The SNP appear to have decided they would try to use the payment of state pensions in an independent Scotland as a bargaining chip in negotiations with the rest of the UK if Scotland were to secede.
Perhaps now realising how calamitous this strategy would be, senior SNP figures are already trying to deny their own on-the-record comments and suggesting that this is all some concocted unionist scare tactic - so part 1 of this blog offers a summary timeline of exactly how the SNP have communicated on this topic in recent weeks.
Part 2 uses the full transcripts of each of the SNP statements referred to in part 1 to a/ allow people to challenge the summary interpretation if they so wish and b/ to allow us to detail precisely where and why those statements were misleading, confused or simply wrong.
Some of the more common myths and misdirections not covered elsewhere in the blog are dealt with in the Appendix.
Part 1: The SNP's State Pension U-turn
There is a lot of SNP verbiage to be processed here and recently some nationalists have started claiming "that's not what was said" - so the below timeline summarises what was said. I provide links and fully annotated transcriptions of each interview in Part 2.
14/12/2021: Ian Blackford (leader of the SNP in the House of commons) was asked during a podcast what would happen to State Pensions post independence and his response was unequivocal:
"Absolutely nothing! [...] that committment to continue to pay pensions rests with the UK Government"
"Well I wouldn't dare disagree with Ian Blackford, the expert on all things pension, so I would agree with him."
"You've said the UK Government will have to pay pensions in Scotland on independence - that's a complete reversal of the SNP policy in the 2014 referendum."
Blackford was customarily long-winded in his response, but he did not challenge MacMahon's interpretation, he merely sought to justify it.
"Is it really now the SNP position that pensions in an independent Scotland would be paid by tax payers in England?"
"Pensions in an independent Scotland will be paid by the Government of an independent Scotland, but the contribution towards that, the cost of meeting that, will be partly met by people paying into the UK pensions pot pre-independence ... That money doesn't get lost, it gets paid back or paid out of the pot. Pensions will be delivered in an independent Scotland by the Government of an independent Scotland but there will be historic contributions made into the UK pot that are owed from that UK side as part of what is paid out"
This all started with comments made by Ian Blackford in a Scotland's Choice Podcast. The ever-diligent Sam Taylor [@staylorish] listened to the podcast a few weeks later and tweeted about a remarkable claim that Blackford made. When asked what would happen to State Pensions post independence, Blackford asserted the following:
"Absolutely nothing! So, the important point is that those that have contributed while we have been part of the UK have an entitlement for a pension. Indeed that was made - um - that was made clear by the Chief Secretary to the Treasury at the time of the independence referendum in 2014. So that commitment to continue to pay pensions rests with the UK Government. That's no different to a UK citizen that chooses for example to live in Canada or Spain or France or anywhere else - that commitment to receive your pension remains in place, that's an obligation of the UK Government and what will happen going forward it will be the obligation of the Scottish Government to look after pension entitlement from the period for those that are working and making pension contributions in the period post independence."
[This is almost entirely nonsense, but he repeats these claims in his interview below, so we'll address them there]
18/01/2022: Kate Forbes Backs Blackford's Claim
Asked in a subsequent edition of the same podcast series whether she agrees with Ian Blackford's comments, Scotland's Cabinet Secretary for Finance and the Economy replied:
"Well I wouldn't dare disagree with Ian Blackford, the expert on all things pension, so I would agree with him."
02/02/2022: Blackford Doubles Down
Blackford was pressed on this claim by Peter MacMahon of ITV News [at 13 mins in]: "You've said that the UK Government will have to pay pensions in Scotland on independence - that's a complete reversal of the previous SNP policy in the 2014 referendum.":
"This was an issue that was discussed in 2014 ... let's be clear on this, because the Chief Secretary to the Treasury made it clear at that point that the UK retained an obligation to pay pensions to those that had paid National insurance ..."
[This repeated assertion is simply untrue. The Chief Secretary to the Treasury at the Time was Danny Alexander and he made no such statement. I will, as ever, happily correct this blog if anybody can provide evidence that he did.]
"... that's a, a matter of precedence .. <interviewer interjects to remind Blackford 'and the Scottish Government's White Paper said the Scottish Government, on independence, would take responsibility for pensions, and you're saying they won't anymore'> ... the Scottish Government will take responsibility to look after its pensioners, let's not forget <interviewer interjects 'but not pay them' - Blackford ignores that statement> ... let's not forget we have the lowest state pension in Western Europe at the moment, our pensioners are being short changed ..."
[Blackford's use of the phrase "short-changed" is particularly disingenuous, as it implies that somehow people are not getting their dues, which is patently not the case. His "lowest state pension in Western Europe" claim is false and one that the SNP have a track-record of repeating. When asked to back it up they always point to an out-of-date OECD report (or a parliamentary briefing which referenced the same report) rather than the latest OECD report which could not be clearer in showing the UK ranking above (amongst others) Norway, Sweden, Germany and Ireland1]
Across the OECD, an average earner will take home
— OECD Social (@OECD_Social) December 9, 2021
6⃣2⃣% of their previous income when they hit #retirement.
Compare your country & learn+ with OECD’s #Pensions at a Glance 👉 https://t.co/thcVGpMH0I pic.twitter.com/PS6KSlmKoY
" ... it's Westminster that's removed the triple lock"
[It's true that the triple-lock has been suspended - but the SNP's own Sustainable Growth Commission abandoned the SNP's commitment to the triple-lock after independence as long ago as 2018, as pointed out by Sam Taylor here]
"The point is that it's an obligation on the UK Government to meet the committment to pensioners that have paid National Insurance contributions; they have paid for the right to receive that pension ... "
[The wording here is highly misleading. The state pension is technically a welfare payment funded by current taxes. The UK's Whole of Government Accounts (WoGA) are very clear about this: "the state pension paid to the general public [..] is included within overall expenditure and recorded as welfare spend". This means people have no more "paid for the right" to receive a future pension than they have "paid for the right" to receive future social security payments or healthcare. Nobody would seriously suggest that the UK Government's obligation to provide future welfare support in Scotland would survive secession, and yet that is effectively what Blackford appears to be arguing for. It's a risible idea; rUK tax payers would obviously not accept continuing to fund an independent Scotland's welfare state.]
"Now you can argue about the mechanism as to how that's transferred and that will be debated, but it's right that the UK Government meets its committment to pensions regardless where they are."
[It's not clear what the "that" is Blackford wants transferred here. If it's past NI contributions, "that" is just Scotland's share of the NI fund (which we'll come on to show is a relatively trivial matter). If "that" is the obligation to look after the future welfare of Scottish citizens, it is extraordinary that Blackford could be suggesting that would be the responsibility of anybody other than the government of an independent Scotland. Healthcare is also funded out of current taxes; having paid taxes all my working life, I expect free healthcare in my dotage - but I don't think anybody's arguing that the UK Government would be expected to fund an independent Scotland's health service?]
"If you or I as UK citizens go and live in another European country, then our right to that UK pension remains; Scottish pensioners have that right ..."
[This is simply a repetition of the ex-pat fallacy. Put simply, you can't take away 8% of the UK's tax base and not expect to take with it an equivalent share of the pensions obligations that tax base funds. It is true that UK state pension entitlement is currently based on past NI contributions (not nationality), but if the constituent part of the UK where those NI contributions were made is no longer part of the UK, it would be logically inconsistent for the remaining UK to still honour that commitment.
To help understand why people in a seceded Scotland would not be the same as UK expats, consider that expats have the right to vote in UK elections. Again, I don't think anybody is suggesting that independent Scots habitually resident in Scotland would get to vote in UK elections; they wouldn't because they would not be the same as expats. Or alternatively try the following thought experiment: if England's 84% of the UK's population seceded, it would be patently absurd and impractical for the remaining 16% of UK tax payers to fund an independent England's state pension - and yet that would be to apply the same expat fallacy logic, just at a larger scale.]
"they have paid National Insurance over a long period to get that; that will remain."
[His wording about paying NI contributions over a long time and "that will remain" seems to imply that money has gone into a pot. As we've already covered: it hasn't, it's been used to pay current pensions.]
The interviewer rightly picks him up on this: I'm sorry, but you know National Insurance only covers current pensions...
"No ... it's .. you're paying National Insurance as an entitlement to a future pension, that's the whole point of the principle - you pay into a National Insurance Fund - OK the UK is then responsible for the disbursements of that and it covers cashflow for a certain period - but that's a right to a UK pension, there's no ifs, there's no buts about that."
[Blackford surely knows the interviewer is correct, so his knee-jerk "No" is revealing. I suspect he realises he's getting into trouble at this point and perhaps that's why he goes on to correctly describe the National Insurance fund. That "certain period" he refers to is a minimum of 2 months and typically 4 - 5 months, so the only asset that would be included in any negotiation is a few months of NI funded welfare payments2.]
Give him his due, Blackford is an olympic-standard bloviator and his overall response above is an effective way of avoiding actually answering the question - so it's worth reminding ourselves of the question put to him at the outset by the interviewer: "you've said the UK Government will have to pay pensions in Scotland on independence - that's a complete reversal of the SNP policy in the 2014 referendum." Judge for yourself, but in all of the word-salad he's dished up here I can't find anything that sounds like "No, that's not what I meant".
"I think he should pay more attention to the UK Government's position on this, he might find it gives him a bit of a shock - let me set out, let me set out the position ... <playing to the gallery> the Tories are really really nervous about this argument, you can feel the discomfort coming from them because they know, when the people of Scotland get the chance to escape Westminster governments and take our future into our own hands they are going to say Yes to independence </playing to the gallery> ... "
[Although Sturgeon has essentially said nothing by this point, note that she is not denying Fraser's interpretation of the SNP's position, she has merely hinted that the UK Government agrees with it]
"... when, when Scotland votes for independence, as was the case in 2014, the distribution of existing UK liabilities and assets including those related to pensions will be subject to negotiation and Scotland will fully pay its way in that, but the key point here is ..."
[So we get some platitudes about everything being a negotiation and a reference to assets and liabilities related to pensions more broadly, before she finally makes her substantive point ...]
"... for those in receipt of pensions and it is what the Minister for Pensions at the time in the UK Government Steve Webb confirmed, that people with accumulated rights would continue to receive the current levels of State Pension in an independent Scotland ..."
[Sturgeon is misrepresenting Steve Webb's stated position here by quoting an out-of-context snippet from a lengthy and frankly rather muddled oral submission Webb gave to the "Scottish Analysis: Work and Pensions" committee in 2014. Clearly aware that his remarks had been potentially misleading, Webb subsequently wrote to the committee to clarify his position and ensure that the written record correctly reflected his view. That is why the words Sturgeon quotes do not appear in the committee's report (or in any other written government record I can find) - but the relevant words from Webb's letter do: "While there are to be no pre-negotiations, I would think the Scottish people would expect their Government to take on full responsibility for paying pensions to people in Scotland including where liabilities had arisen before independence. Similarly people in the rest of the UK would not be expecting to guarantee or underwrite the pensions of those living in what would then have become a separate country. The security and sustainability of pensions being paid to people in Scotland would, therefore, depend on the ability of Scottish tax payers to fund them."]
"- people will notice no difference,..."
[Decide for yourself if she is denying Murdo Fraser's suggestion by this point - while she has not actually said who would be funding the state pension, I think it's fair to say she has strongly implied that it would at least in part continue to be the UK Government]
"... well perhaps the difference they might notice is that an independent Scotland might be able to improve the level of pensions, rather than have, as the UK does, one of the lowest pension levels in the whole of the developed world"
This finishing flourish simply repeats Blackford's false claim about the level of the UK state pension (although it's expanded now to "in the whole of the developed world" rather than just Western Europe) while making a completely unsupported assertion that an independent Scotland would somehow be able to increase the state pension. This claim flies in the face of her own Sustainable Growth Commission's recommendation of fiscal austerity and is surely incompatible with an independent Scotland's putative ambition to satisfy the EU's fiscal rules as outlined in Chapter 17 of the Acquis Communautaire]
As with Blackford's rhetoric, its worth pausing to remember the question asked: "Is it really now the SNP position that pensions in an independent Scotland would be paid by tax payers in England?". Again you can judge for yourself, but at no point does she come close to saying "No, that's not our position".
06/02/2022: Sturgeon's official spokesman cites the mythical "pension pot"
Sturgeon's official spokesman subsequently made the following statement in response to press enquiries:
"Pensions in an independent Scotland will be paid by the Government of an independent Scotland, but the contribution towards that, the cost of meeting that, will be partly met by people paying into the UK pensions pot pre-independence ... That money doesn't get lost, it gets paid back or paid out of the pot. Pensions will be delivered in an independent Scotland by the Government of an independent Scotland but there will be historic contributions made into the UK pot that are owed from that UK side as part of what is paid out"
[As we have already discussed, there is no state "pension pot". An NI fund exists which holds a few months' working balance of NI funded welfare payments, but nobody could seriously suggest that could be described a state "pension pot".]
09/02/2022: Sturgeon starts to row back, but further muddies the water
Asked by the BBC's Glenn Campbell "Do you want to take the opportunity to clarify the SNP's position on the state pension if Scotland were to become an independent country: who would pay for those pensions on day one?" a clearly grumpy Sturgeon responded:
"I don't need to clarify, the position is as it was set out in the 2014 White paper, there would be a negotiation on all sorts of things when Scotland becomes independent about assets and liabilities and that would include the historical position in terms of, you know, National Insurance contributions paid by Scots and that would all be taken account of and that would influence the starting position of an independent Scotland, thereafter <interviewer tries to clarify that there isn't a pension pot> ... you might, you might get the answer if you didn't interrupt me in the throes of giving the answer eh after that of course it's for a Scottish Government to be responsible for the payment of pensions but the historic liabilities and assets around pensions as around other things will be a matter of negotiation at the point of independence."
[So her main point appears to be "there will be negotiations around" "historic assets and liabilities" and she references "National Insurance Contributions paid by Scots"]
The interviewer presses her: but do you accept there isn't a pension pot to be carved up?
"em - there are assets and liabilities including pensions that of course will be the subject of negotiation when Scotland becomes independent, you might want to <interviewer points out pensions are paid out of current taxes> that is the case .. but the i mean you might want to look at the Fraser of Allander - er - comments on this just recently when they talk about the fact that if ... access to pensions in the UK is not based on citizenship it is based on National Insurance contributions eh so there will be a negotiation around all assets and liabilities."
[So rather than accept that there is no "pension pot" she repeats her reference to "negotiation around all assets and liabilities" and "National Insurance contributions". She references this Fraser of Allander paper which talks about the need for negotiations, without drawing any conclusion as to whether the UK Government would allow UK tax payers to fund an independent Scotland's pensions or whether appeals to the expat fallacy would carry any weight.]
The interviewer tries again: So how much of the £8.5 billion - at day one of independence, how much of the £8.5 billion do you think the UK Government should or would pay?
"On an ongoing basis it would be for the Scottish Government to fund Scottish pensions ..."
[This seems like a breakthrough: the Scottish Government is to fund Scottish pensions, which would appear to directly contradict Blackford's earlier assertions. Except then there's a "but" ...]
.".. but in terms of how we take account of historic assets and liabilities that would be a matter of negotiation. I would encourage you to go back and look at the 2014 White Paper that set this out and, the point I'm making is that <interviewer: it didn't mention the UK paying> the 2014 White Paper set out the position of the Scottish Government and what I'm saying to you is that position hasn't changed"
[So here we are again with the "historic assets and liabilities" and perhaps now is the time to pin down what these actually are. The meaning of words matters, so I make no excuses for the accounting pedantry that follows.
There is no "historical liability" associated with the state pension, there are only future liabilities; pensions in the past have already been paid, we are concerned here with paying pensions in the future. We've seen that the way the UK's pay-as-we-go state pension system works is that future pensions are paid out of future taxes, so it seems obvious that a future independent Scotland's pension liabilities would be met out of a future independent Scotland's taxes (assuming sufficient taxes were available).
When it comes to "historical assets" (aka "assets") there is just one related to past NI contributions, and that's the previously discussed National Insurance Fund. Scotland would of course expect a share of the NI Fund in any separation negotiation, but as we've already seen this represents just a few months' worth of payments because it is merely a working capital account, not a "pension pot"3.
Sturgeon's suggestion that "nothing has changed" does not bear scrutiny. As Blair McDougall has rightly highlighted, it's informative to contrast her answer above with how she answered questions on this topic in 2014:
"The quick answer to your question is yes, we would guarantee all of the accrued pension rights for people in Scotland [..] we currently pay for state pensions, there's no money fairy sits in Westminster [..] our taxes, out National Insurance contributions fund these things already"
Or read what the 2014 White Paper had to say on the topic:
Hilariously, there is at least one nationalist blog who claims the wording above refers to administration of the State Pension but not the actual funding of it. The ridiculousness of this interpretation is quickly exposed by observing that no saving (versus the £8.5 billion state pension cost in GERS) was included in either the 2014 White Paper or the SNP's 2018 Sustainable Growth Commission report."for those people living in Scotland in receipt of the UK State Pension at the time of independence, the responsibility for the payment of that pension will transfer to the Scottish Government"
1. But the state pension is a legal entitlement; if you've built an entitlement by making historical NI contributions, it doesn't matter where you live
Somebody better qualified than me should write this up, but I'm pretty confident that we can say "it's more complicated than that".
Take for example the failed legal challenges launched by the WASPI women (women born in the 1950s whose pension age has been raised to 66) - they have learned the hard way that they don't have a legal entitlement to a state pension at the age of 60. The court of appeal concluded:
"The relevant test was whether the measures were “manifestly without reasonable foundation”. The Court of Appeal held that the Divisional Court had been correct to approach the issue on the basis that this legislation operated in a field of macro-economic policy where the decision-making power of Parliament was “very great”"
I think it is reasonable to suggest that 8% of the tax base which funds the state pension seceding from the UK would very obviously count as "reasonable foundation" to not keep paying the state pension to that seceded nation's pensioners.
2. Steve Webb, the then UK pensions minister, told a Westminster committee in 2014 that anyone who “accumulated rights” for pension cash would be entitled to the money after independence. There was absolutely no risk to the money.
The statement above is taken directly from the the National newspaper and is egregiously misrepresentative of Steve Webb's evidence to that committee. They appear to be making reference to Webb's lengthy and frankly rather muddled oral submission given to the "Scottish Analysis: Work and Pensions" committee in 2014 (although even then, he certainly didn't say there was "absolutely no risk to the money"). Aware that his oral remarks could be misconstrued, Webb subsequently wrote to the committee to clarify his position and ensure that the written record correctly reflected his view. The committee's report includes the following relevant words from Webb's letter:
"While there are to be no pre-negotiations, I would think the Scottish people would expect their Government to take on full responsibility for paying pensions to people in Scotland including where liabilities had arisen before independence. Similarly people in the rest of the UK would not be expecting to guarantee or underwrite the pensions of those living in what would then have become a separate country. The security and sustainability of pensions being paid to people in Scotland would, therefore, depend on the ability of Scottish tax payers to fund them."
Any possible doubt as to the official UK Government position has been extinguished by recent statements made by the current Pensions Minister, Guy Opperman:
3. But Alex Salmond had a letter sent to one of his constituents that said "If Scotland does become independent, this will have no effect on your state pension - you will continue to receive it just as you do at present."
This letter was sent by some poor "pension service customer adviser" and was clearly wrong. A Freedom of Information request prompted the Department for Work and Pensions to confirm without equivocation that the letter in question was “misleading and factually incorrect”:
I can confirm that an investigation was carried out and concluded that the statement ‘If Scotland does become Independent this will have no effect on your State Pension you will continue to receive it just as you do at present.’ was misleading and factually incorrect.
At the time of the letter the correct statement was ‘In the event of independence, State Pensions and benefits in Scotland for its citizens would be the responsibility of a Scottish Government. Therefore, any questions about entitlements in an independent Scottish state should be directed to the Scottish Government.’
4. But GERS shows Scotland's NI payments are greater than our State Pension costs, so there's no issue
This argument has been promoted on Twitter by the preternaturally obtuse SNP MP Angus MacNeill, endorsing this widely "liked" tweet by, Tim Rideout (Lothians Member of the SNP Policy Development Committee):
There are so many layers of daftness and inconsistency here it's hard to know where to start;
- He mentions leaving "£2,959m surplus for other benefits" - the headline figure for other benefits is £12,903m (£21,420m - £8,517m). But of course that isn't the whole picture, because a proportion of National Insurance resceipts never reach the NI fund but are redirected to the National Health Service, and other taxes are used to pay some of the other elements of Social Protection (which takes us to point 2.)
- It is meaningless anyway to take one source of taxation and compare it to one line of spending because we do not (in any meaningful way) have hypothecated taxes in the UK. NI is conceptually used to pay not just pensions but also to pay other contributory benefits as well as contributing towards NHS funding - but as Merryn Somerset-Webb rather neatly summarises: "This brings us to the very idea of a hypothecated tax. We don’t have those in the UK. Your NI does not go on the NHS – it’s just a misleadingly-named extra income tax. Your road tax does not go on the roads. Your air passenger duty does not go on emissions mitigation."
- The only way to assess the extent to which Scotland can afford an item of public spending is to consider the totality of taxes raised and the totality of public spending (and then deciding what level of deficit is sustainable). The GERS figures Rideout is quoting from show Scotland's Total Public Expenditure exceeding Scotland's Total Revenue by £36.3 billion or 22.4% of GDP
- The Table Rideout refers to shows that Scotland is responsible for just 8.0% of the UK's National Insurance Contributions but the supplementary data - expenditure database shows us that Scotland receives 8.8% of the UK's State Pension payments - so in fact we "get more out than we put in" when it comes to NI and the State Pension (but per 1. above, we get a lot more out than just the State Pensions)
- If this data did show that Scotland can somehow easily support the current state pension, why all the fuss?
********************************************
Footnotes
1. OECD pensions data
What matters here is that the SNP's claim, on their own terms, is simply not correct if we use the latest data. We could easily devote an entire blog to how to compare state pension entitlements between different countries. The apparent jump in the OECD's treatment of the UK relates to the fact that the auto-enrolment scheme has passed the 85% threshold required to qualify as quasi-mandatory. The OECD's treatment is consistent across countries and represents their view of the best way to compare pensions entitlements on a consistent basis. To go any further, one would have to start looking at the entirety of lifetime tax-burdens and factor in differences in (eg) the costs of health and social care throughout citizens' lifetimes.
2. The National Insurance Fund's accounts are helpfully informative:
"Current practice is to aim to maintain the level of the Fund at a working balance of at least 1/6th (16.7%) of projected annual benefit expenditure [..] The National Insurance scheme is financed on a pay as you go basis with contribution rates set at a level broadly necessary to meet the expected benefits expenditure in that year, after taking into account any other payments and receipts, and to maintain a working balance [..] The minimum working balance for 2020 to 2021 was estimated at £17.9 billion, being 16.7% of estimated benefit expenditure, as stated in the report on the Social Security Benefits Up-rating Order published by the Government Actuary in January 2020."
So the NI fund is just a working balance, it cannot in any meaningful way be described as a pension pot (as the term "pension pot" implies a cumulative holding of banked contributions and any associated returns on those contributions, from which future pension payments would be funded).
"The National Insurance Act 1946 and National Assistance Act 1948 established the modern welfare state that continues today"
This timing is significant, because at the time it raised the question of whether or not soldiers returning from WWII would be entitled to a state pension (having not made past NI contributions). The decision to pay current pensions out of current taxes makes perfect sense within this context, because it was the only way to make a pension immediately available.
As a point of interest, although dominated by the state pension, the NI fund is also used to manage other contributory benefits as listed below
Further helpful detail on the background to and operation of the NI fund can be found here
17 comments:
Not forgetting either the SNP published themselves on page 42 Item 141 on its own Pensions White Paper (Pensions in an Independedent Scotland) in 2013 that ..
" Entitlement to a Scottish State Pension
141 Pension entitlement in an independent Scotland can be understood via the
following four key points:
For those people living in Scotland in receipt of the UK State Pension at
the time of independence, the responsibility for the payment of that
pension would transfer to the Scottish Government.
Expert Working Group on Welfare (2013) , para 4.49"
https://www.webarchive.org.uk/wayback/archive/3000/https://www.gov.scot/resource/0043/00434502.pdf
Good article. For the sake of accuracy, though, maybe worth checking the figures you give in response to Tim Rideout's daft tweet.
I think the 21 Bn that you highlight is the total for all benefits, including pensions. Tim's suggestion was that the less than £3Bn difference between NI receipts and pension payments could then fund "other benefits" - so he's only expecting it to cover about 13Bn rather than 21Bn.
Thanks Kevin,
Forensic and extremely well presented.....as usual.
Regards: Graeme J.
Thanks Kevin,
Forensic and extremely well presented....as usual.
Regards: Graeme J.
Great read, very informative. If only the snp followers would read it, understand it and demand the truth from their party
Wow, a heavy read but worth it.
thanks Archie - yes that was a mistake which i rectified shortly after publishing - it always bemuses me that so many others don’t follow a similar policy!
It seems to me that the real issue here is one of nationality. An argument being used by Nationalists is that after independence those living in Scotland will still be British (i.e. British passport holders) and dual national Scots. That means (they argue) they will still be entitled to British pensions, free movement with no hard border, free use of the NHS, embassy assistance, etc. The implication is that the British government in London is not going to deny 'British' people residing in Scotland the same rights as those south of the border. This is part of the basis of the expatriate argument: 'Scots' are simply British dual nationals living abroad and therefore should draw their UK pensions and these should be funded by London.
Some countries have made dual nationality illegal - I have a female Slovakian friend who has lived here over 20 years and cannot apply for British citizenship without relinquishing her current passport, unless she marries a Briton, the only time the Slovak government will permit it. This is probably the direction in which the UK will need to go if Scotland secedes. Those resident in Scotland at the time of independence should lose their British nationality and become Scots citizens without any right to automatically live in the rest of the UK or to draw any form of British financial benefit. At this point Edinburgh becomes totally responsible for taxes, welfare benefits, pensions, etc, as well as the economy, defence and developing a relationship with the EU. It will be up to the Scottish politicians to then negotiate a common travel area, mutual access to healthcare, etc.
Nationalists really want it both ways, being Scots and independent when it benefits them and being British when it does not, in order to maximise the advantages of both. I live a few miles south of the border in north Cumbria and there is already an acute awareness here that southern Scotland is much better funded for public services, healthcare, transport services and so on. Further south there is probably much less appreciation of how much Scotland gains in comparison with England, but a vote for independence and a two or three year hiatus while the terms are agreed will soon bring this to light.
The idea that Scotland secedes and gains all the benefits while the taxpayers of England (mostly), Wales and Northern Ireland go on paying out is one for the birds. An end to the status of dual nationality would solve other issues too (for example the current divided loyalties of immigrants, some of whom see a British passport as simply a convenience, not a commitment). I suspect that a British government announcement during a referendum campaign that dual nationality was a non-starter and that state pensions would not be paid by London would be very telling in terms of the outcome. If Scotland still votes for independence then I imagine there will be large scale emigration before Independence Day.
Incidentally, where I live I have a surprising number of Scots neighbours who have already abandoned Scotland in anticipation of independence, some of whom say they have moved south because of open hostility from aggressive nationalists. My bank manager tells me that they have a lot of enquiries from Scottish based companies about relocation if another referendum kicks off and some have already opened dormant accounts and talked to local legal firms for about moving company registration south of the border. While it will certainly benefit Cumbria and Northumberland (not least in eyes of house prices), I cannot believe that this is very healthy for business confidence in Scotland.
This is a very useful analysis on a confusing subject. There is just one thing that occurs to me. It appears that the 2013 White Paper and current UK Law, favour dual nationality. It might well be that many Scottish residents in a newly independent Scotland might elect to take up both Scottish and RUK nationality. Would these individuals, absent, some inter-government agreement not be entitled to continuing RUK pensions (assuming they otherwise qualified through prior contributions)? Would they not be like the UK ex-pats in Spain and Portugal getting their pensions paid regularly?
Thanks for any answer. Excellent article.
A
The SNP’s State Pension U-turn is no more than a ruse/ploy/trick to get around the fact of the deficit identified in the SNP Scottish Government’s own GERS reports. Its origins are to be found in the Common Weal paper entitled “Beyond GERS — Scotland's fiscal position post-independence — Craig Dalzell” and available at https://commonweal.scot/wp-content/uploads/2016/11/Beyond-GERS-1.pdf Dr Craig Dalzell’s paper states:-
“Pension Liabilities
The current legal position of the UK government regarding pensions is that all current UK citizens who have fulfilled the requirements including the paying of national insurance are entitled to a UK state pension regardless of whether or not they choose to retire within the UK13. Whilst this position is entirely negotiable between the Scottish and rUK Governments, if it were to be adopted in full – which would be in line with the UK claiming possession of all UK assets and liabilities – then this would be expected to reduce the Scottish deficit by up to £8.5 billion14 in the first year of independence.”
The source for “The current legal position of the UK government regarding pensions…” is stated in Footnote 13 to be:-
“13 House of Commons Scottish Affairs Committee, “The Referendum on Separation for Scotland: Implications for Pensions and Benefits”, pg 16, July, (2014)”.
But the footnote reference is typically nationalist nonsense – typically nationalist deceit. Page 16 actually quotes UK Pensions Minister Steve Webb saying: “…the Scottish people would expect their Government to take on full responsibility for paying pensions to people in Scotland including where liabilities had arisen before independence. Similarly people in the rest of the UK would not be expecting to guarantee or underwrite the pensions of those living in what would then have become a separate country. The security and sustainability of pensions being paid to people in Scotland would, therefore, depend on the ability of Scottish taxpayers to fund them.” - https://publications.parliament.uk/pa/cm201415/cmselect/cmscotaf/498/498.pdf
Seems they are having a bit of a pile on now
https://www.facebook.com/thenationalnewspaperscotland/posts/2897159287240760
Do people think A: That Lesley really beleives there is a UK Gov pension "pot"
or B: That Lesley just knows most Nationalists are completely clueless ?
Off Topic but might be something of interest to you
I was reading this Barhead Boy Blog post by Kenny MacAskill and wondering rather
than Facts he is just inventing another work of fiction for greivance purposes alone.
Things i wonder about are
"With Scotland possessing 25% of Europe’s offshore energy potential..." and
"While a maximum sum was set for Scotwind, New York Bight was not capped...."
I wonder if there is any evidence of either of these statements being true i haven't heard
of maximun prices in Auctions before ,,,why would anyone do that ?
Perhaps you might spot other inconsistencies, the easy answer of course is that the Scottish
coastline isn't as valuable as space in New Yorks River Estuary.
https://www.barrheadboy.com/macaskill-slams-scotwind-as-the-great-scottish-energy-sell-out/?unapproved=18489&moderation-hash=72128f90e58fd6e2efaf6a33e06f4cdc#comment-18489
"Pensions in an independent Scotland will be paid by the Government of an independent Scotland, but the contribution towards that, the cost of meeting that, will be partly met by people paying into the UK pensions pot pre-independence"
I think this might be weasel political words just referering to the fact that in addition to pensions being funded by current contributions theres is a few weeks of slack in the kitty for these payments. So a negligible amount, but being made to look significant in the wording.
Fine work.
I would like this to be true, that in an independent Scotland the UK would no longer be responsible for pension payments but when I look at the Governments Pension website and entitlement I see a different picture.
To qualify for a UK pension you need to have a minimum number of years of paying NI contributions. Nationality isn't mentioned so, a Frenchman Comming to the UK, living an working for say 20yrs and going back to France would qualify for a UK pension if he had payed NI contributions during his time in the UK. The pension would be static (no yearly increments) but his contributions count. In fact I can't find anywhere where nationality is a factor.
Clearly this can change with new legislation but currently I se nothing in our pension rules where someone in Scotland who has made enough qualifying years worth of pension would not receive a UK pension.
I hate saying this but I kinda think Nippy and her band of nutters have a point. If anyone can find something in the current legislation to show I'm wrong please let me know≥
Hi there - the mistake you’re in danger of making here is assuming the guidance written for “business as usual” would apply if 8% of the country’s productive tax seceded - it obviously would not for the reasons explained at some length in this blog and confirmed by the direct statement made not only by the current UK pensions minister but by Sturgeon herself (ie that the position hasn’t changed vs the 2014 White Paper (which assumed an independent Scotland would have to fund the total Scottish state pension bill)
We have two groups to consider:
1. Current pensioners
2. Future pensioners
The current pensioners (living in Scotland or abroad) will need to be paid for by Scottish tax payers, out of current taxes.
The future pensioners depends on what agreement is made about contribution importing. So for example a French person may work for 5 years in Scotland and the rest of their working life in France. The current rules allows the 'importing' of those 5 years to make up the French Social Security calculation. The reverse is also true.
So UK and Scotland could adopt that legislation, and import the qualifying years into their State Pension award calculation. Having such a scheme in place is good for workers as it makes it easier to work in different countries and still build up qualifying years for a pension. Without such a deal it would be a disinsentive to work in Scotland (if you intend to work most of your life in the UK)
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