Brown mixes oil and pensions as No campaign continues fear tactics

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Tuesday, 22 April 2014 06:05

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  By Martin Kelly

Former Labour Prime Minister Gordon Brown has re-entered the independence debate with a warning that pensions in an independent Scotland would cost three times the amount of revenue generated by oil.

The former Labour leader will make the claim in a speech later today to be given on Behelf of the Better Together campaign.

However Brown is facing criticism for the move from the SNP who are highlighting what it has termed the Labour MP’s own “abysmal track record” on pensions.  When the Labour MP was chancellor, his surprise tax raid on pensions was estimated to have cost the industry £100bn.

SNP Work and Pensions spokesperson Eilidh Whiteford said:

“Gordon Brown is simply repeating the same economically illiterate claims the Tories and Lib Dems made over a year ago.  On this backwards logic the UK pensions bill is 25 times the value of its oil and gas – making it impossible for the UK to afford to pay for pensions.

“The only new thing in this contribution is that Gordon Brown has finally ended the charade and joined his Labour colleagues in the Tory No campaign.

“Far from re-launching as a positive campaign this contribution is negative, repetitive and lacks any credibility.”

In his speech Mr Brown will say an independent Scotland Scotland faces a pensions “time bomb” with what he claims is an elderly population growing faster than the rest of the UK.

The former prime minister and chancellor will tell his audience: “The whole point of sharing risks and resources across the UK is that it is right and proper that the British welfare state bears the rising cost of Scottish pensions as the number of old people will rise from one million to 1.3 million.

“As the internal DWP document makes clear, it is fairer and better for everyone that Britain’s faster-rising working-age population rather than Scotland’s slow-rising working-age population covers the cost of the rising numbers of elderly in Scotland, because we have contributed in UK National Insurance all our lives to spread the risks of poverty in retirement.

“If the SNP deny there is a problem, they have to explain why they have set up a working party on ‘the affordability’ of future pensions.

“Scottish public sector pension liabilities of £100 billion, while also higher, are also rightly covered as part of the system of pooling and sharing resources across the UK.

“It makes no sense either to break up the British system of pension payments or to set up a wholly new administrative system which the DWP costs at £1 billion in the first years.

“In areas such as pensions, it makes good sense to combine having a Scottish Parliament with being part of Britain.

“The SNP Government has said the case for independence should be judged on whether Scotland would benefit financially or not.

“It is clear that pensioners are better protected when the risks are spread across the UK and it is also clear that, in the year the SNP want independence, the Scots pension bill alone is three times the income from oil revenues.

“Indeed the best deal for poorer pensioners is the redistribution of resources we have negotiated within the UK which allowed pensioner poverty in Scotland to fall under Labour, from 33% in 1997 to 11% when we left office.”

Mr Brown’s claims, which are believed to have been prompted by the failing Better Together campaign, were dismissed by MP Whiteford who added:

“The reality is that pensions are more affordable in Scotland than in the rest of the UK, a view supported by the National Institute of Economic and Social Research who have also made clear that the demographic challenge is no more important to Scotland than it is to the rest of the UK.

“Pensioners and public sector workers across Scotland will have little faith in Gordon Brown’s comments on pensions.  As Chancellor he failed to restore the link to earnings leaving pensioners out of pocket and his raid on the pension funds saw pensioners lose £100bn of investments. Meanwhile public sector workers have seen the terms and conditions of their pensions eroded and the Scottish Government threatened with funding cuts if it didn’t implement the same policies.

“With independence we will be able to ensure a fair deal for pensioners with a triple lock on the state pension to keep pace with the cost of living, a review of the pension age to ensure it is right for Scotland’s pensioners and a fair approach to public sector pensions.”

The National Institute of Economic and Social Research (NIESR) made clear earlier this year that “Our analysis has shown that the costs of the state pension would be lower in Scotland, due to Scotland’s lower life expectancy”.  NIESR argued that “demographic change is not a strong argument to influence the choice between the status quo and independence”.