UK Government block Scottish pension negotiations
Finance Secretary John Swinney has today written to the Chief Secretary of the Treasury Danny Alexander to outline his concern at the UK Government’s intentions to impose restrictions on the pensions of half a million Scottish workers, blocking effective negotiations by the Scottish Government.
The UK Government has confirmed that it intends to legislate for an automatic link between normal pension age and state pension age, and also set the normal pension age for police officers and firefighters at 60.
In addition to these restrictions, the UK Government also now plans to extend its influence over public sector pensions in Scotland by increasing requirements for the Treasury to consent to any changes, in effect leaving no flexibility or discretion to the Scottish Government.
UK Ministers had previously said that the only restriction to be placed on the Scottish Government’s ability to negotiate the terms of its own deals on pensions would be that any additional costs or shortfall in revenue would have to be met from the block grant.
The moves cut across negotiations already happening in Scotland between Scottish Ministers and employer groups and trades unions on police, fire, NHS and teachers pensions schemes.
Finance Secretary John Swinney said:
“This latest letter from the Treasury is another effort to prevent the Scottish Government from making any changes to pension schemes in Scotland that would differ from those in England.
“Far from allowing Scottish Ministers to negotiate, the Treasury now plans to legislate on age requirements; will not guarantee to make legal changes we may need, and wants to extend its involvement in agreeing to any decisions we may make.
“Previous statements by UK Ministers made it clear that the Scottish Government was free to design schemes which suit Scotland’s needs and we have entered into negotiations on that basis in good faith. Now the UK Government is trying to stop those negotiations having any purpose at all.
“Despite the UK Government beginning the process of scheme reform in the spring of 2011, it is still not clear how it expects its policy reforms to affect Scotland. Instead they are making a series of increasingly ridiculous demands without any meaningful discussion with Scottish Ministers.
“Public sector pensions must be affordable, sustainable and fair and, in partnership with trade unions and employer representatives, we are already discussing the long-term reform of public sector pensions in Scotland.
“That the Treasury’s actions would also prevent us offering local government the freedom to negotiate that we have always intended to offer is a further imposition on Scotland’s public sector workers.
The Treasury’s actions damage our ability to ensure a fair and equitable agreement, taking into account all views and reflecting Scottish circumstances.
“Scottish public sector workers deserve certainty about their future pension terms. Not content with threatening budget cuts if we choose to treat workers differently, the UK Government’s constraints and their demand we complete core negotiations in the next two weeks completely undermines our ability to put in place a pensions agreement that meets the needs of public sector employees in Scotland.
“UK Government Ministers have had numerous opportunities to explain their plans. I find it incredibly disrespectful to the people of Scotland that the Treasury continues to ignore their need for clarity on these important issues. I urge the UK Government to provide full clarification of their plans as soon as possible.”
Occupational pensions policy – including on public service pensions – is a reserved matter. The Scottish Government has certain executively devolved powers, which vary from pension scheme to pension scheme. Until recently it has been able to exercise those powers without interference from the UK Government.
During the period March 2011 to March 2012, the Scottish Government sought clarification of UK policy proposals and their impact on Scotland, so that it might enter into negotiations to reform schemes in Scotland in good faith. However, recognising that such clarity was still not available, Scottish Ministers began partnership negotiations for the semi-devolved schemes under their control in March 2012.
Between 28 March 2012 and 24 May 2012, the Chief Secretary to the Treasury, Rt. Hon. Danny Alexander MP sent a series of letters to the Scottish Government, setting out the UK Government’s intention to use that Bill to once again tightly control the terms of all public service pensions, whether or not executively devolved to Scottish Ministers.
Each letter appears to reveal more about those plans and appears to further tighten the ring of constraints around Scotland. Danny Alexander’s letter of 24 May also seeks confirmation of “precise details” of any areas where the Scottish Government would like to depart from the proposals for counterpart schemes for England and Wales by 20 July – despite not all deals for those counterpart schemes having been finalised and despite Scottish negotiations having only recently begun.
The State Pension Age is the earliest age to draw a state pension, and is defined by a person’s date of birth.
Normal Pension Age is the term used to define the age at which an occupational pension is payable under an occupational pension scheme’s rules.