Beyond GERS goes Beyond Truth

Craig Dazell has a problem.

Whilst the author of Beyond GERS could plead ignorance of the facts whilst he wrote his badly researched essay he can’t do so now. He’s openly admitted that he’s read the critique by myself and Kevin Hague.

So what was his response? Did he take on the criticism and amend his conclusions or reframe his perspective in light of the corrections? No, of course not, this is a post-truth author. He just doubled down on his own flawed conclusions and believed that simply typing out the same points, whilst throwing in a few strawmen will justify his errors.

But he has a problem. In doing so he’s lost any ability to claim ignorance and moved firmly into the realms of deception.

His response to the blogs falls into a few points two of which are largely aimed at my critique on debt and pensions (the two areas I have professional qualifications in and have worked with for 20 years) I’ll deal with both in detail here:

4. We’d Be Defaulting on the UK’s Debt

Oh dear. This isnt a good start. Had Craig actually bothered to read the point being made he would know that the position is that if there is any defaulting it would be an independent Scotland defaulting to its debt agreement with rUK.

No one disputes that rUK would be guaranteeing the current UK's debt, however post-truth authors continue to ignore the fact that at the same time as the UK guaranteed its debt it also stated that a separate debt deal between an independent Scotland and rUK would be set up on independence. Therefore there is no question of an independent Scotland being able to default on the UK's debt, missing this sort of detail is just typical of Dazell's shoddy kind of attention to detail.

The stated objective of the Westminster government in the 2014 campaign was to have the rUK recognised as the “continuing” or, at least, the “successor” state to the United Kingdom (the difference is largely semantic. In the former, the UK would continue unchanged in law but with reduced territory and perhaps a change of name. In the latter, the UK would strictly cease to exist but rUK would inherit all of the rights and obligations of the former state) and for Scotland to be recognised as a “new” state (The link prior went so far as to claim that the 1707 Treaty of Union “extinguished” the country of Scotland as a legal entity despite the UK describing itself to the UN 2007 as being composed of “two countries [Scotland and England], one principality [Wales] and a province [Northern Ireland]“).

Here Dazell get's confused between a state and a country. You would hope that this basic sort of point would be apparent to him.

This state of affairs would carry with it significant advantages for rUK – notably, it would lessen any serious challenge towards their holding the UK’s permanent seat on the UN Security Council which was the case when Russia became the successor to the USSR – but carries with it many obligations also. The historical precedents are clearly laid out and extensively referenced in my paper Claiming Scotland’s Assets but readers should also consider G.F. Treverton’s book on the subject Dividing Divided States.

Essentially, where one country successfully claims “continuing” or “successor” status then it accepts that all of the mobile debts and assets of the former state belong solely to it (non-mobile assets like mineral rights, military bases and public buildings – including public companies and any mobile assets deemed essential to their running – are almost always split geographically). This means that a “continuing” rUK owns all of the UK’s debt in its own name. Scotland can no more default on them than can a former lodger default on your mortgage.
Absolutely. No one (mentioned here) is arguing otherwise. Dazell has set up a rather obvious strawman to deliberately avoid the point being made largely because he cant answer it. The UK has stated clearly that an independent Scotland shall have a separate debt agreement with rUK. This isn't something that is optional unless Dazell wants to explain how it would be possible for an Act of Independence to pass through Westminster without a debt agreement as part of it. Why would rUK MPs give Scotland a free pass on debt that it has helped to build up over 300 years?

One could argue this case, but it's not credible and certainly isn't credible for a group claiming to take a realistic approach to independence to argue it.

Now, if the side negotiating on behalf of the UK wishes to make the case that Scotland should take on a share of debts, perhaps by offering a share of assets to their value, then this is something that Scotland could consider, accept or refuse. There is a very good case to be made that Scotland doesn’t actually need or want a population share of the UK’s mobile assets.

Another attempt at a strawman on debt. The UK has stated that an independent Scotland would get a geographic share of UK assets (that's all the land and natural resources in Scotland) and a population share of our financial assets (gold and FX reserves) - which is about £2-3bn on a net liability basis, which I've already corrected Dazell on. Alongside this we get a population share of debt. That's about £130 billion of debt.

This isn't optional. This isn't something that a proto-independent Scottish government could refuse and then expect the Act of independence to pass through the UK Parliament.

We may need a few £billion worth of military equipment – assuming we can’t buy newer or more appropriate equipment elsewhere. We may need a couple of £billion (those stalwart supporters of independence, Scotland in Union, estimated not more than £1 billion) to set up essential government departments currently lacking – assuming we can’t borrow the money at better rates on the open market. We may need a couple tens of £billions to support our new currency and set up the investment banks we’ll need to start rebuilding our economy.
Where do these 'tens of billions' come to support our new currency? Does Dazell really believe that a new Scottish state could tap the debt market to borrow in debt denominated in the new currency to defend that new currency! He really does not understand how markets work.

After that, it really does start to become a stretch to consider what other assets we would actually need which would justify accepting over £130 billion worth of debt. Answers on a postcard on that one please.

The assets we would need would be the geographic assets of Scotland (say the north sea for instance), these are current UK assets. Dazell (quite deliberately) completely fails to understand this point. Once again on independence Scotland gets the physical and natural assets of Scotland and a population share of the financial assets and liabilities.

How a proto-Scottish Government forces the UK Parliament to accept something other than that I've yet to hear from any nationalist. Answers on a postcard on that one please.


5. rUK Won’t Pay Pensions to People in Scotland

The current rules regarding the UK state pension are quite clear.
Oh another bad start! He uses the terms 'current rules' on 'UK state pensions' but these are the discretionary practices employed by the UK (not actual rules) in the current environment. Post independence it's not remotely reasonable to say that those discretionary practices will apply. It would be like arguing that right now Scotland is in a currency union as part of the UK therefore we can simply project that under independence Scotland will remain part of that currency union, case closed.

If you meet the requirements for one, including paying up to 30 years worth of National Insurance, then you are entitled to a UK state pension when you retire.

You are entitled to a pension at the discretion of the UK government (oh and it's 35 years not 30). You need only look at the fact that your pension value changes depending on where you move to after retirement or that the government can change pension entitlement with an Act of Parliament as the WASPI campaigners highlight. The point that one does not have a legally enforceable right to a pension from the UK state has been established in law by the ECHR which clearly stated:

"The Court did not consider that it sufficed for the applicants to have paid National Insurance contributions in the United Kingdom to place them in a relevantly similar position to all other pensioners, regardless of their country of residence. Claiming the contrary would be based on a misconception of the relationship between National Insurance contributions and the State pension. Unlike private pension schemes, National Insurance contributions had no exclusive link to retirement pensions. Instead, they formed a part of the revenue which paid for a whole range of social security benefits, including incapacity benefits, maternity allowances, widow’s benefits, bereavement benefits and the National Health Service. The complex and interlocking system of the benefits and taxation systems made it impossible to isolate the payment of National Insurance contributions as a sufficient ground for equating the position of pensioners who received up- rating and those, like the applicants, who did not. "

Should you retire outside of the UK then, depending on which country you retire to, you may or may not receive an annual increment to that pension and changes to things like exchange rate and purchasing power may erode or enhance the value of that pension but the basic premise is laid out.
Yes the basic premise is laid out. The UK can pay pensions as it sees fit and at its discretion.

In the absence of an agreement to the contrary, if someone has reached their 30 years contribution before I-Day or has even already retired then they can expect their full UK pension.

This is another attempt to try to warp the debate and if you don't pay attention you miss it. It also shows that this is not ignorance on the part of Dazell but a deliberate attempt to mislead.

Firstly there can be no established practice in respect of rUK pensions to an independent Scotland as neither practice exists. Therefore to argue that there would not be any agreement to the contrary is like saying there would be no debt agreement on independence. Yes it's possible to make the case but it's not remotely reasonable to do so.

You might as well be arguing that the UK will simply give a new Scottish state a bung of £100BN just because they are being nice.

There may be a case here if there was a legally enforceable right to a pension from the rUK state. But there isnt. That's already been established in law.

If, for example, they end up paying 25 years UK NI and then 5 years of Scottish NI (or equivalent) then they can expect both governments to pay according to those shares.

If someone lives their entire working life in an independent Scotland then the full share of that pension lies with Scotland. By this logic, at the point of independence, the full component of pension liabilities would fall on rUK as, at that point, no Scottish NI would have been paid.

Having established that this is not the case in law or rights we can now move on to the practical reasons why this isn't the case in practice either. Pensions are welfare payments and transfer payments. People paying NI contributions now (from around the UK) pay pensions for existing UK pensioners (no matter where they live).

By this logic post independence we can expect rUK taxpayers to pay for rUK pensioners (no matter where they live) and iScotland taxpayers to pay for iScotland pensioners (no matter where they live).

Pensioners will be designated as an rUK pensioner or an iScottish pensioner at the point of independence based on the residence at that time.

There are of course other ways of managing these liabilities. It would for instance be possible to argue that pension payments would be based on the past contribution record with each country accepting its proportional share of these liabilities.

However the trouble is that would mean an independent Scottish government paying for pensions in rUK in respect of those liabilities that arose under the UK (of which Scotland was a part). So taking Dazell's example:

Someone in the UK paying 25 years of NI and then 5 years of rUK NI would expect the rUK to pay for their 5 years of rUK pension and the Scottish Government to pay a population share of the 25 years of a UK pension (remember Scotland was part of the UK state when this liability was built up).

Now Dazell and the Common Weal can argue for this position if they want but the liabilities do not change overall and we end up with an administrative nightmare of cross border pension payments for pensioners who will have no electoral control over the government funding part of their pension.

It is for this practical reason that both sides agree on splitting pensions on independence by residence.

This should not be a controversial point as this was precisely the stance that the UK government itself took during indyref1 and is entirely consistent with the stance laid out above that rUK would act as the continuing state to the UK.

This is a bit of a giveaway by Dazell. Having read my blog (as he's commenting on it) he'll know that this wasnt the UK's position. The UK's position was entirely as I've stated and as Steve Webb (the DWP minister in charge of this area) stated:

“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.”
The fact that Dazell (and others) continue to ignore this official statement by the UK government on this matter is very telling.

At least one commentator has suggested that the UK could “change the law at the stroke of a pen” to block payment of extra-rUK pensions.
Another strawman. I certainly did say the part in quotes (it's true) but I didn't say the second part. Again Dazell is in such a pickle he has to make up the arguments now. My case is that the UK has discretion in how it pays pensions and at no point have I suggested that post independence the rUK would cease to pay for rUK pensioners abroad.

Note that is very different from saying rUK would pay for UK pensioners abroad. In this context UK pensioners no longer exist, you only have iScot pensioners and rUK pensioners and each state would be responsible for providing pensions for 'their' pensioners.

I guess they could. It’d be a “brave” move though. I doubt they’d be able to pass that bill over the howls of horror from all the other British emigrants currently drawing that pension.

I’d also love to hear their explanation to both rUK citizens who choose to move to Scotland at some point after independence

And it's here that Dazell exposes his inability to hold on to the detail. Let me be clear. If after independence an rUK pensioner were to move to Scotland then their rUK pension would continue to be paid by rUK - it would not fall to zero.

Dazell and others are trying to make the point that because rUK would pay for rUK pensioners then rUK would pay for UK pensioners. In other words in this context rUK is not UK.

They wouldn't, they have no need to financially, legally or electorally.

as well as to their core voting base of those British nationalists who would certainly seek to retain their UK citizenship post independence and may even reject the offer of taking Scottish citizenship to which they may be entitled.

Pension liability does not depend on citizenship, it's at the discretion of the providing government.

This was entirely known to the Scottish Government when they published their paper and with a little thought about the way voters on each side of the border would react you can see why.

Let’s say an independent Scottish Government decides to demand the rUK pays pensions to all those Scottish citizens who have paid into the UK system after independence.

The rUK government naturally refuse as both sides agreed on this before the referendum and have no intention of having their current and reduced electorate paying for the pensions of citizens of another state.

In these circumstances the Scottish Government is faced with a dilemma. Scottish pensioners will be thrown into poverty were this to come to pass. These pensioners wont be in a position to take out their wrath on the rUK government as they are no longer citizens of the rUK state and can't vote there. They can only vote in Scotland. So who will they take their wrath out on? The Scottish Government, who happen to be sitting on a huge windfall Dazell seems to thinks exits because they don’t think they need to pay pensions to existing Scots pensioners.

There is only one way this ends. The Scottish Government pays the pensions of Scottish citizens, including those in payment.

That’s why both sides agree, because in a democracy there is only one logical outcome.

It’s why the Scottish Government issued a paper saying that they would take full responsibility for all pensions, it’s why their budgets made full provision for paying all pensions, including those currently in payment. It wasn't prudence on the part of the Scottish Government. It was simply the reality of the world they were going to inherit. How you get around that reality? Answers on a postcard please.

That same commentator also suggested that, rather than a blanket ban on extra-rUK payments, the blockade could be limited solely to Scotland. I find it extremely difficult to suggest a way in which that this could be done which wouldn’t be seen as a blatantly discriminatory attack on pensioners based solely on place of residence.

“You can have your pension paid to you anywhere on the planet*”

*except Scotland

Again the strawman shows Dazell is unable to grasp the difference between rUK pays for rUK pensioners not UK pensioners.

I’m far from a legal authority but I’m fairly sure that one could be challenged in the courts.

Dazell is not a legal authority but as I've said it's already been established in law that NI contributions do not entitle one to a legally enforceable pension.

Now, if an agreement over pensions liability sharing IS reached then this may change and, being that it is entirely a political negotiation, it’s difficult to predict ahead of time what that agreement would look like.

It's not difficult, there is only one logical outcome from an electoral and logistical point of view. That is the outcome that both sides agree upon. In any case under any scenario a Scottish Government doesn't make a saving, it either (in terms of pensions built up before independence) pays for a population share of rUK and iScot pensions or it pays all iScot pensions on independence.

Neither scenario creates a windfall.

Common Weal will soon be producing our own suggestions about what a Scottish pension system may look like and how it would interact with the rest of the social security network. This may include some form of cash settlement from rUK to Scotland to compensate Scottish residents for the NI they’ve paid into the UK system over the years. More on that in good time.

Hopefully by then Dazell will have actually understood pensions, I'm looking forward to the cash settlement argument which I suspect will fundamentally misunderstand the bargaining position of Scotland on independence, the nature of pension liabilities and the concept of the NI fund.

It is true that the Scottish Government claimed in the Scotland’s Future White Paper that they would take up the pension liabilities. This was part of their stance that Scotland would share UK successor status with rUK and would share assets and debts.

No it was based on the practical, legal and democratic reality of independence and pension liabilities.

Remember that it was the No campaign which originally claimed that this wouldn’t be possible. If this has changed; if the pro-Union campaign wants now to seriously suggest asset and liability sharing. Time to make us a serious offer. We may even agree to it.

The UK did state asset and liability sharing, it's been stated since they guaranteed UK debt. I've pointed this out several times but Dazell continues to ignore it. It's easy to see why because soon as you look at the details, like so much of his work, it collapses.

I genuinely felt bad recently for using the "laser engineer" tag for Dazell. Far be it from me to imply that because he is unqualified in debt valuation or pensions that his own qualifications aren't relevant. I shouldn't have gone there and I'm sorry about that. However the trouble is Dazell continues to demonstrate that a little knowledge is a very dangerous thing, and as Ive shown here he's moved from a character for which deep down I had some sympathy for to one of downright deception and shoddy analysis.

Dazell may want to carry on issuing papers which don't actually reflect reality, that's his right, but he's simply demonstrating that he's now part of the Stu Campbell school of lie, double down on the lies and keep lying in the hope no one will notice. That's a shame it could have been so much better.