Some of the workers who won’t ever see the Sturgeon bonus and Council chief executive Joyce White who has awarded herself and her management colleagues an extra £6,000 a year.
By BILL HEANEY
SCOTLAND’S leading economic think tank, trade unions and heroic council and NHS workers have responded with condemnation and fury at Nicola Sturgeon’s plan for a tax-free £500 coronavirus bonus for NHS and care staff.
The Fraser of Allander Institute said the First Minister’s plea to Boris Johnson not to tax the money was muddled, would reward the rich more than the poor, and was overtly political.
Labour MSP Jackie Baillie was on the SNP’s case immediately, protesting: “Front line health and care workers are not political footballs for the SNP and Tories to score cheap points with.
“The payment announced is welcome, but it is clear that the SNP could not resist another constitutional row rather than simply helping working people.
“The Scottish Government can gross up the payment if it wishes to: it should just get on with it.”
However, the workers are deeply aggrieved and feel they have been “conned” by Sturgeon.
A river of discontent as wide as the Clyde is running through West Dunbartonshire Council, where six managers, including Chief Executive Joyce White, have just been awarded a rise of £6,000 each.
This will increase the salaries of nearly all of them almost up to and over £100,000 a year.
Ms White’s own salary will be around £140,000, including her pension pot payment.
It is not known yet if she and her colleagues will receive the £500 bonus or what’s left of it after deductions.
The trade unions are livid at what’s happening.
Ms White is expected to receive a rocket in the post from the joint trade unions about how the managerial salary bonanza came about.
It says: “The Joint Trade Unions in West Dunbartonshire, Unison, EIS, GMB and Unite are stunned that Senior Managers in West Dunbartonshire Council have been awarded a substantial pay increase with no consultation or communication with the Trade Unions.
“Policy and Collective Bargaining arrangements dictate that any restructure or new positions are fully consulted with the Joint Trade Unions. SWITCH Policy states that during a restructure NO member of staff can be matched to a higher graded position and displaced staff must apply through the recruitment process.
“This would suggest to us that West Dunbartonshire Council operates a two tier workforce system where policy and procedures only apply to lower graded staff.
“Our members deserve to be treated fairly and equally throughout the organisation. They have worked through austerity and years of pay cuts while keeping services going, especially during this public emergency.
“The Joint Trade Unions have requested details of this senior management restructure on several occasions with no information to date. We call for a halt to this process pending meaningful consultation and assurances of openness and transparency.
“We demand fair procedures applicable to the whole organisation and an end to this apparent two tier workforce structure.”
Dumbarton MSP Jackie Baillie and First Minister Nicola Sturgeon.
The Fraser of Allander Institute said that if the Scottish Government was serious, it should pay NHS, local authority staff and others who have worked on the pandemic “a higher gross bonus” to offset income tax, which in any case would come back to Holyrood.
“There’s a reason bonuses are taxed; if they weren’t, everyone would want paid in bonuses rather than regular pay.
“Making an exception to the rule once opens the possibility of endless future lobbying for tax-exempt bonuses – which is not something any government should be keen to encourage.”
The Institute also said making bonuses tax free would not be progressive, as the better off would avoid more tax.
“Exempting the bonus from tax would gift higher rate taxpayers a significantly larger tax break than basic rate taxpayers.
“It is really not clear what the rationale for this would be.”
The Institute said the UK Government’s “inevitable rejection” of the plea would “serve up exactly what the Scottish Government had really wanted: another example of the devolved fiscal framework apparently not working.”
Separately, the Chartered Institute of Taxation warned that the poorest would also lose universal credit as a result of getting the bonus, cutting its value after tax and all other deductions to as low as £124.
The Scottish Tories demanded the Scottish Government top-up the money as the Institute suggested and “stop playing politics with the pandemic”.
Labour said the SNP should stop treating frontline workers like “political footballs”.
The row blew up in the wake of Ms Sturgeon announcing the plan in her keynote speech to the SNP annual conference on Monday.
She said that as a “one-off thank you payment”, all NHS and adult social care workers would get a £500 bonus, and then pointedly asked the Prime Minister not to tax it.
The £180m plan is designed to benefit over 300,000 staff, including nurses, porters, doctors, primary care staff, home care workers, care home staff, hospice staff and residential child care staff.
The UK Treasury swiftly shut down the idea of making the money tax-free, pointing out Holyrood was getting an extra £8.2bn this year as a result of Covid, the income tax would flow back to Scotland, and the Scottish Government could bulk-up the bonuses instead.
In a new blog post, the Fraser of Allander Institute’s director Graeme Roy and Scottish budget expert David Eiser agreed with many of the Treasury points.
They said that under Scotland’s Fiscal Framework, the additional income tax paid by NHS and care workers on the £500 bonuses would flow back into the Scottish budget in 2023/24.
A basic rate taxpayer would take home around £340 of their bonus after tax and National Insurance Contributions, with £100 of income tax going to Holyrood and in 2023/24 and £60 of NICs going to the Treasury.
“If the bonus was exempt from income tax, a basic rate payer would take home £440; the upfront cost of the policy to the Scottish Government in 2020/21 would be unchanged (£180 million), but the Scottish Government would forego the increase in future tax revenues.”
“If NHS workers received an extra £500 in normal pay, higher rate taxpayers would pay more of that in tax than basic rate taxpayers – that’s the basis of fairness on which the system is based.
“Exempting the bonus from tax would gift higher rate taxpayers a significantly larger tax break than basic rate taxpayers. It is really not clear what the rationale for this would be.
“It is perfectly legitimate – and indeed desirable – to want to recognise and reward NHS/care workers for their efforts in recent months.
“But if policymakers want those employees to benefit by £500 after tax, the solution is to pay a higher gross bonus.
“There is little reason for these rewards to be exempt from the existing social contract, or for them to require administrative and legislative hurdles to implement.
“Of course, the Scottish Government knows this, and there is a healthy dose of politics in its call on the UK Government to exempt Scottish bonus payments from Scottish income tax.
“As an insight into next year’s election campaign, this debate gives a taste of things to come.”
The Chartered Institute of Taxation warned there was a “benefits trap” associated with an earnings bonus.
It said for every extra £1 that a person receiving Universal Credit earned over and above their allowance, their benefit entitlement was usually reduced by 63p.
That meant someone earning the median Scottish salary of £25,200 who also received Universal Credit could see the value of their bonus reduced from £500 to £123.95 once taxes and benefits were taken into account.
Moira Kelly, chair of the CIOT’s Low Incomes Tax Reform Group, said: “We welcome that the Scottish Government has chosen to recognise the hard work of NHS and care staff during the pandemic, but it is important to point out that if the bonus is taxed, then those on some of the lowest incomes stand to benefit the least.
“For those receiving benefits like Tax Credits and Universal Credit, this would mean that any extra cash they receive may have a knock-on effect on the amount of benefit they are entitled to.
“Every taxpayer’s situation will be different, but the overall picture is that, unless the payment is made tax-free, recipients will end up with less than the headline amount, with some of those on the lowest incomes losing the most.”
“Any extra income tax would go to the Scottish, not the UK Government, so if they increase it, no-one misses out.
“Why is it that the SNP feel the need to take a £500 NHS ‘thank you’ payment and stoke up division with such a clearly political move, all to provoke a fight with the UK Government?
“The SNP are pushing for indyref2 in the middle of a pandemic and creating a political bun fight out of thin air.
“As the Fraser of Allander Institute have now made clear, this is all a political game from the SNP. They’ve dialled nationalist grievances up to 11.
“So my message to Nicola Sturgeon is, put your political guns away, apologise for trying to politicise the efforts of health and social care workers, and top-up this payment immediately.”
Scottish Liberal Democrat leader Willie Rennie added: “SNP ministers should show more respect to NHS and care workers.
“They should get them the money they believe should be paid and not use them as a battering ram on the constitution.
“The Fraser of Allander Institute estimated last week that the SNP has a billion pounds unallocated. It is important for Scottish ministers to set out quickly which other sectors they will support using that money.”
The Scottish scheme echoes that for social care workers in Wales, who were told in May that they would get a £500 coronavirus bonus.
Welsh ministers argued the Treasury should not tax it, but to no avail.
The bonus issue was raised by SNP MPs at Treasury Questions at Westminster.
Glasgow Central’s Alison Thewliss asked if the Chancellor would “do the right thing and ensure that this festive gift of good will is not clawed back” by HM Revenue and Customs.
Chief Secretary to the Treasury Stephen Barclay reminded her the income tax on the bonuses would be paid to Scotland, not Westminster.
He said: “The Scottish Government have the power and the funding to gross up the payment if they wish. The UK Government have provided over £8.2 billion extra funding for the Scottish Government this year to support people, businesses and public services.”
Pressed by Edinburgh East MP Tommy Sheppard on whether the Chancellor would tax the bonus, Mr Barclay said the UK Government would act as it did with the Welsh bonuses.
He said: “While decisions on whether to exempt these payments are reserved, the Scottish Government will keep all the income tax receipts from these payments, so if they wish NHS and care workers to receive £500 net of tax, which is what they say is their wish, they can simply increase the value of the payments going to them.
“That is the point of substance. That is the point they do not want to engage on.”
Responding for the SNP, MSP Tom Arthur MSP said: “It is the SNP who are giving health and care workers in Scotland a thank you bonus so far unmatched anywhere else in the UK – and it is Boris Johnson who is outrageously threatening to snatch as much of it as he can away from them in tax.
“Instead of defending the indefensible, the Scottish Tories should be trying to use whatever dwindling influence they think they have on the Prime Minister to tell him to do the right thing.
“While income tax is devolved, the tax on this bonus wouldn’t be paid back to Scotland until 2023/24 – and National Insurance contributions would just be swallowed by the Tory Treasury and would never come back to Scotland.”
Willie Duffy, UNISON head of health, said: “We welcome this move by the first minister on the eve of our NHS pay ballot to acknowledge the outstanding efforts of our health workers.
“However, it’s important our NHS workers are acknowledged for the vital work they do each and every day, not just during this pandemic.
“Our dedicated NHS staff have suffered a real-terms pay cut over the last decade and, while this is a move in the right direction, we will now be focusing our efforts on ensuring a significant pay rise for our NHS workers in the forthcoming Agenda for Change pay talks.”
Dr Mary Ross-Davie, director for Scotland at the Royal College of Midwives, echoed his views, welcoming the payments.
Smoke and mirrors ‘bonus’ from the SNP
First Minister Nicola Sturgeon’s aides said they did not know whether the UK tax system allowed one-off bonuses to be made tax-free and were not aware whether it had been done before.
Well, if Nicola’s little elves don’t know then there won’t be much dancing and singing around the Christmas tree this year.
Sturgeon’s “gift” to only a fraction of the NHS, local government workers and other heroes who expected the £500 bonus for their outstanding efforts during this national emergency, is nothing more than a myth designed to garner votes for the SNP at next May’s election.
One of Sturgeon’s special advisers said it was down to the prime minister [Boris Johnston] to confirm whether he liked the proposal, before working out the logistics.
The Treasury said any income tax levied on the £500 bonus would be collected by the Scottish government, so Sturgeon could increase the bonus to cover the tax lost, and then eventually recoup that via increased tax revenues.
“The income tax on these payments is paid to Scotland, not Westminster – and the Scottish government has the powers and funding to cover the tax owed on the payment if it wishes,” a spokesman said.
However, it would take a Philadelphia lawyer to work out who qualifies for this and how they qualify for this bonus. How many hours did they have to work to get their hands on the money?
The first minister also unveiled other funding pledges: £100m to help the poor and vulnerable over winter, including a £100 one-off payment to families whose children get free school meals; and new funding for apprenticeships, including a £100-a-week apprenticeship bonus for school leavers under 18 and £5,000 to firms for each new apprentice they hire.
And for good measure she threw in a “free meals for the school children” bribe in 2022 – but only if their parents cast enough votes to keep herself and her SNP cronies in power.
The Scottish Conservatives argued that these schemes used £9.2bn in record extra funding from the Treasury to the devolved government to tackle the social and economic impacts of the coronavirus pandemic.
Scotland Conservative leaders Douglas Ross and Ruth Davidson.
About £1bn of that has not yet been accounted for in Scottish government budgets. “This was a series of SNP promises brought to you by [the chancellor] Rishi Sunak’s spending,” said Douglas Ross, the Scottish Tory leader.
Sturgeon said, however, that the policies were evidence of Scotland’s socially conscious and inclusive ethics in a speech that mentioned Johnson by name five times and Brexit eight times. She said the Covid crisis had proved there was a gulf between the UK and Scottish government’s outlook and attitude, strengthening the case for independence.
She deflected demands from many SNP activists for headway on a fresh referendum, however, asking voters for their authority in next May’s Scottish election to call for one “in the early part of the next parliament”.
“If we want to make sure the country we rebuild is the one we want it to be, with kindness, compassion, fairness, equality and enterprise at its heart, and not one built in the image of Boris Johnson and his band of Brexiteers, we must work to the right plan, with all the tools we need to do the job,” she said. “Independence is not a distraction from the task of post-Covid reconstruction. It is essential to getting it right.”
Sturgeon had succeeded in doing what she set out to do with her £500 “gift” which was to start a major political row about independence.
Richard Leonard, the Scottish Labour leader, said: “This sum announced by Nicola Sturgeon will not make up for the years of pay restraint and austerity that staff in these sectors have had imposed on them by Tory and SNP ministers.” As many care staff were part-time, their pro rata bonus would be “derisory”, he added.
The healthcare and local government trade unions seemed initially content with the hand they were dealt until the process of claiming the money became clear to them.
Council worker Craig Mackenzie wanted to know why the bin men – council refuse workers handling up to 1,000 potentially covid infected bins per day and putting themselves at risk of infection – were made to feel like the little boy Santa Claus forgot. Why was there nothing in their stocking?