Category: Scotland

The ‘pensions timebomb’: don’t panic!

There are reports today that an independent Scotland would face a ‘timebomb’ from increasing numbers of older people.  Scotland on Sunday mangled the figures when it reported that “an independent Scotland would have to increase the proportion of GDP spent on welfare from the current level of 14.4 per cent to around half.”  That would be three-and-half times current spending.  This is obviously wrong, but I’m not going to criticise – one of the hard lessons I’ve learned from writing this blog is that it’s all too easy to jumble figures from different calculations  before hitting the ‘send’ button.  (And yes, I confess, I just did that again on the first version of this very post.)

The actual increase that’s being reported is that the ratio of pensioners to workers will double, going from 25.8 pensioners per 100 workers to 51.7 by the year 2060.   (The figure for the rest of the UK is 45.9).   If that is translated into public expenditure at current rates – which probably won’t happen – it implies that two workers will need to pay for pensions what four workers pay now.  As pensions currently cost half  the ‘welfare’ budget, that implies a 50% increase in that budget, not a 250% increase.  There’ll be increased calls on health and social care, too.  These are contingencies that need to be planned for, but none of them is catastrophic.

I’ve previously considered the general principles of managing the costs of an ageing population in this blog.

How an independent Scotland could manage the cost of pensions

The Herald reveals that the Scottish National Party is apprehensive about the potential size of the benefits bill. As benefits are the largest element in UK spending, there should be no surprise. Equally, it should be obvious that the largest element in the benefits bill – two thirds of spending – goes on pensions, and while Scotland has slightly lower expenditure on pensions than England, this is the part of the benefits bill that is most likely to increase over time.

It would be difficult however to manage pensions in an independent Scotland, for two reasons. The first is that state pensions are contributory, and the existing system could only be maintained through a massive transfer of detailed work records. The second is that transitional people’s rights will be complex, and it is liable to last for fifty years or more. Fortunately, there are straightforward answers to both problems. The quick way to deal with the first problem is to move to a Citizens Pension. The government could de-couple basic pensions from prior commitments, dividing any legacy fund available for S2P among those entitled, and otherwise ignoring for the purposes of benefit administration additional income or additional pensions. The way out of the second problem is to buy out people’s rights.

How not to choose a Chief Executive

Fife, where I live, is advertising for a new Chief Executive for the Council. According to the advertisement:

  • “We are looking for a driven and ambitious leader with a proven record as a strategic thinker and change manager.”
  • “A key early task will be to ensure the smooth introduction of the integrated Social Care and Health model.”
  • “You will deepen the Council’s commitment to the values of Performance, Efficiency, Customer Care and Staff Empowerment …”

The first problem here is a misunderstanding of the role. The work of a Chief Executive is explained in a SOLACE report, Leadership United. Much of the work is about accountability to an elected council in a political environment. The Chief Executive is the key connection between councillors and the administration. The Chief Executive speaks for the council officers, and consequently much of the work of a Chief Executive is outward-facing, including external relations, relationships with other agencies and relationships with the public. Then there is management of the corporate team. Only a very limited part of the task is concerned directly with the internal performance of Council departments, and that is mainly done through established systems of accountability. The Chief Executive is not the main person responsible for integrating health and social services. The specification of this post is hopelessly misconceived.

The second problem is that they are looking for the wrong values. There is nothing here about public service, democratic governance, citizenship or rights. There is no expectation that a Chief Executive should listen to public concerns, or engage with them.

The third problem is a misstatement of the type of person they should be looking for. Driven? Ambitious? Are the Council looking for The Apprentice? I had occasion to comment yesterday about the missplaced emphasis on “leadership” in the NHS; the same pernicious doctrine has infected local authorities (and that would be my main criticism of the SOLACE report). In a democracy, the role of leadership properly belongs to elected authority. A Chief Executive is, first and foremost, a public servant, and anyone who doesn’t understand what that means shouldn’t be allowed within 300 metres of public responsibility.

The timetable to independence

The Scottish Government has published a timetable for independence, under the title Scotland’s future. There have been some rather weak arguments on both sides, such as the daft idea that Scotland should refer to climate change in a new constitution, the claim that Scotland could not receive English television broadcasts (the Belgians do), the idea that Scotland could become independent in the same way that East Germany was unified in the Federal west (it’s hardly the same process) or that England could stop Scotland from using the pound (money is money: look at the countries round the world that use the American dollar).

The objection has been made that there is too many points to be negotiated for independence to be possible in the time frame. The point about independence is not however that all issues have to be decided – Alan Trench has pointed out that Czech Republic and Slovakia are still negotiating agreements, 18 years after separation – but that there has to be a government capable of negotiating them, and carrying the authority and legitimacy to implement new rules. That, not the settlement of all issues, is what the timetable needs to relate to.

There would need to be negotiations about assets, land ownership (who owns the military bases?), preservation of rights (such as licences for oil production), the division of the National Insurance fund and so forth. Where there is a need for negotiation, however, it would not imply that the process of independence needs to be slowed; if anything, it would imply that it needed to be speeded up, to avoid any doubt about the status and authority of the negotiating parties.

Scottish Nationalism and welfare reform

For some time, the Scottish National Party has been edging towards a distinctive position on welfare reform. Scottish nationalism is based not only on a claim to self-determination, but an assertion of a culture and set of values that sets Scotland apart from the rest of the United Kingdom. (There’s a comment on the trend in a blog from the Rowntree Foundation.) This week, Alex Salmond took the argument further in a lecture to the Jimmy Reid Foundation. Jimmy Reid, Salmond argued, “was proud of Scotland’s tradition of compassion, egalitarianism and empathy. He spoke out whenever that tradition was abandoned and betrayed. It is being betrayed at present.”

John Curtice has expressed some scepticism about whether an appeal to collective social values can sway the campaign for independence. He’s been quoted as saying: “What the Yes campaign needs to do is to persuade Scots they will have £400 more in their own pocket, not £400 in their poorer neighbour’s pocket.” (That doesn’t sound like John, actually, but I’ll let that pass.) This may well be right, but I’d like to think the tendency can be overcome. On one hand, many people express strong, passionate views about many issues that don’t visibly or directly affect them – gay marriage, abortion, tax avoidance and MP’s expenses among them. On the other, the issues that shape responses to benefits are are not impersonally altruistic. Welfare reform, unemployment and disability affect people in tens and hundreds of thousands – there can be few people who have no relatives, friends or acquaintances affected. The question for the SNP is not just whether they can have to appeal to people’s self-interest, but whether they can construct a convincing narrative where shared values are translated into support for self-determination.

Part of the problem in doing that is that the SNP’s position to date has mainly been reactive. “Make no mistake”, Salmond says. “What we are doing at present is mitigation – nothing more.” If the SNP wants to establish a distinctive policy on benefits, it needs to identify a model that is about more than restoring benefit cuts; and it cannot do that without committing itself to spending much more money.

Scotland in Europe

In a perceptive article, Michael Keating points to a series of misconceptions behind David Cameron’s position. Given the options that Cameron is proposing, which lie between moving half-way out of Europe or wholly out of it, Michael suggests that people in Scotland who are pro-European may need to vote for independence if they want to remain in the EU.

At the same time, various European officials and politicans have been lining up to say that Scotland can’t expect a smooth passage into the Union. That seems to me misjudged – and arguably contrary to European law. The Scottish Government has been denied access to political negotiations, but another route may be open to them. I’d be interested to know the view of the European Court of Justice on any proposal to remove European citizenship from the people of a successor state that is currently entitled to it.

Thoughts on a Scottish constitution

Alex Salmond suggests that a Scottish constitution could cover issues like weapons of mass destruction, homelessness and free education. I don’t resile from the policies, but they are not constitutional issues – once they are included, there is nowhere to stop. What should be left out – biodiversity, climate change, sustainability, EU membership, pensions, marriage, health care? When the abortive European constitution was under discussion, I wrote this:

A constitution is a foundational statement. It needs to be communicative, transparent, and justiciable. Every constitution needs to set out the basic institutional framework. It needs to state primary legal rules – rules of recognition, change and adjudication. It should probably state fundamental principles, like the Bill of Rights in the US constitution. But it should not include policy. Instead of confining itself to constitutional issues, the “constitutional treaty” sought both to consolidate the content of previous treaties and to include substantial elements of previously agreed policy – issues like the environment, agriculture and fisheries, and commercial rules. However important these may be, they are not constitutional principles; and whatever the merits of the policies may be, it is very questionable whether the policy which is appropriate now should be expected to be appropriate a hundred years from now.

My colleague Paul Arnell has argued against a constitution, giving the example of the right to bear arms in the USA as bad law that has proved impossible to change. That seems to me an argument against the inclusion of substantive law, rather than an objection to all constitutions. A constitution should confine itself to principles and the institutional framework. It should not include matters of policy or substantive law. And it must be short.

Can we afford to support older people?

The Herald asked me yesterday to comment on whether we could afford universal services for older people; here is my response, as it appears. (The Herald website allows direct access to first-time users; after five views you have to register.)

The debate on free services for older people lumps three questions together. The first is whether we can afford to support services for growing numbers of older people. That question has been reviewed in many reports; the answer comes out, consistently, that the commitments are sustainable, but they will have to be paid for in higher taxes or contributions. Many people imagine that when they pay for pensions, that the money is being saved for their old age. In most cases, it isn’t. Contributions now largely pay for pensions now; the current generation of workers is relying on the next generation to pay for them in turn. The real test, then, is whether we’re willing to pay for pensioners now.

The second question is whether help should be free. The critical judgment is about what should be provided, and what should not. Some essential items we expect pensioners to pay for (food and telephones), some we don’t (personal care and prescriptions) and for some the signals are mixed (cleaning). The arguments for free services are partly about solidarity – services we want people to have and have a duty to provide – and partly self-interest, whether we’d want ourselves or our families to be charged in the same circumstances. Few people in Scotland would want everything to be paid for: it’s difficult to make the case that help with incontinence – an important component of health care as well as personal care – should not be free.

The third question is about universalism, whether benefits and services should go to everyone, or only those in most need. Services that test people’s needs are complex, difficult to provide fairly and can be expensive. Tests are often intrusive, burdensome, demeaning and many are put off from asking for help. Universal services use simple eligibility criteria, such as age, so are cheap to run. The basic argument for bus passes, for example, is that many older people need help, extending it generally allows those who need it to get help, and people who have alternative transport don’t use the buses. When money is short, simple generalised provision is often the way to go.

A new power for Scotland

I didn’t learn about this as soon as it happened, but a draft Statutory Instrument has been put to Parliament covering the particular hole I’d identified earlier this year. The instrument makes it possible for Scottish authorities to make provision for

occasional financial or other assistance to or in respect of individuals for the purposes of —
(a) meeting, or helping to meet, an immediate short term need—
(i) arising out of an exceptional event or exceptional circumstances, and
(ii) that requires to be met to avoid a risk to the well-being of an individual, or
(b) enabling qualifying individuals to establish or maintain a settled home, and “qualifying individuals” means individuals who have been or, without the assistance, might otherwise be—
(i) in prison, hospital, a residential care establishment or other institution, or
(ii) homeless or otherwise living an unsettled way of life.

It’s always difficult to know how specific provisions will work out in practice, but it should prevent the kind of administrative lock-up that I feared might otherwise happen. I’m greatly relieved.

Dividing up the single police force

When the Scottish Government announced the plans to merge Scotland’s eight police forces into one, they complained: “Scotland can no longer afford to do things eight times over.” (There have been, actually, more than eight services – there was also the nuclear police, the transport police and the Scottish Crime and Drug Enforcement Agency). In parliament, however, a requirement was made to have plans for all the 32 local authorities, and today it’s been announced that there will be 14 policy authority areas, replacing the previous eight. So the main effect of a single police service is not to reduce the number of service divisions, but to centralise control.