Ian Blackford has exposed the SNP’s pensions muddle

Amidst the Downing Street psychodrama, have we missed the moment the reality of Scottish fiscal autonomy finally dawned on the SNP? 

This week saw an extraordinary turn of events in London and at Holyrood. First there was an interview the SNP's Commons leader Ian Blackford gave in which he stated the government of the remaining UK will be responsible for paying the Scottish state pension after a Scottish exit. The next day, Nicola Sturgeon was asked at First Minister's Questions if the SNP's position now really was that pensions in an independent Scotland would be paid by English taxpayers. Amazingly, she took the same brazen stance as Blackford.

The Scots are going to have really great state pensions — the best state pensions — and they're going to make the English pay for it.

This is a full 180-degree turn from the party's previous position, which explicitly accepted that the Scottish government will have sole responsibility for paying the state pension after secession. The SNP Scottish government's 2013 pre-referendum blueprint for separation, Scotland's Future, which Sturgeon as deputy leader at the time had a lead role in developing, was clear:

'For those people living in Scotland in receipt of the UK State Pension at the time of independence, the responsibility for the payment of that pension will transfer to the Scottish Government.'

And:

'For those people of working age who are living and working in Scotland at the time of independence, the UK pension entitlement they have accrued prior to independence will form part of their Scottish State Pension entitlement. Any pension entitlement accrued in Scotland after independence would also form part of that Scottish State Pension. On reaching the State Pension Age, their Scottish State Pension would be paid by the Scottish Government.'

Contrast with Blackford and Sturgeon's position now. 'It's an obligation on the UK government to meet the commitment to pensioners that have paid National Insurance contributions. They have paid for the right to receive that pension,' said Blackford.

He added: 

'It's right that the UK government meets its commitment to pensioners, regardless of where they are. If you or I as UK citizens go and live in another European country, our right to that UK pension remains. Scottish pensioners have that right.'

So what's going on here? The first point to note is the irony. The SNP ruthlessly attack anyone who raises questions about a newly independent Scottish state's ability to replicate current state spending levels, questioning their patriotism by insisting they're 'talking Scotland down'. Scotland can do all the things any other 'normal country' can, and if you're asking difficult questions about transition then that must be because you don't believe in Scotland. Yet here we have Sturgeon and Blackford insisting a secessionist Scotland, unique among the world's independent states, will have a large chunk of its welfare bill paid for by a foreign country. It is tempting to ask why they think Scotland is too wee, too poor and too stupid to fund its own state pensions.

There will be an 'obligation' on the UK Government to pay the pensions of Scots after independence, @Ianblackford_MP insists.

SNP Westminster leader is adamant paying National Insurance means 'a right to a UK pension, no ifs and no buts'.

Full interview: https://t.co/qYcszuWW83 pic.twitter.com/jvz0ZjWeCl

— Representing Border (@ITVBorderRB) February 3, 2022

The second point to note is how Blackford is using a line of argument that until now only existed as a foolish internet meme, which is that pensioners in a newly independent Scotland will have the same state pension rights, in relation to the remaining UK, as a UK citizen who decides to spend their retirement in the south of Spain. This is simply false information, and it should be obvious to anyone that the rights of British citizens living abroad now are completely unrelated to the rights to state welfare that citizens of a newly independent Scotland would be entitled to.

It is difficult to see who this is aimed at. It's certainly not aimed at sensible people who are unsure about independence but could be persuadable.

The thinking behind the position switch is probably to find a way to neutralise arguments about Scotland's large fiscal deficit. Scotland’s deficit for 2020-21 was 22.4 per cent of Scottish GDP, or £36.3 billion. Pre-pandemic (2019-20), the deficit was 8.6 per cent of GDP, or £15 billion, and it is predicted to remain high, at around ten per cent of GDP, through to 2025-26.

A budget deficit that high would be unsustainable in a new state, with an uncertain currency situation and no borrowing track record. Spending on state pensions in Scotland amounts to around £8.5 billion per year, according to the latest Government Expenditure and Revenue Scotland numbers.

The strategy therefore appears to be to knock several billion pounds off the deficit figure by apportioning state pension liabilities to the remaining UK government. The state pension is paid out of current taxation — there is no 'pension pot'. The idea that workers in Wales, Liverpool and Coventry will pay taxes to fund state pensions in a foreign country, while workers in that foreign country will pay nothing towards their fellow citizens' pensions, is novel to say the least.

Serious people should not be making these absurd arguments. That Scotland's First Minister is making them is both astonishing and telling: astonishing in its farcical brazenness. And telling in that the economic arguments for secession are now so threadbare that the party leading the cause has found itself in a position several degrees removed from reality.

There is at least one chink of light in all this. The material impact of fiscal autonomy must at least be starting to sink in. That's progress of a sort.