Ed Miliband warns Scots of pensions cuts under SNP

Miliband will warn Scottish voters about the dangers of devo-max. Picture: Getty
Miliband will warn Scottish voters about the dangers of devo-max. Picture: Getty
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Ed Miliband has warned that elderly Scots would be frozen out of the UK state pension system under the SNP’s flagship plan for sweeping economic freedoms from Westminster.

Retired Scots face losing £18 a week – or £940 a year – under the Nationalists’ proposals for full control over tax and spend in Scotland, the Labour leader warned on a trip to Edinburgh.

Fiscal autonomy will mean a £7.6 billion hole in Scotland’s finances.

Ed Miliband

But the claims were branded “despicable scaremongering” by Deputy First Minister John Swinney, who said similar “smear” tactics during the referendum campaign had fuelled the current surge in support for the SNP.

New polls showed the SNP racing ahead in the election race north of the Border. They suggest 49 per cent of Scots are poised to vote for the Nationalists in next month’s UK’s election, with the Labour vote plunging to 25 per cent, which could leave Mr Miliband with only four Scottish seats.

Yesterday’s bitter exchanges appear to cast even more doubt on the prospect of any post-election deal between the SNP and Labour, after Mr Miliband said there was a “wide gulf” between the parties.

The SNP’s policy of “full fiscal autonomy” would effectively give Scotland complete freedom over taxes raised and how they are spent.

But it came under fire from Labour’s big guns as Mr Miliband was joined by shadow chancellor Ed Balls and Scottish party leader Jim Murphy to launch a dossier entitled Full Fiscal Austerity. It set out how the plan would mean a £7.6 billion “black hole” in Scotland’s public finances.

Mr Miliband said it would mean an end to the “pooling and sharing” of resources throughout the United Kingdom at a time when Scotland’s economy is struggling as a result of the global oil price crash.

It would be a “devastating blow for working people”, the Labour leader said.

“Today I challenge Nicola Sturgeon to set out how she will fill this £7.6 billion gap – which services will be cut?

“Which taxes will be raised and what cuts will it mean for pensioners in Scotland when they’re taken out of the UK pension system?”

Mr Miliband went on: “The SNP claims in this campaign to be proposing no reductions in spending – in fact they’re planning dramatic reductions in spending. They must come clean.”

SNP leader Ms Sturgeon said this week that Nationalist MPs would vote for full fiscal autonomy “next year” at Westminster, although the prospect of it being implemented seems remote, with Mr Miliband admitting he would block it. “I will never sell Scotland short by signing up to the SNP plan,” he said.

Labour was buoyed yesterday by three UK opinion polls giving them a national lead of between three and six points, after weeks in which the Tories appeared to be very slowly edging into a lead.

But the slump in support in Scotland could deny them the seats needed to form a majority government. However, the prospect of a working arrangement with the SNP is growing more unlikely, with a formal coalition already ruled out and disagreement over the renewal of the Clyde-based Trident nuclear weapons system likely to scupper a less formal “confidence and supply” arrangement.

“The gulf is very wide because they’ve got a totally different set of priorities: their priority is not social justice,” Mr Miliband said.

Mr Murphy stressed yesterday that the UK’s pensions were funded by UK taxpayers.

“Pensions contributions from today’s pensioners are paid in real time by today’s workers,” he said. “If Scotland removes itself from the UK tax system, we remove ourselves from the UK pension system.

“To suggest that we can have full fiscal autonomy and the UK pension system is to suggest that English, Welsh and Northern Irish workers should continue to pay for Scottish pensions and Scottish pensioners while we’ve stopped contributing into the pooling and sharing of resources across the UK.

“That argument asks the rest of the UK to share the risks while we refuse to share in the resources. Full fiscal autonomy abolishes the guarantee of the existing of the UK state pension here in Scotland.”

Mr Balls said the £7.6bn black hole would mean the current level of spending cuts would have to double – with £1bn being slashed from Scotland’s pensions budget.

“That would mean one million Scots whose state pension is currently guaranteed by the United Kingdom would, on those plans, see their pensions cut – a cut of £18 a week or £940 a year on average,” he said.

“It’s not full fiscal autonomy – it’s full fiscal austerity if the SNP plans go ahead.

“Their numbers do not add up and the SNP plan would mean continuing austerity in the next parliament.”

The shadow chancellor added: “The biggest lie in this campaign is that the SNP are the anti-austerity party, when we’ve made clear today that with full fiscal autonomy – or full fiscal austerity – the SNP are the extended austerity party.”

But the claims were branded “desperate” by Mr Swinney, who said that Labour had already signed up to £30bn worth of austerity cuts in the next parliament.

The Nationalists say greater economic control will allow them to generate growth through measures such as tax breaks for key industries like life sciences and high-end tech firms. Labour says this plan would require annual growth of 5.3 per cent in the Scottish economy over the coming years – double the estimated global rate for advanced countries.

But Mr Swinney said: “Scotland’s economy is strong. By 2020 our onshore revenues are expected to grow by £15bn, and with more powers we could do even better. In two of the last four years, Scotland’s deficit has been less than the UK’s, and in each of the last 34 years, Scotland has paid more tax per person than the rest of the UK.

“Obviously greater economic and welfare powers would be introduced over a period of time. The problem for Scotland is that Labour stands along with the Tories and Lib Dems in refusing to give Scotland the ‘extensive new powers’ vowed by the No campaign in the referendum.

“To fly into Scotland and frankly insult people’s intelligence in this way simply underlines why voters have moved in their droves from Labour to the SNP – and why seven out of ten Labour voters think Nicola Sturgeon is doing well as First Minister.

“And for Labour to return to their referendum scaremongering about pensions is nothing short of despicable.”

Liberal Democrat deputy leader Sir Malcolm Bruce also pressed the Nationalists on the impact of changing the way the UK is funded.

Sir Malcolm, who was campaigning in Cupar, Fife, said: “Nicola Sturgeon told us that SNP MPs would vote for full fiscal autonomy at the first opportunity. This could leave us facing a £7.6bn funding black hole in year one of the new parliament. This is more than half the annual Scottish NHS budget.

“The SNP need to tell people what public services would be cut to balance the books under their plans.

“The SNP are veering away from a plan that has delivered 174,000 new jobs for Scotland and are putting the recovery at risk.”

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