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  By George Kerevan
 
IF HISTORY tells us anything it is don’t trust Gordon Brown with your pension. In 1997, in one of his first acts as chancellor, Brown abolished tax relief on advance corporation tax (ACT). Unfortunately, this technical move penalised pension funds, robbing £5 billion from their annual income, and producing a £100bn loss in value. True, Mr Brown’s dawn raid on the pension funds did let him reduce the headline rate of corporation tax, boosting bank profits. We all know where that led.

Before Mr Brown’s meddling, the UK had one of the best private pension systems in the world. In 1995, nearly five million people were in open final-salary pension schemes (ie they got a pension linked to their earnings at retiral).

 

By the end of 2008, as the recession started, it was less than a million. Mr Brown’s ultimate contribution to UK pensions was the great banking collapse. According to the Association of Consulting Actuaries (not a profession prone to exaggeration), there has been a “seismic collapse” in workplace pensions since 2008.

You might argue that Gordon Brown can’t be held responsible for a global economic meltdown. That’s not my point. ACT relief was a cushion that protected pension funds from the volatility of share values in their investment portfolios. Chancellor Brown was warned that abolishing ACT relief effectively removed that protection. As a result, any sudden drop in share prices would create a black hole in the portfolio needed to support final scheme pensions. That is exactly what happened after 2008.

The state pension did not fare any better under Mr Brown. In 2007, he famously changed the benchmark for the annual cost of living increase from prices to earnings. This occurred just in time for the recession to halt the rise in earnings, while sending inflation through the roof. Labour’s 2007 legislation also raised the pension age for women and men to 68 (between 2024 and 2046). Thank you, Gordon.

Mr Brown did give us pension credit in 2003, but largely because the British state pension is so pathetic and he wasn’t willing to sort the problem at root. Pension credit is a means-tested top-up. The problem with means testing is that many pensioners are too proud to claim their entitlements. When Mr Brown finally made it into 10 Downing Street, two out of five people entitled to pension credit were still failing to claim it.

Gordon Brown is the man who robbed Britain’s citizens of a decent old age. He did this principally by creating a casino economy that went spectacularly bust. In his final year as prime minister, after presiding over economic policy for an unprecedented 13 years, Britain saved the equivalent of 11.6 per cent of national income. In Germany, the figure was nearly double. Saving is the key to funding pensions. Under Gordon, Britain did not save, it lived off tick.

Now Mr Brown has taken to the airwaves to warn Scotland that our pensions are in danger if we dare to vote Yes in the independence referendum. Given Mr Brown’s past misjudgments, we might take these words with a very big pinch of salt. His starting point is a “leaked” document from the Department for Work and Pensions (DWP).

Mr Brown claims that Scottish pensioners are being subsidised by the rest of the UK, as we have proportionately more retired public sector workers, and a proportionately larger bill for additional welfare benefits. The number of Scottish pensioners is expected to rise from one million to 1.3 million in the next two decades. So an independent Scotland will face a steep rise in pension costs. Mr Brown argues: “It is clear that pensioners are better protected when the risks are spread across the UK.”

If I read this correctly, Gordon thinks Scots should stay with the Union so England, Wales and Northern Ireland can subsidise our pensioners. That’s neither moral nor fair, and it’s certainly not politically sustainable. If a No vote leads to devolved income tax powers for Holyrood, you can kiss goodbye to the Barnett Formula and any hint of fiscal subsidies to Scotland.

Actually, I would dispute the “leaked” DWP numbers. They ignore the fact that Scotland (including its North Sea oil share) has normally paid in more to the Treasury in tax than it gets out. They also ignore the fact that Scots (regrettably) live shorter lives than people in England.

There is also a major sleight of hand in how Mr Brown and the DWP end up claiming that Scotland needs the Union to pay its pension bill. His principal argument is that there will be fewer Scots workers available in future to support each Scottish pensioner, compared with the British status quo. He quotes the DWP document: “Under the principal migration variant in 20 years’ time, there are projected to be 2.84 working age people per pensioner in Scotland compared with 2.98 in the whole of the UK.”

Note that crucial caveat: “Under the principal migration variant.” Decoded, the main reason the UK might have a higher average worker to pensioner ratio than Scotland is because of continued high immigration, principally into London. Booming London already is home to half the UK’s foreign-born population, despite having only 7.8 per cent of Britain’s entire population. Scotland has only 4.7 per cent of UK immigrants, despite being 8.3 per cent of the UK population. Will the DWP’s immigration projection for Scotland hold after independence? I think not. Independent Scotland will be more welcoming to immigrants than it is allowed to be at present.

That influx of academic researchers and skilled workers will help boost growth to European levels – something Mr Brown leaves out of his argument. Conversely, inside the Union, we could see English voters march Britain out of the European Union, cutting off immigration.

I forgot. Some pensioners did well out of Gordon’s reign at the Treasury – the bankers who destroyed the economy. Fred Goodwin, former chief executive at Royal Bank of Scotland, now has to endure on a mere £342,500 a year.


Courtesy of George Kerevan and the Scotsman

Comments  

 
# UpSpake 2014-04-23 07:43
This is a remarkably restrained article George. Given the nature of Brown's obvious hatred for anywhere north of the border, whereever that is.
It was he too that introduced APD and socialised Bank Debt placing that burden on the shoulders of all whilst his Banker friends got off Scot Free. See the irony in that ?.
Nope, the man has no credibility whatsoever and neither does his sidekick - Darling.
So, for a reminder of why we should never listen to a word he ever utters and why the compliant media fall over his every word, let's hear more from his and his faux smile as he digs himself into an even deeper hole of his own making.
His every word is another vote for Yes so I expect his motor mouth to single handedly do more for a positive vote than almost anything else with the exception of a few millionaire Tory Toffs jetting in for the day to top up the numbers.
 
 
# bringiton 2014-04-23 09:03
First we had Lamont with her "confidential" economic advice whose details were secret but basically bad news for Scotland and now Brown with his leaked documents from unimpeachable government sources no doubt.
Dodgy dossier comes to mind because what they actually have to say doesn't stand up to scrutiny.
 
 
# cirsium 2014-04-23 10:00
thank you, Mr Kerevan, for a salutary reminder of the scale of Mr Brown's incompetence.
 
 
# RJBH 2014-04-23 11:11
Misery Brown...comes to North Britain to frighten us into voting No, Brown had you still been in power, we would still be paying to enter and exit Fife.
 
 
# Will 2014-04-23 11:17
George writes, "They ignore the fact that Scotland (including its North Sea oil share) has normally paid in more to the Treasury in tax than it gets out." That is debatable. Gavin McCrone claims in the new edition of his 'Scottish independence: weighing up the economics', that since 2007-08 public spending per head in Scotland has been 10 per cent above the British average. It has been above since at least the 1960s, 20 per cent above in the 1990s and 15 per cent above in the 2000s. It was £1,197 per head higher in 2011-12. The Scottish government’s figure is 14 per cent more for identifiable spending only (that is, excluding defence, national debt interest and international services).
 
 
# Fungus 2014-04-23 11:57
Quote:
Mr Brown claims that Scottish pensioners are being subsidised by the rest of the UK, as we have proportionately more retired public sector workers,


As an ex public service worker soon to be picking up my pension I'd like to point out to Mr. Broon that every month I worked I paid more than the going rate into my pension fund. It's not us who are being subsidised, it's greedy bankers aided and abetted by useless troughing politicians who are being subsidised by the theft of our savings.
 
 
# Onwards 2014-04-23 14:33
@Will,
Spending is higher, but the extra taxes from Scotland more than make up the difference.
(Including the Scottish North Sea income)

Unionists only like to look at one side of the equation.
 
 
# Breeks 2014-04-23 16:33
And irrespective of the spending, there is the issue of competence.
Our oil is treated as a one off annual sum of revenue, and given a face value. If that revenue had been set aside in the good times, not squandered, then that face value of the commodity would not be expenditure, but investment, and thus have become an asset earning additional wealth from interest and dividends. That is how and why Norway will benefit from its oil for generations after the oil runs out. Oh that Westminster had been anywhere near as competent. Instead they marvel at Thatcher's economic miracle. You know, the economic miracle that closed all our shipyards, coal mines, steelworks, and heavy engineering plants and sold our souls to the crooks & thieves in the financial sector. Now there is no capacity to increase the tax take from produce, so we are all banjo'd with VAT, Duty and Stealth taxes on all we touch.
Vote YES to rid ourselves of these cretins.
 
 
# Will 2014-04-24 12:03
Onward, Scotland’s revenues roughly equal its population share of Britain.
The Scottish deficit was 5 per cent in 2011-12, which is unsustainable (even including a geographical share of North Sea revenues).
Breeks, of course Thatcher was a wrecker of industry throughout Britain. How would splitting the British working class help to defeat 'the crooks and thieves in the financial sector' (i.e. the finance capitalists based in Edinburgh and in London)?
Scotland’s output per head has recently improved compared to Britain as a whole, and as Alex Salmond recently pinted out, an independent Scotland would be one of the richest countries in the OECD, which disproves Gopher3's claim that Scotland is a plundered colony.
 
 
# Claverhouse 2014-04-23 15:58
Good article George..see also WingsoverScotla nd article on the same subject
 
 
# gopher3 2014-04-23 17:19
To Westminster , Scotland is just another "Colony" of the British (English)Empire , to be plundered of it's resources then disposed of.
We have to vote YES to stop this.
 

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