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Pensions and welfare together represent one of the most important and sensitive areas of government policy. Individuals and families depend upon clarity and certainty in this area, in order to help them plan for retirement and know what support is available when they may not be able to support themselves.
The Scottish Government have set out a number of proposals outlining the changes they would seek to make to welfare and pensions in the event of separation from the United Kingdom. The Committee acknowledges the broad progressive thrust of these proposals, but is deeply concerned about their lack of detail and failure to consider some of the more practical issues around implementation and, in particular, costs. Their pledges on welfare and pensions will inevitably mean more spending, and when the projected increase in the number of people of pension age to people of working age in Scotland is taken into consideration, the price of separation can only get higher. There are also serious doubts as to whether or not the Scottish Government could hope to achieve the changes it wants within the timeframe it sets out. Our evidence indicates that their stated aim of launching a new benefits system by 2018 is unrealistic.
On the State Pension, the Scottish Government propose a higher starting-rate than the rest of the UK and to delay the decision on whether or not increase the state pension age to 67. We call on Scottish Government to spell out the full cost of these pledges, and to make a decision on their proposed State Pension Age before the referendum, in order to give the Scottish people a clear idea of the pension arrangements they could expect in a separate Scotland.
Many people also rely on or are expecting public sector pensions, which the Scottish Government plan to administer through the already-existing Scottish Public Pensions Agency. However, this organisation currently does not cover all public service pensions, so would have to be expanded to cover currently reserved schemes. Moreover, many public sector pension schemes are not funded up to sufficient levels to cover all their commitments to their members, so have had to receive additional funding from Westminster. In the event of separation the Scottish Government would have to take on responsibility for making up any shortfall, the amount of which is presently unknown.
Holyrood have acknowledged the positive steps the UK Government is taking to increase private saving for retirement, and have promised to continue the current policy of auto-enrolment for occupational pensions. However, we have heard evidence that a Scottish version of the National Employment Savings Trust (NEST)—which the Scottish Government propose in order to cover small savers—would fail to achieve the value for money of its larger, UK equivalent, and could take a long time to set up. A number of the Scottish Government's other statements on occupational pensions, such as on pension protection, take the form of vague, speculative comments. This is completely unacceptable.
On working-age benefits, the Scottish Government make a number of bold commitments, such as the abolition of the Bedroom Tax and the halting of Universal Credit (UC) and the Personal Independence Payment (PIP). While the Committee has called for an end to the Bedroom Tax on a number of occasions, unlike the Scottish Government we also acknowledge the underlying strength of the UK system as a large and economically diverse risk-pool and well-integrated labour market. Holyrood also fails to acknowledge the logistical complexity and significant costs of disentangling Scottish welfare claimants from the current UK-wide system.
Finally, we consider the costs and difficulties of setting up new infrastructure to deliver all these promises. The Scottish Government assumes that Westminster can run two parallel systems in a transition period, but we have been assured this is not feasible. There is clear evidence that the process of establishing a new welfare system will be difficult and costly. Our evidence indicates that the process would take many years, and we do not believe that interim changes of the sort the Scottish Government has promised could be made in the timescale it has set.
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