Dennis Canavan: A Yes for independence makes sense

INDEPENDENCE would give the Scottish Parliament the powers it needs to build a fairer nation, writes Dennis Canavan

By DENNIS CANAVAN Saturday, 17th May 2014, 1:00 am

Dennis Canavan is a former Labour MP and Independent MSP. He is chair of Yes Scotlands advisory board. Picture: Contributed

This week, I celebrated my great-granddaughter’s first birthday. It made me more conscious of getting older, but it also made me wonder what kind of Scotland today’s children will inherit.

My main reason for voting Yes on 18 September is to build a better Scotland and a better world so that future generations live in a fairer society than the one we have today.

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But I also want to ensure a fair deal for people in my own age group, most of whom are worse off than me and are rightly seeking assurances about what an independent Scotland will mean for them.

When campaigning for Yes Scotland, I am often asked by pensioners: “Can we really afford to be independent?” Even some of our leading opponents now belatedly admit that we can. But as the gap between the richest and poorest continues to widen, and as the Tory-led coalition at Westminster shows no sign of reining back on its punitive austerity policies, the more pointed question is: “Can we really afford NOT to be independent?”

Scotland has more than paid its way in the UK over several decades. We also spend a lower share of our national wealth on pensions and benefits than the UK as a whole. That means better pensions are certainly affordable in an independent Scotland.

So will pensioners be better off in the UK or in an independent Scotland? When searching for the answer to that question, it is relevant to compare how the Scottish Parliament has treated pensioners compared with Westminster’s record. It is better to judge politicians on their track records and not just on their promises.

I was a Labour MP when Harold Wilson’s government introduced a statutory link whereby the state pension was increased annually in line with the rise in prices or earnings, whichever was the greater.

The Thatcher government abolished the earnings link and the Blair government never restored it. The same Blair government was also responsible for the tax raid on pensions which cost pension funds more than £100 billion, pushing many funds into deficit and forcing many final salary schemes to close. As a result, many pensioners lost out.

The current Westminster government introduced the so-called “granny tax”, with age-related tax allowances being frozen and phased out. And, most significantly, according to the Institute for Fiscal Studies, the vast majority of pensioners will be worse off as a result of the recent state pension reforms. It is clear, then, that pensioners have not been well served by recent Westminster governments.

By contrast, the Scottish Parliament, despite its limited powers, has a good track record. Unlike Westminster, the Scottish Parliament introduced free personal care for the elderly. It also brought in the free bus pass for over-60s and the council tax freeze, which has benefited many pensioners.

Under the existing devolution settlement, the powers of the Scottish Parliament over pensions are very limited. Scotland already administers a range of public-sector pension schemes, from police and teachers to fire service and NHS employees. The recent cuts to public-sector pensions were Westminster-driven and the Scottish Government was faced with the choice of complying or suffering a massive reduction in its block grant.

That illustrates very clearly one of the fundamental flaws of devolution. In an independent Scotland, the Scottish Parliament would not be dependent on a block grant from Westminster. It would have responsibility for tax and national insurance and the power to introduce a fairer system of pensions and benefits.

The current Scottish Government has committed itself to extending the pensions triple lock, whereby the state pension would increase annually by either 2.5 per cent or the rate of inflation or the increase in average wages, whichever is highest. That would ensure that existing state pension entitlement is more than met.

An independent Scotland would also be able to deal with the gross inequality in private pensions, whereby the average pension pot for people in the wealthiest 10 per cent of society is 40 times larger than for people in the bottom half.

In the league of rich countries, Scotland is 14th in the world – richer, for example, than the UK, France or Japan – yet the UK is one of the most unequal societies in the western world, and becoming more unequal.

At present, we have a government at Westminster that is increasingly out of touch with the needs, priorities and aspirations of people in Scotland. An independent Scottish Government would have a full range of political and economic levers. That would enable us to tackle some of Scotland’s demographic challenges, such as the need to increase life expectancy in our most deprived areas and to increase the proportion of our population who are working and therefore paying tax and national insurance contributions which are essential for a viable pensions policy. For example, we could take action to encourage more economically active people to stay in Scotland and we should also adopt a more welcoming approach to people from other countries who want to live and work in Scotland.