IN our last Open Minds article we discussed the wellbeing agenda and how independence would give Scotland the powers to follow a different path to Westminster.
That path would be a better path than the one we are forced to follow while the agenda for our society and our economy remains set by a UK Government that Scotland rejected at the ballot box.
At the core of the wellbeing agenda is understanding the value of looking after the most vulnerable in our society. If the Covid pandemic has proven anything it is the need to place people’s wellbeing at the heart of the economic recovery, to build a more resilient society. The recent Westminster Budget has confirmed that the UK Government has no interest in doing that.
A classic example of the UK Government’s priorities is the state pension, which is the worst in the developed world in terms of its value verses average wages. It ranks bottom in a list of countries compiled by the Organisation for Economic Co-operation and Development (OECD), paying out just 29% of the average wage.
READ MORE: Open Minds on Independence #7: Believe in Scotland’s Manifesto for Wellbeing
Top of the pension table in the data is the Netherlands (100.6%), followed by Portugal (94%) and Italy (93.2%). The second worst is Mexico (29.6%) but it is quite a jump to the third worst, Poland, which pays 38.6% of the average wage. The average pension of all the countries on the list is 62.9%.
Thus the drop in earnings from employed to retired in the UK is the largest in the developed world. That isn’t because the UK can’t afford pensions or that the UK economy isn’t strong enough to survive if we decided to end pensioner poverty. It is a political decision and the UK Government simply has a policy of not paying a good pension.
The reason they have adopted that policy is that it significantly boosts the financial sector as it encourages those who can afford it to buy private pensions to increase their retirement income. That diverts money away from the real economy (local to you) into the City of London-based financial economy.
It also condemns those who simply can’t afford a private pension – those who have experienced unemployment, poor mental or physical health or who could only find low-waged work – to live in poverty in old age, to years of worrying about heating their houses in the winter and even in some case to early death.
Most other developed countries do not see the job of the state pension as boosting the financial services sector by forcing people into buying private pensions but rather making sure retired people do not have to live in poverty and misery.
Let’s be clear: the current dire situation is the direct result of a Westminster Government economic policy and not an economic necessity. And yet when Scotland was debating its future in the run-up to the 2014 independence referendum the pro-Union campaign had a policy of scaring older folk by telling them that they would lose their pensions in an independent Scotland. The truth is that voting-No locked many into continuing financial hardship in retirement.
Imagine an alternative country. One where pensioners were given a 20% pay rise. Almost all of that money would go straight into the local economy. It would be spent in supermarkets, in clothing shops, with local tradesmen, at the bingo or local cafe. That would stimulate the local economy and create jobs and profits and significantly raise taxation revenues, thus making it cost-effective.
Independence could transform Scotland into that country. The 2019 SNP conference voted that in an independent Scotland the Scottish Government should create a plan to increase the state pension to the EU average … that would effectively mean doubling it.
That ambition would need to be achieved through staged increases. Believe in Scotland has called on the Scottish government to commit to a 5-10% instant increase in the state pension after independence and to follow that with a staged series of rises until pensioner poverty is eradicated.
That would mean that pensioners rather than financiers in the City of London can enjoy a better standard of living and local businesses can flourish. And as we escape generational economic mismanagement by successive UK Governments our economy will grow, allowing further improvements to the state pension until it reaches an acceptable level.
This is no pipe dream. In this series of articles we have already shown that Scotland is a country rich in resources and talent. We can afford to increase our pensions and it makes economic sense to do so. If every other developed country in the world can afford decent pensions then an independent Scotland with all its wealth and natural economic advantages could too. It is being part of the UK that has been stopping us from doing so.
Of course, those who want us to remain in the UK don’t want you to know this. It suits them and their friends in the City of London to keep things the way they are.
Believe in Scotland recently staged a major pro-independence billboard campaign. This wasn’t a stunt like the recent pro-Union #ResignNicola billboards in just three locations in Scotland. Believe in Scotland placed billboards in 98 sites featuring four designs all over Scotland.
READ MORE: Open Minds #6: The truth about GERS – Scotland’s annual economic political football
Supporters of the Union were furious and one billboard design was the particular focus for their ire. It stated: "The UK pays the worst state pension in the developed world. Let’s double it in an independent Scotland and match the EU average."
In what bore all the hallmarks of a concerted complaints campaign, Unionists wrote to the Advertising Standards Authority (ASA) claiming that our statement was not true.
We were happy to provide the ASA with the evidence to support our claim. Gordon MacIntyre- Kemp, founder of Believe in Scotland, wrote to tell the ASA we were “committed to the highest standards in advertising statements and we completely believe our statements in the pensions advert are true and fair’’. He also sent a link to the relevant OECD data.
The ASA rejected the complaints and the billboards stayed up as we always knew they would.
In our article on Saturday we will look in more detail at how independence can benefit the state pension and protect private pensions.
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