The National:

I SPEND quite a lot of time talking to groups in Scotland, talking about how I think its economy might work when it’s independent. Three issues always come up. They are the currency, mortgages and pensions. The first two are easy to address, but I admit pensions take a bit more explaining. Let me give it a go.

There are three issues here. One is existing pension commitments. That is, the promise to pay that everyone in the UK already has from the Westminster government. The answer to this one is easy to provide. Just as anyone who leaves the UK is still due their accumulated pension entitlement from the UK Government, so too will everyone in Scotland be entitled to the pensions they have earned to date from that government, which has benefitted from their tax contributions to date. Admittedly those pensions will be paid in English pounds, and they may be worth less than Scottish pounds, but that is the only risk I foresee.

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The same is true of employer pensions. They too will, of course, still be paid. The only risk is that the value of the English pound will be less than the Scottish pound, and most will live with that.

So what of the state pension that might be due in the future from the Scottish government? The question asked is whether that government will be able to pay the pensions the Scottish people expect after independence? Let me avoid the glib (but appropriate) answer, which is that every country of similar size and stage of development in the world manages to achieve that goal, and instead consider the policies required to ensure that Scotland can do what all other similar governments seem to achieve.

When considering this issue it has to be remembered that state pensions are not paid out of a pension fund. There are no savings or investments that back them up. The taxes and national insurance that we pay now are used to pay the pensions of those already retired. Those not yet retired will have to rely on those younger than them to still honour this deal if they are to get a state pension in their own retirement. Whether those younger people will be able to afford to honour that commitment will very largely depend upon the collective effort of Scotland to build an economy that generates value in the long term with that value, quite crucially, staying in Scotland. In other words, this is down to the industrial strategy that Scotland chooses to pursue as an independent country.

The National:

If Scotland chose to exploit all its economic advantages it could have an incredible future. It could be an energy powerhouse, exploiting wind, tidal and hydro power in particular. It could also be a major green hydrogen producer because it has excess electricity generating capacity. And when water is heading for scarcity, Scotland has plenty.

If the Scottish Government had a plan to not just exploit these assets, but Scotland’s strengths in whisky, education and financial services and tourism as well, and to have a plan to keep those assets within Scotland by taking stakes in key developments, then the future for Scotland looks to be very bright indeed.

But, and this is key, that requires a Scottish government committed to the people of Scotland and not to individual business interests. As is now readily apparent, private sector pensions have not delivered in their promises and are only successful at making financiers richer. So, my point that Scotland has to ensure that there really is Scottish benefit from these activities is key.

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If the people of Scotland want secure long-term pensions then I am quite convinced that they can have them. But that will require politicians who believe that they can create the industrial strategy that makes that possible by intervening in markets and investing now to create the possibilities that must exist. The closure of the last wind turbine manufacturing plant in Scotland in the last week is not a good sign that it has those politicians as yet, and I am honest about that when I discuss this issue.

But, as I always conclude, independence is not the goal of those who believe in Scotland. It is instead just a step in the way. Having the policy to deliver for Scotland after independence is what is really key, and right now all politicians who want an independent Scotland need to get their houses in order. If they are to pay the pensions that the people of Scotland need in the future then they have to plan for the prosperity that will underpin their promises and not rely on markets to do so. They need to have a plan for prosperity in which all can share.

And let’s be honest, if they do not have such plans what is the point of independence anyway? Scotland is going to hell in a handcart now, with lousy pensions already on offer. Independence has to do better than that. The question is, will politicians rise to the challenge? If they do the pension question can be answered, very easily.