By Keith Aitken in Edinburgh | 10 April 2013
Scotland is better placed economically than the rest of the UK to afford pension commitments, benefits and other social welfare costs, according to a Scottish Government report.
It concluded that Scotland devotes significantly less of its economy to public expenditure than do other parts of the UK.
Deputy First Minister Nicola Sturgeon used the figures to argue that a yes vote in the independence referendum on September 18 next year ‘will allow us to take welfare and pensions into Scotland’s hands and use the full strength of our economy to provide the support people across Scotland deserve’.
The report, based on Scottish gross domestic product figures, will form part of a larger pre-referendum analysis of Scotland’s financial position in comparison with both the UK and other European Union countries.
It finds that total public spending accounted for a lower share of economic output in Scotland than in the UK last year, and in each of the past five years. The report suggests that Westminster would need to allocate Scotland an additional £4.1bn to bring public spending in Scotland as a share of GDP up to UK levels.
From this it concludes that ‘spending on social protection – which includes welfare, pensions and social services – is more affordable as a share of Scotland’s economy than it is across the UK’.
Sturgeon said: ‘Compared to the original 15 member states of the EU, 13 of them use more of their national wealth to pay for social protection than Scotland does. With full responsibility for our economy these figures clearly show that welfare and pensions are more affordable in Scotland.’
But Labour disputed both the report’s basis and inferences. Finance spokesman Ken Mackintosh contrasted it with an earlier leaked Cabinet paper from Finance Secretary John Swinney highlighting concerns about pension costs.
‘Rather than produce meaningless and untrustworthy propaganda, it’s time this government actually did something to improve our economy and provide long-term security for older people,’ Mackintosh said.
Meanwhile, a report from the House of Lords economic affairs select committee ridiculed the Scottish Government’s vision of an influential post-independence Scottish relationship with the Bank of England. It claimed Scotland could inherit a share of UK national debt – including public sector pension liabilities – of up to £93bn, or 123% of Scottish GDP.
The Lords report urged both sides in the referendum campaign to publish non-negotiable economic ‘red line’ positions on issues such as currency, debt and defence. The peers said that without these there was a risk of Scots ‘sleepwalking’ into independence.
