Conclusions and recommendations
The Overall Context
1. The
Scottish people deserve a more realistic assessment of the likely
costs of the social security system the Scottish Government envisages,
and where additional money would come from, particularly given
the demographic projections and economic structure of Scotland.
We therefore call on the Scottish Government to provide more information
on costs. In addition, we urge them to provide greater detail
about the pensions and welfare settlement they envisage for the
longer term and how it would be afforded. In their proposals,
a great deal of emphasis is placed on halting or reversing certain
UK policies, such as the Bedroom Tax or Universal Credit, in the
short term, while little is said about the longer-term system
beyond general statements of principle. For example, given that
information already exists about future demographic changes, we
call on the Scottish Government to make a decision on what the
State Pension Age would be if Scotland were to leave the Union
and become a separate state, rather than delaying the decision
on whether or not it should rise to 67, as proposed in the White
Paper. Such information will help create greater certainty and
clarity on this most important of policy areas and provide reassurance
for the people of Scotland. (Paragraph 9)
Pensions
2. Scotland's
future higher age dependency ratio has very significant consequences
for the affordability of old age pensions. The Scottish government
have been very reluctant to acknowledge this reality. (Paragraph
19)
3. Given
the expected decline in oil revenues and the projected higher
number of dependents to those of working age in Scotland compared
to the UK, the Scottish Government must provide more detailed
costing of their proposed changes to the new Single-tier Pension
settlement. In addition, we recommend that the Scottish Government
bring forward their decision on whether or not to raise the SPA
to 67 in the event of separation. The UK Government has already
taken this step, and enough information already exists for the
Scottish Government to be able to state clearly what it would
do, given the choice. Greater certainty on this vital issue is
essential, if voters are to be given the opportunity to make an
informed choice. (Paragraph 33)
4. It
is clear that the process of disentangling Scottish and UK-wide
public sector pensions, and negotiating responsibility for their
payment, will be a lengthy process. It could take years to resolve
these questions. (Paragraph 37)
5. Pension
provision is an extremely important and sensitive issue, affecting
every person in the UK. People understandably worry about the
integrity of their retirement savings and want reassurance and
certainty about how their money will be safeguarded. The Scottish
Government's vague and woolly statements on arrangements for the
regulation of private pensions are therefore of concern to the
Committee, and we call for much greater clarity on exactly what
changes the Scottish Government would or would not make to the
present institutions and arrangements. (Paragraph 44)
6. Uncertainty
is inevitable when a decision as far reaching as the possibility
of separation is being considered, and for some people, no doubt,
the possibility of change is attractive. However, pensions require
long-term, responsible stable government policies, because individuals
and companies are making long-term commitments which matter a
great deal. The Scottish government's approach is apparently to
make ill-defined, uncosted and possibly undeliverable promises.
This can only add to individuals' uncertainty about their financial
future. Scottish ministers are free to make promises, but it is
ordinary voters who may have to pay a price in terms of their
long-term financial security. (Paragraph 51)
Welfare (working age benefits)
7. These
points indicate that Scottish Government's proposal to establish
an independent welfare system "that better reflects Scotland's
priorities" by 2018, just two years after their preferred
independence date, is over-optimistic. In reality this process
will take much longer. (Paragraph 59)
8. There
is clear evidence that the process of establishing a new welfare
system would 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; nor is it clear that
UK systems could in reality be used to administer two separate
benefits regimes. The Scottish Government should produce further
analysis of the methodology and costings by which a transitional
welfare system could be implemented. The Scottish Government should
not make promises it cannot deliver. (Paragraph 66)
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