs would be created and additional direct and indirect tax revenue would yield an estimated additional £1.5 billion annually. This would drastically improve care services and would also benefit the economy year on year.

SWBG recognise that brave political decisions would be needed to fund such a transformation and sadly there seems to be no appetite on the part of the Scottish government to do this. 

Yet we know that there is much more that it could be doing even within existing powers. The STUC-commissioned report, Raising Taxes to Deliver for Scotland, shows that reforms to the tax system which could be introduced as early as April 2024 could raise just over £1.1bn with longer-term reforms, including to council tax, raising a further £2.6bn.

So there you have it. We have the means, the motive and all we need now is the opportunity. But that will need a concerted effort by those of us on the left to present this alternative economic narrative at every chance we get.