Leader: Pensions posturing demands Salmond be held to account

here are few subjects likely to generate more passionate debate than the issue of public sector pensions and pension reform. Those who receive, or who are about to receive, a public sector pension are angry enough about the changes the UK government is seeking to introduce to curb the soaring cost of providing for state employees in their retirement, that they are threatening strike action.

Those in the private sector, however, generally have a different perspective and are puzzled or perhaps bewildered by the attitude of public sector workers and their unions. In most private companies final salary pension schemes are a thing or the past and employees have long been forced to pay in more in order to guarantee a decent sum to live on when they retire.

If the debate over this issue was not heated enough, it was stoked up further yesterday by First Minister Alex Salmond. He accused Treasury Chief Secretary Danny Alexander of “holding a gun to the head” of the Scottish Government over the SNP’s call to delay an increase of up to 3.2 per cent in pensions paid by public sector workers north of the Border, a rise due to come into force next April.

The reason for Mr Salmond’s ire was Mr Alexander’s insistence that, if the SNP went ahead with this, he would charge the Scottish Government £8.4 million a month, the figure he put on the cost to the Treasury of delaying the pensions contributions increase in Scotland. To a neutral, outside observer, if such a person exists, this row will seem trivial, a clash over what is, in the grand scheme of things, a relatively small sum of money.

However, as always with Mr Salmond, there is a deeper motive beneath his rather exaggerated expression of outrage.

In the week when unions have voted to strike over pension reforms, it is clear the First Minister wanted to appear to be on the side of public sector workers, making common cause with them against Westminster.

It mattered not to Mr Salmond that he was going against a sensible principle that devolved administrations have to pay for policies they introduce which have cost implications. Such a principle has to be in place, otherwise the Scottish Parliament, or the Welsh or Northern Ireland assemblies could bring in expensive policies daily with Westminster having to foot the bill.

Whatever one thinks of the First Minister’s populist stance, this latest row between Holyrood and Westminster exposed a fundamental flaw in the current devolution settlement.

Without having responsibility for raising as well as spending cash, the Scottish Government will always be at odds with Westminster over issues which involve spending. We have argued on many occasions that Holyrood needs greater fiscal powers. This latest row further illustrates the case for just such a development.