A Scare A Day...Pensions edition

This is the first of our 'Scare a Day' posts.  We say first because unfortunately we believe this will become a regular feature until the referendum.  Hopefully we're wrong and we can focus on more positive topics, such as our potential to diversify our economy, create a more peaceful foreign policy and reduce poverty and homelessness.

 "Independence...independence?!  NNOOOOOOooooooo............" BBC Scotland viewer survey

Today's 'scare' story comes from the BBC and focuses on pensions.  You can look at it here.  It raised quite a number of points so lets look at them one at a time:

1) Who would make state pension payments in an independent Scotland and take responsibility for any entitlements built up prior to independence?

A) Your entitlement to the state pension or pension credits on Day One of an independent Scotland will be the exact same as your entitlement before independence (Yes Scotland website).  This part depends upon the outcome of the negotiations between Holyrood and Westminster, although it is likely to be based on residency.  We can't say for certain because Westminster refuses to discuss the details.

2) Who would be responsible for unfunded public sector pension liabilities built up prior to independence?

A) Scotland currency spends a smaller share than the UK of both our national wealth and tax revenues to deliver pension and welfare payments in Scotland.  So the pension or pension credit you receive is more affordable for Scotland than it is for the UK (Yes Scotland website).  This part also depends upon the outcome of negotiations.  We can't answer because Westminster MPs don't want you to know.

3) What pension regulation and protection arrangements would an independent Scotland need for private sector pensions?

A) Your private pension will not be affected by Scotland becoming an independent country.  Your contract with your pension provider will continue as now (Yes Scotland website).  Ultimately, pension policy would depend upon who we elect.

4) And how would EU solvency requirements for defined benefit and hybrid pensions schemes be met across the UK if Scotland became an independent country?

A) Finally, we come across a question where the answer isn't available on the first page of the Yes Scotland pensions Q&A section.

The answer to this is in two parts: first, many countries within the EU (and outwith) have agreements in place to allow temporary deficits in private pension schemes, and there is no reason why Scotland could not be included in those.  There are many Scottish companies who employ workers abroad, and few nations would want to lose these jobs trying to block something that doesn't affect them.

Second, who allowed the massive funding gaps in private pensions?  Which parliament raided the pension funds and left them precious little protection from the financial markets?  Which parliament has created this problem and left it to us to pick up the tab?  Taking control over pensions, and ensuring that the hard earned funds that people need to rely on aren't abused, is one of the main reasons for independence.

"The mainstream media are not biased," every mainstream media outlet.

We at Sign for Scotland believe that journalism is about investigating the facts, removing fiction and distortion, fairly representing differing viewpoints and avoiding personal bias.  Unfortunately the BBC doesn't agree:

"We reported the opinions as expressed at that time. We featured an opposing voice. We report other opinions, such as those you cite, when they are made known, and quote those who disagree with them, too. It is called journalism." (email from editor of Reporting Scotland - 24th April 2013).

When someone believes the above idiology, they don't realise when they are being biased.  We've mentioned media bias before (Recording this Moment - A challenge) and others have done the same (Bella Caledonia - On Balance) but it needs repeating to help these journalists understand that their job is more than to just parrot the views of the powerful.  Their job is to bring better understand.

Can BBC Scotland genuinely say that they left their viewers with a greater level of understanding?  I don't think so.
Drew

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Ten a Penny - Westminster's Current Currency Threats

George Osborne, the UK Chancellor, has made a number of threats since the referendum on Scottish Independence was announced…

http://uk.reuters.com/article/2013/04/20/uk-britain-scotland-currency-idUKBRE93J0K020130420

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/22-Apr-2013/osborne-questions-currency-of-an-independent-scotland

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-22235315

He claims that Pound Sterling could be denied to an independent Scotland, that the currency union that the Scottish Government is proposing could never work and that he would put up as many obstacles as he could in an attempt to punish us for voting Yes.  There are only two reasons for him to say this:

1 – George Osborne doesn’t understand how currencies work

2 – He is intending to radically alter the role of the Bank of England, Pound Sterling, and Scottish Bank Notes, with massive implications for those considering a ‘no’ vote.

"Trust me, I have the interests of the common man at heart," George Osborne (probably)

Judging from his past utterances I believe that the first option is the most likely.  Mr Osborne probably doesn’t know that Scottish wealth and exports are providing a great deal of the value to the Pound.  This story from Newsnet Scotland (http://www.newsnetscotland.com/index.php/scottish-economy/5325-uks-balance-of-payments-would-double-without-scotland) highlights the precarious situation that the Bank of England without Scotland would find itself in.  Without the £135 per second generated by Scotch whisky exports (http://www.chinchinjobs.com/news/article/scotch-whisky-is-now-worth-135-a-second-to-the-uk-balance-of-trade-3804) the currency would be forced to weaken very fast and very hard.  If Mr Osborne understood this, then he wouldn’t be making the statements above.

Another reason why the chancellor is wrong is because the Pound is one of a number of fully convertible currencies (http://www.bank.lv/en/monetary-policy/list-of-convertible-currencies-quoted-by-the-bank-of-latvia).  This means that it has few restrictions on the manner and amount that can be traded for another currency.  It isn’t possible to say ‘our currency has immediate value on a foreign exchange (advantage of a fully convertible currency) but not in Scotland’.  It is an either or situation.

Finally, currency unions are actually very common.  You can see from this map just how many nations actually share currencies without having to share economic, social or foreign policy.  It’s difficult to imagine how Scotland and the UK cannot have what all of these nations currently enjoy.

"Currency unions cannot work without political unions, except in the nations above, but none of them really count...stop looking at them!" George Osborne (probably)

There is only one circumstance where the above statements could be wrong.  At the moment, currency is dealt with by the Bank of England independently from Westminster.  They are unlikely to support the vast reduction of influence which would result from Scotland having a rival (and significantly stronger) currency, nor the loss of fully convertible status.  It stands to reason that if Mr Osborne does understand finance, and that his threats are real and not just scare tactics, that his only option is for him to directly control the bank’s actions.

Taking away the fully convertible status of the Pound would result in nations around the world returning their holdings of Pound Sterling.  International trade would become much more expensive, as every transaction would have to be converted into Dollars or Euros, with business bearing the additional costs.  London would lose its status as a global centre for finance and the value of savings would plummet, leaving millions impoverished.  We suspect that this isn’t very likely.

There is only one thing that Mr Osborne can do, although it depends entirely on us voting ‘no’ in the referendum.  At present, three Scottish banks (HBOS, Royal Bank of Scotland and the Clydesdale Bank) are permitted to issue currency (this arrangement also exists for certain banks in Northern Ireland).  Every one of these notes is backed by a Bank of England note, which guarantees their value.  Mr Osborne has claimed that independence threatens the continuance of this setup, however only the opposite can be true.

http://www.ft.com/cms/s/0/a38116c0-aa9d-11e2-bc0d-00144feabdc0.html

After independence we will either have a formal agreement with the Bank of England which will maintain the current arrangement, or we will have an informal alliance, where Scottish bank notes will continue to be printed and used as before.

Official advisor to the Treasury

The only circumstance where Scottish notes can cease to have value is after a no vote.  This could be Mr Osborne’s strategy, as at the moment having our own currency mixed in with that issued by the Bank of England makes independence much easier for us.  It would cost us nothing to switch from sharing notes to simply printing more of our own, and it would be straightforward for us to leave a currency union if that was in our interests.

When it comes to currency, independence gives us flexibly and influence, with the worst settlement being status quo.  A no vote gives us uncertainty, and makes us vulnerable to the whims of Osborne and his successors.  I know which option I’m more comfortable with.

Drew

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How much for a Voltron? - The Scottish Defence Force

I’ve probably revealed my age with the title of this post, but how much should it cost to defend Scotland?

There are three answers:          The amount that Westminster charges us now

                                              The amount that similar countries pay

                                              The amount we want

Scotland contributes 9.6% of total UK tax revenue, so 9.6% of UK military spending is paid for by us either directly or through debt.  This equates to £3,200,000,000 (£3.2 billion) per year, or 2.5% of GDP (Gross Domestic Product).  Not all of this spending is actually defensive.  Beyond Trident (the UK’s nuclear armed fleet of submarines) there has been £2 billion spent on military drones and unmanned aircraft (with £2 billion more expected) and £5.2 billion on aircraft carriers which have little defensive value and which the UK can’t afford to put aircraft on.

"Voltron, defender of the universe, won't want to defend Scotland unless she hosts nuclear weapons!" - Better Together statement.

Military spending is also uneven.  The UK spends £1,244 per head on defence in the Southwest of England, but only £302 per head in Scotland.  Military contracts are also disproportionate, with Scottish firms receiving less than our share.  There are 11,190 military personnel based in Scotland, compared to the UK armed forces total of 186,400.

So how much do similar countries pay?

Norway spends £3,821,500,000 (£3.8 billion) or 1.6% of GDP [24,025 personnel]

Denmark spends £2,528,340,000 (£2.5 billion) or 1.4% of GDP [26,585 personnel]

Ireland spends £1,101,150,000 (£1.1 billion) or 0.6% of GDP [10,460 personnel]

Sweden spends £3,230,130,000 (£3.2 billion) or 1.2% of GDP [13,050 personnel]

Switzerland spends £2,823,900,000 (£2.8 billion) or 0.8% of GDP [22,059 personnel]

Finland spends £2,288,420,000 (£2.2 billion) or 1.5% of GDP [22,600 personnel]

So the amount Scotland would pay if we were like our European neighbours would be £2 billion (1.2% of GDP).  Of course, being independent we would see much more of this money remaining in Scotland and aimed at actually defending us.

The biggest threat currently posed to an independent Scotland.

But the status quo and the same as those like us aren’t the only options.  If we want to maintain a substantial military budget, then we can (we’re paying for one at the moment!)  If we want a modest defence force, then that’s possible too and if we want something in between, then there will be political parties who will advocate that position.

Scotland's defence will be much simplier once it is focused on conventional forces and equipment.  Trident, which failed to prevent the wars in Iraq, Afghanistan and Libya, drains our resources and distracts our attention.  It is a weapon which the people of Scotland are opposed to, and with a Yes vote in 2014, it will be gone.

With independence we get the choice of how much we want to pay for defence, enough for our own Voltron if we so liked, but more importantly, we will have a defence that is focused upon defending us, which cannot be said of the UK at present.
Drew

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Recording this Moment - A challenge

We at Sign for Scotland are aiming to do as much as we can in the lead up to the referendum in September 2014.

We’re keeping our Facebook page filled with content

We’re sending out Tweets on breaking stories

We’re uploading videos to YouTube

We’re taking part in Yes Scotland events

And we’re updating this humble blog with articles that we hope you enjoy

Sign for Scotland members John and Drew helping Yes Moray in Elgin

The great thing about this campaign is that there are so many different ways to get involved, from Signing the Yes Declaration, to printing off stories from Newsnet Scotland or Wings over Scotland and leaving them on a table at work, to just talking to friends, neighbours and family members.  If all of us do a little bit each, I’m certain that we will win and begin building a fairer nation.

But there’s one thing that we’d love to see, something that would be of great value to every generation that follows: a documentary that chronicles the activities of the mainstream media in this referendum campaign.

There are lots of groups which highlight bias in the media and attempt to curb excessive and deceitful comments by exposing their inaccuracies, but what we’d like is someone impartial to record events as they take place and only completes the film once the result is known.

We’re convinced that this would be of great value because future generations deserve to know how hard we are working to achieve self determination for them.  We believe that they deserve the truth about the wall of resistance we face from the multinational and state owned broadcasters, and not the carefully crafted spin and lies which some will undoubtedly attempt.

"Don't worry, we're impartial." - BBC in Scotland statement

And faintly, we hope that the knowledge that there is someone watching and recording for prosperity the worst excesses of poor journalism will encourage more temperate and logical debate.

We feel that this project would be valued not only in Scotland post 2014, but around the world as an example of a cause struggling against an establishment backed press.  Perhaps this could be our first major contribution as an independent nation.

Voting ‘Yes’ is the first step we take into a much larger world, and it is our responsibility to protect the truth for those who look back on us.

Drew

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The North Britain - Early Morning Edition

Happy April Fools Day!  Normal blogs (or as normal as we can achieve) will resume presently.
Drew