We need to talk about babies.

In all of the discussion of pensions, the economy, or why can't Scotland be like <insert current favourite economy> few people want to talk about probably the biggest long term problem in Scotland *whispers* fertility. 

Just the mention of this has probably got you shifting in your seat. 

'Scotland' this is a conversation we need to have. 

Scotland has a problem. We've had it for some time and it's only getting worse. It's not something that is cured by independence or caused by the union, it's something much deeper and ingrained into our society, and we really need to deal with it. 

Total Fertility Rate

In demographics fertility is measured in a number of ways but the main statistic is the Total Fertility Rate. This is essentially the number of children each female in a society gives birth to in their lifetime. 

If the TFR is at or around 2.1 this is regarded as the required level of children for a population to sustain itself. That's important for any number of issues but given the recent discussion on state funded pensions, where the workers of today pay for the pensioners of today, we can see the problem if there are less and less workers funding increasing numbers of pensioners receiving the state pension. 

A TFR higher than 2.1 means the population is growing. That will incur certain additional current costs but it's also an investment in the future because no matter how much some people may bang on about 'resources' in Scotland productivity in a modern economy is generated by people. 

A TFR of less than 2.1  means the opposite, and like the mirror of a higher TFR it can mean short term benefits, in the form of lower current costs, but as noted above it will lead to productivity problems and a higher social burden on future generations. 

We're just not having enough babies

Last year Scotland's TFR fell to 1.29. Let me say that again 1.29. This mean that for every female (and therefore broadly every couple) in Scotland on average there are only 1.29 children.

Now it's probably easy to wish that away, with something about lockdown, but to be honest many people thought that lockdown would probably have increased the chance of children being born given it this was the longest blackout baby spike in history. Thus far there is some evidence that lockdown deferred the birth of babies and we may see a short term uptick but TFR is a long term figure and the data grinds our slowly so they don't just turn on one year's data. 

We could also argue that this is a Western phenomenon and Scotland isn't unique. And that is true, most western economies are below the necessary replacement rate. But in Scotland the issue is acute, long term and persistent. 

To help illustrate the problem I've taken data from the 1960s until today from the World Bank and NR Scotland and plotted Scotland against some of our 'nearest neighbours'. 

Ireland was once an outlier (for rather obvious reasons), but it has faced the same challenges as most western societies and a falling fertility rate. 

Scotland, on the other hand has tended to hug the lower end of this chart and since 2000 has persisted with the worst rates of this cohort, with the more recent trend over the last decade being a serious problem. 

But this data should really be viewed logarithmically and with the upper level as the replacement ratio. It's when you look at it this way you can really see Scotland's problem.  

Why can't Scotland be like Ireland/Norway/Denmark/Sweden? Well here is one striking reason why. They have more babies than us. They aren't facing the same level of demographic squeeze that our economy is facing. What's worse is that the real pain of this is yet to come. 

The big data

Of course, perhaps I'm just picking my cohorts to 'make Scotland look bad' but I'm really not, if anything I'm flattering Scotland. Looking at the world bank and NRS data you'll be able to see this for yourself. 

I've tried to simplify the data a little to help provide a visual guide and aid my analysis. 

- Green is a TFR at or above 2 (not even 2.1), 

- Amber is a TFR below 2 but above 1.6, 

- Red is below 1.6. 

I've ranked each data line (all 258 if them) by their 2019 TFR (smallest at the top). 

This is just an extract of the full database. If you want to see the full one I'll enclose it at the bottom of the post but it's just a sea of green below what you are seeing here. 

The key point is this lets you see some relative patterns. For the societies shown there is a phase shift in the 1980s to amber and then another to red in the 2000s. 

Scotland ranks 17 out of 258 entries (some of the entries are regional averages) but no matter how you look at it, Scotland is certainly in the 'this is a bit alarming' group'. 

Furthermore contrast the 'distance' between Scotland in blue and the UK in orange (the UK rates would be even higher if it were rUK). Scotland's peers are Japan (a society known to be ageing rapidly), Belarus, Greece, Finland, the UAE and Poland. All very different, but each of them facing a current acute issue with fertility. 

We really need to talk

In many of these countries discussion is underway about how can they deal with their current population literally dying out, but in Scotland it's just not on the agenda. 

There are a number of reasons for this. 

The first is that it's a very difficult conversation to have in the modern world. Imagine the scene of the Government of Scotland or the UK, the EU Commission or UN telling Scottish women that they need to have more children. The noise would be deafening and rational debate would be lost.

I'm hesitant even publishing this blog as it feels a taboo subject., but shutting down debate on this topic is just going to mean we ignore the problem more and more, and we really can't put this off much longer. 

It also touches on another subject in which debate is all too easy to run out of control: immigration. Some countries such as Germany have seen a recovery in their fertility rate due to extensive immigration, immigrants tend to at least temporarily have a higher fertility rate that non-immigrants, but it does seem that this effect is not long lasting. I've blogged elsewhere about immigration but this is a topic that needs discussed in a very different way in Scotland. 

- Why aren't immigrants coming to Scotland? 

- Does the Scottish population have an appetite for higher levels of immigration? 

- Does Scotland have an appetite for the sort of levels of immigration required to make a serious difference to our fertility rate?

Thirdly as a society how do we really feel about large families? In the UK you only need to look at policies such as the family cap to see evidence that the Government can get away with tapping some sort of prejudice that people with large families should not get state support. This is an irrational policy and entirely self defeating for a society. However in Scotland is the position really that different? 

I've blogged many times on the family cap and the SNP's ability to get rid of it, but the fact that they choose not to is nothing to do with budgets it's because that they  at least fear that they will alienate some of their voters by financially supporting large families. 

Let me put it another way if the removal of the family cap was testing as a popular policy in Scotland do we honestly think the SNP would not be proudly removing it, in the same way as they ended the bedroom tax? 

The drivers of low fertility

The Scottish Government have set out some thoughts on fertility, citing financial insecurity, housing, 'personal' reasons and even a belief that we are saving the planet by not having many kids (yes that was cited as a possible Scottish reason)! Whilst these issues are likely contributory factors nothing here really explains why Scotland is suffering so acutely. 

Indeed this tool from the ONS shows the regional split of the fertility rate in England and Wales and what's remarkable is the number of northern areas in England which remain ahead of Scotland. 

There is likely no single reason here, contraception, the acceptance of abortion, the rise of single parent families and families having children later in life are all undoubtedly factors at play across all of western society, but something, or all of them are driving the position in Scotland in a way that is not beneficial for our present or our future. 

There has been some great work in the past on this such as Kevin Ralston's work from a decade ago where he theorises on the threshold effect of delaying having the first child causes no second child to be born at all. There is clear and sustained evidence that 'Scottish mothers are getting older' so there is certainly something interesting going on here. 

But while a great piece of work it really doesn't explain the Scottish effect, indeed it just begs a new question, why are Scottish mothers getting older?

  

Furthermore looking at the regional breakdown of TFR in Scotland there is nothing particularly surprising. The urban centres (Edinburgh, Glasgow, Aberdeen Dundee) have lower fertility and the more rural areas (Argyll and Bute) and commuter belts (Midlothian) are higher than average.

The solution

So what is the solution? If there is one at all? I'm sure a nationalist reading this will instantly come up with the answer as independence, and a unionist will blame the SNP for the fall over the past decade.  When you are a hammer everything looks like a nail. 

In practice this is way beyond the Union, flags or independence. This is about our society and what we want it to look like now, in the medium term and the future. 

It needs our Scottish Government to be brave and take radical steps to skew the economy and welfare policies towards larger families. It needs the UK Government to be far more sympathetic towards immigration in Scotland and where possible the devolution of immigration. 

It needs society and the media to recognise the difficulties around this topic and to deal with it in as mature and as objective a way as possible. It also needs us to have a society shift when it comes to large families and immigration, two shifts which will be difficult to achieve. 

Our navel gazing over the Constitution in Scotland has often blinded us to some of the real challenges facing our society, but the gradual squeezing and ageing of our population is being completely overlooked. 

We are the proverbial frog in the pan of water , the question is do we have the courage to start talking about the fact that the water is getting increasingly hot and maybe we should do something about it? Let's start by at least having an adult conversation about it?

Appendix

As promised here's the full table, enjoy!

How the SNP have just shot themselves in the foot and cost us £13bn

I've tried. 

Honestly I've tried to stay out of it. 

But come on!!!

I've been watching the SNP drive a coach and horses through their pensions policy (again) and I've expected myself to sit on my hands.Nope, can't do it any longer. 

Now I'm not going to go into the detail on the complete mess the SNP have gotten themselves into. Kevin Hague has brilliantly captured that. 

Blackford on Sky news again

All I want to do is to take the latest (insane) policy from the SNP at face value, Sam Taylor of These Islands has been painstakingly following all of these twists and turns. From Blackford, to Forbes, to Sturgeon, to Blackford again and to Michelle Thompson, he's been highlighting the often contradictory messaging from the SNP. 

But we've now got enough to see though all of the chaff. 

The SNP policy on pensions is that pensions will be paid by the Scottish Government for all Scottish pensioners, that includes all of those in payment at the moment. 

So much so the same as 2014. 

However now the SNP also say that they will also expect to receive a share of all of the historic NI pension payments made to the UK over the years, despite them recognising there is no pot for pensions. 

It's this assertion I want to break down and show you that this is an exceptionally bad move from the SNP and will backfire spectacularly on them were they to use this in negotiations. 

A share of historic payments

The SNP think that Scotland is entitled to a historic share of NI contributions in respect of the state pension. It's easy enough to obtain that figure from the GERS database. 

From the 2021 latest publication Scotland paid £11,5bn in National insurance, and received state pensions of £8.6bn, so that around 75% of all Scottish NI is going towards the state pension, or to put it another way it's around 30.8% of the total social security spend in Scotland. 

It's this share of NI contributions that the SNP think Scotland is entitled to get back, pot or no pot. What's more, according to the theory, Scotland is entitled to them for each year going back a generation, or at least the lifetime of a Scot. 

So, for a female, that's about 16 years from the state pension age of 65, but we can be more generous and go back 23 years to 1998-99 because that's where the database takes us. 

So we could tally up all these payments and come up with a number that the SNP would like us to think we are entitled to.

If you eat your cake, you can't have it

The trouble is the SNP haven't thought any of this through, or more likely they have thought it through, they just hope their supporters won't. 

If your case is that you are entitled to get your NI back, because it was really funding your own pension (pot or not pot) then that begs one important question? Who has been funding historic state pensions during this time?

Now we know, and everyone generally concedes, that current state pensions are funded by current NI, but let's go along with this suspension of reality and accept that a share of historic NI needs to come back to Scotland. 

But equally In that case historic state pension payments need also to go back to Westminster as they have funded them not from Scottish NI but from their resources. 

So if you can't have your pension cake and eat it, we need to balance the equation and look at the (pensions) share of Scottish NI paid in the UK and the share of state pensions paid to Scotland. 

Here the numbers are really rather consistent. 

Scotland provides around 8.1% of National Insurance to the UK but receives around 8.8% of Social spending in Scotland. 

Now obviously there is much more in Social spending than just pensions, but fortunately we can receive a further breakdown of this spend from the main expenditure database and we can see that the numbers are remarkably correlated with a consistent average of Scotland receiving 8.8% of State pension funding. 

Let's remember then, you want Scotland to have all of our NI contributions back, then rUK is entitled to all of those pension payments back. 

So this year alone. Scotland paid 8% of UK National Insurance and received 8.8% of State Pensions back in return. So netting these figures off one another Scotland owes the UK 0.8% of UK State Pension spend, or putting it another way Scotland was only entitled (under this theory) 8% of all UK State Pension spend. 

In short we received £8.6bn but only 'paid' £7.9bn, that's us due a net payment of £0.7bn for this year alone. 

Be careful what you wish for

We can of course then apply this technique throughout all of the back data, identifying the share of NI paid and the actual share of Social Spend and State Pension Spend (either directly 2015-21 or though the historic average (98-14)). 

This gives us a total bill from rUK to Scotland for just under £13bn, and I havent even revalued it to today's prices. 

So let me sum up the absurdity of this position in negotiations. 

The SNP say ' We want our NI back!'.

The UK replies, OK that's fine, we want the pensions we paid you then, here's a bill for £13bn. We'll need that settled up immediately and then we can talk about your UK debt share. 

As ever the SNP hope that no one will look beyond the first line of their proposition, but this isn't just bad politics, this is terrible negotiation tactics. 

The SNP could easily have argued for a 'clean break' - just call it quits and everyone starts funding their own pensions with no assets. But they've now opened themselves up to this challenge from the UK. In negotiations you can now bet that the UK team will be staring at the same numbers I am and pushing a pensions bill for £13bn over the table and playing clips by Ian Blackford and Nicola Sturgeon on an endless loop. 

For a bit of bad politics the SNP have just cost us £13bn. 

Transcript of Steve Webb's evidence to the Scottish Affairs committee

 00:03

could i

00:04

welcome everybody to this meeting of the

00:05

scottish affairs select committee

00:07

as you'll probably be aware we are

00:10

conducting

00:11

a series of hearings into various

00:14

aspects of the consequences of

00:15

separation

00:17

today we're looking at the government's

00:19

scotland analysis paper

00:21

work and pensions and we've got with us

00:24

um as ever david mondale from the

00:27

scotland office and he's got a special

00:29

friend

00:30

uh with um today another special friend

00:34

uh steve webb who's dealing with

00:37

pensions she's dealing with big

00:38

questions

00:40

right i wonder if i could start off then

00:42

just by saying that asking about one of

00:44

the key arguments in the paper

00:46

is that higher social security in

00:48

scotland is more affordable

00:50

if we remain part of the united kingdom

00:52

could he just clarify

00:54

why you believe that's the case

00:57

um thank you chair so um clearly one of

01:01

the things about social security

01:02

is it is done well at scale particularly

01:06

given

01:06

the cyclical nature of the demand for

01:08

working age social security so you know

01:10

we have

01:11

recessions we have growth spurts we have

01:13

banking crises and all the rest of it

01:15

so simply the bigger the base on which

01:17

you are trying to build a system the

01:18

more robust it is the more stable it's

01:20

going to be

01:21

for the citizens so trying to do

01:23

anything on a population a tenth the

01:25

size simply gives you greater volatility

01:27

i think that's the first thing

01:29

i think the second therefore is on on

01:31

the pension side which obviously more my

01:33

area

01:33

is the whole infrastructure that we put

01:35

in place

01:36

for uk pensions policy works at scale

01:40

so we have a pension protection fund

01:42

when companies go to the wall to protect

01:44

your pension

01:45

doing that at the scale we can means if

01:47

a big firm goes to the wall it kind of

01:48

bounces off

01:49

it's it's small relative to the whole

01:50

thing trying to do it at a tenth the

01:52

scale if a big scottish employer goes to

01:54

the wall and you have a scottish

01:56

protection fund

01:56

it's much more volatile has a much

01:58

bigger hit so i think risk pooling risk

02:01

sharing and scale

02:02

is a key advantage for the citizens of

02:04

the united kingdom

02:06

can i just clarify i mean a world like

02:08

volatility

02:10

um doesn't necessarily mean a great deal

02:12

to people

02:13

in the industry what is what does

02:15

volatility

02:16

uh mean in that context so for example

02:19

if you have

02:22

a sudden downturn across the uk

02:26

the economy as a whole can absorb that

02:27

so taxes don't suddenly have to go up or

02:29

benefits don't suddenly have to be cut

02:31

you can take the long-term

02:32

view but if you are operating at a tenth

02:35

the scale then

02:36

if something goes wrong if there's a hit

02:38

if there's a big company goes down

02:40

suddenly there's a big hole in the

02:41

finances relative to the tax base

02:43

so that could mean a sudden tax increase

02:45

or sudden cutting spending somewhere

02:47

else

02:47

just to keep things on an even key right

02:49

okay

02:50

great right thanks cher good afternoon

02:53

gentlemen

02:54

what about the argument that sometimes

02:55

given that in an independent scotland

02:58

pensions would be

02:59

cheaper because the life expen

03:01

expectancy of pensioners is actually

03:04

less compared to the rest of the uk

03:06

how would you respond to that sure um so

03:10

the baseline taking account of the point

03:12

that you've made given

03:14

lower average life expectancies in

03:15

scotland which of course vary hugely as

03:17

you know across scotland

03:19

the baseline is that scotland has a

03:22

slightly higher proportion of pensioners

03:23

to begin with than the uk as a whole and

03:26

then

03:27

the worldwide factors of increasing

03:29

longevity are

03:30

at least as true in scotland as for

03:32

example in england so for example

03:34

a man at 65 over a period say from

03:38

2010 where we are now to 2013 2010 the

03:41

most recent figures to 2030.

03:43

in england the life expectancy of that

03:46

man will rise by two and a half

03:48

in scotland it will rise by 2.6 years so

03:50

in a sense

03:52

that the the cost pressure is just as

03:55

great if not more

03:56

on the demographic side and the working

03:59

age base to pay for it

04:01

is less favorable because of the adult

04:04

population in scotland

04:05

working age a lot are in the 50 to 65

04:08

bracket

04:08

so you're going to lose those people out

04:10

to the working age population so

04:12

it's both the cost pressure is just as

04:13

great and the tax base to fund it is

04:16

less robust

04:18

okay that's very easy can i just

04:22

clarify in addition to that i mean it

04:25

has been argued that it's just simply

04:27

more affordable in scotland to drop the

04:30

pension level because people die

04:32

quicker now that that seems in the face

04:34

of it to be a not unreasonable point

04:36

i mean surely you can have a a lower

04:39

starting age

04:40

if you're having to pay it for a less

04:42

long period

04:43

surely it would be feasible then for

04:45

scotland to drop the pension age as

04:47

compared to the rest of the uk in those

04:48

circumstances

04:50

so what we're saying is if you look

04:51

across the whole social security

04:54

spending

04:55

in scotland compared with the uk then in

04:58

the current system taking account of

05:00

lower scottish life expectancies

05:01

we're already paying slightly more per

05:03

head in working age in scotland than we

05:06

are in the rest of the uk

05:07

so there's a whole raft of different

05:08

factors going on and that baseline

05:11

situation will deteriorate substantially

05:13

so

05:14

in a sense the uk government to meet

05:16

those long-term demographic pressures is

05:18

having to do things like race state

05:19

pension ages

05:20

if scotland didn't do that then they

05:23

would have to find

05:24

far more money from the working age

05:25

population in a sense it's

05:27

starting from where we are scottish life

05:29

expectancy will improve just as fast as

05:31

in the rest of the uk

05:32

and our abilities and scotland's ability

05:34

to pay will not

05:35

improve relative to just the uk right

05:38

okay can i just clarify though whether

05:41

or not

05:42

um your argument is that

05:45

it would be possible for the pensions uh

05:48

themselves

05:49

and within isolation to be treated

05:52

differently

05:53

it's the taking all the other benefits

05:56

um together with the pensions that would

05:59

make

05:59

dealing with the pensions separately

06:01

different difficult um

06:03

there are just ring fencing pensions

06:05

which is your question

06:07

there are pressures arising on the state

06:09

pension side

06:11

but there are also pressures arising on

06:13

the public service pension side

06:15

which again if you were to because we're

06:17

linking public service pension ages to

06:19

state pension agents if you eased off

06:22

or reduced scottish state pension ages

06:24

that would have a knock-on effect on the

06:25

public service

06:26

pension schemes as well and they are

06:28

already in deficit in scotland and if i

06:30

may

06:31

just give you a couple of figures which

06:32

i've dug out specifically for scotland

06:35

if you look at the nhs and the teachers

06:38

pension scheme

06:39

and the scottish members of that scheme

06:41

both of those as the committee will know

06:43

are

06:43

unfunded there is no pot today's working

06:45

teachers and nurses

06:46

are paying for today's retired teachers

06:49

and nurses

06:49

so the year just ended 2013-14

06:52

the westminster government subbed the

06:55

scottish teachers and nurses 300 million

06:58

pounds

06:58

so westminster government paid out or

07:01

the schemes paid out

07:02

two billion pounds to scottish retired

07:04

teachers and nurses but got in 1.7

07:07

billion

07:08

from the workers and their employers so

07:10

there's a 300 million hole

07:11

last year by 2018 that hole will be

07:14

double will be 600 million pounds now in

07:17

the uk context

07:18

the uk exchequer will have to find that

07:21

if it's in a scottish context well

07:23

either that's unfunded promises or

07:25

scottish teachers and nurses have to pay

07:26

more

07:27

or the scottish nhs or schools will have

07:28

less money for schools and

07:30

nurses so that's just a so if you look

07:33

at

07:33

all of that together these these

07:34

unfunded pressures means that reducing

07:36

or not increasing the state pension age

07:38

would be completely unsustainable

07:39

because of all those pressures

07:41

can i just clarify that the point that

07:43

you made there that there being a

07:45

300 million pounds hole yeah which is as

07:47

you put it is subbed

07:49

from the treasury um is it only scotland

07:52

that is subbed from the treasury

07:54

i mean or is the rest of the uk sub from

07:56

the treasury as well

07:58

so that's the scottish share of the sub

07:59

from the treasury to the whole uk

08:01

right yeah but is the scottish sub

08:03

bigger

08:04

proportionately than the rest of the uk

08:06

some

08:07

because we can understand the argument

08:09

if everybody's sub then

08:11

that the argument would be that scotland

08:13

separated would not be comparatively

08:15

worse off

08:15

leaving aside the issues about sharing

08:17

and so on yes

08:18

um i'm pretty sure that the the doubling

08:21

that i mentioned in five years

08:23

is particularly acute because you're

08:26

doubling from 300 million

08:28

to 600 million i'm pretty sure that i i

08:30

will

08:31

supply the committee with the uk wide

08:32

figures but i'm pretty sure it's

08:33

particularly acute

08:34

for the reasons we've talked about the

08:36

the faster aging of the scottish

08:38

population

08:39

five thanks alan yes in the event of

08:42

separation how would you decide who

08:46

is whose pension will come in the future

08:49

from

08:49

the scottish government and whose

08:50

pension will come from the uk government

08:52

state

08:56

so we already have rules

09:00

about what happens to pensions where

09:02

somebody has for example served sometime

09:04

in the uk

09:05

and spent some time working say in

09:07

another eu country

09:08

and they are complicated so you know if

09:11

you worked in france some of your french

09:12

contributions count a bit and some of

09:14

them don't and it's

09:15

messy and complicated so there would

09:17

have to be a negotiation a conversation

09:19

about that

09:21

the classic issue would be people who've

09:22

worked in both countries

09:24

you know i've worked in scotland i've

09:25

worked in england i retire in one or the

09:27

other

09:27

how are the rights i built up in the

09:29

other scheme valued transferred

09:32

you know that would all have to be

09:33

negotiated and for me

09:35

one of the things people want about

09:36

pensions is certainty they want to be

09:38

able to plan ahead for their retirement

09:39

they want to know what they're going to

09:40

get and when they're going to get it

09:41

and for me creating separation

09:44

casts a whole lot of uncertainty and

09:46

doubt on people's retirement planning

09:48

and it's all subject to the outcome of

09:50

negotiations and we just don't know

09:52

but what about somebody that they could

09:54

have worked all their working life

09:55

based in scotland but for a company

09:57

whose head office

09:59

was in england and their and their

10:02

paycheck would

10:03

come from that head office i mean how do

10:05

you

10:06

uh work out earlier pension companies

10:08

that's very good question and i mean

10:10

obviously

10:10

companies which our headquarters say in

10:12

england and you've worked in scotland

10:14

in the company side of it would be

10:16

cross-border schemes

10:18

and uh the european union looked at this

10:22

issue there was some suggestion they

10:23

might back off and they didn't

10:25

on the rules on funding cross-border

10:27

schemes so there is a rule that says

10:30

from the point of creation within two

10:32

years those schemes have to be fully

10:34

funded

10:34

and of course if you work for a firm

10:36

that suddenly has to fill a hole in its

10:37

pension scheme

10:38

where does that money come from so

10:40

that's potentially

10:41

uh employers suddenly having to find

10:44

money to fill gaps in their pension

10:46

scheme or close pension schemes

10:47

again it's just a cost and uncertainty

10:49

that i'm sure scottish workers would

10:50

rather not

10:51

face but in terms of the state pension

10:53

is what you're saying

10:54

is that there are no rules there are no

10:57

guidelines

10:58

it would simply be two governments

11:01

sitting down

11:02

and negotiating yes i mean if you

11:05

leave the uk and retire to spain say

11:08

we pay you your uk pension in spain

11:10

that's that's that's not problematic

11:12

but if you've done some of your working

11:14

life in spain and some of your

11:16

contributions of spanish contributions

11:18

there's all sorts of convoluted rules

11:19

which can differ

11:21

between eu and non-eu and all the rest

11:23

of it so it is it's convoluted and

11:25

difficult and the outcome of those

11:26

negotiations is unclear to me but

11:30

looking at the state pension aspect of

11:32

the the person who

11:33

worked in scotland but for a company who

11:36

was based in england

11:38

um i mean you you as the uk pension

11:41

service

11:42

will not know where that will have no

11:44

record saying where that person's

11:46

place of work was so how do you decide

11:49

who's responsible for his state pension

11:52

that's right i mean um they will have

11:55

put national

11:56

uk national insurance contributions into

11:58

a pot we don't currently record or have

12:00

any reason to record on our systems

12:02

the location of the workplace the

12:04

location of the head office we don't

12:05

need that information

12:06

so trying to disentangle all of that

12:08

would be exceptionally difficult

12:11

but if if there are no guidelines

12:13

clearly

12:14

um each party to the negotiations is

12:17

wanting to

12:18

come out of those negotiations paying

12:21

out as little as possible

12:22

but um have you any

12:26

viewers to how those negotiations

12:30

would be conducted i'm guessing

12:34

david i'm guessing i'm not the first

12:35

witness to this committee who said i

12:37

have a feeling that the lawyers will

12:38

have a field day

12:41

you know they will just be so you know

12:42

if if anybody thinks they've perhaps got

12:44

a smaller pension they would have done

12:46

or or something like that

12:49

i mean if somebody who's living in

12:51

scotland for example

12:53

wants to keep their uk citizenship does

12:56

that have any

12:57

impact on their pension or is it or is

13:00

the pension purely

13:01

to be determined by where they work so

13:04

at the moment

13:05

the only thing that determines how much

13:07

pension you get is how much national

13:08

insurance you've paid in

13:09

right so you don't have to be british to

13:11

get a british pension

13:12

you can be anything if you paid british

13:15

national insurance you satisfy the

13:16

minimum contribution rules you get a

13:18

pension from the uk government whether

13:20

you're a uk citizen or not so

13:21

citizenship

13:22

doesn't matter from the point of view of

13:24

paying pensions but

13:26

for winter fuel payments presumably

13:27

citizenship does matter

13:30

and obviously we are we have reviewed

13:33

the rules on winterfell payments and

13:35

it's where

13:35

where you live is part of that story as

13:37

well um

13:39

we have excluded um very hot places

13:41

which may be less of an issue in this

13:42

context i guess

13:43

um but yeah but yes i mean the

13:45

winterfell payments i guess is a tiny

13:47

fraction of the total budget there so

13:48

the

13:49

big budget item is the statement right

13:51

so but if

13:52

um people in living in scotland

13:56

chose to keep uk citizenship

14:00

would they then be entitled to a uk

14:03

winter fuel payment

14:05

well my assumption would be that winter

14:07

fuel payment policy will be a matter for

14:09

the continuing uk government for its own

14:10

citizens and the scottish government

14:12

will decide whether it wants to have a

14:13

winterfell payment system and wants to

14:14

pay for it according to people living in

14:16

scotland when they reach the eligible

14:17

age

14:19

right so in summary we prefer to say

14:21

it's all very complicated and

14:23

you have to go there ahead of me as to

14:25

how these negotiations will go

14:28

okay i wonder if absolutely if i could

14:30

just come back and seek

14:32

clarification a couple of points i mean

14:34

it seems to me that there are there are

14:36

two areas of of uncertainty one is the

14:40

question of

14:41

once the pension is settled who pays for

14:43

it whether or not it comes out of

14:45

scotland's

14:46

pot or comes out of the rest of the uk's

14:48

pot and you've

14:49

that's that's deeply boring and and you

14:52

get people in your department who will

14:53

specialize no doubt in these sorts of

14:55

things

14:56

um i'm not clear whether or not there

15:00

that then has any direct impact upon

15:02

individuals

15:04

other than one remove in the sense of

15:06

how much money is then available

15:07

i mean unless i'm mistaken it doesn't

15:09

what i'm not entirely clear about is

15:12

whether or not

15:13

there would be any impact as a result of

15:15

this uncertainty about the rules

15:17

upon the amount that the individuals

15:19

received

15:20

as distinct from the question of who's

15:22

paying for it can you maybe clarify for

15:24

us

15:25

whether or not there would be

15:26

justifiable anxiety

15:28

about what the amounts that people might

15:30

receive would be yeah

15:32

so the continuing uk has a set of rules

15:35

for converting past national insurance

15:37

contributions

15:38

into pension entitlements

15:41

in the event of separation first

15:43

question any years

15:45

of service after separation how do they

15:48

convert into state pension rights

15:50

that will be a matter for the future

15:51

scottish government so so what they do

15:53

with those

15:54

we won't know um clearly people who stay

15:57

in the uk

15:58

um we will continue to apply our rules

16:02

but

16:02

um

16:06

you'd have to have a conversation

16:07

clearly about the way that that past

16:09

national insurance service turned into a

16:10

pension right for people who

16:12

i mean clearly if you if you

16:15

as i said you don't have to be a uk

16:16

citizen to get uk pensions so we will

16:18

obviously for the people who have put

16:20

insurance into our system we would pay

16:22

them a pension wherever they lived

16:24

so in so separation wouldn't affect that

16:27

but what happened

16:28

post-separation would be a matter for

16:31

them

16:31

yes post-separation going forward i can

16:34

see yes that the scottish government

16:36

would have to then devise a pension

16:38

system and i understand that

16:40

if if you are saying as i think you are

16:43

which is something

16:44

new that um if people have paid into the

16:48

national insurance system

16:50

then they would in a sense inherit a

16:52

payment from that national insurance

16:54

system

16:55

that would actually presumably mean that

16:57

the liabilities and assets would stay

17:00

with the

17:00

united kingdom government rather than be

17:03

divided i mean that would clearly have

17:04

to be a matter of negotiation because of

17:06

course

17:06

um for to give a simple example

17:09

someone's worked all their life in

17:11

england

17:12

retires into scotland can you just

17:14

assume that the

17:15

continuing uk government will pay the

17:17

whole cost of that pension so there is a

17:19

liability

17:20

to pay a pension or they have built up

17:22

an entitlement

17:24

but the split of funding of that is for

17:26

negotiation

17:27

so the split sorry the split of funding

17:30

is only unclear in as much as who

17:32

actually

17:33

pays it it's not unclear as to what

17:36

people would get

17:38

up to the period of separation because i

17:40

say because you could you could retire

17:41

to france

17:43

and we'd just pay you a pension so where

17:45

you end up

17:46

isn't material because you've built

17:48

you've paid into the system

17:50

fine because i think it isn't i mean

17:52

people in scotland will be anxious

17:53

about whether or not um their pensions

17:57

are secure

17:58

in the event of separation i think that

18:00

you are saying to us

18:02

um that their pensions will be secure

18:05

because

18:06

they if they have paid in then they will

18:08

get out the question of whether or not

18:10

that comes from a separate scotland

18:12

or the remaining the uk will have to be

18:14

yet divided devised by a scheme

18:16

as yet undetermined but the individual

18:20

can be secure in the knowledge that they

18:22

will get their money so that that's

18:24

so just to stress i know i know you know

18:26

this but we're talking about state

18:27

pensions only i think the position of

18:29

private pensions

18:30

and public service pensions yes that's

18:31

right we're just stacking just

18:33

just on the state people have built up a

18:35

right wherever they retire to

18:37

in respect of service for as long as

18:39

they are paying into the uk national

18:41

insurance system

18:42

right jim and then well i just want to

18:46

i was going to pick up this point about

18:49

where people retired too

18:50

but i think minister answered that with

18:52

his reference to he retired

18:54

to france or spain can we just

18:57

clarify that when we're talking about

18:59

the entitlement

19:01

that is to a state pension the level

19:03

that the state pension though

19:05

is not predetermined and that therefore

19:09

somebody

19:10

who is uh in if they retire from england

19:13

to scotland they would obviously get the

19:16

the the pens the state pension as

19:17

decided by the

19:19

government here in westminster but if

19:21

they were

19:24

the chairman's scottish uh uh

19:28

pensioners who've earned their pension

19:29

in scotland we must be

19:32

clear should we not that the actual

19:34

although they might be entitled to a

19:36

state pension the level of that state

19:38

pension would then be set by the

19:39

scottish government

19:42

so um my argument is that

19:46

just as for example take a scottish

19:50

person who's paid in all their life and

19:52

then retired

19:53

to france or something like that they

19:55

they still have

19:56

an accumulated pension right in respect

19:58

to the national ships they have paid in

20:00

when they were part of the united

20:01

kingdom

20:02

that's that's the key point but if

20:04

they've stayed in scotland

20:07

are they then entitled to the uk level

20:10

of state pension

20:11

or the state pension whatever it would

20:13

be as set by the new scott independent

20:16

scottish government so

20:18

inevitably with all these things there's

20:20

a bit of who knows exactly what would

20:22

happen but my presumption would be

20:25

that because they paid into the uk

20:27

national insurance system prior to

20:28

separation

20:29

built up a set of my lawyers always told

20:32

me not to call them rights

20:33

but a set a set of service which under

20:36

our rules converts into a pension

20:38

under the rules prevailing at the point

20:39

they draw it that that

20:42

that that bit is is they've

20:45

banked that because of their national

20:47

insurance contributions to the uk system

20:51

yeah but future

20:54

scottish uh workers still working not

20:57

yet entitled

20:59

any the remaining entitlement they built

21:01

up after independence would be

21:04

behest entirely absolutely yes so that's

21:06

all i wanted

21:07

yes and i think mr it's also

21:10

important to understand in this

21:13

a context that the scottish government

21:17

have announced that they wouldn't

21:18

uh go ahead with the delay uh with

21:21

putting back the

21:22

the pension age so that they would be in

21:25

themselves entirely responsible

21:27

for funding a uh a different

21:31

a uh age for the start of the of the

21:35

state

21:35

a pension and that's been

21:39

a estimated to be around six billion

21:42

pounds

21:43

to fund having a different and earlier

21:46

age at which you become entitled to the

21:49

state pension

21:50

right yes i think in in this discussion

21:52

particularly about pensions

21:54

i'm trying to distinguish um between on

21:56

the one hand um

21:58

these big figures about governments

22:00

paying things

22:01

and somebody somewhere will at some

22:03

stage add these up and work out what's

22:05

affordable what's not

22:06

but on the other hand and how they

22:08

actually impact upon individuals

22:11

and i think i think you're saying yes

22:14

the the state pension of any individual

22:18

in scotland after in the event of

22:20

separation

22:21

would not be adversely affected that

22:25

they would continue

22:26

to get the level of state pension the

22:28

same as everyone else

22:30

in the uk the question of how that cost

22:32

is allocated

22:33

between scotland than the in this in the

22:35

uk is a matter of haggling and

22:38

processing all the rest of it but people

22:40

themselves can be assured

22:42

that their pensions are secure and i

22:44

like taking your point david if the

22:45

scottish government then decides

22:47

to increase the pension at all they will

22:50

have to meet the entirety

22:52

of the cost since it would be patently

22:54

unreasonable for them to be able to pay

22:56

decide to pay out more but decide to

22:58

have somebody else

22:59

paying for it is that that accurate

23:02

reflection of the position

23:04

yeah so they have accumulated rights up

23:06

into the uk system

23:08

under the uk system's rules so as as

23:10

david says

23:11

to a pension at our age at the age we

23:13

would have paid it to them not at the

23:14

age of the scottish government the heart

23:16

right fine thanks now if you passed

23:19

notes oh sorry i was going to take allen

23:20

you pass notes correcting that possibly

23:22

but

23:23

in the meantime we'll ask alan to ask

23:25

you a question

23:27

under the current rules how many years

23:29

does somebody

23:30

in the uk system have to work for in

23:33

order to

23:34

be entitled to a full state pension yeah

23:36

so

23:38

we are introducing a new state pension

23:39

regime in 2016 which i suspect is the

23:41

relevant one for the purpose of this

23:43

conversation and that's 35 years for a

23:45

full pension

23:47

right so let's take a hypothetical case

23:49

of somebody who

23:50

left school at 16 worked all their

23:53

working life

23:54

so by the age of 51 they would be

23:56

entitled to

23:57

a full pension and let's just suppose

24:00

they reach

24:01

51 at the separation date so they are

24:04

they are now entitled to a full

24:06

united kingdom pension but they're

24:08

living in scotland have always lived in

24:09

scotland they're a scottish citizen

24:13

will they get that pension from the uk

24:16

government or

24:17

will it be the scottish government that

24:19

would become responsible

24:20

for paying that pension so citizenship

24:24

is irrelevant

24:25

right it's what have you put into the uk

24:28

national insurance system

24:29

separation answer 35 years that builds

24:32

you up a right to a full

24:34

uk pensions of the uk cis uh continuing

24:36

uk rules

24:38

um so and then the question so they're

24:40

entitled to that money big question is

24:42

who's paying for it and how is that

24:43

split but they are entitled to that

24:45

money

24:46

but not at 51. no no no

24:49

but indeed right but if they're in

24:51

scotland

24:52

then obviously if if

24:55

during the next um 15 16 years between

24:58

being 51 and retirement

25:00

if the scottish pension rules diverge

25:03

significantly

25:04

from the uk pension rules i mean what

25:07

happens when does that

25:08

person then get their pension

25:11

at the time that the scottish government

25:14

the age of scottish government

25:15

determined so the age of the uk

25:16

government determines

25:18

and what about annual increases who

25:20

determines the annual increase well

25:22

that is a good question and that is a

25:24

different question but an important one

25:25

so

25:26

just dwell on that for a moment annual

25:28

increases are a matter of annual

25:30

discretion

25:32

beyond the legal minimum yeah so

25:36

you do your service in the uk scheme you

25:37

build up a set of rights in the uk

25:39

scheme

25:39

but the indexation of it post-retirement

25:42

would be a decision

25:43

for the continuing uk if they were if if

25:46

that's the scheme you built up your

25:47

right so your pre-separation service

25:50

is indexed according to whatever in

25:52

principle the uk

25:53

continuing uk is doing for people who

25:56

paid into the scheme

25:57

so if the scottish government wants to

25:58

do something same or generous they would

26:00

have to find the difference

26:01

right or if there is something less

26:02

generous they wouldn't be saving

26:08

well would they be able to do something

26:09

less generous or with that

26:11

in respect of post separation service

26:13

yet they do have a lot

26:14

of separation right just to give a

26:17

obviously this is going to be a very big

26:18

item in the negotiations i mean just to

26:21

get

26:21

a handle on how big this will be

26:24

compared to other items do you have a

26:26

figure for

26:27

the total liabilities

26:30

so far as state pension is concerned um

26:34

we tend not to add up the whole sort of

26:38

future ever

26:39

liabilities for scottish what for state

26:42

pension don't tend to do it in the uk

26:43

basis very often it can help it because

26:45

the numbers

26:46

even i think they're truly trillions are

26:48

a bit scary there is another

26:49

coming my way no no but but just to give

26:51

you a feel for for scale

26:54

um you know we think that um there's

26:57

probably a hundred billion of unfunded

26:58

scottish

26:59

uh public sector pension liabilities

27:02

unfunded

27:03

that would have to be paid by someone so

27:05

you know we're just talking literally

27:06

hundreds of billions of pounds between

27:08

vast numbers of promises that

27:10

essentially are always paid in year i

27:11

mean that's that's

27:12

the point really yeah so how does this

27:16

in comparison say to the accumulated

27:18

national debt i mean how

27:20

big is this figure in comparison with

27:22

that for example

27:24

so the would say this figure which

27:27

figures

27:27

well well we're talking about still

27:29

talking about state tensions i mean

27:31

i don't know if that piece of paper

27:32

gives you that number

27:35

but um of the so

27:38

liabilities for state in very round

27:41

numbers at the moment at the uk level

27:43

we're spending

27:44

of the order of i'm saying very round

27:46

numbers 100 ish on

27:48

100 million a year 100 million state

27:50

pensions give or take 100 billion yeah

27:52

it's slightly less than that but you

27:53

know if you

27:54

that's the national debt well over a

27:56

trillion so it's

27:57

you know but these are still very large

27:59

numbers relative to the national

28:01

yes right okay thank you okay

28:04

thank you to you um

28:08

can can i just ask uh first of all

28:11

what is the estimate that the government

28:14

has made

28:14

of the cost of the promises that the

28:17

current scottish government has made in

28:19

the white paper

28:20

sure of pensions yes thank you um

28:23

so what we're trying to do to again to

28:24

take the chairs in junction to sort of

28:27

earth facing things that means something

28:28

to people not this sort of trillions of

28:30

billion stuff

28:30

is we've said what would be the cost per

28:32

working age person

28:34

so if for example it was all funded

28:35

through taxation what were the extra tax

28:37

bill and we estimate just over 200

28:40

pounds a year

28:41

relieving the demographics so if you

28:43

ignore the fact of the aging population

28:44

or the rest of it if you just took the

28:46

promises

28:47

like holding off on 67 like keeping the

28:50

savings credits

28:51

like having transitional protection in

28:53

the single tier all that kind of stuff

28:55

which is big ticket items that the tax

28:57

hit is of the order of 200 210 pounds a

28:59

year

29:00

on the average scottish worker

29:03

okay and do you think um

29:07

the policies that have been announced in

29:08

the white paper and otherwise by

29:11

the scottish government do you think

29:14

that this will impact

29:15

how individual scottish people save

29:18

privately for the future

29:23

certainly in terms of private pension

29:25

saving

29:26

i have some serious misgivings about

29:28

what what separation

29:30

would mean and if i just run through one

29:31

or two of those i think something that

29:33

the uk government has done

29:34

very successfully is automatic

29:35

enrollment into workplace pensions

29:38

and we started with the biggest firms

29:39

we're working our way down to the

29:41

smallest firms by

29:42

2017 2018. one of the key elements of

29:45

that

29:46

is that every employer has the nest

29:49

corporation to go to

29:50

so we've given the legal duty on the

29:52

employer to put their workers into a

29:54

scheme

29:54

we have to make sure that there's a

29:55

scheme that's willing to take them and

29:57

as you get to the smaller employers the

29:58

big firms are not interested the big

30:00

providers are not interested

30:02

so we've given creativeness to the

30:04

public service duties to take the

30:05

business

30:06

roll forward separation happens

30:10

if the scottish government thinks that

30:11

auto enrolment is still a good thing

30:13

which

30:13

it seems to be an extraordinarily good

30:15

thing they would have to make sure that

30:16

small scottish firms

30:18

had somewhere to enroll their workforce

30:20

into well nest

30:22

is a uk body has no would have no

30:25

legal duty to take scottish employers so

30:27

the suggestion is you create a scottish

30:29

nest

30:29

well a if you think about the lead times

30:32

on all of this

30:33

nest you know we had the turner

30:34

commission over a decade ago nest was

30:36

only set up in 2012.

30:38

we the government had to lend nest

30:39

hundreds of millions of pounds to get

30:40

started

30:41

we had to negotiate it with the eu

30:43

because of state aid issues

30:44

setting up a scottish nest would require

30:46

a lot of money up front

30:47

uh b negotiation if they were in the eu

30:50

with the eu

30:51

i think auto enrollment would come to a

30:53

grinding halt

30:54

if separation happens soon i think auto

30:57

enrolment would screech to a halt

30:58

and there'd be a set of scottish workers

31:00

to answer your question who worked for

31:01

small firms

31:02

for whom ultimate enrollment just

31:04

couldn't happen because there's nowhere

31:05

to alternate them into

31:06

and i think that would be very damaging

31:07

you're a worker in a small scottish firm

31:09

you haven't got a pension

31:10

carry on with the uk auto enrollment

31:12

carries on you get a pension for the

31:13

first time

31:14

if we have separation who knows what it

31:17

could be

31:18

years before a scottish nest is set up

31:20

it couldn't

31:21

it would struggle to be as good a value

31:22

for money as a uk wide one because it'd

31:24

be a tenth the size

31:25

so i think on the private pension side

31:27

it could be seriously damaging

31:28

can i just a as a lay person on this and

31:31

and

31:32

uh i appreciate this is an issue that we

31:34

could probably have a full session on

31:35

but

31:36

um as briefly as you could why exactly

31:39

was nest

31:40

absolutely necessary for auto enrollment

31:42

to be set up and

31:43

could there's a scottish government come

31:45

up with an alternative a quicker

31:46

alternative

31:47

to create that system yeah sure so um

31:50

the short answer is profit

31:52

so uh i am a scottish employer with one

31:55

relatively low paid employee

31:57

the amount of pension contributions

31:58

going in each year could be a few pounds

32:00

could be tens of pounds if you you know

32:02

tiny amounts of money

32:03

by the time the provider has taken their

32:05

0.75

32:07

which is going to be our new cap it

32:08

would be a tiny tiny amount of money

32:10

most providers would run a mile which

32:12

can't make any money out of it

32:14

so because we've given firms a legal

32:16

duty to choose a scheme for their

32:17

workers we have to make sure that

32:19

there's one there it's a bit like

32:20

posting a letter to the authorities it's

32:22

a public service duty you have to take

32:24

it

32:24

so nest is legally obliged to take so

32:26

the scottish government has talked about

32:28

a snes to scottish nest

32:30

it took us years to get the thing going

32:32

we had to lend large amounts of money we

32:34

had to negotiate and all the rest of it

32:36

and it's you know it's a uk wide scheme

32:38

it will have three or four million

32:39

members by the time it's up and running

32:41

do that at a tenth of the size with the

32:43

same fixed costs

32:44

can you even deliver it at the pension

32:46

charges we're talking about you know

32:48

i would be a concerned employee of a

32:50

small scottish firm

32:51

i think my chances of getting into a

32:53

decent quality workplace pension would

32:55

be substantially harmed

32:56

by separation okay and i think we might

32:59

become onto that a bit late and i hadn't

33:01

intended to go down the autumn

33:02

road but thank you for that information

33:04

and as i was thinking more in terms of

33:06

individuals

33:07

so so you said that the extra cost to

33:09

the government be 200 pounds per year

33:11

per head

33:12

can i just just to be clear per working

33:14

person

33:16

perhaps okay so to me that doesn't sound

33:19

very

33:20

sustainable would you agree

33:23

i would i mean in a sense it's easy to

33:24

say oh well maybe we wouldn't put state

33:26

pensions ages up maybe we'd keep the

33:28

savings credit maybe we'd do this maybe

33:30

we'd do that

33:31

maybe you know maybe we'd start the new

33:32

single tier pension a few pounds a week

33:34

higher

33:35

these are all kind of nice things but

33:37

they as we're discovering with pensions

33:39

everything has a lot of zeros attached

33:40

to it

33:41

so these are very attractive sounding

33:43

promises but essentially what we're

33:44

doing is promising

33:47

good things to the retired population at

33:48

the expense of the working population

33:50

which within a couple of decades

33:52

are costing the working age population

33:53

hundreds of pounds okay

33:55

um so i mean my view would be if these

33:58

promises

33:59

uh are made and then can't be kept then

34:02

individuals might not

34:03

save as much for their retirement than

34:05

things that

34:07

later on that that's a mistake is that

34:10

i i see i see your logic yes so so you

34:12

you think you're going to get

34:14

you know a pension earlier than you

34:16

eventually do you think it's going to be

34:17

higher than it eventually is

34:19

and you plan on that basis so i take the

34:21

point you you

34:22

you might under save privately in

34:24

anticipation of a more generous state

34:26

pension that never materializes

34:28

yeah okay thank you and just before i

34:31

hang back here i just wanted to touch on

34:33

on migration

34:35

um clearly migration for scotland is

34:38

essential when we're looking at

34:39

the future of scotland and the future of

34:41

pensions

34:42

and can i just ask is it a figure that

34:45

the uk government has been using as an

34:47

assumption

34:48

and to calculate this yes so

34:51

um the figures have been uh

34:54

calculated on the base of a set of core

34:57

migration assumptions but we've also

34:58

tested the sensitivity

35:00

so let me give you a just just some for

35:03

instance

35:04

you asked what the the cost of the

35:07

pension promises was and i said 210

35:09

pound for working age person

35:10

if you add in the demographic pressures

35:13

uh aging population and all of that

35:15

relative to the working that's another

35:16

200.

35:17

so you end up at 410 pounds just on the

35:19

pension side

35:20

we think about another 40 on the working

35:22

age side so our kind of headline number

35:24

i'll come back to migration in a second

35:26

a headline number is 450 pounds

35:29

per working age person to pay for

35:32

demographics and the scottish

35:33

government's promises

35:34

that 450 if you took a more

35:37

if you thought migration would be bigger

35:39

you know if you took a a

35:41

higher migration that 450 might be 420

35:44

say so obviously more working age people

35:46

coming from outside the country

35:47

helps a bit at the margins but it

35:50

doesn't change the fundamental story

35:52

okay so just be clear so 210 was just

35:54

the cost of the promises yes from sports

35:57

450 was including demographic

35:59

demographics and a bit of working age as

36:01

well

36:01

yeah and working age okay so you think

36:04

it would only bring it down about about

36:05

30 times

36:07

okay and what level of migration would

36:09

that so that's that's a move

36:10

that's uh the the the migration estimate

36:14

that

36:14

as i recall has been used it's about 15

36:16

000 a year so over

36:18

over a decade it's like migration of the

36:20

size of the population of dundee

36:21

something like that

36:22

over a 10-year period okay so

36:26

how much additional migration then would

36:29

be needed

36:30

to make activity well

36:34

i suppose you could argue that if i'm

36:35

sure i could work it out by then

36:38

these figures

36:41

i mean i think the short answer is

36:43

implausible levels i mean

36:44

at any sort of plausible level of

36:46

migration there is still a significant

36:48

hit on the working age population

36:50

okay so we need to more than fill the

36:52

highlands then

36:53

well the figure that was used by i mean

36:56

by

36:56

one of our colleagues was that it by

36:58

2050 it would be just under a million

37:01

now does that seem to be a reasonable

37:03

sort of figure

37:05

to you so so um

37:08

the the inward migration would require

37:10

to be

37:11

about just well just under a million i

37:14

think it was nine hundred and thirty

37:15

thousand if i remember

37:17

twenty fifty achieve what to to keep

37:20

down to well to have the the number of

37:22

people paying in

37:23

to pensions to be able to to fund them

37:26

at the existing levels

37:29

um well certainly the the main

37:32

comparisons that we've used assume net

37:34

inward migration of just over eleven

37:36

eleven and a half thousand a year

37:37

in scotland that's the sort of scale

37:38

that we've been assuming um

37:41

so as i say that the kind of scale that

37:43

you'd need to dwarf

37:44

these underlying pressures is just huge

37:46

i couldn't tell if it's exactly a

37:47

million but it would be huge relative to

37:48

the numbers we've actually used

37:50

right and can i just clarify again i

37:52

mean this question

37:53

of um 450 pounds per person

37:57

yeah per year yes i mean it has been

38:00

suggested that there's lots of people in

38:02

scotland that

38:03

that would sell their granny for 500

38:04

pounds a year

38:07

but this is this is 450 pounds of it

38:10

in in pension payments or relating to

38:13

pension

38:14

obligations alone is that correct so

38:16

this

38:17

is this is principally about pensions

38:20

bit about working age but overwhelmingly

38:21

about pensions

38:22

and it's two things it's the demographic

38:24

pressure and it's the promises the

38:25

unfunded promises

38:27

right and that's every year now once we

38:28

get to this point that's the bill every

38:30

year

38:30

okay right i wonder if we could move on

38:32

because we've that was pensions in

38:34

general

38:35

if we move on just to look a bit more at

38:38

public sector

38:39

um pensions now alan you wanted to pick

38:42

up some points some of which we touched

38:44

on earlier

38:44

right we'll look at public sector

38:46

pensions so we take what's probably the

38:47

easiest

38:48

one first the funded schemes which is i

38:51

think largely the mainly the local

38:52

government scheme

38:53

yeah would someday in a funded scheme

38:57

see any change if separation happened

39:00

um well again that that would be a very

39:04

messy thing to disentangle because for

39:07

example suppose you live

39:08

post-separation in the continuing uk but

39:11

you worked at some point for scottish

39:13

local authority

39:14

you presumably have a property rights on

39:17

that scottish scheme

39:19

um under the now funded pensions in

39:22

general

39:23

are a lot easier because there is a

39:25

sense of property right there's an asset

39:26

and all the rest of it

39:27

um but i mean you know

39:31

this what i want to try and convey is

39:32

the complexity of disentangling this

39:34

stuff because let me give you a simple

39:35

example people get divorced

39:37

and one of the ways they deal with

39:38

pensions after divorce is that one of

39:40

the partners

39:41

gets a claim on the other person's

39:43

divorce pension

39:44

they don't take money out at the time

39:46

they just say when they retire this week

39:47

so they live both sides of the border so

39:50

this scheme is paying this person

39:52

because they got divorced and then you

39:54

get i you know i just want to sort of

39:56

convey that i don't know the answer to

39:58

mostly or

39:58

i try not to come to a select community

39:59

saying this i think many of these things

40:02

are unknowable until you have that

40:04

discussion that negotiation you know

40:05

what what would be the lead position

40:07

what would the result of a negotiation

40:09

and how would it one of the things

40:10

working to stress on public service

40:12

pensions is

40:13

it's part of the whole you know it's not

40:15

just nhs pensions it's the nhs

40:17

and nhs pensions seen as a whole who

40:20

employs everybody and that will have an

40:21

effect on the pension side so we can't

40:24

segment off just the pension bit of this

40:26

it would have to be part of the whole

40:27

story

40:29

right that was meant to be the easy bit

40:31

yes return to the

40:33

more complicated area of the one before

40:36

we move

40:42

sector pension is presently fully funded

40:45

there should be no difficulty because

40:47

the liabilities and the funding

40:49

just simply move together just separate

40:51

scotland

40:52

where there's a deficit then that would

40:54

become the the responsibility

40:57

of a separate scottish government and

41:00

that that mean that seems all remarkably

41:01

straightforward to me that i understand

41:03

there's difficulty about partial

41:05

payments and so on

41:06

but um i guess i mean a

41:09

in reality local government pension

41:11

schemes in general are chronically

41:12

underfunded

41:14

so there is just you know it ain't going

41:16

to be the case that we're talking about

41:18

fully funded pension schemes

41:19

so then there'll be an issue no i

41:20

understand that so if they're not fully

41:22

funded though

41:23

the liabilities um transfer i mean if

41:26

it's

41:27

the strathclyde or the loading or some

41:29

similar pension scheme

41:31

in scotland that then just simply

41:32

transfers to the

41:34

the scottish government well no and they

41:36

inherit the liabilities

41:38

so just to be careful so if it is a

41:40

genuine pension fund

41:43

then the fund has to pay the pension and

41:46

they have to get the money from

41:47

somewhere

41:48

so the fund has has taken contributions

41:51

in has to pay a pension to the member of

41:53

the scheme wherever they live

41:55

and then the question is if they don't

41:56

have enough money

41:59

i mean they'll have enough money in year

42:00

to pay this year's pensions because

42:02

they've got

42:02

billions of pounds but if their whole

42:04

pension fund hold is getting

42:06

worse because people are living longer

42:08

and stock markets falling how on earth

42:09

do you carve up

42:11

that deficit there's a thousand

42:13

different ways of measuring it and a

42:14

thousand different

42:15

outcomes i suspect so well there are a

42:17

number of of finite

42:19

identifiable scottish um public sector

42:22

pension schemes

42:24

that and these are distinct from the

42:25

ones that are cross-border it was those

42:27

ones that i was

42:28

identifying there but yeah back home

42:31

would the money not come from the local

42:33

authority

42:35

so um at the moment

42:39

scheme members pay in if they are still

42:41

employed

42:42

the local authority potentially pays in

42:45

if it's still actively employing people

42:47

but

42:47

for example let me give you an example

42:48

of what they call in the jargon a

42:49

deferred member

42:50

you used to work for scottish local

42:52

authority there's no money going in at

42:54

the moment from you there's no money

42:55

going in from the employer

42:56

you have a pension promise which you

42:58

expect to be kept and there isn't enough

42:59

money

43:00

in the scheme to pay those liabilities

43:02

who's going to pay that shortfall

43:05

well we're asking we're asking questions

43:09

and the answer is i don't know because

43:11

you could argue well

43:12

they did they they now live in england

43:15

so is that a uk

43:16

problem or they've retired to scotland

43:18

so that becomes a scottish problem or

43:20

they you know there was there wasn't a

43:21

deficit when they retired and the

43:23

deficits happened since

43:24

what if what if it's fully funded at the

43:26

point suppose it's fully funded at the

43:27

point of separation

43:28

and then it deteriorates so a deficit

43:31

arises which they do because obviously

43:32

pension funds go up and down

43:34

a new deficit arises who's responsible

43:36

for the new deficit it's there is no

43:38

obvious right answer to any of these

43:40

questions there is no

43:41

simple principle that sorts all this

43:44

stuff out it will be hugely uncertain

43:46

hugely complicated

43:47

and will take ages to sort out and if we

43:50

stay in the uk

43:51

who is responsible for making the

43:53

payments

43:55

so the scheme is responsible for making

43:57

the payments and

44:01

employers each year and employees are

44:03

putting money in and then

44:05

in general the uk government has

44:07

overseen the process of making sure that

44:09

pension funds are properly

44:10

properly funded where there is a fund

44:12

but as you know in most

44:13

most public service schemes there isn't

44:15

even a fund

44:17

right if we turn to the um

44:20

well i think will be a more complicated

44:23

area

44:24

of the unfunded schemes

44:27

um i mean we touched it we touched on

44:28

this earlier uh

44:31

i mean i think i'm right in saying

44:34

other than armed forces and civil

44:37

service

44:38

the other schemes are all clearly

44:41

identifiable

44:42

as being separate scottish schemes such

44:44

as for teachers and national health

44:46

services

44:47

is that correct so that so the the

44:50

uh that's right so particularly the nhs

44:52

and the teachers the separate

44:54

it's an identifiable set of scottish

44:57

members and so on

44:58

so is it would it then be a case if

45:01

separation happened that

45:03

the scottish government would be

45:05

responsible for

45:06

the scottish schemes and the uk

45:08

government would be responsible for

45:10

the english welsh and northern ireland

45:12

schemes is that a fair

45:13

comment um

45:17

again i'm keen to stress that we don't

45:19

see the public service pension schemes

45:21

as being this kind of free-floating

45:22

thing over here and there's an answer to

45:24

that

45:25

and then what happens to the continuing

45:27

nhs and the schools

45:28

well nhs in particular as being somehow

45:31

over here

45:31

this is a whole set of costs

45:34

assets liabilities which we think would

45:37

be negotiated as a whole you wouldn't

45:38

kind of carve up the nhs pensions and

45:40

say well that's over there that's done

45:41

dusted

45:42

because you know if you take for example

45:45

i know more about

45:46

the english nhs the english nhs for

45:48

example is employing

45:50

charities voluntary groups that sector

45:52

groups that so so whose pension rights

45:55

are are different so you have to look at

45:57

the whole thing you can't just

45:59

section off the pension rights yes the

46:02

things like

46:02

nhs as distinct say from defense

46:05

are very much geographically based and

46:08

therefore it's much easier to make

46:10

allocations there

46:11

than it is for something like defence

46:13

which by its very nature

46:14

it covers the country as a whole

46:18

but again i i i would caution against

46:20

thinking any of this is straightforward

46:22

i don't think any of any of it is and so

46:25

for example

46:27

alan has said uh scottish citizen

46:30

scottish resident scottish employee and

46:33

you could

46:34

you know you could make different

46:35

arguments on all of these bases that

46:37

would come up with different answers

46:38

what

46:38

what if uh you know when you were

46:42

when you were in the scheme the rules of

46:43

this and subsequently they were changed

46:45

you know carving all of this up just

46:47

will not be straightforward i'm sure of

46:48

that right

46:52

you implied by your answer just now

46:54

referring to the nhs scheme as part of

46:56

the nhs widely

46:57

you implied that therefore in the event

47:00

of independence

47:02

the arrangements for different public

47:04

sector schemes could be different yes

47:07

so there's the arrangements for the nhs

47:09

pension scheme could be different to

47:11

that for the teachers

47:12

or one of the others yes okay just

47:14

wanted that right

47:16

do we have um do you have figures for

47:19

the liabilities for the purely scottish

47:23

public service schemes

47:25

as opposed to the equivalent of england

47:27

and wales yes so so this is this was the

47:29

hun

47:31

the 100 billion figure that i was

47:33

quoting so

47:34

we don't we don't have a very precise

47:36

number but of the the uk wide liability

47:38

which i think from memory is a trillion

47:40

or so i mean

47:41

that's a trillion amongst friends you

47:44

know

47:44

the the scottish air is thought of

47:46

unfunded public service pension

47:48

liabilities is thought to be of the

47:49

order of 100 billion pounds

47:51

now obviously that's spread over decades

47:53

and decades it wouldn't fall to you

47:55

in one go but you know and that will

47:57

clearly as as

47:58

the chair said that will have to be met

47:59

in any case somebody's got to pay for

48:01

those pensions but they are

48:02

sure right so around figures the

48:05

scottish uh

48:06

share of the liabilities is ten percent

48:08

of the uk

48:09

which is obviously significantly more

48:11

than the either the population or the

48:13

gdp

48:17

um sorry yes yes

48:22

why is this um

48:27

clearly one of the issues is the um

48:30

relative size of

48:31

the public sector in the continuum uk

48:33

and in scotland

48:34

uh relative wage levels so there's a

48:36

whole raft of different factors but

48:38

clearly

48:39

um if we come back to this issue about

48:42

increasing life expectancies and so on

48:43

clearly if life expectancy is going to

48:45

rise rapidly

48:46

at proportionately different rates then

48:49

that has a bearing as well

48:52

um right when we talked earlier

48:56

so dude i mean do the figures for

48:58

increasing life expectancy that apply to

49:00

the population as a whole

49:02

do the same figures apply

49:05

to um teachers nurses yes i didn't i

49:08

didn't so much mean public service

49:10

i mean obviously that would be the right

49:11

number to use and we don't have those

49:12

but

49:13

what i meant is i gave some figures

49:15

earlier that said the

49:16

the average man at 65 will see an

49:19

improvement in the life expectancy in

49:20

england scotland of about the same

49:21

amount but

49:22

percentage-wise that's a bigger increase

49:24

in scotland

49:25

for example because they start from a

49:28

lower basis

49:29

i mean these um you know you mentioned

49:31

there were the

49:33

um increased the liabilities per header

49:36

population are higher in scotland

49:38

is it any higher than

49:42

obviously public we also said you know

49:44

public spending in scotland

49:46

is higher than the rest of the uk is the

49:51

is the share of the the liabilities uh

49:54

is it

49:54

that broadly similar to the share of

49:56

public spending

49:58

i i don't know we we could have a look

50:01

at that for you and

50:02

probably come back to you right okay i

50:05

think that's

50:06

all thank you see this whole area seems

50:08

to be about the minefield

50:10

um how would public center pension

50:13

schemes apply across the uk be

50:15

disaggregated

50:16

and can you give us an estimate as to

50:18

how long it would take

50:20

you know like the civil service yes um

50:24

disaggregation is is in one sense

50:28

simpler if there isn't a fund possibly

50:31

with a deficit because that raises whole

50:33

different sets of issues

50:35

um but you know i would anticipate these

50:39

things will take years to disentangle

50:41

um i always say whenever i have a

50:44

meeting in the department about pensions

50:45

if there's two lawyers in a room that's

50:47

bad news

50:48

and there will just be you know buy

50:51

shares in pensions lawyers

50:52

because it would just it would just take

50:54

forever to sort all of this stuff out

50:56

because

50:57

um clearly um there's issues about

51:02

the rights you've built up under the

51:03

scheme but the crucial uncertainty is

51:05

who's actually going to pay the bill so

51:07

these pension promises have been made

51:08

they should be honored

51:10

but arguing about who's who's actually

51:11

going to pay for them

51:13

do we even have the data because as i

51:15

said a moment ago

51:16

very often you don't record data that

51:18

you don't need

51:19

so in a sense if i'm a member of the

51:20

civil service whether i work for a

51:22

pension service in dundee or in burnley

51:24

it doesn't matter i'm building up the

51:26

same right so we may not even know for

51:28

example

51:29

where somebody was when that when they

51:30

did the work if they're in a uk

51:32

new systems which have to come into

51:34

place well or would it even be possible

51:36

to do on you know in other words

51:38

if if you felt the right way to carve

51:40

things up was to look at where people

51:41

were working when they contributed

51:44

you might not even have gathered the

51:45

data so potentially you might be trying

51:47

to gather data for millions of people

51:49

for their working history of debt right

51:50

but

51:51

can i just be clear though i mean while

51:52

i appreciate that this is enormously

51:54

complicated

51:55

and could potentially generate

51:56

employment for you know

51:58

for the undeserving nonetheless it

52:01

wouldn't necessarily

52:02

impact upon people who were the

52:04

recipients of pensions

52:06

so nausea nodding doesn't get recorded

52:09

so i think i mean

52:10

a statement so so um

52:14

the difficult thing to disentangle

52:17

wouldn't principally

52:18

be the level of the pension right you'd

52:20

already built up we have a figure for

52:21

that

52:22

it would be who pays the bill that that

52:24

would be the source of endless

52:26

negotiation take years to disentangle

52:28

that's the day that we'll take it but

52:30

it could be as long as try them

52:31

basically

52:35

yes but sorry i think there are an

52:38

interest here and

52:38

i'm proud of the teachers

52:43

would there be a guarantee that those

52:44

who have already retired from my college

52:46

are about to retire who get the

52:48

balance that's due to them

52:52

in terms of their you know the figure

52:54

they've been promised

52:56

in terms of return or actually getting

52:57

now in terms of the time

53:00

that would clearly be the right outcome

53:03

you know i think it would be entirely

53:04

wrong if someone so you're a scottish

53:06

teacher you've retired you're drawing a

53:07

pension under a set of scheme rules

53:09

clearly

53:10

we have to make sure that those ventures

53:12

go on being paid according to those

53:13

rules

53:14

i think the pressure wouldn't be so much

53:15

whether that pension got paid

53:17

would be so for example

53:21

suppose the scottish future scottish

53:23

government took on that

53:24

liability and was then short of cash

53:26

because as i've said there is a hole in

53:28

these schemes

53:29

what might they do then so although in

53:31

principle you'd want to see it carry on

53:33

they might say well we're so short of

53:35

cash maybe we won't pay the full

53:37

inflation increase this year or

53:38

something like that you could

53:40

that's conceivable and we the uk

53:41

government couldn't control that i don't

53:43

think

53:43

yeah we'd have to take on that liability

53:47

um well as i say

53:50

i don't think anything is clear i really

53:52

don't i don't think you can simply say

53:54

oh well it's obvious you're a scottish

53:55

teacher you worked in scotland all your

53:57

life the scottish government will pay

53:58

your pension in future i don't think

53:59

even that

54:00

is absolutely clear because as i say

54:04

you can't section off the pension stuff

54:06

from the rest of the public service the

54:08

whole thing would have to be considered

54:09

in the round

54:10

now you're not scared and wondering

54:11

because in my book

54:14

translation would be asking a question

54:16

to which people can't give you the

54:17

answer

54:19

um in a way you know i want to do right

54:22

by the citizens of the united kingdom i

54:24

would love to give very clear answers to

54:26

the questions you're asking and so do we

54:27

all yeah

54:28

and i don't feel able to do that okay

54:30

thank you very much

54:33

as we previously discussed we are

54:34

talking about very large amounts of

54:36

money and clearly in the negotiations

54:38

both sides are going to be extremely

54:40

anxious to come out of the negotiations

54:41

being out as little as possible yes so

54:44

negotiations are going to be

54:45

difficult now say they haven't concluded

54:48

by

54:49

the time by the 24th of march 2016 when

54:52

the scottish government plans

54:54

got into an independent state i mean is

54:56

it possible

54:57

for scotland to become an independent

54:59

state without these negotiations having

55:02

been concluded

55:03

i think i think it's important to

55:06

remember in this context

55:08

that the date given in in march 2016 is

55:11

an assertion

55:12

it's not based on any a factual

55:16

uh analysis a it's a chosen

55:20

uh date it would a the the date of which

55:24

scotland

55:25

uh became independent would would depend

55:27

on the nature

55:28

of the negotiations obviously the

55:30

scottish government choose a position

55:32

whereby they're going to say regardless

55:34

of where we've reached our negotiations

55:37

uh we're going to just accept that

55:39

position so that we can be

55:41

independent in march 2016. uh

55:44

that's that's an option for them but you

55:47

know

55:48

our position is that that seems

55:50

extremely

55:51

unlikely that these very complicated

55:54

negotiations not just in relation

55:56

to pensions but all the other uh areas

56:00

which this committee has looked at could

56:02

be concluded in an 18-month

56:03

period a uh so that you had detailed

56:07

uh resolution so if the scottish

56:10

government

56:11

went through with that independence of

56:14

that date

56:16

and declared scotland to be independent

56:18

and these negotiations hadn't been

56:20

concluded

56:20

and what impact would that have on

56:23

people who were

56:24

in receipt of pensions well as

56:27

in relation to whole a range

56:31

of issues clearly if independence was

56:34

concluded

56:35

it was without a the resolution of a

56:38

number

56:39

of issues it would just a

56:43

manifest and and increase the

56:46

uncertainty for an independent scotland

56:48

uh that uh mr webbs referred to

56:52

so i mean so somebody in

56:55

scotland who was um expected to be in

56:58

receipt of a pension and we were in this

57:01

very

57:01

unclear situation do you have any idea

57:06

what would that would be could they

57:08

guarantee getting that pension

57:10

or could we be in a completely

57:14

chaotic situation well i i think it's

57:18

quite clear that we could be

57:19

in a completely chaotic situation i

57:22

certainly don't want us to be

57:24

in a chaotic situation you as you know

57:27

the uk government in the

57:29

edinburgh agreement have committed a to

57:32

work with the scottish government in the

57:34

event of a yes vote to ensure

57:36

a a smooth a transition

57:40

that of course doesn't mean as the

57:42

scottish government sometimes

57:43

seek to interpret it as doing exactly

57:46

what they would wish because obviously

57:48

the government for the rest of the uk

57:50

will have to act

57:52

in the interests of the citizens of the

57:54

rest of the uk which will include

57:56

pension uh pension issues

57:59

but clearly if there isn't a

58:03

you know if there isn't sufficient time

58:04

for negotiations

58:06

and there isn't a clarity of where

58:09

the scottish government is seeking to to

58:11

take those negotiations in terms of

58:14

of what a resolution they're looking for

58:17

then then you do risk a chaotic

58:20

outcome and i think you know one of the

58:22

things that even at this stage

58:25

is as you as you know having looked at

58:27

the white paper

58:28

there is actually very little detail as

58:31

to actually what

58:32

the the direction of travel or objective

58:35

would be

58:36

in relation to a range of these matters

58:38

and on a number of the other

58:40

issues both in relation to pensions or

58:42

welfare there's just a number of

58:44

statements

58:44

that the scottish government wouldn't be

58:46

doing what the uk government's doing

58:49

but no assertion no even by this time

58:52

there's no assertion of actually what

58:53

they would be doing

58:54

and therefore i mean i think that makes

58:57

it even more complicated to come to a

58:59

successful

59:00

resolution within a very short period of

59:02

time

59:04

okay i wonder if we could turn now to

59:05

occupational private pensions

59:07

so jim thank you mr chairman and i'd

59:10

probably ought to

59:11

remind the committee of my red entry in

59:14

the register on

59:15

i'm going to talk about these things

59:19

your own minister your own analysis

59:21

paper

59:22

refers to all the things that uh will

59:25

that

59:26

apply to the private and occupational

59:28

pensions

59:29

regulatory things and compensatory

59:32

schemes and things like that

59:33

so can you tell us

59:36

how would you say in the event of

59:39

independence in scotland how would

59:41

what would the effect on occupational

59:43

and private pensions

59:44

be

59:49

the infrastructure for private pensions

59:50

is one of those things that you don't

59:52

notice until it goes wrong

59:54

so the fact that we have a pensions

59:56

regulator based in brighton

59:57

whose job every day is to make sure that

59:59

company pension schemes are

60:01

properly funded or will be we have a

60:04

pension protection fund dimension so

60:05

that if your company goes to the wall

60:07

and the money the fund is short of money

60:09

then you get a pension

60:10

paid we have nests that i talked about

60:12

to make enrollment work

60:14

if the pensions trace and service and so

60:16

we have a whole infrastructure

60:18

and the challenge really would be does

60:22

an independent scotland reinvent all of

60:25

this stuff

60:26

now this has taken years and years to

60:29

evolve

60:30

uh it's obviously been designed with the

60:31

uk context in mind

60:33

um it would take a very long time to

60:34

recreate all of these things

60:36

but for example take the pension

60:37

protection fund it's very hard to see

60:40

how unless scottish firms

60:43

or scottish pension funds were paying

60:44

the pension protection fund levy

60:46

they'd have any rights under the pension

60:47

protection fund they wouldn't be members

60:49

of it anymore

60:50

so i'm a scottish worker you have

60:51

independence my firm goes to the wall

60:55

what happens and the answer i don't know

60:58

what happens and you know unless a new

60:59

regime has been put in place well it

61:00

took us

61:01

years to legislate for these things um

61:04

and if i might if i may just very

61:06

briefly make a more general point which

61:07

is just the lead time on all of these

61:09

things

61:10

even if the negotiations we were just

61:11

talking about a moment ago happened

61:13

you then have to write the laws we

61:15

generally take a long time to write

61:16

pensions laws we consult on all the rest

61:18

of it so even if you've had

61:19

negotiations taking a while there's been

61:21

a lead time to write legislation consult

61:23

and put it in

61:24

so how you'd have independence and have

61:27

pension protection the day after i can't

61:29

see how it could possibly work

61:31

can i pursue you on the point you

61:34

touched on just now

61:35

you talked i think about the company

61:37

paying your pension

61:38

yeah do you mean the company that used

61:41

to employ you has a pension fund

61:44

um where that company is located or what

61:47

about if

61:48

it is being run by one of the big

61:50

providers

61:51

scottish ones like standard life or

61:53

scottish widows i mean yeah

61:55

is there is there a location issue here

61:57

so we've got two different sorts of

61:58

pensions that we're talking about so

62:00

first is the the defined benefit company

62:02

pension

62:03

where the employer the sponsoring

62:06

employer whose job it is to make sure

62:08

the fund is eventually has enough money

62:09

in it for instance they go to the wall

62:13

and there is no pension protection fund

62:15

in place post-independence to pay

62:16

your pension from from the fund so all

62:19

you get is the

62:20

you know if the fund's 70 funded you get

62:22

70 of your pension or whatever whatever

62:24

um so that's one set of issues

62:28

the other sort of pensions you describe

62:30

the defined contribution the pension pot

62:33

the concept of a shortfall doesn't

62:34

really arise it's just a pot of money

62:36

it's a set of assets they are your that

62:38

is your money

62:39

so where you choose to draw that on the

62:41

whole won't make a great deal of

62:42

difference

62:43

although there will need to be a

62:44

regulatory relationship she's going to

62:45

say it's only that's only on protection

62:46

of rest

62:48

yeah so so if you're a member if you've

62:50

got a standard life pension or something

62:51

like that

62:52

you can draw your standard life pension

62:53

wherever you happen to live

62:55

um there'd be an issue about currency

62:58

you know

62:58

in what currency did you accrue your

63:00

rights and what currency do you want to

63:01

draw them that would be that

63:04

but standard life would assuming it

63:07

remains

63:08

in its current location would then need

63:10

to be regulated by

63:12

in under whatever regime the new

63:13

scottish government developed

63:16

so yes so an english person in the rest

63:19

of the uk

63:20

currently saving with or a pensioner

63:22

with standard life for example

63:25

would no longer be protected by the

63:27

regulatory

63:28

systems that they currently are broadly

63:31

yes so they would they would have

63:32

effectively chosen to have saved with a

63:35

a pension provider in another country

63:37

and they would have to hope that the

63:39

government of that country had got a

63:40

good regulatory regime in place

63:43

except they didn't choose well by

63:46

remaining in the scheme they are

63:47

choosing

63:49

yeah okay it's been suggested

63:52

by the institute of chartered

63:53

accountants for scotland that the eu

63:55

could uh

63:56

have a locus on all of this yeah and

63:58

that the rules would require

63:59

cross-border pension schemes to be fully

64:01

funded

64:03

separation do you have a view on that

64:05

yes i had a very good meeting with uh

64:07

the icas

64:09

in edinburgh a little while ago and i

64:11

think they've made a really valuable

64:12

contribution to this debate

64:14

and the issue here is that the eu has

64:17

rules the the what's called the iop

64:19

directive the iorp

64:21

the ielts directive which says that

64:23

where

64:24

you have a cross-border pension scheme

64:26

then you have to make sure

64:27

within a two-year time frame that it's

64:30

funded up

64:31

to the requisite level there was some

64:33

suggestion they might roll back on that

64:35

the eu in revising this directive and in

64:37

fact they didn't

64:39

so so there had been some hope i think

64:40

amongst the nationalists that the eu

64:42

would relax these rules

64:44

and they have not done so they might at

64:46

some point in the future but at the

64:48

moment they are in place

64:49

so if independence separation happened

64:51

on a certain date

64:53

as far as one can tell these rules would

64:55

bite so if you work

64:56

for say you work for a big supermarket

64:58

headquarters in england

65:00

you work in scotland for the supermarket

65:02

you would potentially become a member

65:04

immediately of a cross-border scheme

65:06

if that supermarket scheme had a

65:08

shortfall in it

65:10

your employer would suddenly have to

65:11

fill within the next couple of years

65:13

fill that gap or do complicated

65:15

restructuring of the pension scheme

65:17

so that's bad news for your employer

65:20

there's going to be costs associated

65:22

with all of that so so

65:24

um the current rules would allow the

65:26

employer to fill the deficit over a

65:27

reasonable length of time

65:29

if firms suddenly have to find that

65:30

money in the short run that's

65:31

potentially bad news

65:32

bad news for the business so can we be

65:34

clear what what money would they need to

65:36

find to balance the scottish deficit

65:38

so they'd have to the whole scheme the

65:40

entire year

65:41

because it's a cross-border scheme by

65:43

virtue of coming across border schemes

65:45

yes they'd have to fill the whole

65:47

deficit

65:47

so this is going to be a major impost on

65:51

a vast number of businesses that trade

65:53

currently trade and employ in both

65:54

england that were uk

65:56

yes if they have these defined benefit

65:58

pension schemes so traditional seller

65:59

related pension schemes that

66:01

are capable of having a deficit that

66:03

deficit would have to be filled

66:05

over over two-year period in principle

66:07

um

66:08

we the uk government have been fighting

66:10

eu attempts to impose

66:12

strict funding requirements on uk

66:14

pension funds precisely because it

66:16

brings up front

66:17

these long-term liabilities and that's

66:18

exactly what would be at risk of

66:20

happening here

66:22

can i just see clarification on whether

66:24

or not it would be possible for

66:26

ethereum just simply to break

66:30

its unified scheme in half and just say

66:32

well yesterday

66:34

we had one scheme today we have two

66:37

schemes

66:38

um and each has the assets and the

66:40

liabilities of the of the

66:41

the staff who are in particular

66:43

locations

66:46

it's certainly possible that

66:47

restructurings of that sort might be one

66:49

thing again

66:49

our friends the lawyers would have a

66:51

look at um but then

66:53

then you have an issue about is it is it

66:55

genuinely

66:56

separate schemes so yeah do you

66:58

literally have to carve them up and make

66:59

them completely separate schemes

67:01

you probably would um and then of course

67:04

you've got the issue of scale because if

67:06

you've got

67:06

one one sub scheme that's now a fraction

67:09

of the size

67:10

against another you've got the

67:11

additional costs and so on so it's not a

67:13

free lunch as it were it might be a way

67:15

around that particular problem but it

67:17

would create new problems and

67:19

certainly new costs look and i

67:21

understand that i mean we cannot always

67:23

assume

67:24

excuse me in circumstances where there

67:26

are close cross-border

67:28

films that the proportions of employees

67:30

is the same proportion as the population

67:32

of the

67:32

the uk and scotland may very well be it

67:35

could be the scottish

67:36

end is the bigger is the bigger end yes

67:38

um

67:39

but in the in the event leaving aside

67:42

the question

67:43

of um the the running costs

67:46

i mean simply splitting them would leave

67:49

them no worse off than they were before

67:52

because presumably if there was a

67:53

deficit to the office it would be a

67:55

as with the assets and you would then

67:57

have that you know a dislocation

68:00

but that would be attainable position

68:01

would it not um

68:03

it might well be the way that some

68:04

schemes choose to respond to this

68:06

i think it's fair to say i wouldn't want

68:08

to dismiss when you say

68:10

running costs i mean just i just quote

68:12

from the national association of pension

68:13

funds

68:14

in march when this directive was was

68:16

published and they said just one

68:18

sentence

68:18

the knock-on effect of this i.e the

68:20

directive is that schemes with members

68:22

both north and south of the border will

68:23

become much more expensive to run

68:25

if scotland were to vote for

68:26

independence so i think i always say i

68:29

want every pound that goes into a

68:30

pension fund to turn into as much

68:32

pension as possible

68:33

and the risk of all of this is this is

68:35

all cost that's coming out of people's

68:36

pensions and that's the way

68:38

i wonder if i could just go back one

68:40

point to the the point that jim made

68:42

earlier on just previously

68:44

about the um occupational and private

68:46

pensions and the structures

68:48

about regulation and the protection fund

68:51

and all the rest of it

68:52

yeah i mean is there any reason why um

68:54

in the event of a decision for

68:56

separation

68:57

that the uk government should not just

68:59

simply say

69:00

well we will allow this to continue on a

69:03

cross-border basis

69:04

and that that would overcome the the

69:07

the short-term difficulty and say that

69:10

well either in the long term subject to

69:12

negotiations

69:13

we'll keep it as a joint function

69:16

or um in the longer term we will allow

69:19

the scottish government to do the hell

69:21

of its own

69:22

but that would overcome the short-term

69:24

difficulty would it not

69:25

would obviously be subject to

69:26

negotiation but

69:28

it's a possibility i suppose if you take

69:30

something like the pension protection

69:32

fund

69:32

for example um there will be a

69:35

differential hit on the pension

69:37

protection fund between scotland and

69:38

england

69:39

just because the risks are different i

69:40

don't know which way it would go

69:41

necessarily i'm not saying be worse from

69:43

one or the other but they will just be

69:44

different

69:45

so if you are the continuing uk

69:46

government and you've got your own

69:48

pension protection fund for your

69:49

continuing

69:50

uh employees in your country

69:53

do you want for example insolvency risk

69:56

from another country

69:58

potentially destabilizing your

70:00

protection fund

70:02

i don't know but it's not necessarily

70:04

because you can't control

70:05

in the same way that insolvency risk you

70:07

can't control these things all together

70:08

anyway but

70:10

it wouldn't necessarily be attractive i

70:12

wouldn't say it couldn't happen

70:13

but but there might be reasons why it

70:15

would be unattractive likewise nest

70:18

if say the continuing the the

70:20

independent scotland

70:22

i don't know had more low paid employees

70:24

than than the remaining uk

70:26

you'd be getting more poor value into

70:29

economic terms

70:30

uh members who you're essentially

70:32

subsidizing so

70:34

i'm not saying any of this is impossible

70:36

but it might be quite unattractive

70:38

no i understand that but the the

70:40

question of the um

70:42

the basis of the division of assets and

70:44

liabilities

70:45

again as so many things potentially

70:47

involve big sums

70:48

and are complicated to work through yeah

70:51

but the

70:51

decision to do it would essentially be a

70:54

political one

70:56

and therefore entirely entirely possible

70:59

and you know all the all the arithmetic

71:01

would be consequential

71:02

upon a whole set of complex negotiations

71:07

which would be balancing the health

71:08

service against you know pension

71:10

responsibilities against defense again

71:13

you know and on the basis that nothing

71:15

is agreed until everything's agreed

71:17

it would not in fact be impossible for

71:19

this to be

71:21

a solution to be found that was

71:22

agreeable and that involved scotland

71:25

keeping um the uk pensions regulated in

71:28

the uk protection fund

71:31

it wouldn't be impossible but bear in

71:33

mind on this one i'm talking about the

71:34

future as well as the past so it's not

71:36

just an argument about how you carve up

71:38

the past

71:39

you know if i if i was a member of the

71:41

continuing uk government

71:43

i really wouldn't want my pension

71:45

protection fund to be exposed to risks

71:47

and revenues but risks

71:49

from another country i mean why don't we

71:50

allow another country

71:52

into our pension protection fund well

71:54

because we you know we know our domestic

71:57

situation we know our risks we can

71:58

control them to some extent

72:00

why would you want to exposure it would

72:01

be unattractive i think it's not

72:03

impossible but i think it would be

72:04

unattractive are you ruling it out

72:05

i'm not running it out now so it's

72:08

something that is subject to negotiation

72:10

it is entirely possible but but i think

72:12

unlikely

72:14

i mean but that's what negotiation is

72:16

all about though isn't it yeah

72:17

right thanks jim i just uh

72:21

as a purely a point of order mr chairman

72:23

just to clarify my comment about

72:26

uh my interest it is register the entry

72:28

that says i'm chairman of first milk

72:30

which is you know

72:31

he's a scottish company and has

72:33

employees in

72:34

england wales and scotland anything to

72:37

do with occupational pensions

72:39

right

72:43

i just wanted to say something in

72:45

relation to a point that

72:47

sir jim touched on in passing and i know

72:49

that you're conducting

72:51

a separate inquiry which you'll have the

72:53

chief secretary of treasury here

72:54

in relation to the currency union but i

72:56

do think it is worth recording

72:58

that complex as these issues are they

73:01

will be even more complex

73:03

if scotland was not operating uh with

73:06

the pound sterling

73:08

in relation to the these cross-border

73:12

a pension payments and i think

73:16

a currency separate currency

73:19

or other currency arrangement would have

73:21

a very very significant impact

73:23

on on the issues that we're discussing

73:25

today can i

73:27

why because um presumably

73:30

if the uk government was paying pensions

73:33

to somebody in scotland

73:34

in sterling then it's just changed into

73:37

the

73:38

the merk or whatever the scottish

73:39

currency is at the prevailing rate of

73:41

exchange

73:42

i mean surely that's fairly

73:44

straightforward i i

73:46

i don't think uh i i don't think it is

73:49

because you you run into

73:51

exchange rates in being required uh

73:54

to determine payments payment levels uh

73:57

being determining uh the point at which

74:01

a the the future assessment of the

74:04

payment

74:05

is being uh made it also makes it much

74:08

more difficult because i think you're

74:09

going to come on to discuss

74:10

the administr the operation of systems

74:13

uh

74:14

it makes it much more difficult for

74:16

those systems uh

74:18

at all to operate in on a dual or

74:22

a currency basis when the uk government

74:26

pays pensions to pensioners in australia

74:29

or spain or anywhere else presumably we

74:32

pay the money in sterling

74:34

and they then translate it do they

74:37

we we sometimes do um bulk currency um

74:42

um conversion for people so if we pay

74:45

british people in us

74:46

in australia uh we we can pay into

74:49

australian denominated accounts but at

74:53

whatever

74:53

deal we've been able to strike on on

74:55

currency and so on

74:57

so so all of that is doable yes right

75:00

let's do

75:00

i mean again i think as david he says

75:02

though a lot of these none of these

75:04

things are impossible a lot of them add

75:06

costs and complexity

75:07

yes it adds costs i understand that but

75:10

it is doable sorry right

75:11

so jim all right thanks mike right okay

75:14

um graeme thank you i wanted to

75:18

touch on the the issue of um the labor

75:20

market and

75:21

in the the scotland analysis paper that

75:25

that's obviously discussing today

75:28

uh the dwp goes on about the the

75:31

advantages

75:32

to all with regards to the current uk

75:36

labor markets can i maybe just ask you

75:39

to maybe kind of um confirm um

75:43

that is correct to say that we do have a

75:45

single uh

75:46

uk labor market in the country and

75:49

can you maybe just explain what that is

75:51

and what the advantages are

75:53

yeah particularly to scotland sure i

75:55

mean i think

75:56

wherever you're working in the uk there

75:58

is a common set

75:59

of uh legal employment rights for

76:02

example

76:02

uh a common uh minimum wage obviously

76:05

sometimes there are different rules for

76:07

london

76:07

that's that's separate issue common set

76:09

of employment rights

76:10

uh so for example if you work for a big

76:12

firm and you move from their office one

76:14

side the border to the other

76:15

that's not changing your terms and

76:17

conditions of employment

76:18

so i think it gives a flexibility to

76:20

individuals and to employers

76:22

both sides of that of that mix um

76:25

you know from the from the social

76:26

security side you're building up a set

76:28

a common set of you're paying national

76:30

insurance into one system

76:31

so if then your job in that common

76:33

labour market fails you've got a set of

76:35

rights

76:36

wherever you paid in there's no sort of

76:38

disentangling different periods of

76:39

service and slicing it together so i

76:41

think for the individual

76:42

it's seamless uh for the for the

76:45

employer

76:46

that's able to treat everyone the same

76:49

you know when you're deciding where to

76:50

work you're not thinking oh well

76:52

you know i'm in a different benefit

76:53

system or a different set of legal

76:54

rights all of that is standardized so i

76:56

think it just adds

76:57

to the individual and the employer's

76:58

flexibility

77:01

okay so maybe in particular um to answer

77:04

the second part of my question

77:06

how is this advantage

77:09

advantageous to to scotland so i suppose

77:13

if you are um working for

77:16

a uk-wide company then

77:20

uh working you know if your company

77:22

wants to work in scotland then there's

77:24

no issue about well

77:25

i might be paid in a different currency

77:27

or on my my my future state pension

77:29

rights are built up on a different basis

77:31

or my benefit position if i lose my job

77:33

is different you know

77:34

as an employee you are happy to work i

77:37

mean other things being equally happy to

77:38

work wherever in the uk you need to

77:40

uh so i think that means from from

77:42

scottish point of view

77:43

there's no issue no question if your

77:45

firm wants you to work in scotland

77:46

there's no

77:47

there's nothing in your back your mind

77:48

saying ah but there's all these things i

77:49

need to think about you just don't need

77:51

to think about them

77:53

okay and what risks do you perceive as

77:57

scotland was indeed to

77:58

become independent

78:01

um i think in terms of the labor market

78:06

i mean

78:06

if i just give you one sort of anecdotal

78:08

example but you know i have a

78:10

constituent who worked in scotland and

78:11

worked in england

78:13

in the public sector as it happened and

78:14

she built up pension rights in both

78:16

and she said i want all my pension in

78:18

one

78:19

in in in this case in the british in the

78:22

english scheme

78:23

because i want all of my money in one

78:24

currency and she was worried about

78:26

currency fluctuations

78:27

so if you imagine a world where you've

78:28

got two separate countries you you work

78:30

in both of them

78:31

you're going to build up pension rights

78:33

going forward in

78:35

different state pension schemes you're

78:36

going to get pensions presumably

78:38

potentially paid in different currencies

78:40

you're gonna you know if you lose your

78:42

job

78:43

it might depend which benefit system

78:45

you're going to be under so i think

78:46

there's all

78:47

that kind of uncertainty um

78:50

complexity that you just don't have and

78:52

for no obvious benefit

78:54

in terms of your job

78:57

you obviously talk about the the healthy

79:00

states

79:01

of the single uk labor market

79:04

as it is and despite

79:08

scotland perhaps becoming independent

79:10

would there still not be

79:11

advantages in terms of people crossing

79:14

the board

79:15

either way in terms of seeking jobs and

79:18

businesses moving to and fro

79:20

i mean we do obviously have a single

79:22

market when it comes to the eu

79:24

yes um so why in particular scotland

79:28

may be disadvantaged in relation to this

79:31

if scotland did indeed become

79:33

independent

79:34

i think if you are an employee of a

79:36

uk-wide company

79:38

and they and the company says you know

79:39

we'd like to work

79:41

uh in scotland then at the moment then

79:44

then that's you know subject you wanted

79:46

to work in scotland absolutely fine

79:48

whereas i think in this new situation

79:50

just as if they said we want to work you

79:51

and

79:51

want you to work in front say you'd be

79:53

thinking well hang on

79:54

if i'm working in france what tax am i

79:58

paying

79:58

what you know what pension rights am i

80:00

building up what what if i fall

80:01

sick you know and there's a whole set of

80:03

things that are just common now that you

80:05

don't even think about that you suddenly

80:06

have to think about

80:07

um so so i think it's as much about you

80:11

you know scotland it seems to me the

80:12

scottish economy wants to have the

80:14

biggest pool of label available to it

80:16

that it can it wants to have the

80:17

brightest and best from around the

80:18

united kingdom willing and happy to work

80:20

there

80:20

without having a second thought about

80:21

all those things

80:23

well i think if you say

80:27

just referring back to our borders paper

80:29

which obviously committee looked

80:31

at before and looking at just as part of

80:33

that general evidence

80:34

that although there is interaction

80:36

across

80:37

between the north and a republic of

80:41

ireland

80:41

between canada and united states and

80:44

between austria and germany three

80:46

examples

80:46

it is actually less than people would

80:49

anticipate for

80:50

very simple you know very similar

80:53

co-terminus every

80:54

equatement countries and i i think

80:58

you know the the evidence presented

81:00

there was that if you do create a border

81:02

then that border does have an effect in

81:05

terms not just in terms of goods of

81:06

movement but people as well

81:09

yeah and i suppose uh your points

81:11

earlier mr mundell in relation to

81:13

they're not being the currency union or

81:15

the likelihood of there not been

81:16

a currency union in scotland was become

81:18

independent would probably put up a very

81:21

sizable barrier to the you know the free

81:24

flowing of of labor and business and

81:26

trade between

81:27

scotland and the rest of the united

81:29

kingdom i think you're correct and i

81:31

mean that's why i find

81:32

that you know i have many constituents

81:34

in my border constituency

81:35

who operate small businesses uh

81:38

and who who are very concerned that

81:40

people on the other side of the border

81:42

simply wouldn't employ them because they

81:44

would just be put off

81:45

by the thought that factual or otherwise

81:48

that there would just be a great deal of

81:49

complexity

81:50

of using trades people are using a

81:52

business uh

81:54

on the different side of a border i mean

81:56

that's an interesting point because of

81:58

the geopolitical publication of your own

82:00

constituency

82:02

which does border onto england

82:06

these concerns been expressed to you

82:08

personally by by

82:09

individual constitutions they've been

82:12

expressed by a large number of

82:14

constituents

82:15

and that's why i was quite surprised

82:17

when mr alex salmond first minister

82:19

scotland

82:19

visited carlisle to tell people that all

82:22

these things would be all right

82:24

but didn't feel that he needed to come

82:26

to the scottish side of the border

82:28

to reassure people there i i think my

82:31

constituents were quite surprised

82:33

uh that he chose to go to carlisle to

82:36

announce

82:36

that actually their concerns were

82:38

unfounded rather than

82:40

to come a a and meet them

82:43

well don't worry minister we're going to

82:45

dump freeze and gamma shield shortly

82:50

indeed

83:04

you're very much uh enjoy the visit to

83:06

people's people's high street

83:08

has the largest number of independent

83:10

shops of any high street in scotland so

83:13

it's a thriving small business so that

83:15

doesn't surprise me having been shopping

83:16

there myself

83:27

scotland but um in terms of uh

83:30

just looking at welfare and look at

83:32

benefits

83:33

um can i just clarify scotland does

83:37

have a higher expenditure

83:40

on benefits compared to the rest of the

83:43

uk

83:43

um and if you just look at

83:47

why what is the uk government's analysis

83:49

of

83:50

why that's the key yeah and particular

83:52

disability benefit but they're

83:54

interested to hear your views on

83:55

sure on other benefits you're right it

83:58

does have a

83:59

scotland currently has a slightly higher

84:02

expenditure of their head on

84:03

social security and one of the points i

84:05

would make is that number has fluctuated

84:07

a lot

84:07

so there have been times when it's been

84:08

a lot higher it's now slightly higher

84:11

one of the reasons the differentials

84:12

come down has been that within the

84:14

united kingdom the scottish economy is

84:16

doing relative

84:17

has been doing relatively well so

84:19

employment growth has been relatively

84:20

rapid

84:21

so which has changed the differential um

84:24

obviously there are slightly higher

84:26

proportion of pensioners in the

84:27

population in scotland

84:28

relative to working age and children

84:30

which puts an upward

84:32

pressure on spending there are slightly

84:34

fewer children

84:35

relative to the rest of population which

84:36

puts it downward pressure so there's a

84:38

range of different factors

84:40

rent levels tend to be slightly lower in

84:42

scotland the rest of the uk particularly

84:44

london so you know so there are lots of

84:46

different factors going on

84:48

but taking all of that overall

84:49

particularly because of pensioners it's

84:51

it's slightly above

84:51

and as you say uh incapacity benefits

84:54

are slightly above

84:55

i i am i have to say i'm guessing but

84:58

i'm reasonably confident that a lot of

84:59

people are in capacity tight benefits

85:01

now

85:02

previously worked in the sort of heavy

85:04

industry manufacturing and so on

85:06

uh and that's part of the reason why

85:08

they have the the bad backs and all the

85:09

rest of it now

85:10

and that i think tends to it's tend to

85:12

be a sort of hidden form of long-term

85:13

unemployment to be honest

85:14

in those sectors of the economy uh which

85:17

i would speculate have been historically

85:18

quite well

85:19

represented in scotland but i wouldn't

85:20

swear to that can i just ask me that's

85:22

not the first time i've heard this

85:23

either

85:24

in this committee are beyond that that

85:25

is the reason why we have higher

85:28

levels of disability benefits in

85:30

scotland

85:31

and are you aware of any analysis that's

85:33

been done with this um

85:35

we could certainly give you the the the

85:37

figures for scotland and the rest of the

85:39

uk

85:39

and and some historical trends in that

85:41

very happy to supply you with that

85:43

in terms of what the health problem

85:44

would be we would have that information

85:46

yes

85:47

yeah okay um and

85:51

so in that case if scotland was to

85:54

to leave the uk and is the

85:58

the gap significant enough between um

86:02

the the current the uk level of

86:05

disability benefit and other benefits

86:07

the scottish benefits that a scottish

86:10

government would need to

86:11

increase taxes in order to fill that gap

86:15

um so at the moment the difference is

86:19

relatively slight taking if i can take

86:21

the whole of social security together

86:23

first of all

86:24

um it's a couple of percent higher so we

86:28

we

86:28

converting this into my parents per

86:30

working age person

86:32

it's perhaps an extra 10 pounds now

86:34

which doesn't sound like very much

86:36

but when you then roll forward uh the

86:39

the demographics and so on that 10

86:41

pounds turns into

86:42

120 pounds the

86:46

additional cost for social security in

86:48

scotland is 10 pounds per head yeah

86:50

per yeah per head per working age

86:53

population so

86:54

if you simply required um

86:57

the current working age scottish

86:59

population to pay for

87:01

what the scottish benefit receiving

87:03

population got

87:04

there would be a slight increase in

87:05

taxation or borrowing or whatever

87:08

really as i say about 10 pounds ahead of

87:10

working age population

87:12

but because of long-term trends so for

87:15

example

87:16

because the scottish working age

87:17

population is older

87:19

more 50 to 65 year olds and the incident

87:22

of disability and capacity benefits is

87:23

higher

87:24

in that age group that's that's one of

87:26

the reasons why

87:27

the scottish figures are higher so so we

87:30

know although there's been a growth in

87:31

young people getting these sickness

87:32

related benefits it's still quite

87:33

heavily concentrated amongst older

87:35

working age people um and so those

87:38

trends would

87:39

get worse over time okay

87:43

um thank you can i just the 10 pounds is

87:47

can i just ask what benefits that you're

87:49

including so that's

87:50

so that's that's everything so uh it's

87:53

made up at the moment

87:54

that's not not pensions it does include

87:56

pensions so it's

87:57

it's it's a plus 80 on pensions and a

88:00

minus 70 on working age

88:02

so so we spend if if the scottish

88:05

working age population had to fund the

88:07

bill of the scottish benefit receiving

88:08

population

88:09

it would be paying 80 pound extra per

88:11

working age person on pensions

88:13

70 pounds less on working age and the

88:15

reason it's less on working age is

88:17

primarily because there are fewer

88:18

children

88:18

and obviously if you think about the

88:20

working age population families with

88:21

children

88:22

tax credits and all the rest of it

88:23

that's where we pay a lot of money out

88:26

owns is in addition to the 400 odd that

88:28

we discussed earlier on

88:30

which gets us ever closer to the magic

88:32

500

88:33

at which people will sell their souls of

88:35

their grandmothers

88:36

so so that's the base that's the

88:38

baseline now and then these other

88:39

figures

88:39

are additional just to be clear though

88:42

the 450 was referring to scottish

88:44

government policies whereas

88:46

this figure is referring to current uk

88:47

government policies is that correct

88:49

yes so the so the the 450 number is a

88:52

split of unfunded scottish government

88:54

promises

88:55

and demographics so half half of it

88:58

is that is the 10 that will become worse

89:03

but just sorry you did see there's only

89:06

slight difference in terms of benefits

89:08

and

89:08

we discussed the the disability benefits

89:12

what is the difference of disability um

89:14

i i haven't got the sub

89:15

breakdown but i'm very happy to give you

89:17

that thank you okay thank you thank you

89:20

turning now to universal credit as you

89:23

know the scottish

89:24

government in the event of separation

89:25

proposes to stop the implementation of

89:27

universal credit in scotland

89:29

yeah is that a practical thing to do i

89:32

think it gets to the

89:33

nub of the inconsistency here of the

89:36

scottish government's position

89:37

because on the one hand they they even

89:39

they recognize

89:41

that you can't invent a new social

89:43

security infrastructure overnight it

89:44

takes

89:45

years to do all the computers and all

89:46

the rest of it so they anticipate

89:48

paying the uk government presumably to

89:51

go on administering these things

89:53

post-independence

89:54

but the uk government will only be

89:56

administering uk social security

89:57

benefits according to uk rules

90:00

so there will be a computer system

90:01

delivering universal credit and personal

90:03

independence payment and all of these

90:04

things

90:05

the uk government is not going to want

90:07

to uh

90:08

jeopardize what it delivers to its own

90:10

citizens by changing its computer

90:12

systems

90:13

to do versions of its own benefit system

90:15

that work for the

90:16

for a different country so either the

90:19

scottish government sets up its own

90:20

systems

90:21

or it pays the uk government continuing

90:23

uk government to run uk benefits

90:25

but what it can't do is immediately

90:27

deliver

90:28

its own version of those systems those

90:30

benefits

90:31

so does that does that

90:35

but there's a computer system there that

90:37

operates the

90:39

present pre-universal credit system why

90:41

could the scottish government not

90:43

simply continue to operate that

90:46

existing computer system so so those

90:49

systems are being progressively

90:51

uh dismantled essentially those are

90:54

being run down and

90:55

the software the software exists they

90:57

exist yeah um

90:58

why can't it just running that software

91:01

um but the

91:02

the uk government won't want to be

91:04

running i mean you know

91:05

i i think it's very unlikely the uk

91:07

government will want to

91:09

be running what we i mean a lot of these

91:12

are what we call the jargon legacy

91:14

systems

91:15

i.e they're very not all of them a lot

91:16

of them are very old

91:18

basically some of them we are eeking out

91:21

to the day when we switch them off

91:23

so i think you know to keep them going

91:25

into the medium term would probably cost

91:26

a lot of money i can't see the uk

91:28

government wanted to spend that money or

91:30

actually wanting to be diverted from

91:32

doing the day job and i think that's the

91:33

important point the uk government will

91:35

still be trying to pay

91:36

hundreds of billions of pounds in

91:38

benefits of pensions to its own citizens

91:40

it won't want to be diverted to running

91:41

legacy systems to a small number of

91:43

people

91:44

have your any um estimates of how long

91:47

it would take

91:47

for the scottish government to design

91:50

and implement

91:51

a computer system of its own for the

91:54

benefit system that it wanted

91:56

well it's clearly multiple systems so

91:58

for example

91:59

it says it wouldn't have universal

92:01

credit now bear in mind universal credit

92:03

replaces

92:04

three separate streams of benefits so

92:06

it's replacing

92:07

uh local authority housing benefit rent

92:09

rebates it's replacing dwp

92:11

job seekers and esa um and it's

92:14

replacing tax credits

92:15

so the scottish government would have to

92:16

keep presumably

92:18

three separate computer systems going

92:20

for those three things

92:21

it wouldn't have the personal

92:23

independence payment it'd have

92:24

disability living allowance so it would

92:25

need a system for that

92:26

uh it would keep the savings credit bit

92:29

of the pension credit which we're

92:30

getting rid of for new cases so we'd

92:32

have to add a bit

92:32

you start see this is multiple systems

92:34

over many years i mean you think

92:36

trying to merge all of those into one

92:38

has proven um demanding for the dwp

92:41

over a period of many years as it will

92:44

you know these things take several years

92:45

to do

92:46

even when you've had plenty of time to

92:47

think them through to plan to get the

92:49

legislation through

92:50

because you know before you do the

92:51

system do you write the laws

92:53

so the lead times on these things are

92:55

just huge in terms of unity

92:57

just to take an example in terms of

92:58

universal credit i mean how long will it

93:00

take

93:01

from um thinking about it to it actually

93:04

being

93:05

fully implemented was a scottish version

93:08

well i was just really asking for

93:10

how long did universal credit take from

93:13

the initial concept yeah to

93:15

implementation just to get together

93:18

the welfare the welfare reform act that

93:20

provided for universal credit to come in

93:22

was if i remember 2011 but it was early

93:24

2012 that sort of thing 2011 2012

93:27

um the lead time therefore is six

93:30

seven years something like that from

93:32

from getting the law through

93:33

to actually having the payments on the

93:35

ground to everybody i mean it's

93:37

certainly where you're bringing complex

93:38

systems together

93:40

and do you have a figure for how long it

93:42

for the cost of

93:43

of implementing university we think a

93:45

significant it

93:47

program for a major benefit is of the

93:48

order of 300 to 400 million pounds

93:51

and a lot of that cost is fixed whether

93:53

you're doing it for 5 million or 50

93:55

million a lot of that is just fixed cost

93:57

right and i think the point which i made

94:00

earlier is

94:00

it it's not clear what um

94:04

benefit system welfare proposals

94:07

scottish government intend to bring

94:08

forward

94:09

they had established a commission which

94:11

you may be aware of

94:12

but as far as i'm aware it hasn't

94:15

reported within the time scale that was

94:17

initially uh

94:18

set out i so it it

94:21

it's not clear the framework on which

94:24

they would wish to legislate to create

94:26

their new

94:27

uh system if they were if they were to

94:28

do so i'm

94:30

sure you're aware of the nao report

94:32

which found that the dwp

94:35

had no detailed view of how universal

94:37

credit is meant to work

94:39

and has not achieved value for money

94:41

with the program

94:43

so given that what's your response first

94:47

of all

94:47

to that the neo report

94:51

and buddhist independent scotland

94:53

therefore

94:55

in designing a different system i think

94:57

it's

94:58

worth just reminding ourselves what

94:59

universal credit is trying to achieve i

95:01

think all of us will have had

95:02

constituents who've had tax credits

95:04

nightmares so you've got a tax credit

95:06

system based on annual assessment end

95:08

year reconciliations flaw backs over

95:10

payments under payments

95:11

you've got a local authority based rent

95:13

rebate system and then a dwp based

95:16

jsa esa system and for the for the

95:19

for the constituent what universal

95:20

credit is doing is saying let's have all

95:22

of this in one place

95:23

let's make sure we don't have

95:24

overlapping rules that are to the

95:26

detriment to the individual

95:27

so the idea that scottish citizens would

95:30

be deprived of having

95:32

so scottish systems presumably have to

95:34

carry on with some

95:35

continuing tax credits thing going to

95:37

the council of the housing benefit going

95:38

to

95:38

whatever the dwp successor is for jsa

95:41

esa or whatever

95:42

that is you know having overlapping

95:45

tapers and all of those things you know

95:47

if i were a scottish citizen i

95:49

absolutely would want to be part of

95:50

universal credit i mean i think there's

95:52

a

95:52

you know a compelling case that that

95:54

will be better experience for the

95:56

consumer it takes a while to get in but

95:58

once it's in it'll be very good

96:00

in the scotland analysis paper you

96:01

suggest that stopping universal credit

96:04

would create

96:05

poorer incentives to work and so make

96:08

unemployment higher in independent

96:10

scotland

96:11

yeah i mean what evidence do you have

96:13

that incentives

96:14

such as universal credit system do raise

96:17

the employment rate yeah

96:18

let me give you two examples one is um

96:21

smaller jobs

96:23

at the moment the benefit system is very

96:24

much you're in work you're out of work

96:26

it's either or it's black or white

96:28

there's nothing much

96:28

16-hour rules all sorts of artificial

96:30

rules what universal credit enables

96:32

people to do perhaps

96:33

people with disabilities for example who

96:35

might not be able to

96:37

do a full hour four weeks work uh he

96:39

enables people to do

96:40

smaller jobs part-time jobs jobs where

96:43

hours might vary from week to week

96:45

and it's much more accommodating rather

96:47

than saying well are you in work were

96:49

you out of work that week

96:50

and so many of the newer jobs being

96:52

created i mean a lot of them are

96:53

full-time jobs but

96:54

also jobs have been created perhaps

96:56

part-time or very variable hours

96:58

and the new labor market is a much more

97:00

flexible labor market

97:01

and you need a benefit system that

97:03

meshes with that so actually the sorts

97:05

of jobs employers want to create

97:07

uh to some extent and you have to say

97:08

many of them are just traditional

97:10

full-time jobs

97:11

but at the margins a benefit system that

97:13

fits that is going to help

97:15

the second thing is the whole issue of

97:17

of tapers you know you earn another

97:18

pound

97:19

is it worth it because things are clawed

97:21

back at the moment if you have your tax

97:22

credits here your housing benefit there

97:24

your esa jsa here

97:26

all of that together can mean you're

97:27

only a few pennies better off in

97:29

extremis

97:30

and what universal credit does is

97:31

because it's all in one system

97:33

it can align all of those withdrawal

97:34

rates so many people don't face these

97:36

very extreme withdrawal rates that put

97:38

them off working altogether

97:39

so there is good reason obviously

97:41

surveys and all the rest of it have been

97:42

done but there's good structural reasons

97:44

to think that universal credit

97:45

will be good for the labour market good

97:47

both for employers and employees

97:48

and a country that misses out on uc will

97:51

miss out on employment opportunities

97:53

so do you have evidence to suggest that

97:56

under the old system people are

97:58

being deterred from taking a job because

98:00

the financial

98:02

incentives is is a very small amount of

98:04

money um

98:05

yes and i mean the classic one is the 16

98:07

hours rule you know i've talked to

98:08

employers who say you know

98:10

you know they've got people who will

98:12

work for them for 15 hours but not 16

98:14

hours

98:14

because a whole different set of benefit

98:16

rules applies and i mean also that you

98:18

know

98:18

universal credit when it comes in is

98:21

typically more generous

98:23

those who would get less get

98:24

transitional protection so we estimate

98:26

around 300 000 people in scotland

98:28

will be an average of 166 pounds a month

98:31

better off under universal credit which

98:33

potentially they miss out on

98:34

if they're not part right okay thank you

98:36

sorry can i just clarify when you say

98:38

there's a certain number of people going

98:39

to be better off

98:41

um is there a net increase in

98:43

expenditure

98:44

as a result of the introduction of

98:46

universal credit because if not

98:48

yes and presumably the number would be

98:50

balanced by a number who would lose

98:52

no so so universal credit uh does

98:54

involve

98:55

an injection of money into the system

98:57

right graham you had some questions on

99:01

that so i just just a brief aside

99:04

following up from

99:05

from mr reese's questions uh it might be

99:07

a little bit of the name of the session

99:09

but

99:09

we were talking about any issues with

99:12

not going ahead with universal credit in

99:14

scotland

99:15

if um scotland votes no there is

99:18

a talk certainly in the labour party but

99:21

beyond as well about devolving

99:23

at least some elements of housing

99:24

benefit to scotland

99:26

could you see how that could work within

99:28

the universal credit system

99:30

um part of the point of universal credit

99:33

really is

99:33

is integrating the difference of the

99:36

benefit system

99:37

both so that the individual doesn't have

99:39

to go to different places

99:41

and so that all of the rules are aligned

99:43

so for example

99:44

there's a set of rules on on how savings

99:47

are treated there are different for

99:48

housing benefits for other benefits so

99:50

so instinctively part of the point of

99:53

view universal credit is it's a single

99:55

payment a single system integrated

99:57

so fracturing a bit off would undermine

100:00

i think potentially some of those

100:01

advantages

100:02

okay thank you thank you

100:07

obviously if we had a separate scotland

100:09

it would be a separate

100:10

benefit scheme presumably uh and also a

100:13

separate benefit administration system

100:16

have you done a network of the cost of

100:19

that including any

100:20

transitional costs or are you aware that

100:23

the scottish government

100:24

has has estimated the cost of this as

100:28

well

100:30

yes i mean we think it's costing around

100:33

720 million pounds a year at the moment

100:36

to deliver social security benefits and

100:38

pensions to the people of scotland

100:39

that's the sort of scale of what we're

100:41

talking about here um

100:43

it inevitably there is an infrastructure

100:46

to all of this

100:47

and um having to set all of that up from

100:50

scratch

100:51

clearly there are fixed costs to doing

100:53

all of that

100:54

and also ongoing running costs so for

100:56

example um

100:58

one of the things that we try and do is

101:00

pull call center

101:02

capacity so uh you know you you phone up

101:05

and this call centers at capacity so you

101:07

can divert to another one

101:09

uh there's a big rush on phone calls

101:11

about jsa this month and next month it's

101:13

about esa and so

101:15

the dwp we took we have this phrase

101:17

within department one dwp

101:20

where we pull all of these things and

101:21

then you can flex the system

101:23

clearly if you're doing all of these

101:24

things at a much smaller scale the

101:26

potential for flexibility is smaller

101:28

you probably can have surplus capacity i

101:30

think so i think

101:31

it is of course it's doable small

101:32

countries on social security systems

101:34

uh but i think clearly the cost per head

101:37

is bound to be higher

101:38

and there would be substantial set up

101:40

costs as well

101:42

yes and if you were disaggregating the

101:45

dwp

101:46

within scotland and then presumably

101:48

there'll be

101:49

a kind of knock-on cost effect to the

101:51

rest of the uk

101:52

because it would have to fine-tune its

101:55

system

101:55

and scheme as well has there been any

101:58

assessment undertaken of the financial

102:00

implications of that as well

102:02

um not specifically i mean so as you

102:05

rightly say

102:05

so we we have just to give you a feel we

102:07

have 94 job centres

102:09

in scotland three contact centers seven

102:11

benefit processing centers two pension

102:12

centres you know three child maintenance

102:14

centers you know

102:15

we do obviously a lot throughout the

102:17

united kingdom so there would be clearly

102:19

a knock-on cost to the continuing united

102:21

kingdom of

102:22

disentangling all of that uh you know

102:24

which would be obviously a deadweight

102:26

cost to

102:26

to the rest of the uk as well and you

102:29

point

102:30

earlier about sharing the wwp resources

102:33

call centers in particular

102:35

then presumably there would be you know

102:38

a disadvantage

102:39

to scotland and the rest of the uk

102:42

in terms of losing the advantages of

102:45

economies of scale yes

102:46

yes and clearly in a sense the the uk is

102:49

losing a tenth or whatever of its

102:51

capacity

102:52

scotland is operating at 10 of the uk

102:54

scale give or take

102:56

so so that the cost hit on scotland is

102:58

clearly significant

102:59

could i just if i if i may because we

103:02

just i i just mentioned child

103:03

maintenance which does get a mention in

103:05

the scotland paper

103:06

and i think it's a neglected area you

103:08

know we have a child maintenance system

103:10

undergoing reform so wherever you are in

103:12

the uk you're a separated parent

103:14

the other parent there's a mechanism

103:16

trying to make sure they sort things out

103:17

between themselves and if not as a

103:19

statutory scheme to try and recover

103:20

money

103:21

um all of that you know in a

103:24

post-independence situation well what

103:25

does that look like does does the

103:27

scottish government have to set up a

103:28

scottish csa that would be a joy i

103:30

imagine

103:31

um with a whole set of rules obviously

103:33

um scottish legal system's different

103:35

anyway which might complicate things

103:36

and but then you know you've got a a an

103:39

ex partner

103:40

the other side of the border suddenly

103:42

you're chasing someone for money in

103:44

another country

103:45

we know from our own experience just how

103:47

difficult complicated that is

103:48

you're getting court orders in other

103:50

countries you know just just in terms of

103:51

simple things like the infrastructure of

103:53

child maintenance it's just one of those

103:54

things we just say well

103:56

we don't take it for granted it's just

103:57

not an issue if your ex is living the

103:59

other side of the board it's just not an

104:00

issue

104:01

and you know is that something else

104:02

that's going to have to be reinvented

104:03

yeah

104:04

if you take the number of wp staff

104:08

working and living in scotland yeah what

104:10

assessment have you undertaken in

104:12

relation to

104:13

um you know is there a disproportionate

104:15

larger amount

104:16

of these staff in scotland compared to

104:19

the rest of the uk

104:20

if you look at it on the basis of share

104:23

of the population and per capita

104:25

yeah um in general

104:29

because of scotland geography there's

104:31

probably slightly more job centres per

104:33

head

104:33

because you have to cover a rural area

104:35

and clearly the coverage is limited i

104:37

understand that but you know

104:38

probably slightly more up ahead on the

104:40

other hand as i say out of

104:41

um 32 contact centers three in scotland

104:44

so i think it's different for the

104:45

different services

104:46

there hasn't been a deliberate drive to

104:48

over or under represent scotland

104:50

uh but different services would be

104:51

differentially affected i think

104:53

but i think it's an important point that

104:56

the

104:56

the services provided are not geographic

104:59

and so

105:00

i when i recently visited a the north

105:03

gate

105:04

a in glasgow where about 1300 dwp

105:08

staff uh work they're providing support

105:11

to people right across

105:13

the united kingdom that they're not

105:15

providing a geographic

105:17

service which is solely to a to scotland

105:20

i think that's a helpful intervention i

105:22

think that was the point i was driving

105:24

out and that being the case

105:25

would we ultimately see less

105:28

people employed in scotland compared to

105:32

what we have

105:33

currently within the dwp providing that

105:35

that service

105:37

um i mean just just to give you some

105:39

some sense of scale so

105:40

um about 11 percent of dwp staff

105:44

are in scotland uh as against about nine

105:46

percent of claimants so you could argue

105:48

that slightly more i mean i wouldn't

105:50

make a huge

105:51

huge issue of it but but clearly there

105:53

would be huge disruption because you

105:54

know i visited the dundee pension center

105:56

for example

105:57

and as david says those folk are

105:59

providing uk wide services and that

106:01

would all have to be sorted out

106:02

well it's part of a wider issue

106:06

which i i think is one of the a

106:10

little known facts which we perhaps

106:12

haven't in the past made clear enough

106:14

there are twice as many uk government

106:17

civil servants in scotland as scottish

106:19

government

106:20

a civil servants a

106:24

tangent i visited uh the hmrc

106:28

offices in aberdeen recently for example

106:30

where again people are providing

106:31

specialist

106:32

and uk wide a uk-wide support

106:36

and i think there is a clear sense of

106:39

uncertainty amongst those people

106:41

as to what their role would be uh

106:44

in an independent scotland given that

106:47

the scottish government

106:48

you know have not indicated that they

106:50

would wish to have a scottish civil

106:52

servant

106:52

of 30 000 people yes i think i think

106:56

that's

106:57

just ask if you'd possibly help us um

107:00

by coming back just with some

107:02

information about that i mean i was in

107:03

stone away recently

107:05

and it was drawn to my attention that

107:06

there's a service in stoneware that's

107:08

providing

107:09

a service you know uk wide or certainly

107:11

beyond the western isles

107:13

can you give us a new of of how many dwp

107:16

people that are in scotland

107:18

and where they're based who are

107:19

providing a uk-wide service or a service

107:22

you know fourth of scotland if it's not

107:24

for the for the whole

107:25

um of the uk i think that would be quite

107:27

helpful for us

107:31

as well all the uk government the

107:33

victims that we have today

107:41

you know to provide a that information

107:44

because i i think

107:46

you know and i accept that perhaps uk

107:49

government hasn't in the past

107:50

just made it as clear as possible you

107:53

know we are a major

107:54

employer in in scotland regardless of

107:57

all our other

107:58

interests fine well if steve can do the

108:00

stuff for the dwp and then david

108:02

arranged

108:02

for it to be done with the with the

108:04

other departments i think i'm very

108:05

helpful

108:06

yeah yeah thanks sir the dwt has stated

108:10

that scotland does not

108:11

use sterling then scotland and the uk

108:13

cannot share a benefit system

108:16

even for a transitional period can you

108:18

explain why

108:20

um well clearly our our systems are

108:23

geared up to make payments in sterling

108:26

and

108:26

uh it is astonishing how difficult it is

108:29

to change these systems it wouldn't be

108:31

willful

108:32

hostility and if i just give you one

108:33

example

108:35

we currently have a cold weather payment

108:37

system

108:38

and there are just under 100 separate

108:40

cold weather stations across the united

108:42

kingdom

108:43

and we had a report that recommended

108:44

that we should go from just under 100 to

108:46

just over 100

108:47

and i was told that this would be

108:49

incredibly expensive because the

108:51

computer

108:51

was hard-coded to have a two-digit

108:53

number for the number of for the code

108:55

for the cold weather station and to have

108:56

a three-digit number

108:58

would require vast amounts of consultant

109:00

time expert

109:01

just to make a tiny little change like

109:03

that so what seems to allay person a

109:05

trivial change

109:06

because a lot of these systems are very

109:07

old and are very rigid changes are very

109:10

difficult

109:12

i absolutely believe that yes yes

109:16

and so um we would be geared up to make

109:19

payments in sterling now of course

109:20

interesting question you are in scotland

109:23

under some scottish system with the

109:24

legal right to a payment of a set amount

109:26

in a scottish currency we deliver a

109:28

payment in sterling so is

109:30

the scottish government then taking on

109:32

an exchange rate risk because we're only

109:33

going to promise that

109:34

you know it that so we we would not be

109:37

changing our systems we would be paying

109:38

sterling benefits if we had that deal

109:43

okay can i we've got one other major

109:46

area that we want to cover relating to

109:47

the bedroom tax but

109:48

i just want to pursue some elements of

109:51

this a bit about partly about the timing

109:54

of the introduction um of universal

109:57

credit and the various changes now it's

109:58

not

109:59

as far as i'm aware running quite the

110:01

time is it

110:02

um and therefore you know it has been

110:04

suggested

110:05

that it might not be um entirely

110:08

implemented

110:09

by the day either of the referendum or

110:11

obviously or of the

110:12

um or of separation in the event of um

110:16

scotland voting to leave now to what

110:20

extent does that make a substantial

110:22

difference

110:23

if you're still transitioning presumably

110:26

it would be possible to have a situation

110:28

where you're

110:29

operating both anyway you just simply

110:32

change the geographical areas

110:34

that are operating the existing system

110:37

and

110:38

don't you know don't transition it and

110:40

move do the transition

110:41

into the new system elsewhere so just to

110:44

be clear there's two sorts of transition

110:46

going on here one is geographic so for

110:48

example i think from memory

110:49

uh universal credits started being

110:50

rolled out in vanessa

110:52

for example um and then there is

110:54

transition by family type

110:56

so i understand that that's starting

110:58

with what's regarded as the simplest

110:59

cases you know the young single

111:01

unemployed person

111:02

moving to couples moving to families and

111:03

so on so over the coming months and

111:05

years there's a set of

111:07

phases clearly that process won't have

111:10

finished

111:10

by the referendum or by the dates that

111:12

the scottish government has indicated it

111:14

wants

111:15

this process to be completed um it will

111:17

be

111:18

in terms of dwp investment and so on

111:21

there will be no interest whatsoever

111:23

in maintaining computer systems and

111:25

capacity to deliver

111:26

what we call legacy benefits so we will

111:29

have no interest in diverting

111:31

so the crucial point here is we the

111:33

continuing uk will want to deliver the

111:35

best we can for our citizens through

111:37

universal credit etc

111:38

we won't want to take our computer

111:40

people off our policy people off our

111:41

lawyers off

111:42

to set up maintain modify legacy systems

111:46

to keep them going in scotland

111:48

will you refuse to do it

111:52

um we will refuse to do anything

111:55

which is to the detriment of the

111:58

citizens that continue united kingdom so

112:00

we will not prejudice

112:02

the well-being of the citizens of the

112:03

united kingdom to deliver services to

112:05

the people of scotland

112:07

well i mean i think this is obviously a

112:09

crucial question because i think

112:10

we've had discussion with a number of

112:12

ministers about what they

112:14

they might prefer to do and what they

112:15

wouldn't prefer to do

112:17

but we've not been entirely clear except

112:20

um for i think david willetts and some

112:23

ministers may be coming about currency

112:25

about whether or not they would actually

112:26

decline or refuse

112:28

to do certain things now i i think you

112:30

are saying to us and i just

112:32

want to be absolutely clear about this

112:34

um that the dwp

112:36

would refuse to operate two parallel

112:38

systems

112:39

simply because of the question of

112:41

complexity and would also refuse to

112:44

maintain a a legacy system

112:48

for a separate scotland and i mean the

112:50

implication of that

112:51

unless i'm mistaken is that a scotland

112:54

that voted for separation

112:56

would end up with at least for a period

112:59

being

113:00

bound in to the uk benefits system

113:04

and if they wanted to make changes in

113:06

transition to a new system

113:08

then they would have to develop their

113:10

own system over quite a substantial

113:12

period

113:13

and it was you know to suggest that they

113:15

could either

113:16

have a change or retain the existing

113:18

system at the time of separation

113:20

or have a transition to their own system

113:23

operated by the uk

113:25

um neither of those is feasible or

113:27

practical

113:29

let me put it in in my own words uh so

113:32

um i entirely agree with the point that

113:35

uh if this if the future independent

113:39

scotland

113:40

wanted the uk government to administer

113:43

benefits

113:44

we would be administering uk benefits on

113:46

the uk rules

113:48

that's what that's what we want to be

113:50

doing the idea that scotland can design

113:52

its own benefit system

113:53

and ask us to tweak our computer systems

113:56

and so on i just don't see

113:57

i don't see that happening so we're we

114:00

are running our own systems under our

114:02

own rules

114:02

uh as david has said we have obviously

114:05

got the editor

114:06

agreements to work constructively

114:09

but not to the detriment of uk citizens

114:12

so

114:12

so us diverting our policy people our

114:14

computer people our lawyers and so on

114:16

off to doing any of that work i can't

114:18

see that happening

114:21

can i just pick up if i may just just to

114:23

make sure i'm absolutely clear on the

114:24

currency point just just to get to get

114:26

this absolutely right

114:27

um obviously our systems assess in

114:30

sterling that's what they're set up to

114:32

do

114:32

and that's something that we couldn't

114:34

change clearly we can in principle as i

114:35

said earlier on in my remarks

114:37

we can press the button and pay out in

114:39

another currency so it's not

114:40

as i said with australia we can pay out

114:42

in another currency but our systems are

114:44

set up to assess in sterling

114:46

and that's the thing that we wouldn't be

114:47

able to change so the rights as it were

114:49

the rules and the rights would be in

114:50

sterling whatever the currency

114:52

and i just wanted to put that on the

114:53

record just to clarify so so to go back

114:55

to you

114:56

to your earlier points um our guiding

114:59

principle

115:00

without being hostile or unhelpful is

115:02

that we've got an ambitious program of

115:04

welfare reform going on big computer

115:06

systems big evolution and all the rest

115:07

of it

115:08

which we which we would not want to

115:10

detriment our own citizens as the uk

115:12

government from

115:13

by running you know tweaking legacy

115:15

systems for example

115:16

can i just clarify i mean in the event

115:19

of a change of government

115:20

in the uk leaving aside the question of

115:22

separation

115:23

um a change of government in the uk

115:25

maybe a different coalition

115:27

you might still be there but who knows

115:30

um

115:30

you're not telling us um you are not

115:34

telling us though that there could be no

115:36

change

115:37

made to the system that's being proposed

115:39

at the moment are you

115:41

it's obviously at the disposal of the uk

115:43

government of the day to form a judgment

115:45

as to

115:46

whether its reform program needs to be

115:48

changed or not clearly the uk government

115:50

thinking that that's in the best

115:51

interests of uk citizens is of course

115:54

able to do that what i'm saying is as

115:56

far from where we stand now

115:58

we the future uk government would not

116:00

want to do anything to the detriment of

116:01

you

116:02

no no i understand that i understand i

116:04

just wanted to be clear

116:05

that you're not telling us that the um

116:08

the scheme that you've got at the moment

116:09

in no both its strategy and its detail

116:12

is so set in stone unamendable

116:16

things can always change fine i just

116:17

wanted to be clear about that but

116:19

the point that you were making about you

116:22

didn't see

116:23

um operating two parallel systems and

116:25

you can't see

116:27

operating at two parallel systems and he

116:29

phrased it in various different ways

116:31

am i am i clear that you are saying that

116:33

you won't

116:35

i mean you will refuse to do so we will

116:37

form a judgment if the question is asked

116:39

so we're in the multiple hypotheticals

116:41

here

116:42

if there's a yes vote if the question is

116:44

asked

116:45

will you the uk government yeah would

116:47

you do you mind running us another

116:48

system over here

116:49

with our you know with our own with

116:51

different rules say

116:53

the first question we would ask

116:54

ourselves is can we do that

116:56

without doing it to the detriment of our

116:58

own citizens

116:59

i think is implausible to be honest that

117:02

we could you know given the the stress

117:03

on resources and all the technical

117:04

skills that we have in running a system

117:06

it's hard to see how that would be

117:07

possible i mean why why i labor this

117:10

is that one of the most most important

117:13

significant drivers

117:14

um of the move towards separation

117:17

is to break away from what they see is

117:20

basically tory you know anti-welfare

117:22

policy

117:23

and people who are campaigning for

117:25

separation

117:26

would be horrified at the idea that they

117:29

were going to end up with it anyway

117:30

even if they voted for separation and

117:33

that's that's why i'm trying to just

117:35

be absolutely clear i mean i i think

117:37

you're saying to us

117:39

um that the 18-month period would not be

117:42

sufficient

117:43

for uh for a scottish government to

117:44

develop its own system

117:46

and therefore in the event of a vote for

117:48

separation

117:50

you would not be willing to operate two

117:52

systems in parallel

117:54

and therefore in the event of a even a

117:56

vote for separation and even a

117:57

declaration

117:58

of independence the only system that

118:01

could actually be operated

118:03

is the is the existing or with

118:06

variations

118:07

um uk system it's very hard to see a

118:11

scenario in which

118:13

independence has been declared or

118:15

whatever and there is immediately in

118:17

place either system the scottish

118:18

government can run for

118:19

itself or a continuing uk government

118:22

that would be willing to run a bespoke

118:25

scottish system according to scottish

118:26

specifications it's very hard to see

118:28

that scenario happening

118:29

so the best those who were voting for

118:32

for separation

118:33

good envisage would be um reducing the

118:36

period

118:37

um that they have you know they

118:39

inherited uk system

118:41

and the introduction of a of a separate

118:43

scottish system which might take what

118:45

six or seven years i mean i'm

118:47

i'm not quite clear how long these

118:48

things might take illustrative

118:50

lead time from and bear in mind that

118:52

when this government introduced the

118:53

universal credits

118:54

in the first year or so of government

118:57

that was based on years of policy making

118:59

and thinking and all the rest of it so

119:01

so many years down the track but i mean

119:03

how long did it take to

119:04

reduce from the time the decision was

119:06

made to have it paying out the csa for

119:08

example

119:09

now leaving aside that the csa was not

119:12

was not a raging success immediately

119:13

well again

119:15

if you think about the reforms we're

119:16

doing to the child maintenance system

119:18

now what we call the 2012 system

119:21

which which just started on a small

119:23

scale in 2012

119:25

won't we've got another three years of

119:26

moving people closing places and

119:28

bringing people on

119:30

until 2017-ish so that's five

119:32

operational years

119:33

preceded by legislation and all the rest

119:35

of it so again we're in the five to ten

119:37

year

119:38

lead time territory right i mean i think

119:41

i think i think you could maybe reflect

119:42

on this and if you feel

119:44

um whether the the five to ten year

119:47

period

119:48

is is unrealistic one way or the other i

119:51

think it would be helpful

119:52

um if you could come back yes because i

119:54

think this is some considerable

119:55

significance

119:56

and for people in scotland and it's one

119:58

of the areas that we are trying to

120:00

provide clarification

120:01

for people who will be voting in the

120:03

next six months or so

120:04

okay lindsay gentleman we are aware that

120:08

the bedroom tax is welcoming scotland as

120:11

a stinkbomb in a spacesuit

120:18

you'll be aware that it's a heated tax

120:22

and at the last meeting david you said

120:24

quite clearly that the scottish

120:26

government already had the first to

120:27

mitigate and nullify

120:28

the attacks within the party had he tell

120:31

us what they were

120:33

what they are at the last meeting i i

120:36

think we agreed that

120:37

that we may have different views in

120:39

relation to

120:41

a uh the spare room uh

120:44

subsidy but in but that we would focus

120:47

on

120:47

uh the the practical uh operation

120:51

in my uh previous evidence i i set out

120:54

that i believe the scottish government

120:56

did have powers

120:57

uh by which they could uh use funds

121:01

their own funds uh to mitigate

121:04

uh what they they said was was the

121:06

impact of these

121:08

measures

121:12

essentially they have they control the

121:15

funding of of local government

121:17

and a registered social

121:20

a landlords and therefore they would

121:24

they were they were able to direct

121:26

funding

121:27

to those bodies rather than to

121:29

individuals

121:30

in ways uh which would i

121:33

mean that a the the the

121:36

there was there was funding a support

121:39

available for some of the measures

121:41

which councils were already coming up

121:43

with a

121:44

uh to proactively uh take steps

121:47

to to to mitigate what they said were

121:50

the

121:50

impact of a uh of the change

121:54

particularly in relation to the

121:56

spare room subsidy what a has

121:59

what became clear to me uh

122:02

was that the scottish government either

122:05

was unwilling or did not have the

122:07

capacity

122:08

to develop those mechanisms

122:11

and in discussions that i subsequently

122:15

had with local authorities including i

122:18

think all the local authorities other

122:20

other than argyle and butte who i

122:22

previously met but i've met with your

122:24

own

122:24

a local authority with the city of

122:26

glasgow west lothian

122:28

and north uh lanarkshire uh that it be

122:31

it was clear to me that a

122:35

those local authorities were being put

122:37

in a position

122:38

uh potentially putting in a position

122:40

where we

122:42

the uk government were saying the

122:43

scottish government has power to spend

122:45

money

122:46

that it was forced to allocate

122:49

as we know to this matter by the

122:51

scottish parliament

122:52

i and the scottish government was saying

122:55

we can only

122:56

allocate this money through

122:58

discretionary housing payments

123:00

and i formed the view that i did not

123:02

want local authorities in scotland to be

123:05

caught

123:06

in a a a to and fro

123:09

between the uk government

123:12

and the scottish government particularly

123:15

obviously in this highly

123:16

a political period uh and that therefore

123:20

we it would be better to find a way

123:24

by which uh they by which they could

123:27

receive additional discretionary housing

123:29

payments but i remain firmly of the view

123:32

that the scottish government

123:33

could have developed their own

123:37

approach but they haven't they have not

123:39

done so you have evidence that the

123:40

facility was available

123:42

but they didn't have the determination

123:43

to see it through well i i set out i

123:45

mean

123:45

in in detail in our previous a uh

123:49

our previous meeting the sort of a range

123:52

of things

123:53

that that could be done now i mean

123:56

anecdotal

123:57

evidence and uh is that clearly

124:01

you know a large number of

124:04

scottish government officials are very

124:07

heavily focused

124:08

on the issue of independence and

124:10

therefore

124:12

they might not have the capacity to

124:14

determine

124:15

a a scheme they could operate in

124:18

scotland to

124:19

a uh to to putting forward

124:22

their own measures mitigating

124:26

uh mitigating a

124:29

spare room subsidy and as we saw with

124:32

the way in which they allocated the 20

124:34

million pounds that they spent

124:36

they didn't really spend a lot of time

124:39

determining which local authorities

124:41

should receive the money and which

124:43

wouldn't and how that

124:45

interacted with payments that that the

124:48

department of work and pensions had

124:50

already made so some local

124:52

authorities were in a very positive

124:54

position where they actually received

124:55

money from both the uk government

124:57

and a the scottish government

125:01

which indicated to me that a lot of

125:03

thought hadn't been given

125:05

to how to allocate that funding

125:09

but i i i think you would i hope would

125:11

agree

125:12

that the principle that we adopted was

125:15

you know

125:16

to to put the needs of a

125:20

the the local authorities first to come

125:23

forward with a way

125:24

in which they could achieve their

125:26

objectives because

125:27

what i respect about a local authorities

125:31

in scotland is although they don't agree

125:34

and i accept that many of them don't

125:35

agree with the government's

125:36

policy position they take a very

125:39

pragmatic

125:40

and professional approach in adopting

125:43

and taking forward a taking forward

125:47

a you know what what is what is

125:49

government policy they don't

125:51

they don't politic about it they get on

125:54

with what they have to do on the ground

125:56

and i don't

125:57

i did not feel a that they should be

126:00

drawn into

126:02

a political a a political battle between

126:06

a a perceived political battle anyway

126:09

between

126:10

a westminster and hollywood so your

126:12

experience was that local government had

126:14

used that

126:15

their enterprise and be pragmatic but

126:18

you're feeling words the scottish

126:19

government has put scotland on pause

126:21

in relation to their determination to

126:22

see this through

126:24

well as as we know this policy

126:28

again whether agreem there was agreement

126:30

or not was announced in june

126:32

2010 nothing happened

126:36

in relation to the scottish government

126:38

until september 2013

126:41

when they announced some additional

126:42

funding no proactive steps were taken

126:47

then in january a uh this year

126:50

just actually i think the day before

126:54

i i was due to appear this committee

126:57

a uh you know nicholas sturgeon was on

127:00

the radio announcing what

127:02

a uh again what approach they wanted

127:06

uh to follow a and

127:09

a since then again uh

127:13

we restated our we you know we've

127:15

restated our view

127:16

that dhp discretionary pain wasn't the

127:19

only way forward

127:20

i think margaret burgess came before

127:21

this committee and then

127:23

re-state reasserted that that it was

127:27

i you know i i just think that it

127:30

i just i mean i just came to the view

127:33

that it wasn't

127:34

it wasn't appropriate to simply be

127:37

engaged

127:38

in a in a situation where scottish local

127:42

government

127:43

uh and housing associations were caught

127:46

between

127:47

us saying you have the power to do this

127:50

and and the scottish government saying

127:52

they didn't

127:53

why do you think it took so long for the

127:54

scottish government to act

127:57

well my own personal view would be that

128:00

scottish government

128:01

obviously conclude this is a highly

128:02

political issue and wish to

128:05

derive the maximum benefit from

128:07

politicizing

128:09

a this issue and that's in marked

128:11

contrast

128:12

to local authorities in scotland you

128:14

know who have sought to achieve

128:16

uh the best outcome they could for their

128:19

uh tenants and wider

128:22

citizens so you like me think this is

128:24

about uh

128:26

particle capital from the situation that

128:29

that's the conclusion that

128:30

that i came to but i didn't but the

128:33

reason that we

128:34

we've gone forward to offer a the

128:38

discretionary a housing payment cap

128:41

to be determined by a scottish

128:44

government

128:45

uh you know is to allow uh local

128:48

government

128:49

allow the money that scottish parliament

128:52

which

128:53

as you as you know the scottish

128:55

parliament pressed the scottish

128:56

government to spend

128:57

additional money it wasn't it it wasn't

129:01

a entirely voluntary uh to allow them to

129:05

spend

129:05

the money in a way that meant that local

129:08

authorities and housing associations in

129:10

scotland

129:10

uh were able to receive the funds and

129:14

weren't

129:14

caught in our you know in a he

129:18

said she said a uh situation between the

129:21

scottish government and you kicked him

129:22

i think there's a welcome for the

129:24

increase in the car

129:26

but it's all the same money from the

129:28

scottish government there's no

129:28

additional funding from the uk

129:30

government is that right

129:31

there is no additional there is no

129:33

additional uh funding from

129:35

a the uk government we've put forward uh

129:38

approximately 15 a million pounds

129:42

the scottish government had intended to

129:44

put forward 20 million

129:46

the scottish parliament then then after

129:48

discussions there

129:50

the sum that sum was increased to 35

129:52

million

129:54

so to what extent will increasing the

129:55

cap nullify the problem bearing in mind

129:57

the evidence we've taken

129:59

about people with learning difficulties

130:01

and mental health issues

130:03

i i think that on the basis of the

130:07

of the funding um that's been

130:11

a put forward a

130:15

there is no uh there there's no

130:18

excuse from the scottish government in

130:21

relation to any specific

130:22

group that the there are measures in

130:25

place

130:26

a in individual local authorities to uh

130:30

mitigate any a a perceived adverse

130:34

impact

130:35

will it still be the case this isn't

130:36

after applying for dhp

130:39

it will be um it it will be

130:42

clearly for a individual

130:46

local authorities the basis in which

130:48

they administer

130:49

dhp under certain guidelines which

130:52

clearly come

130:52

from both the d from dwp and

130:56

uh the d8 the the a and from the

130:59

scottish government

131:00

but i mean across scotland and one of

131:02

the things that i've said in discussions

131:04

with scottish government with kosla with

131:06

others um

131:07

is is that some local authorities have

131:09

been much more

131:10

a proactive in terms of

131:14

uh what they what they've done i think

131:16

there's been some very good work if i

131:17

may say so in north lanarkshire

131:19

uh for example in fife as well

131:23

i had indeed both west loathing in the

131:24

city of glasgow it was let's say

131:26

i from because having visited all 32

131:29

local authorities i mean

131:30

there's some very proactive and good

131:32

work being done and i i i think

131:34

what we do want to look at uh is best

131:37

practice

131:38

in relation to how these steps uh have

131:41

been

131:41

have have been the steps that that have

131:44

been taken

131:45

but clearly that you know within that

131:46

there's a degree of discretion in

131:48

relation to the length of the payment

131:50

and in relation to

131:52

a um in relation to just how much

131:56

a a

131:59

how much information etc has to be

132:03

has to be provided right i think our

132:06

evidence indicated that 25

132:08

was eligible but hadn't taken it up for

132:10

people who had learning difficulties

132:13

and mental health issues is a

132:16

flexibility for the local authority to

132:18

deal with that in a different way

132:20

well a number of local soldiers have

132:21

been very proactive at identifying

132:24

a um identifying

132:27

individuals who

132:30

have have specific uh issues and have

132:33

sought to do that

132:35

you know by by effectively going out uh

132:38

uh and visiting them i think that's been

132:40

done in in life as i

132:42

as as i recall a i mean i think there is

132:45

a

132:46

i mean what a wider issues identified is

132:47

that there are i mean there are a group

132:49

of people inside

132:49

very very difficult to make to to make

132:53

contact with but

132:54

i mean i think different local

132:55

authorities have those local authorities

132:58

and housing associations

132:59

that have been most proactive have been

133:01

most successful in terms of

133:03

of signing up of signing people up and

133:06

as i say what i want and i think this

133:08

great scope to do

133:09

is to encourage the best practice in

133:12

terms

133:12

of of how uh how the how these issues

133:16

have been how these issues have been

133:18

approached you can look no further than

133:19

david ross and his wife council team

133:22

and thanks thanks for the plug

133:25

do you think in terms of equity and

133:27

fairness that those who scrimped and

133:29

saved to pay part of the dhp

133:32

or pay all of the dhp to be reimbursed

133:35

by the scottish government

133:37

well these are these are matt

133:40

in terms of of your issues within

133:43

a um the the

133:46

the responsibility of the scottish

133:48

government for them

133:50

and the scottish parliament a for the

133:53

scottish parliament understand

133:55

to determine what i can set out you know

133:58

is a factual background

134:00

that this this policy having been

134:02

announced in

134:03

2010 the scottish government did not

134:05

take any proactive steps

134:07

until september 2013 and i think people

134:10

in scott

134:11

you know people in scottish parliament

134:12

and scotland you know will

134:14

form their own conclusions on that basis

134:18

i understand where you're coming from by

134:20

ask you

134:21

in terms of social justice and fairness

134:23

do you think

134:24

the scottish government should reimburse

134:26

those who scrimped and saved

134:28

maybe gone without pay their victim

134:31

times

134:32

i i i i genuinely don't think that that

134:35

it that it's

134:36

it's it's for me or for ministers within

134:39

where you know westminster to tell

134:41

you the scottish government what to do i

134:44

i think

134:45

i think that the situ i think the

134:48

situation

134:49

is is clear that the scottish parliament

134:51

was able

134:52

in relation to a wish to see additional

134:55

funding in this

134:56

area they were able to demonstrate

135:00

their effectiveness the effectiveness of

135:02

the scottish parliament

135:03

in forcing the scottish government to

135:05

put in additional funding

135:07

and if the view of the scottish

135:08

parliament is uh

135:10

that there should be some recompense uh

135:13

then

135:14

i i think that would be the way a to

135:16

take it forward

135:17

you personally have no opinion on this i

135:20

don't think that it's from i i don't

135:22

think that it would be

135:23

helpful for me to be seen to be telling

135:26

the scottish government of scottish

135:27

parliament what to do

135:30

could i can i just seek clarification um

135:32

on a couple of points just arising from

135:34

what lindsay said i mean i think you've

135:35

given it

135:36

i just want to be absolutely clear i

135:38

think you were saying to us

135:40

that the lifting of the cap allows the

135:43

scottish government

135:44

to cancel effectively the impact of the

135:47

bedroom tax for everyone in scotland

135:50

this year is is that your understanding

135:53

well i wouldn't phrase it like that

135:55

but i i think that it could be that that

135:59

is my understanding right

136:00

and then following on from that then for

136:03

last year that's that's for this year

136:06

um for the last year my understanding

136:09

from previous discussions um that we've

136:12

had

136:12

is the the power that the scottish

136:15

government already had

136:17

did allow them if they wished to write

136:19

off any debts that had been

136:21

accumulated is that still your

136:24

understanding

136:25

that would that in in general terms

136:28

would

136:28

be my understand right and and i think

136:31

that the the final point without asking

136:32

you to

136:33

say whether or not you're in favor of it

136:36

the um my understanding is that the

136:38

scottish government

136:40

had before but certainly have no the

136:43

power

136:43

if they wish to refund any bedroom tax

136:47

payments that were made by anybody last

136:49

year

136:51

i i think that there might be this what

136:54

they um what they

136:57

can't do is clearly make payments

137:00

directly to

137:01

um individuals that could be construed

137:04

as

137:04

the operation of a of

137:07

a of a welfare um system because

137:11

obviously as we've discussed before

137:13

welfare

137:14

uh vis-a-vis payments to individuals is

137:16

a reserved

137:17

matter i i'm you know it would

137:21

it would seem to me that if thought was

137:22

applied

137:24

a a process some form of process

137:28

i could be drawn up to achieve the

137:31

objective you set out but i'm not

137:34

you know i i'm not able to set out what

137:36

that is

137:37

right and the final point i just wanted

137:39

to seek clarification on

137:41

um is we after you'd said to us

137:44

um in our in our hearings that you

137:47

thought that the

137:48

you know the scottish government had

137:49

powers to deal with various things

137:51

um we asked margaret burgess whether or

137:54

not she'd

137:54

pursued this with yourself to seek

137:57

clarification

137:58

can you can you let us know whether or

137:59

not um the scottish government

138:02

ever did come to you and say

138:05

you know when you indicated you thought

138:06

they had powers to go beyond

138:08

the powers they already had whether or

138:10

not they actually did

138:11

did that and pursued that with you there

138:14

was

138:15

no direct dialogue with me fine thank

138:18

you

138:19

lindsey yeah i mean finally

138:22

do you think that the housing benefit

138:26

from the welfare system should be

138:28

devolved

138:30

i i think that we we need to

138:33

look at a what you know

138:36

the the balance which is always the

138:38

balance

138:40

between reserved and devolved uh

138:42

responsibilities

138:44

uh to ensure the between local decision

138:47

making and

138:48

the circums and getting decisions which

138:50

are specific and relevant to people of

138:52

scotland

138:53

and the benefits of having uh the

138:55

uk-based

138:56

uh systems as a

138:59

panelist set out at the moment each of

139:02

the political parties

139:03

is coming forward with proposals for

139:06

additional

139:07

devolution conservative proposal will be

139:10

uh tabled at the uh

139:12

made public at the end uh end of may and

139:15

i know that the commission under

139:16

uh lord south clyde has looked at a

139:21

has looked at a uh this

139:24

issue so i i'm looking forward to seeing

139:27

what their

139:28

conclusion is because i think it is i

139:31

think it's an important

139:33

uh it's an important part of the debate

139:36

and it's it's the judging

139:38

because the benefits of the

139:41

the wider uk pensions and benefit

139:44

systems set against

139:46

uh a more more local uh

139:50

needs and and i think we just have to

139:52

you know we do have to debate and

139:54

discuss where that balance lies so it's

139:56

been on the table

139:56

and the answer at the moment is maybe i

140:00

think

140:00

i think it's an issue that that's worthy

140:02

of of substantia

140:04

of significance but to be fair it's not

140:06

also just simply a question of being

140:08

involved or retained i mean it's a

140:10

question of whether or not housing

140:11

benefit is to do with housing or to do

140:13

with benefit

140:14

it isn't it is where the ballot is where

140:16

that balance lies and i i i think that

140:19

a uh you know i think that's what we

140:22

should be discussing

140:23

not not discussing that if we don't like

140:27

a particular way the benefit system of

140:29

housing is administered

140:31

you know we tear up our country that's

140:33

not you know

140:34

my view that's not what we do we have a

140:36

debate people vote

140:38

and that's how policy is determined

140:41

right

140:42

well i think that covers all the points

140:44

that we had

140:45

um as i indicated to you privately

140:48

before we before we started we always

140:50

like to end these things by asking

140:52

whether or not there's any answers you

140:53

had prepared

140:54

the questions that we haven't asked you

140:56

know any issues that you feel we should

140:58

have touched on that we

141:00

that we haven't is there is there

141:02

anything that you would want to leave us

141:03

with that we haven't gone over

141:05

yeah if i may just a concluding

141:08

observation really which is

141:09

um for me the biggest message i have is

141:13

one of

141:15

uncertainty about people's future

141:18

pensions how they'll be paid what

141:19

they'll be how they'll be organized

141:22

which we're spending all our time as a

141:24

uk pension policy

141:25

i'm trying to give people greater

141:26

certainty trying to give people firm

141:28

foundations enabling people to plan

141:30

and i think part of the color of the

141:31

replies that i've given is in how many

141:33

of these areas it's actually very

141:35

difficult to know

141:35

what might happen uh we we clearly will

141:38

act in good faith of course we will but

141:40

but the the the prospect of independent

141:42

separation

141:43

creates huge uncertainties um and and

141:46

real costs you know real costs

141:48

uh you know setting up new systems and

141:50

all the rest of it but just periods of

141:51

great uncertainty and i think

141:52

we know we want people to plan ahead for

141:54

their retirement with confidence and

141:56

certainty

141:56

and uh so many of these issues would i

141:59

think just be thrown into uncertainty

142:01

uh in the event of a yes vote i

142:04

i think okay that that's a correct

142:08

and i think uh it's very interesting

142:12

this uh analysis paper i've launched it

142:14

with the secretary of state

142:16

i um along with with the institute of

142:19

uh actuaries so you can imagine that

142:21

that was a non-stop fun event

142:24

but a um i think

142:27

as in as in the course of