Deputy First Minister Nicola Sturgeon made the announcement of the working group’s recommendations yesterday and reassured Scots that this would mean so seamless a transition in welfare payments that no one would notice any difference. The problem here was that under repeated questioning, Ms Sturgeon had to admit that this had not yet been discussed with the UK government, so it is far from being a certain transition arrangement. The UK scenario It does, though, underline the fact that if a decision in September 2014 by Scotland to separate from the Union will compel the continuing UK to suffer costs it would not otherwise incur. Given that the UK has complex work to do in supporting the return to growth of its economy, such transition costs and the accompanying upheavals will be untimely and unwelcome – but that would be of no great concern to Scotland. It does mean that the continuing UK will not be in a position to do anything but look after its own interests first – that is its duty to its continuing electorate. So, should the proposed arrangements seem to the UK to be cost effective in its own interests, this proposal would be agreed. However: The UK owns the software and the databases. It has its own welfare processing establishments which handle an unspecified volume and type of payments to Scots. It processes 80% of its own pension payments already – which means that it has the systems in place for the remaining 20% and needs only some more staff to cover that extra work. It will have job losses in the demerger of other administrative systems. It has to be questionable that the continuing UK would wish to leave 20% of its pension processing in the hands of what would be a foreign country and one with a lot on its hands. It would arguably be in the interests of the continuing UK to execute the demerger of welfare processing as soon as possible. Jobs lost in other demerged administrative areas could be switched to fill the additional need at welfare. Where that decision would mean job losses in Scotland in welfare administration – a matter which the Deputy First Minister avoided answering on Newsnight Scotland last night - this would nevertheless not present Scotland with any difficulty. One certain outcome of independence is that Scotland would require a vastly swollen public sector to replicate the systems we currently share as a member of the UK. The downside here is that although employment in this sector would grow substantially, so would the proportion of Scotland’s budget spent on economically unproductive services. The ratio of spend on Welfare and Pensions to total annual budget for the UK-minus-Scotland in 2o11 is therefore 33.34%. For Scotland the ratio is 39.25%, a significantly higher percentage. The expert opinion last night from the academics from Edinburgh University [Nicola McEwen] and Stirling [David Bell] was that Scotland would struggle to afford its welfare payments unless it could sustain significant economic growth. With swollen public sector costs to sustain duplicated administrative systems across the spectrum, and with oil revenues immediately swallowed to pay the interest on our national debt, this will be a considerable challenge.
Posted on: Wed, 12 Jun 2013 09:33:05 +0000
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