Saturday, 4 March 2017

FOI request, putting the zombie pensions letter to rest

Summary
During the independence campaign the First Minister brandished a letter from the DWP which the Yes movement repeatedly and wrongly went on to claim proved that the UK Government would pay Scottish pensions post independence. Here I show through an FOI request that their claim was categorically wrong. 

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The smoking gun
It's no mistake, given my background, that I obsess over pensions in an independent Scotland but I'm convinced, barring currency, it's the weakest part of the case for independence. 

It didn't have to be. The Yes movement could have come up with an honest, dispassionate and credible state pension policy. Indeed they did at first, but ended up abandoning the policy for a dog whistle attempt to confuse the electorate and their supporters. 

So sharp was the sound of that dog whistle that some of the more extreme ends of their support, such as Campbell and Bell took the dog whistle as gospel. Indeed in the case of Campbell he went so far as to base the crux of his Wee Blue Book on a fundamental error involving pensions

None of this would have happened were it not for that letter. The 'one off' letter held up by Salmond in the Scottish Parliament as part of their disinformation campaign on pensions. 

For some in the Yes Campaign this is the smoking gun. The trouble is it's not, the letter is wrong and now, as I'll show, we've finally got an official admission as such from the DWP. 

But it's wrong...
I've said before there are several problems with the letter when nationalists brandish it as proof that Scottish pensions would be paid by the continuing UK. 

1. The letter doesn't say that.

2. It contradicts the policy of the Scottish Government which explicitly stated in their Pensions in an Independent Scotland paper that the responsibility for all existing UK pensions would lie with the Scottish Government. For further measure the white paper clarified beyond all doubt that this responsibility included financial as well as administrative responsibility and their budget assumes that the Scottish Government makes these payments from Scottish tax receipts. 

3. It contradicts the statements made by the DWP minister to the Scottish Affairs Select Committee which explicitly stated that payments would be dependent on the ability of the Scottish Government to pay. 

4. It's factually inaccurate. There was no legal assurance that on independence that there would be no effect on the UK Pension. Had Scotland not been in the EU or Scotland and the continuing UK did not agree a welfare sharing agreement then, like in Australia, Scots pensioners would not receive annual increases in their pensions. Whilst this was likely to happen it was not qualified in the letter and therefore was legally incorrect. 

5. The DWP cast doubt on the letter at the time it came to light and they said "We will look into this specific letter in case any misleading information was inadvertently given out"

This all underlines my view that the letter was probably a one off issued by a junior official in a DWP office aiming to reassure enquirer whilst not wanting to second guess the outcome of independence. The only trouble is that, despite having the best of intentions, the official went too far in doing so. 

The zombie letter
Despite the overwhelming evidence above that the letter did not accurately reflect the position on independence the letter is like a zombie in The Walking Dead. No matter how many times you cut it down it just keeps getting revived by a Yes movement that still hasn't come to terms with their inconsistent position on pensions. 

Therefore I thought it was time to put this issue to rest for once and for all. The most obvious approach was to the DWP themselves. I've tried a few approaches to get the issue of the letter clarified but unsurprisingly the DWP aren't very keen to throw a member of their staff under the metaphorical bus. 

After all if one of your colleagues made an innocent mistake but it was blown up out of all proportion by the First Minister of Scotland wouldn't you be likely to circle the wagons around them and obfuscate any attempt at getting this information?

However finally this weekend I got official confirmation from the DWP.


Rather that trying to establish facts about a one off letter (and let them hide behind the Data Protection Act) I realised that the correct approach was ask about the investigation that the DWP announced above. 

So on my second attempt at an Freedom of Information request I was able to get the DWP to admit that there was indeed an error on the original letter. Their investigation concluded that factually inaccurate information was issued and the letter should have stated:

‘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.’ 

So there we have it, it was a mistake. Plain and simple as that. 

I've still got a further FOI request running trying to establish if this letter was indeed, as I suspect, a one off. Despite looking very hard I haven't been able to find any other versions of this letter to anyone else, but if anyone does have another genuine DWP letter on the same basis then let me know. 

I'm aware that for some this zombie letter will never die, but for me this finally provides the headshot (watch the Walking Dead if you don't understand) that this letter needs. We can finally put it to rest.

The DWP letter to an individual that was brandished by the First Minister as a statement of policy was simply an error issued by an ill informed junior official acting with best intentions. The First Minister could have established this at the time but decided not to, in doing so he caused confusion within his own campaign, dumped his own good pensions policy and probably caused a junior civil servant to be disciplined. 

















17 comments:

  1. Scotland currently pays for its own pensions and any Indy Scotland would continue to pay it's own pensions.

    I've never spoken to anyone that doesn't agree with this position.

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    1. Sadly Ian I've made many to see exactly the opposite. They are of course wrong but that doesn't stop them asserting anyway.

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  2. Man with splinter is wrestling with two short planks over who is more intelligent.

    Canadian citizens beware lovat is gunning for your UK pensions!

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    1. Were you drunk when you wrote that... I hope you were to be honest.

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  3. Hi Neil ... we have corresponded before. We occupy differing political views, I hope that is not an obstacle.

    Suggested starting point:
    http://www.parliament.uk/written-questions-answers-statements/written-question/lords/2016-02-23/HL6343

    From there you can download what was said in a Parliamentary Question, and an annex.

    Second relevant item:
    researchbriefings.files.parliament.uk/documents/SN01457/SN01457.pdf

    Both items suggest that the issue of pensions is very far from over and done with, concluded and fixed beyond question, and not just as it applies to Scotland. There is just too much still in play, the negotiations as they relate to Brexit are just a start

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  4. Mike of course differing political views aren't a barrier!

    I'm not sure what you think the links are showing. I specifically cite the issue you raise in these links in my other blogs on pensions. They are very clear cut (as your second link shows) that there is no legal obligation on the UK to provide pensions to anyone. That is why they are legally allowed to differentiate between pensioners at home or abroad.

    So I'm a bit lost as to what point you think is being made here? Let me know and we can have a proper chat on the detail of this.


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  5. Hi Neil ... looks like I need to break my response into a series of posts - I am getting this message: Your HTML cannot be accepted: Must be at most 4,096 character.

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  6. Part 1:

    Hi Neil … whilst I will attempt to deviate as little as possible – the theme I want to follow can be summed up in two words - “things change”.

    Perhaps the major change makers (for the purpose of this discussion at least) are democratically elected Governments with a sufficient enough majority to effect change.

    I could use the proposed Qrops changes today as an example, but I want to go back further in time, not as may appear to show any levels of personal experience or longevity in such matters, but to develop the theme - “things change”.

    In my earlier years I gave financial advice on the subject of Estate Duty, based on its legal and taxation implications – it was a complicated area, not one to fool around with, and I think you would agree pensions very much matches that criteria.

    “Things changed” … and with the introduction of Capital Transfer Tax, arrangements that had met earlier legal and tax requirements required to be undone, and new arrangements set in place.

    “Things changed” - and now Inheritance Tax was introduced, same story, etc etc, I could even take you back in terms of pensions to a time, well within my personal experience, when so called “Executive Pension Plans” were non- existent – then “things changed”.

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  7. Part 2:

    What worries me at the moment, as it applies to pensions but not just pensions, is that there are substantial numbers of individuals who are to be affected by changes, changes in process as we speak, and may be being mislead, because for me the changes yet to come are very unclear as to their eventual outcome – very very unclear.

    So when I see Stu Campbell in the Red corner waving his DWP letter, then with you in the Blue corner with your DWP letter, it doesn't diminish my concern it increases it.

    If nothing was in flux I would honestly just let you both get on with it, but there are millions who may be relying on you both, each in their own way and motivated by differing outlooks and biases – and all we can really truly guarantee is that “things change”, that was the point I was alluding to in my original post.

    Let me use this extract from Baroness Altmann: “Of course there is uncertainty about how a vote to leave the EU could impact on access to pensioner benefits for UK pensioners living in other parts of Europe. These questions would need to be answered as part of the process of negotiating the UK’s exit if there is a vote to leave. We could only consider the detail of access to pensions and benefits for people in receipt of UK state pensions who are resident in Europe as part of the process for leaving the EU.”

    I know and understand that you frame your comments (and facts) within a Scotland dimension, but how “things change” goes wider than that, Brexit is such a change. I don't want to deviate too far (we both could I think) but say we have a married couple resident today in England, husband in receipt of the state pension, with the wife a leading light in the Waspi campaign. Because it seems certain that the Government will not further ameliorate the wife's position, they have bought a house in Spain, the husband will make his move there this summer.

    I am in receipt of a state pension – who – today, and I stress today – based on the answer above from Baroness Altmann is more secure over its continuance, me or the husband?

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  8. Part 3:

    Below that link, is an Annex, it lists the countries where (index linked or otherwise) state pensions continue to be paid, and here I wish to use an extract from your post, this: there is no legal obligation on the UK to provide pensions to anyone. That is why they are legally allowed to differentiate between pensioners at home or abroad.

    Can we agree, whilst not differing from your comment, that beyond the legality lies a commercial aspect, namely does the Government of the day, view a “reciprocal agreement” over social security issues (including pensions) as warranting one – specifically is it in their financial interests. You will know that has been the arbiter of such agreements, and their terms, those that have been established, and equally of those which have not been concluded.

    We witness today much talk of the status of EU citizens in the UK, and of UK ex-pats – how much of such discussions relate in great detail to pensions – very little that I see – and that is where forming the locus of pensions within a solely Scottish context worries me – yes, of course, as a result of the independence YES/NO debate it undoubtedly has its place – but how many fully understand the very much wider implications over geographical boundaries and their impact – should we show them the list from that Annex – or inform them of the Altmann quote, or just restrict it to a narrow Scottish landscape.

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  9. Final part:

    “Things change”, Neil – I, and you, could speculate on the outcome of the Brexit negotiations as they apply to pensions, but we cannot offer their conclusions. How many even know there are such discussions to take place, but are today making plans over where they might take up residence – should I move to Germany or England?

    Likewise, no matter our individual standpoint over Scottish Independence, “things change” - again we could speculate on what might or might not be agreed if there were to be a Scottish Government – rUK Government negotiation if there were to be a majority Yes vote – but neither of us could offer the conclusion of any such negotiations, if they were to happen. Maybe if the Brexit negotiations lead to a “reciprocal agreement” between the UK and the EU, but later on no such agreement is reached between an independent Scotland and rUK – I have my answer – I move to Germany! Until perhaps Scotland takes up membership of the EEA?

    We are most certainly where we are now, but tomorrow? “Things change!”

    In no way do I intend to anticipate how you may reply, but I hope what I have said may, even if in the most minor way, encourage you to recognise that the very many individuals whose knowledge of this subject is not extensive deserve the broadest understanding we can provide. That was my purpose in making contact - thanks for allowing me to post.

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    1. Hi Mike
      Thanks for your extensive reply.

      Let me start with your theme, things change. Yes there is no doubt that things change, you have then went on to list changes to private pension regulations which change all the time. However the important point about those private pension changes was that they were not retrospective, benefits earned up to that point were preserved whilst benefits going forwards were changed.

      You could have equally listed the many changes to state pensions from Lloyd George through to where we are now. The important difference there is that those changes to state pensions were often retrospective, see WASPI for a good example.

      The difference is subtle but important things do change, but they change in very different ways depending on whether they are private or public pensions.

      Let me start by saying something that is hopefully obvious, and as I’ve argued on other blogs on this topic. It is perfectly possible to argue that rUK would pay Scottish pensions, just as it is possible to argue that rUK would give every Scot £25,000 a year an income for life. Yes you can argue these points but it’s not got a shred of credibility.

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    2. To argue for a position on pensions it needs to be based on reality, the positions set out by both sides and the nature of any negotiations. Of course within that one can argue things would change but to have any credibility one must argue based on reality.

      That remains my point. We all know current pensions are funded by current taxation therefore it is a nonsense to argue that an independent Scotland would have it’s current pension provision paid for by the current taxation of a foreign state. The only way around that would be to find some legal obligation on the rUK to do so irrespective of any taxation agreement.

      That remains my central point about the error at the heart of the Wee Blue Book and the position professed by the Common Weal – they assert without any backing that the legal default position on pensions are that the UK would be legally obliged to pay for Scottish Pensions. That legal obligation does not exist and has been proven at the level of the European Court.

      Then we are left with the likes of Campbell quoting a DWP letter in the hope of creating some legal obligation on the UK. Even if the letter were accurate it would not provide such legal comfort, but in any case we now know that the letter was simply a mistake. Something that was effectively said at the time by the DWP but now we have it confirmed.

      To turn to your specific point about reciprocal agreements then you are absolutely correct that one is possible but again let me note that it has to be based on reality and the positions of the two governments.

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    3. I've set out the model of pensions as agreed by both governments. The Scottish Government in their paper Pensions In An Independent Scotland and Steve Webb’s evidence before the Scottish Affairs Select Committee.

      Briefly that model is that on independence all responsibility for the pensions of all existing and future pensions of Scottish residents transfer to the Scottish government. Therefore the Scottish government has the financial and administrative responsibility to provide pensions for their population.

      However, unlike the Scottish Government position, the British government did leave open the possibility of a different model. One which may match your thoughts of a reciprocal agreement.

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    4. Under this model UK pensions remain administered and paid for by continuing the UK government, however as Webb clearly states that would also be dependent on the Scottish Government paying the UK government for doing so, thus bearing the burden of the financial responsibility of pensions for all Scots (current and future pensioners).

      That’s a possible solution but the Scottish Government rejected that option and I can see why, it would severely restrict their ability to provide a distinct Scottish pension system for their residents. It would infact not be independent.

      Furthermore the model does not provide the Scottish Government with any savings. The position under either model is that the Scottish Government pays for Scottish pensions and the cUK government pays for cUK pensions, so neither one saves any money or provides the Scottish government with any leverage over the UK government in negotiations – which was the point that both Campbell and the Common Weal have been trying to assert. In both cases that is just plainly wrong.

      So yes Mike things change, but if you want to offer a clear and rational case for independence then we can’t go on with this sort of “fairy dust”or “money tree” solutions that there are easy ways to get around the problem of funding independence. Absolutely let’s discuss alternative models for pensions and ways of funding them but lets get them based on reality.

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  10. Neil ... " We all know current pensions are funded by current taxation therefore it is a nonsense to argue that an independent Scotland would have it’s current pension provision paid for by the current taxation of a foreign state. The only way around that would be to find some legal obligation on the rUK to do so irrespective of any taxation agreement."

    Were that absolute, Neil, the only basis to be established is legality - how do we explain the list of countries in that Annex where pensions are being paid by virtue of UK taxation, the funding of pensions in foreign states arising from the taxation of another but distinctly separate foreign state? I know I won't alter your perspective, not my intention, but I would personally recommend that you factor in "reciprocal agreements", as a step beyond the ambit of the purely legal - reciprocal agreements do reflect a known and currently functioning reality. A reality I suggest cannot be ignored.

    I strongly suspect we shall see one such reciprocal agreememt formed between the UK and the EU, and if that proves correct, it may prove a factor in what happens in the choices open to Scotland - we are supposedly attributed with the inherent ability to be canny. Who knows - it will be years away before we know.

    If I am still kicking about, and my brain still functions reasonably well, I hope to re-visit your page and our discussion - I would estimate in about maybe 3, possibly 5 years, time, to see what "changed", to assess what transpired, to gauge reality as it then presents itself.

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  11. Sorry Mike I didn't ignore the reciprocal agreement. I specifically addressed how one would be possible but how it would need to be funded by the Scottish government via the UK government. I'm not sure if you are deliberately ignoring my direct answer to your point of if you missed it but either way can you look over it again.

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