Scotland analysis: work and pensions paper
24 Apr 2014 02:49 PM
What Scottish independence would mean for social
security, pensions and helping people into
work.
The
broad shoulders of the UK help to spread risks and pool resources to provide
greater certainty and security for people in Scotland, according to the latest
paper in the Scotland analysis series: Scotland analysis:
work and pensions.
The
paper says that in 2012 to 2013, benefit spending per head of the population in
Scotland was 2% higher than for the UK as a whole (in the past it has been 9%
higher) but that by pooling the resources of the UK economy, this cost was
spread across the whole UK.
The
paper also shows that Scotland has the best of both worlds – housing and
skills policy is devolved so that local solutions can be found for local
issues, but employment and social security policy is reserved so employers and
jobseekers can benefit from a Great Britain-wide network of jobcentres and the
same levels of support, wherever they live.
Jobs
The
latest Labour Market Statistics show that employment in Scotland is up 138,000
since 2010 – close to the size of a city like Dundee, with the number of
people claiming Jobseeker’s Allowance down 30,200, and the numbers
claiming the main out-of-work benefits down by 42,120.
The
work and pensions paper says that an independent Scottish state would need to
decide if it wanted to provide a similar level of active labour market support
as the UK government provides with Great Britain-wide schemes including the
Work Programme, New Enterprise Allowance and Youth Contract which includes the
wage incentive for employers and apprenticeships.
The
costs of this based on the current claimant count would be in the region of
£200 million per year.
Pensions
Over the last 20 years, investment by the UK government
has reduced the number of pensioners on very low incomes right across the UK
and it has fallen fastest in Scotland.
The
UK government is introducing the new single tier state pension and provides a
‘triple lock’ guarantee on increases each year. Spending on
pensions, benefits and public services in Scotland is more affordable as part
of the UK.
Over the next 20 years however, an independent Scotland
would face additional social security costs rising to around £1.55
billion per year as a result of an ageing population and the policy commitments
of the current Scottish government. That’s the equivalent of around
£450 for every working age person, every year.
As
people live longer the costs of providing pensions and benefits are predicted
to go up and these costs are better absorbed by the bigger, more diverse UK
economy – with more taxpayers and less reliance on oil revenues –
than an independent Scotland.
Currently spending on pensioners is proportionally
higher in Scotland than the UK average. Over the next 20 years, the proportion
of pensioners in Scotland is expected to increase faster than the rest of the
UK. And the current Scottish government are committing to spending more without
saying how they’ll pay for it.
Welfare system
Our
system works. It makes around 3 million payments every working day and supports
over 30 million people across the UK regardless of where they
live.
If
an independent Scotland wanted to do things differently than the UK, it would
need to introduce a wholly new system. IT set-up costs alone would be
£300 to £400 million and it would take many years to
develop.
If
an independent Scotland wanted to negotiate to use the UK’s system it
would have to follow the UK’s policies and would not be able to make
changes to existing social security policy or processes or to opt out of Great
Britain-wide reforms.
Reconfiguring the current system to meet the demands of
2 governments with different policies would introduce additional costs and
risks. This would not be in the interests of the government of the continuing
UK.
Work and Pensions Secretary, Iain Duncan Smith
said:
This country has a long history of a strong welfare
state, which we can rightly be proud of. As part of the UK, Scottish people
benefit from this resilient and unified system – which delivers the same
support everywhere irrespective of peaks and troughs in economies of the
nations or demographic differences.
Proposals by the Scottish government would risk the
wellbeing of vulnerable people who are currently supported by this system. On
top of the ageing population – which is increasing faster in Scotland
than the rest of the UK – the Scottish government are committing to
spending even more on wider welfare without saying how they’ll pay for
it.
The
Secretary of State for Scotland, Alistair Carmichael said:
The
UK labour market is resilient, adaptable to changes in economic conditions, and
responsive to new opportunities and challenges. As part of the UK, Scotland
benefits from the policies that have created these conditions.
Both the UK and Scotland have flexible labour markets
with a wide variety of jobs and working patterns available. With record
employment in our country people can move across other parts of the UK, to
where there are labour shortages or where they can find a job that better
matches their skills, ambitions and aspirations.
Contact Press Office
Media enquiries for this press release 0203 267
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