Middle-class ‘freebies’ hurt poor, report claims

Council tax helps pay for services such as refuse collection. Picture: TSPL
Council tax helps pay for services such as refuse collection. Picture: TSPL
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A RAFT of middle-class benefits which helped sweep the SNP to power need to be curbed with savings re-allocated to help core services for the poor, according to a major policy review by the Labour Party.

In an initial report which is to go before the party’s shadow cabinet, Professor Arthur Midwinter concludes that the cutbacks on public spending mean ministers in Edinburgh can no longer shower so-called “freebies” and tax freezes on the whole of the population without hurting services for the most vulnerable.

The report recommends to Scottish Labour leader Johann Lamont that she need not slash every universal benefit – which include free personal care, free tuition, free bus passes and free prescriptions. But it argues she should consider “increasing revenue and increasing charges for services”.

The council tax freeze – which costs the public purse £350 million a year to sustain – is now “both unsustainable and regressive”, the report declares.

Labour figures last night criticised the council tax freeze, saying it had benefited most those living in the biggest homes, and said they wanted a wholesale reform of the way councils are funded.

Ms Lamont and deputy leader Anas Sarwar have warned that deep spending cuts must now trigger a fundamental rethink on the delivery of public services in Scotland.

A report by the independent CPPR think-tank last week warned that deep cuts to the Scottish Government’s budget are only half-way through their course, with a further £3 billion still to be found by 2018.

That budget pays for NHS, schools, local government and transport funding in Scotland.

Unlike England, Scotland has opted to continue with benefits such as free tuition, free prescriptions and free personal care, with the cost met from general taxation rather than extra charges to households..

In his report, seen by The Scotsman, Prof Midwinter concludes that the bill for these benefits and the council tax freeze rose from £532m in 2007 to £1.38bn in 2012. A further £220m was spent in 2012 to ensure university students do not have to pay fees to fund their courses.

He claims that much of this is no longer affordable – and may damage funding on core services in the NHS and education, hurting those at the bottom the most.

He says: “A fundamental policy review is necessary, to ensure our resources are targeted on those in greatest social need and to redistribute funding from universal benefits to core services which will support employment.

“Scotland needs to raise revenues from taxes and charges for public services to limit these damaging cuts. Otherwise the trends of rising unemployment and poverty since 2007 will continue.”

On the raft of universal benefits paid out of general taxation, he adds: “The reality is that such public services have not always been free and it is a matter of political priorities to decide which should or must be free.

“What matters most is the funding of our core public services, on which vulnerable households are most dependent, and which provide a major source of employment.”

The extra sums going to pay for universal benefits and the council tax freeze is “taking money out of service budgets”, he says. But he adds: “This does not mean that all free benefits will be ended.”

Prof Midwinter’s findings will now feed into Labour’s policy review.

A Scottish Labour spokesman said last night: “Our policy review is designed to ensure that at a time of scarce resources, we protect those who need our support the most.”

A spokesman for First Minister Alex Salmond said last night: “Labour are so wedded to the Westminster system and the Tory austerity agenda that their ‘Cuts Commission’ now wants to axe popular universal benefits like personal care for the elderly and university education – and increase taxes at the same time.”