Scotland's Future

Scotland’s referendum on 18 September 2014 is a choice between two futures.

Chapter 4 Health, Wellbeing and Social Protection

  • Independence will provide the opportunity to create a fairer, more equal society, built around the needs of citizens
  • Spending on social protection which includes pensions and welfare is more affordable in Scotland. We spend a smaller proportion of our national wealth and tax revenues on the provision of social protection than the UK as a whole
  • There will be continuity of payments for pension and benefit recipients
  • This Government proposes a series of improvements to the State Pension and to the benefits system that will:
    • extend the triple-lock on state pensions so they increase by either inflation, earnings or 2.5 per cent, whichever is higher
    • introduce the new single-tier pension and set it at £160 in 2016
    • abolish the "bedroom tax", assisting 82,500 households in Scotland - including 63,500 households with a disabled adult and 15,500 households with children - to save an average of £50 per month
    • halt the further rollout of Universal Credit (UC) and Personal Independence Payment (PIP) in Scotland
    • change elements of UK pension and welfare rules to better protect the position of women in work and on retirement
  • The NHS will remain in public hands, free at the point of need, delivering high-quality, safe care for the people of Scotland

Why we need a new approach

Scotland is a prosperous country, but too many people and communities are trapped in poverty and prevented from realising their full potential.

In 2011/12, 710,000 people (14 per cent of the population) were living in relative poverty in Scotland[133]. This total is made up of 420,000 people of working age, 150,000 children, and 140,000 pensioners[134]. This Government believes it is unacceptable, in a nation with the wealth and resources of Scotland, that one in seven of us still lives in poverty.

The current Westminster approach is making the situation worse. The Institute of Fiscal Studies has estimated that the child poverty rate in Scotland will increase to 22.7 per cent by 2020[135]. This means that an additional 50,000 children will be living in poverty as a direct result of Westminster welfare changes. This will reverse improvements made over the last decade and return the child poverty rate to the level it was 10 years ago.

The UK is already one of the developed world's most unequal societies. The UK is now one of ten least equal countries in the OECD - it ranks 28th out of 34 on a measure of overall inequality. OECD analysis shows that, since 1975, income inequality among working age people has increased faster than any other country in the organisation.

Academic analysis comparing the earnings of the worst off and best off has found that the UK was the fourth most unequal nation amongst the world's richest countries[136].

These inequalities are also seen strongly in health outcomes. Life expectancy in Scotland is lower than in the rest of the UK. In 2010, life expectancy at age 65 was 1.2 years higher in the UK than in Scotland for both men and women[137]. Men born in the most deprived areas of Scotland can expect to live 10.9 years less than those in the more affluent areas - and their healthy life expectancy is only 50[138]. These statistics are a human tragedy, and they also hold us back both economically and as a society. Life expectancy in Scotland is now lower than in all other Western European countries[139]. Compared to similar countries, Scotland has a greater incidence of cancer and of premature deaths from all causes including heart disease, chronic liver disease and cirrhosis[140].

With devolution, the Scottish Parliament has been able to deliver some improvement. For some indicators, such as deaths from coronary heart disease, health inequalities have decreased, but for others, such as healthy life expectancy, mental health, smoking and alcohol and drug misuse, they remain significantly worse in the most deprived parts of Scotland[141].

Responsibility for delivering health services to our population is not enough. To tackle these major challenges, we also need responsibility for our society's wellbeing and welfare. The solution to ill-health is not in the hands of the NHS alone - it depends on breaking the cycle of poverty, educational under-attainment, worklessness, poor mental wellbeing, and, through these, preventable ill-health[142].

Westminster's changes to our welfare system make the need for a new approach more urgent. Their plans could potentially remove over £4.5 billion from Scottish households[143]. The one per cent cap on welfare benefit increases will impose real terms cuts on one million low income working age households amounting to £210 million in the five years to 2014/15[144]. Real terms cuts to child benefit will remove £1,100 from families with two children[145]. The "bedroom tax" will result in Westminster saving £50 million per year in Scotland but it will cost the Scottish economy around £50 million per year. There will also be one-off losses of around £29 million in Scotland[146]. Seventy-nine per cent of households affected by the "bedroom tax" in Scotland contain a disabled adult and the policy will impact on 15,500 families with children[147]. In Scotland's rural areas, the "bedroom tax", when combined with other factors such as expensive travel costs and the low-wage job market, will have a particularly severe impact.

The Scottish Government has been able to mitigate the impact of some of these changes, with agreement reached with Scotland's councils to protect 560,000 people from cuts in Council Tax Benefit and up to £20 million has been committed in both 2013/14 and 2014/15 to support those most severely affected by the "bedroom tax"[148]. Frontline advice and support services have a critical role in helping people to understand and respond to the Westminster's changes, which is why an additional £7.9 million for advice and support services is being provided over three years from 2012/13[149].

A new £33 million Scottish Welfare Fund is also in place[150]. This is a national scheme delivered through local authorities. It helps people facing a financial crisis and in need of short-term help and those who require essential household items to set up, or stay in, their own homes.

However, mitigation is not enough. Independence will allow the Scottish Parliament to: make decisions on welfare; reverse the most damaging of the Westminster changes; and ensure that we have a social security system for the future that meets our needs and objectives.

As well as implementing damaging welfare cuts, Westminster has also contributed, over many years, to what many people acknowledge to be a crisis in pensions provision. The State Pension lost value following the decision in 1979 to abolish the link between the state pension and earnings. It has never recovered its previous level relative to earnings[151]. In 2011, the UK State Pension ranked second worst of 27 EU member states relative to gross average pre-retirement earnings[152]. The UK pension system is also one of the most complex in the world[153].

The 1983 Conservative Government removed tax exemptions from payments by employers to their pension schemes in apparent surplus. Many employers then took "pension holidays" on contributions to their pension schemes[154]. In 1997, the then Labour Government removed Advanced Corporation Tax Relief from dividends for pension schemes, reducing pension scheme income from dividend payments by 20 per cent, causing estimated losses of up to £100 billion for pension funds across the UK[155].

Collectively, these and other decisions have helped create a UK pensions landscape where:

  • 13.2 million people of working age in the UK are under-saving for retirement[156]
  • private pension scheme membership has fallen: in 2011, membership of occupational pension schemes in the UK reached its lowest level since 1953[157]
  • the number of people contributing to a personal pension has fallen over the last decade[158]
  • access to quality pension schemes has reduced: in 1993, all the FTSE 100 leading companies in the UK had a defined benefits final salary scheme open to new members; in October 2012, there was only one[159]

The Scottish Parliament has a record of using the powers available to it to benefit older people in Scotland. With responsibility for pensions, it can also ensure that Scottish pensioners receive a state pension that reflects Scottish needs and circumstances.


The opportunities available to Scotland

The goal of an effective pensions system is to provide the financial underpinning to support people to enjoy a full and active retirement. However, the Westminster Government has mismanaged the pensions system over many years, to the extent that an estimated 13.2 million people in the UK are now under-saving for retirement[160], while 140,000 Scottish pensioners are living in relative poverty[161].

Independence offers a unique opportunity to do better, establishing pensions on a responsible and sustainable basis for the future.

The Scotland we can create

An independent Scotland will have the powers to deliver an affordable, fair and efficient pensions system, one that rewards hard work and incentivises saving, while also tackling pensioner poverty[162]. An independent Scotland will have the ability to protect and improve state pensions and ensure that private pensions are secure and saving for retirement is actively encouraged. An independent Scotland will be able to set the State Pension Age at a level appropriate to Scottish circumstances.

Scotland has strong foundations on which to build such a pensions system. The amount spent in Scotland on social protection, which includes pensions and other welfare spending, is lower as a share of GDP than in the UK. In 2011/12, a lower proportion of Scottish tax revenues was spent on social protection than in the UK as a whole[163]. Scotland can afford a high-quality pensions service.

The choices open to us

Scotland has the people and infrastructure needed to manage and to pay pensions. The Pension Centres, located in Motherwell and Dundee and currently part of the Department for Work and Pensions, currently administer State Pension and Pension Credit claims for everyone living in Scotland. This Government proposes they will continue to do so on independence.

The Scottish Public Pensions Agency and local authority teams already manage Scottish public sector pensions. This Government proposes that an independent Scotland will take on responsibility for the pensions of staff within the civil service, armed forces and others who work in Scotland's public service, as well as existing pensioners and deferred members. For current UK-wide public service pension schemes, the Scottish Government proposes taking our fair share of pension liabilities based on responsibilities for meeting the pension entitlements of pensioners who live in Scotland. In short, Scotland can deliver high-quality state and public sector pensions, and future Scottish governments will be able to ensure that we have efficient systems in place to deliver pensions to those who rely on them.

Scotland also has the track record - via successive Scottish governments - of delivering real benefits to older people, as exemplified by free personal and nursing care and concessionary travel. The current Scottish Government has retained these in the face of current spending pressures, and plans to continue them with independence. These initiatives, taken forward using the powers of devolution, give a clear signal of our priorities and our commitment to our older citizens. With independence, future Scottish governments will have the choice to extend this approach to securing dignity in old age into all aspects of the services and benefits we provide.

The longer-term demographic challenge of an ageing population affects every western country, including Scotland and the UK as a whole. The particular challenge Scotland faces is projected lower growth in our working age population. The Government Economic Strategy sets out a target:

to match average European (EU-15) population growth over the period from 2007 to 2017, supported by increased healthy life expectancy in Scotland over this period

The longer-term target must be to grow our working age population in line with the projected increase in those dependent on it - pensioners and young people under 16. What is clear is that this challenge is best addressed in an independent Scotland. An independent Scotland can address population growth by creating new opportunities for young people to build their careers and families within Scotland, and through action to attract the right people with the right skills to Scotland - either Scots who have moved away or new migrants.

Our Priorities for Action

The State Pension

The general principle of this Scottish Government, in planning for pensions in an independent Scotland, is to keep the best of the current State Pensions system, while making improvements where it is sensible to do so. On independence, our approach means:

  • current pensioners will receive their pensions as now, on time and in full. Accrued rights will be honoured and protected
  • planned reforms will be rolled out from 2016, including the introduction of the single-tier pension

Our priorities, if we form the government of an independent Scotland, will be to:

  • establish an independent commission to advise on the state pension age for Scotland, taking into account Scottish circumstances
  • ensure that around one million pensioners in Scotland benefit each year from the uprating of the State Pension by the triple-lock, initially for the first term of an independent parliament. This would protect the value of the State Pension over time against increases in prices or earnings, providing a minimum annual increase of 2.5 per cent. The triple-lock would apply to the Basic State Pension, the single-tier pension, and Guarantee Credit[164]
  • set the single-tier pension at the rate of £160 per week in 2016 - £1.10 a week higher than the rate currently expected for the UK
  • retain Savings Credit (the full Savings Credit payment is currently £18 per week for a single person)[165], benefiting around 9,000 low income pensioners

State Pension Age

The State Pension Age (SPA) for women across the UK is in the process of increasing from 60 to 65 between 2010 and 2018. An increase to 66 for both men and women is to be fully implemented by October 2020. A further phased increase in the State Pension Age to 67 is planned between 2026 and 2028.

The Scottish Government accepts that State Pension Age should rise to 66 in line with the existing timetable. The rapid move to 67 is a concern, however, as it is a significantly faster timetable than that announced by the previous Westminster government. Lower average life expectancy in Scotland compared to the UK means that Scots currently enjoy fewer years in receipt of the State Pensions.

In an independent Scotland, this Scottish Government will reserve judgement on the increase to 67 between 2026 and 2028. We propose that an Independent Commission on the State Pension Age is established and tasked with considering the appropriate rate of increase of the State Pension Age for Scotland over the long term. This Government plans that the Commission will report to parliament within the first two years of independence with a view to its recommendations being implemented promptly thereafter.

Current pension arrangements

On independence, everyone currently in receipt of the Basic State Pension, Graduated Retirement Benefit, State Earnings Related Pension Scheme or the State Second Pension will receive these pensions as now, on time and in full. This Scottish Government plans to uprate the Basic State Pension by the triple-lock from 2016. This provides protection for the value of pensions over time, meaning that pensions increase by average earnings, CPI inflation, or 2.5 per cent - whichever of these is highest.

This Government's commitment will be in place initially for the first term of an independent Scottish parliament. The Westminster Government has only made a commitment to the triple-lock until 2015.

This Government also proposes that the Guarantee Credit element of Pension Credit, which tops up pensioners' weekly income to a minimum level set by government, is uprated using the triple-lock from 2016. This provides an improved safeguard for low-income pensioners in Scotland compared to their counterparts in the rest of the UK where the only requirement is for Guarantee Credit to be uprated in line with earnings. This Government proposes that the Savings Credit element of Pension Credit is retained as additional support for those with low incomes and increased in line with earnings. This element provides a credit for those aged 65 or over who have made some financial provision for their retirement but are on a low income.

The new Single-Tier Pension

From 6 April 2016, new pensioners will receive a Scottish single-tier pension, similar to that proposed by the Westminster Government, but with important improvements. The main features of the pension are:

  • the single-tier pension will be paid in full to everyone who reaches State Pension Age after the introduction date and has 35 qualifying years of National Insurance (NI) Contributions or NI credits
  • there will be a qualifying requirement of 7 to 10 years of contributions
  • all Additional State Pension rights accrued prior to April 2016 will be retained and paid to individuals on retirement
  • as a result of the abolition of the state second pension, contracting out of NI contributions for those currently in defined benefit pension schemes will cease

In addition we propose to make a number of improvements to current Westminster Government plans:

  • within the first year of independence, the single-tier pension will be set at a level of £160 per week (£8,320 per annum); in the unlikely event that the rest of the UK rate for the single-tier pension is set at a higher level, the Scottish single-tier pension will match the higher figure
  • the rate of the single-tier pension will be increased on an annual basis in line with the triple-lock. The triple-lock provides protection for the value of pensions and is based on whichever is highest: average earnings, CPI inflation, or 2.5 per cent. This commitment will initially be in place for the period of the first Parliament of an independent Scotland. The Westminster Government, by contrast, has only committed to uprate the single-tier pension by earnings
  • Provision will be maintained for those expecting to receive a State Pension based on their spouse's contributions for 15 years after the introduction of the single-tier pension, unlike in the rest of the UK
  • Savings Credit will be retained for new pensioners who are on low incomes and increased in line with earnings. This will ensure that those pensioners approaching retirement who would have received Savings Credit are not disadvantaged by the move to the single-tier pension. The Westminster Government is to abolish Savings Credit for those reaching State Pension Age after April 2016

State Pension entitlement in an independent Scotland

The key points of the Scottish Government's proposals for State Pension entitlement are:

  • for those people living in Scotland in receipt of the UK State Pension at the time of independence, the responsibility for the payment of that pension will transfer to the Scottish Government
  • for those people of working age who are living and working in Scotland at the time of independence, the UK pension entitlement they have accrued prior to independence will form part of their Scottish State Pension entitlement. Any pension entitlement accrued in Scotland after independence would also form part of that Scottish State Pension. On reaching the State Pension Age, their Scottish State Pension would be paid by the Scottish Government
  • for future pensioners who have accrued rights to the Scottish State Pension but who retire outside Scotland, the Scottish State Pension will be paid either via a Scottish equivalent of the International Pensions Centre (IPC) or by the pensions institution in the country of residence, depending on their circumstances. The Scottish IPC will be established following a transitional period of shared service provision
  • for people who build up entitlement to a range of State Pensions - in Scotland, in the rest of the UK, in Europe, or elsewhere - the current situation will continue. The only difference will be that, from independence, pension entitlement accrued from working in Scotland will be to the Scottish State Pension, rather than to the UK State Pension

Boosting the working age population

A key factor in the planning of future state pensions is the projected structure of the population. 'Dependency ratios' are used to help consider this, comparing the numbers of people of working age against the number of 'dependents' (people of pensionable age and/or children). Scotland's total dependency ratio[166], that is the number of children and pensioners for every 1,000 persons of working age, is projected to remain below that of the UK for the next 15 years[167]. This dependency ratio is a useful indicator of wider fiscal sustainability, as it includes all dependents. Beyond the late 2020s, current projections[168] suggest that, without action to increase the working age population, the total dependency ratio in Scotland and the rest of the UK will converge and from 2033 onwards will be marginally higher in Scotland than in the UK as a whole.

Taking a narrower view, the 'pensioner dependency ratio' compares the population of people of working age in Scotland with the population of state pension age. This ratio is projected to be higher than the UK as a whole over the next 20 years.

Whichever dependency ratio is used, the key issue in terms of broader Scottish population pressures, relative to the UK, is the lower projected growth in the working age population in Scotland (four per cent compared with 12 per cent), not higher growth in the pensioner population. In fact, pensioner numbers are projected to grow at a faster rate in the UK than in Scotland in the longer term. Between 2012 and 2037 the number of people of state pension age in Scotland is projected to increase by 27 per cent, lower than the projected increase in the UK of 31 per cent[169]. The difference between the two rates is projected to widen still further beyond this point, although projections this far ahead are subject to considerable uncertainty. The longer-term target must be to grow our working-age population in line with the projected increase in those dependent on it - pensioners and young people under 16.

Addressing the issue of the working-age population in the long term requires sustainable economic growth. Independence will allow Scotland to develop our own economic policy, which means we can improve productivity and participation in the Scottish economy through targeting growth sectors and coherent welfare and skills policies. Independence will also allow Scotland to address population growth by: creating new opportunities for young people to build their careers and families within Scotland; action to attract people back to Scotland; and steps to encourage skilled migrants to move to Scotland. These matters are currently reserved to Westminster, which has different priorities for the UK economy and migration. Without independence, Scotland will not have the mechanisms to address our projected demographic issues.

Occupational and personal pensions

Occupational and personal pension rights and accrued benefits will not be affected by Scotland becoming independent. An individual's occupational or personal pension will already set out the retirement benefits which will be granted under the particular scheme and under which conditions.

Currently only around half of Scottish employees contribute to a private pension (that is, to a personal or an occupational pension in the public or private sector)[170]. Helping people save for a better retirement will be one of the key focuses for this Government in an independent Scotland. This Government's proposals are to:

  • continue with the roll-out of automatic enrolment, introduced last year, to help address the historic decline in private pension saving
  • continue to support tax-free savings, through products like savings and investment ISAs
  • establish as soon as possible following independence a Scottish equivalent of the National Employment Savings Trust (NEST). The Scottish Employment Savings Trust (SEST) will provide a workplace pension scheme focused on people with low to moderate earnings, which will accept any employer wishing to use it
  • launch a Financial Capability Strategy to build skills, knowledge and understanding about personal finance. This could include, for example, improving access to financial advice about purchasing an annuity on retirement. Recent comparisons of example annuity rates have suggested that, without good advice, the value of the annuity provided can be highly variable

Future Scottish governments could also explore ways to improve incentives to save, including through the tax system, and work with the pensions industry, employers and other stakeholders on the development of innovative pension and savings products.

Pensions regulation

The Scottish Government proposes that the structure and activities of the regulatory framework in an independent Scotland should be closely aligned with that in the rest of the UK.

We propose to establish a Scottish Pensions Regulator, which would work closely with the UK Pensions Regulator and the Financial Conduct Authority (FCA) to maintain a pan-UK approach to the regulation of private pensions. We will consider whether to include responsibilities for the regulation of pensions as part of a wider financial services regulatory body.

We consider that the current arrangements for the protection of individuals' pensions by the Pension Protection Fund (including its responsibility for the Financial Assistance Scheme and the Fraud Compensation Fund) should continue, with Scotland playing our full part. However, it will also be possible for the Scottish Government to establish a Scottish equivalent to the Pension Protection Fund. Individuals will have the same level of protection as they do now.

This Scottish Government will ensure that arrangements for an effective compensation scheme are established, mirroring the level of protection provided in the UK Financial Services Compensation Scheme.

Cross-border pension schemes

The EU's Institutions for Occupational Retirement Provision (IORP) Directive places specific requirements on pension schemes operating across the borders of two or more EU member states.

Pension schemes that wish to accept contributions from an employer located in another EU member state must be fully funded at all times; schemes must have prior authorisation and approval from the relevant competent authority; and must comply with the social and labour laws of the host member state. These requirements would apply to those schemes that currently operate in Scotland and the rest of the UK if they continued to operate, on independence, on a cross-border basis.

The Scottish Government considers that discussions should start immediately to agree appropriate transitional arrangements to address the impact on funding arrangements for schemes that would become cross-border on independence. The case for such transitional arrangements is strong:

  • regulatory requirements for schemes operating within an integrated financial services market, as proposed for an independent Scotland, are quite different from the general case on which the IORP Directive was based
  • transitional arrangements would be strongly in the interests of the Scottish and Westminster Governments, the European Commission, employers and their employees. Indeed, the European Commission's aim in bringing forward the Directive was precisely to promote greater cross-border occupational pension provision
  • member states already interpret the cross-border requirements flexibly in order to protect pension schemes. Member states have interpreted the requirement for cross-border schemes to be 'fully funded at all times' differently. For example, the period allowed for cross-border schemes in Ireland to regain full funding is decided by the Irish Pensions Board on a case-by-case basis

We will agree arrangements which will provide sufficient flexibility for employers, whilst ensuring that members and beneficiaries are protected in the way intended by the Directive.

Transitional arrangements of this kind have been implemented previously. On the introduction of the Directive, the Westminster Government's implementing legislation provided for a three year grace period for existing UK/Ireland cross-border schemes to reach full funding levels. We consider that transitional arrangements for independence should allow a scheme with an existing recovery plan to be allowed to implement that plan in accordance with the period originally set for it.

This is an issue for Westminster as much as it is for the Scottish Government. And there is no reason that this issue should not be capable of sensible and practical resolution.

Public Service Pensions

The Scottish Government is fully committed to providing a fair, affordable and sustainable pension and reward package to public sector employees.

In an independent Scotland, all public service pension rights and entitlements which have been accrued for fully or executively devolved or reserved schemes will be fully protected and accessible. There will be no difference to how much people pay for their pensions or the level of benefits they receive as a result of the move to independence.

Scotland already has the people and the infrastructure in place to deliver high-quality public service pensions. The Scottish Public Pensions Agency has unrivalled first-hand knowledge and experience of both designing and delivering occupational pensions policy for the public sector. We propose that the Scottish Public Pensions Agency will, therefore, form the basis for delivering the additional responsibilities for public sector pensions that will be required in an independent Scotland.

In the past, public sector pensions policy has been imposed on Scotland with insufficient engagement and consultation. In an independent Scotland, this Government plans that the approach to negotiations about any future changes to public sector pensions will be positive and inclusive, rather than confrontational.

In the first term of an independent parliament, this Government will establish an independent commission to review and make recommendations on policy for an appropriate State Pension Age for Scotland. Within the first parliamentary term, this Government will also consider the Commission's findings when reviewing the impact State Pension Age policy has on the working and retirement patterns of Scotland's public servants. This Government is also committed to reviewing the pension terms of all "uniformed" services, including whether or not they should all have access to their occupational pension at a consistent age or whether this should better reflect the role they carry out and the physical impact of their service.

Scotland's social protection system

The opportunities available to Scotland

Scotland has the wealth it needs to be a fairer nation. The experience of other comparable countries across the world shows that this is more than achievable. While the UK is joint 26th on the UN Human Development Index, small countries make up a majority of the top 20 positions in the Index[171]. There is no reason why Scotland cannot match such successful small countries. Each country is different, but there are key lessons we can learn, such as the importance of social capital, trust, and a sense of national purpose[172].

In taking on independent responsibility for our social protection system, we will be building on strong financial foundations, with spending on social protection currently more affordable in Scotland than in the UK as a whole:

  • in 2011/12, the most recent year for which statistics are available, 38 per cent of Scottish tax revenues were spent on social protection[173], compared with 42 per cent for the UK as a whole[174]
  • expenditure on social protection as a share of economic output (GDP) has also been lower in Scotland than in the UK in each of the past five years[175]
  • on an internationally comparable basis, spending on social protection in Scotland, as a share of economic output, is estimated to be lower than in the majority of EU-15 members[176]

With independence, therefore, we can afford to choose a different path for Scotland, with an approach to social justice that is based on our view of what a healthy and flourishing society should be. This is an opportunity for us to create a new Scotland.

Social justice is about wellbeing and opportunity for all and, with independence, the Scottish Parliament and Government can improve the quality of life for most people in Scotland, as well as securing the wellbeing of the most vulnerable. We can do more to promote the cohesiveness of society, to enable equality of opportunity and respect and build the intrinsic dignity of individuals and communities.

This highlights a key difference in the approach between governments in Scotland and at Westminster. Scottish administrations have sought to tackle social inclusion and cohesion, and to address equality issues. By contrast, the Westminster Government has conceded that 200,000 more children across the UK will be pushed into relative poverty by 2016 as a result of a 1 per cent cap on increases to benefit payments[177]. This equates to around 15,000 children in Scotland[178]. Scottish Government analysis[179] shows that many women in Scotland will be worse off due to Westminster's changes to the benefits system. Mothers in particular are more likely to lose out financially as they are often the main carers of children and because certain benefits are typically paid to women.

Social justice and equality are objectives that should be pursued for their own sake in a civilised country. They are also important aspects of improved economic performance[180], which in turn provides for a happier, safer, healthier and fairer society. As the Fiscal Commission reported:

Scotland is also currently part of a UK economic model and society which is one of the most unequal in the OECD. Inequality within the UK has increased in recent decades. Such patterns of inequality will continue to have a negative impact on growth and prosperity over the long-term[181].

We see the evidence in other nations, such as Norway and Sweden. They have demonstrated that fairness and prosperity are part of a virtuous circle, reinforcing each other and delivering a range of benefits for society as a whole.

Making the right choices on social justice will deliver greater equality, will deliver benefits across our society, and will be an important part of building the more prosperous and successful nation we all want Scotland to be.

The Scotland we can create

The record of successive Scottish administrations shows "the commitment to social justice which lies at the heart of political and civic life in Scotland"[182]. However, an independent Scotland will have all the necessary means to deliver a coherent approach to social justice and to tackle inequality by, for example:

  • building a welfare system, based on clear principles and values that: supports people who work; provides support for people who cannot work; and fosters a climate of social solidarity
  • integrating tax and benefit policy, embodying key principles of fairness and dignity
  • taking a distinctive approach to providing public services, built on the principle of improving the lives of people and communities
  • building on our pioneering approach of preventing problems arising, rather than relying on crisis interventions. In an independent Scotland, this can be extended and integrated with currently reserved services, such as welfare and employment

There will be immediate gains from independence, such as the abolition of the "bedroom tax", alongside benefits that can develop over time. We propose early co-ordinated action to grow the economy and employment, and increase wages, for example through the promotion of a Scottish living wage and a commitment to increase the minimum wage in line with inflation. This will improve the lives of people in Scotland. Investment in childcare and social housing can also have longer-term, positive impacts for individuals and communities, reducing the need for expensive interventions through the justice and health systems later in life. This approach can create savings for the long-term that can be reinvested for the benefit of people in Scotland in the future, and provide sustained benefits to individuals and communities.

We can also choose to protect key elements of our commitments to social justice in a written constitution. This approach is adopted in many other European nations. These rights could include a Youth Guarantee to employment, education or training, and rights to welfare support and health care. This would provide explicit guidance to future governments, of whatever political persuasion, about the needs and aspirations the people of Scotland expect to see prioritised. Social rights embedded in a constitution will put questions of social justice at the forefront of the work of Scotland's Parliament, government and public institutions.

The choices open to us

The right welfare system, working with tax and economic policy, is a powerful mechanism to address poverty and inequality.

In 2016/17, benefit expenditure (including benefits for pensioners) in Scotland is expected to be almost £19 billion per year[183]. The Scottish Government and Scottish local authorities also provide other wider welfare services, for example through social work and social care services, at an additional cost of approximately £5 billion per year[184].

Infographic showing UK welfare changes

With independence, we can decide how best to allocate these resources to deliver a welfare system that meets our needs.

UK welfare changes

With independence, it will be for the Scottish Parliament and future Scottish governments to determine the future direction of the welfare system in Scotland.

Under the current system, the Westminster Government is taking forward a series of changes to the welfare system, at the heart of which is the introduction of Universal Credit (UC), a new single payment for working-age adults who are looking for work or who are in work but on a low income. UC is due to be fully implemented by 2017, but is currently beset by problems and delays.

Other major changes include:

  • the change from Disability Living Allowance to Personal Independence Payment (PIP) for people aged 16 to 64. Some people currently receiving Disability Living Allowance will not be awarded PIP because it uses different criteria for the award
  • the "bedroom tax" which reduces housing benefit by 14 per cent if the tenant is deemed to be under-occupying by one bedroom, or 25 per cent if under-occupation is by two or more bedrooms
  • an overall benefit cap, limiting the total amount of benefit a household can receive at the national average income (approximately £26,000 per year)

The Westminster Government's equality impact assessments show that the majority of the changes have negative impacts on particular groups of people[185], while the Scottish Government's recent analysis concludes that women will also lose out because of how the UC system in particular is structured[186].

We do not accept Westminster's approach to welfare. We believe that it is possible to design an efficient and fair welfare system that meets the needs of those who depend on it, and treats them with dignity and respect while supporting those who can into work. However, it is only with the powers of independence that we will be able to build such a system.

Principles for a welfare system in an independent Scotland

There are some key principles for a welfare system which the Scottish Government has identified to inform our approach. The Expert Working Group on Welfare[187] is looking at these and other principles as part of its call for evidence. Among the principles that would underpin this Government's approach to welfare in an independent Scotland are:

  • Scotland's benefits and tax credits system and employment support services should protect our people from poverty and help them fulfil their potential, in work and in life
  • over the course of our lives, we should contribute to the welfare system when we can. In return, we should be able to access that system when we need to
  • the benefits system should be fair, transparent and sympathetic to the challenges faced by people receiving them, respecting personal dignity, equality and human rights
  • the benefits, tax credits and employment support systems should work in harmony to ensure that people who lose their job do not face extreme financial uncertainty
  • for those who cannot undertake paid work, benefits should not relegate them to a life of financial uncertainty and poverty. Benefits must support a standard of living that ensures dignity and enables participation in society
  • the administration of benefits and tax credits should be swift, streamlined and responsive to individual circumstances

The Expert Working Group is exploring how the benefits system should enable people who can work to move into employment, and how it can support people who can't work to participate in society as fully as possible. The recommendations of the Expert Working Group will be available well in advance of the referendum in order to further inform the debate.

The tax system and welfare

Tax and welfare are two of the most powerful means that governments have to address poverty and income inequality. Recently published evidence[188] shows the overall regressive nature of Westminster's changes to taxation and benefits in recent years. Levels of income inequality have been made worse by decisions of Westminster[189]. It would be open to an independent Scotland to choose to alter this balance.

In its Principles for a Modern and Efficient Tax System in an Independent Scotland[190], the Fiscal Commission recognised that, along with welfare policy, taxation is the main means to consider the distribution of income and wealth across society. Taxation is also important in supporting efforts to reduce inequality and boost economic opportunities. The commission also recognised the opportunity for Scotland from an integrated policy framework for tax and welfare:

The tax and welfare systems are key levers in tackling inequality - both are strongly interlinked and should be considered as fundamentally part of the same system. Welfare and tax policy should therefore be developed in tandem to ensure policy integration and alignment[191].

This Scottish Government has already demonstrated our commitment to enhancing the progressive nature of the taxation system in our approach to implementing the limited taxation powers devolved by the Scotland Act 2012[192].

We have also demonstrated a commitment to fairness and tackling inequality by ensuring public sector workers in government and its agencies are paid the Scottish living wage of £7.45 per hour, rising to £7.65 from April 2014 (minimum wage is £6.31 per hour for those aged 21 and over). We have encouraged other public, private and Third Sector bodies to follow suit. The living wage can help provide certainty for households who are already dealing with pressures on family budgets caused by rising food and fuel prices and, with independence, it will be open to future governments to extend the reach and scope of the living wage. This Government has also indicated that, following independence, the minimum wage should be increased by at least the rate of inflation (see Chapter 3).

Our priorities for action

The UK welfare system is now too complicated, and is in need of fundamental reform. We disagree with the approach being taken by Westminster to achieving these aims. The welfare system of an independent Scotland will reflect the principles we believe that are at the heart of Scotland's approach to social justice, including fairness, respect and dignity.

Immediate priorities for action

The Scottish Government considers that the immediate priorities following independence must be to reverse the most damaging and counterproductive of the UK welfare changes. Action in these areas will enable us to relieve the hardship being caused to some of the most vulnerable people in Scotland. It will also free up money in the Scottish budget that is currently directed towards mitigating the worst effects of Westminster's changes.

  • abolish the "bedroom tax" within the first year of the first independent Scottish parliament. This will save 82,500 households in Scotland - including 63,500 households with a disabled adult and 15,500 households with children - an average of £50 per month[193]. The cost of abolishing the "bedroom tax" at around £50 million per annum is estimated to be less than the overall harm it does directly to the Scottish economy (£50 million per annum plus one-off losses of £29 million). As such, there is a clear case in monetary terms for its abolition even before the wider social costs are taken into account
  • halt the further rollout of Universal Credit and Personal Independence Payment in Scotland allowing the first government of an independent Scotland to take forward reforms to the welfare system that meet Scotland's needs and reflect our priorities. This Government plans to ensure that those already in receipt of Universal Credit by May 2016 are no worse off than anyone else in the following ways. We will:
    • remove housing benefit from the single payment, restore it as a separate benefit and maintain direct payments to social landlords. This Government plans to also maintain housing benefit as a separate payment in any longer term reform. This will provide protection for some of our most vulnerable citizens
    • restore the ability of claimants to receive individual support rather than single household payments. We will maintain such an approach in taking forward any longer term reforms. It is estimated that this will benefit 880,000 individuals, many of them women[194]
    • equalise the earnings disregard between first and second earners and continue such an approach into any longer term reforms. It is estimated that this would benefit as many as 70,000 people by as much as £1,200 a year and will be of particular benefit to women who are most often the second earner in a household[195]
  • ensure that benefits and tax credits increase in line with inflation to avoid the poorest families falling further into poverty

These priorities enjoyed widespread support amongst those who gave evidence to the Expert Working Group on Welfare, as well as reflecting the views of stakeholders more widely[196].

Alongside our priorities for immediate improvements we also plan to maintain access to passported benefits, such as free school meals. This will support 130,000 children in Scotland[197].

A further early priority for this Government will be to launch an urgent review of the conditionality and sanctions regime, to establish an approach that is proportionate and ethical, and that avoids excessive or blanket measures which penalise those looking for work. We will also conduct an urgent review of the system of assessments for disability benefits.

We will follow the recommendation of the Fiscal Commission and develop the tax and welfare systems in tandem to ensure policy integration and alignment[198].

Future welfare in an independent Scotland

With independence, there will be the opportunity for longer term welfare reform in Scotland, built on the principles set out above. The recommendations of the Expert Working Group - which is due to report in spring 2014 - will help to inform the approach of this Government to longer-term reforms.

Our overarching aim will be that benefits work hand-in-hand with programmes designed to help people find work. We want to help people move into sustained employment and, with independence, we will have the opportunity to develop our public services in a way that aligns welfare with other public services such as health, housing and social care. In this way, people can look forward to a more personalised package of support than at present. And when people's circumstances change through ill health, unemployment or retirement, they will know what levels of support they are entitled to and can plan for the longer term with certainty.

In considering our approach to welfare in the longer term, a priority will be to live within our financial resources, just as we have done throughout our period in office since 2007. However, we will not allow changes to the welfare system to be driven by short-term cuts to budgets, but by what is best in the long-term interests of the people of Scotland.

Social investment

In the longer term, this Scottish Government will pursue policies which conform with the idea that welfare is a "social investment" - an investment across a person's life that is designed at all stages to promote equality, fairness and social cohesion. This is an idea that has been discussed by the Expert Working Group on Welfare and is part of its call for evidence[199]. It defines welfare as all of the services and benefits that we receive from the state rather than just cash transfers.

A social investment approach starts from the premise that the delivery of welfare services should not be seen as simply a safety net for individuals who cannot support themselves. Instead they should be seen as an opportunity for positive investment in people throughout their lives. Social investments are designed to produce specific returns, such as learning and development in early years, employment and health gains in adult life, and for older people, increased independence and ability to be active in their communities. This investment is repaid through better outcomes for people, families and communities, and through increased contributions to society, whether that is through taxation or other means. This approach is designed to create a shared responsibility amongst citizens, helping to establish a social partnership between them and the state, where high-quality public services are provided in return for people participating in society through work where this is possible or making other positive contributions where this is not.

So, for example, ensuring that there is high-quality readily available childcare supports parents to find sustained employment, but it is also an investment in children to give them the best start in life. And, as a result of this early investment, when those children go on to achieve their full potential, they will repay that investment through their productivity and creativity as active members of a more cohesive society.

Another example of social investment will be the use of active labour market policies to get people into good quality sustainable work. This can ensure that our young people, for example, are supported to develop their skills and experience. DWP research into the early stages of the Work Programme suggests that, at the moment, many providers are prioritising more "job-ready" participants for support, ahead of those who are assessed as having more complex/substantial barriers to employment[200]. Our social investment approach would not encourage focus on short-term gains. With independence, we could develop more targeted labour market policies suited to Scottish circumstances, matching demand - in growth areas like engineering, renewables, oil and gas and life sciences - with young people seeking to develop their skills, expertise and experience.

The Nordic countries have shown that effective social protection systems, based on the social investment principle, can help to reduce unemployment, increase earnings and spending power as economies grow.

The social investment model recognises that people require lifelong investments, made at different times in their lives. When these investments are made through the delivery of high-quality services, enjoyed by all members of society regardless of income or background, the life chances of all members of society are improved. The social investment model fosters a culture in society that is more inclusive, more respectful and more equal. It also places the cash transfers that people traditionally think of as welfare - such as out of work benefits and tax credits - in a wider, more cost-effective and socially beneficial context when viewed over the longer-term. Investments in childcare, education, health and active labour market policies will reduce reliance on, and also the costs of the cash transfer parts of the welfare system.

A social investment approach will reap benefits for the whole of Scotland in the medium and long-term. Scotland already practises this model of investment in the areas over which the Scottish Government already has powers - in our approach to early years and the prioritisation of youth employment for example. We now want to extend that approach into the crucial areas of welfare, employment and childcare - all currently reserved to Westminster.

The social investment approach creates a framework of guiding principles that will underpin the development of welfare policies, but in order to deliver it, Scotland must have control of the full range of powers, and responsibility for all government revenues and expenditure. It offers an alternative approach to that being pursued by Westminster.

Halt the further rollout of Universal Credit and Personal Independence Payment

As well as the recommendations of the Expert Working Group, our precise proposals for longer term welfare reform will also depend on the state of the system inherited by Scotland on independence.

Universal Credit rollout has been affected by significant controversy delay. The National Audit Office[201] has concluded that it has not achieved value for money and the Department for Work and Pensions has no detailed view of how UC is meant to work. The NAO also notes that rollout across the UK has been scaled back considerably and the DWP does not yet know to what extent its new IT systems will support national roll-out. Their report goes on to say that the Department has not yet been able to assess the value of the systems it spent over £300 million to develop.

The rollout of Personal Independence Payment (PIP) has also been difficult and created significant anxiety amongst recipients of Disability Living Allowance (DLA) and those people and organisations that support them.

Any change to disability benefits requires the medical re-assessment of recipients of disability benefits. We know that recipients of disability benefits, and the organisations that support them, have lost faith in the reassessment process. The work capability assessment which considers whether those in receipt of Incapacity Benefit should instead receive Employment and Support Allowance has already been reviewed four times and, in the eyes of many, has lost all credibility. The roll out of PIP using the same process will cause even greater hardship for the most vulnerable members of our society.

Westminster has been forced to delay the introduction of PIP twice. The latest delay means that current DLA cases will not begin to be migrated to the new PIP until 2015, well after the referendum.

It is, at this time, not possible to predict precisely how many people in Scotland will be in receipt of UC or PIP in an independent Scotland in early 2016. By the time of the referendum, however, the number of people receiving UC or PIP will be very small.

The current Scottish Government considers that the continued roll out of UC and PIP is not in the best interests of Scotland. Halting these changes will give an independent Scotland the opportunity to design and implement a welfare system suited to our needs. In the event of a vote for independence in the referendum, the Scottish Government will ask Westminster not to proceed any further with the roll-out in Scotland of UC and PIP, in order to give the Scottish Government elected in 2016 maximum flexibility to begin to reform the welfare system in line with its priorities. This Scottish Government will not proceed with UC and PIP if we form that government. For those not already in receipt of UC and PIP, the existing welfare arrangements will remain in place (changed by our immediate priorities such as abolishing the "bedroom tax"), until longer-term reforms are introduced in Scotland.

Tackling in-work poverty

The current welfare system has failed to tackle in-work poverty. It will be a priority of this Government to do so in taking forward welfare reform in an independent Scotland.

Despite periods of time when overall poverty has reduced, in-work poverty levels have remained stubbornly consistent from one year to the next, meaning that over time, in-work poverty has accounted for a greater proportion of the overall number of households in poverty in the UK. Two thirds of children who live in poverty in the UK have at least one parent in paid work[202].

Critical to this is that much of the work available to families is low-paid, low-skilled, insecure and underpinned by a minimum wage that has failed to keep up with the cost of living.

Our proposals on childcare, and the establishment of a Fair Work Commission to ensure the minimum wage, matches inflation are designed to address these issues.

Importantly, from a social investment perspective, investments in early years childcare, and ensuring that benefits and tax credits keep pace with inflation, will help to reduce the potentially damaging consequences that affect children who are raised in homes living below the poverty line. In other words, they can reduce costs in the longer-term. That is why the social investment principle will guide the action of the current Government as we reform welfare in the future.

Delivery of benefits in an independent Scotland

We accept the Expert Working Group on Welfare's recommendation in its first report that there should be a transitional period of shared administration for delivery of benefit payments[203]. As highlighted by the Group, this makes sense in the short term, not least because it ensures continuity of payments for millions of benefit recipients elsewhere in the UK. However, we propose that such a system of shared administration will last only until 2018 and be organised in such a way that will:

  • allow the first government of an independent Scotland to introduce its priorities for change from 2016
  • allow that government to begin the work towards creating a welfare system that better reflects Scotland's priorities

We will therefore work to ensure the transitional period is as short as possible, with a target for it to end in 2018.

As we look towards our own system of administration for welfare and pensions, we will benefit from the fact that much of the infrastructure for making such payments already exists in Scotland. As the Expert Working Group on Welfare reported:

Scotland delivers almost all parts of the current UK benefits system to people living in Scotland from locations within Scotland[204].

Delivery of benefits to people in Scotland is carried out mainly by the Department for Work and Pensions (DWP), with HM Revenue and Customs (HMRC) responsible for the administration of Child Benefit and Tax Credits. Currently all claims for Jobseekers Allowance, Employment and Support Allowance, Income Support and Incapacity Benefit made by people living in Scotland are processed in Scotland.

All claims for State Pensions and Pension Credit in Scotland are also processed in Scotland, as are all applications to the Child Maintenance Service from Scotland.

There are four HMRC Contact Centres in Scotland and 28 Enquiry Centres that deal with all revenue matters, including claims for Child Benefit, Working Tax Credit, and Child Tax Credit, which are administered by HMRC. In addition, as at April 2011, 1,800 local authority staff in Scotland provided combined Housing Benefit and Council Tax Benefit services[205]. This substantial infrastructure that already exists in Scotland will provide us with the required capacity to ensure the effective and efficient payment of benefits. Added to that will be our agreed transitional arrangements, which will form a solid, and sensible, platform from which to develop both medium and longer-term options. We will seek agreement with the Westminster Government in the transitional period to cover:

  • the term of the agreement and arrangements for varying that term
  • the services each government will provide to citizens
  • the financial arrangements for providing those services
  • data sharing and record keeping
  • contracts, leases and all third party arrangements

We also envisage that our system of delivering benefits in the future - including health assessments - will be in the public sector. In designing the most appropriate future delivery arrangements, therefore, we will work in partnership with local government, the Third Sector and others. We will ensure that the people most directly affected by the system of welfare support, those in receipt of benefits, will play a central role in its design.

Housing and communities

The Scotland we can create

Building strong communities has been central to the Scottish Parliament's approach to social justice since devolution, but we remain a nation of unequal outcomes, with some places and groups suffering profound disadvantage and inequality[206]. Under the current settlement, we are limited by the powers available to us. As an independent country, we can do more to put our communities at the heart of policy-making in areas currently reserved to Westminster, creating new opportunities to make different and better choices.

Just as we believe that the people of Scotland are best placed to make decisions in the best interests of all in Scotland, so we believe that local people will also secure the best outcomes for their communities. Successful regeneration is dependent on a wide range of organisations, including the public, private and Third Sectors, working together alongside communities themselves. In Scotland, the importance of local decision making is already being recognised, not least in the proposed Community Empowerment Bill, and with new responsibilities we can see this approach extended across all aspects of government.

The choices open to us

Decisions made at Westminster undermine our efforts to create resilience in communities. For example, the "bedroom tax" risks forcing people away from the communities that support them.

The housing challenges facing Scotland are very different from those in England. Social housing remains an essential part of our housing system, catering for 23 per cent of households[207]. The harsher Scottish climate and the challenges of heating remote homes call for an ambitious approach to energy efficiency and carbon emissions reduction.

Successive Scottish Governments have taken a distinctively Scottish approach, which prioritises the sustainability of communities. However, there is more that can be achieved. Full flexibility over our budgets will enable future Scottish Governments to broaden action to make more affordable housing available to meet housing need and tackle fuel poverty. Removing constraints placed on us by the Westminster Government will open up opportunities for action to further improve the quality of housing, for example in the social rented sector, and allow governments to introduce different ways of supporting first-time buyers.

Our priorities for action

The current devolution settlement places significant constraints on the Scottish Government's freedom to invest in housing supply. The Institute of Fiscal Studies observed that "under the present devolution settlement, the Scottish Government is bearing the cost of greater investment in social housing and lower rents, whilst some of the benefits of that spending accrue to Westminster in the form of lower housing benefit payments"[208]. This Government, therefore, will ensure greater integration between our policies on housing supply and housing benefit support.

Recently the Scottish Government has also pioneered innovative financing approaches for affordable housing. At least 1900 new affordable homes are currently being delivered in communities across Scotland using new mechanisms. These measures have had to conform to UK Treasury rules, which are often not designed for Scotland's needs or circumstances. With independence, we will make use of our increased flexibility to deliver a more appropriate financial framework to support housing investment in new and innovative ways.

Similar restrictions are in place in other aspects of housing finance. For example, when the Westminster Government invests in loans and equity stakes to support market housing, the consequential resources for Scotland must also be used to provide loans or equity stakes. While the current Scottish Government has chosen to invest these resources in a range of housing initiatives, especially shared equity, other options, such as increased investment in social housing, have not been possible. With independence, this Government will ensure these limitations are removed so that the most effective investment choices can be made.

Independence will allow a joined-up system in which future Scottish governments can take strategic decisions about up-front investment in housing supply, to best support our communities and our house building sector, based on the full-life costs and benefits of that investment.

Fuel poverty is another very real problem for far too many of our people, putting at risk the very young and older people. Scotland is an energy-rich nation, but currently only has control over one of the contributing factors to fuel poverty - the energy efficiency of Scottish dwellings.

The current UK regulatory model has proved to be ineffective in providing meaningful incentives for improved energy efficiency of Scotland's homes. It has done little to increase households' ability to access low cost "dual fuel" tariffs. Around nine per cent of households in Scotland are without mains gas and 43 per cent[209] of these households live in fuel poverty[210]. Independence will enable a regulatory approach that is tailored to specific Scottish conditions that influence the costs of keeping homes warm, such as our climate, our mix of urban, rural and remote communities and our distinctive housing stock.

In addition, the Energy Expert Commission will advise on ways in which an independent Scotland can promote fairer, more affordable energy prices, and meet the need to address fuel poverty and deliver measures to improve energy efficiency. The Government has already announced our intention to save households money by funding from central resources the existing Energy Company Obligation and Warm Homes Discount (see Chapter 8), and give full weight to the Expert Commission's findings.

Health, social care and the NHS

The Scotland we can create

The provision of health and social care services is one of the major responsibilities of the Scottish Parliament and Government. Since 1999, successive Scottish governments have made steady improvements to Scotland's health and the quality of healthcare, while protecting the NHS as a free, truly public service, consistent with the values of the NHS and the priorities of people in Scotland.

Responsibility for the health service in Scotland has allowed us to show what can be achieved with the full powers of independence. Scotland has taken a very different approach to health and social care from that taken by Westminster governments over the years. We have maintained a commitment to the NHS as a public service and, in delivering free personal care, we have demonstrated that Scotland can provide support for older people in a way that looks after them, maintains their dignity, and respects the contribution they have made to society.

Without devolution, NHS Scotland - like its counterpart in England - would have been repeatedly re-organised by the Westminster Government of the day, regardless of the needs of the health service in Scotland. It would now be exposed to private competition and an unfair system of social care. We would be experiencing today the consequences of Westminster decisions on our health service in the same way as we are seeing the impact of Westminster's welfare choices on our most vulnerable fellow citizens.

Infographic showing quality of health service

Under devolution, NHS Scotland has been reshaped and modernised - but to reflect our requirements and the opportunities for a health service in a country the size of Scotland. Currently this Government and our partners in health boards and local authorities are taking radical steps to join up health and social care, ensuring that organisational barriers do not prevent people receiving the care they need in the setting they prefer, for example, at home.

With independence we can address directly inequalities in Scotland, which are the root cause of many of the country's remaining health issues. If in government after the 2016 election, we will adopt a government-wide approach to the health and wellbeing of our nation with confidence that the actions we take, and their success, will be down to our own efforts and our own decisions. The alternative is for Westminster to continue to control the overall level of Scotland's budget, and to make decisions that directly affect poverty and wellbeing through the tax and benefits systems.

In an independent Scotland, we will continue to provide high-quality, world-leading health and social care to the Scottish people in a way that reflects the founding principles of the NHS and our social care services. Independence will not affect the day-to-day management of the NHS in Scotland or how people access NHS services. However, it has the potential to transform the environment within which our NHS operates. Similarly, it will not mean ending current cross-border arrangements with health services in the rest of the UK, which have continued even though the NHS in Scotland already operates independently.

The choices open to us

With independence, we can build on the gains of devolution for our health and social care services to enhance the health and wellbeing of people across society.

Since the Scottish Parliament was established in 1999, we have had full operational responsibility for the National Health Service in Scotland, and for health and social care policy. Scotland has chosen a different way forward for our NHS compared to successive Westminster Governments. There is no competition, or internal market, in Scotland. GPs refer patients to a treatment centre within their own health board area, and they will be referred elsewhere if the required service is not provided locally. One of the strengths of the integrated model in Scotland is greater consistency of approach and clear responsibility for NHS Boards to deliver safe, effective and person-centred services, for which they are held to account through annual accountability reviews, held in public.

Successive Scottish governments have ruled out the disruptive and costly structural reforms and upheaval that have taken place in NHS England. Avoiding these multiple and costly reorganisations, and privatisation, has allowed us to focus on improving safety and quality of care.

The Scottish Parliament has used its responsibilities to introduce free personal care and protect the National Health Service. Major achievements of the health and care services in Scotland under devolution, which we can build on with independence, include:

  • introduction of the smoking ban in public places
  • our world-leading patient safety programme with major reductions in levels of hospital healthcare associated infections (a programme which has been endorsed by Don Berwick, adviser on healthcare issues to Barack Obama)
  • significant reductions in premature mortality from cancer, heart disease and stroke
  • reduced waiting times and delayed discharge from hospital
  • the removal of prescription charges and introduction of free eye tests
  • the highest level of dementia diagnosis in the UK
  • a focus on the importance of the early years as a foundation for long term health and wellbeing through initiatives such as Family Nurse Partnership and the Early Years Collaborative
  • protection of the frontline NHS budget
  • a single vision for sustainable quality across health and social care services
  • agreement to the integration of adult health and social care services
  • unique workforce partnership arrangements

Our priorities for action

This Scottish Government plans to continue with current arrangements for the management of the NHS in Scotland, focussing on sustainable quality and for the integration of adult health and social care services. Services will be accessed in the same way as under the devolution settlement.

Despite efforts to address the challenge of health inequalities in Scotland over recent years, health inequalities persist and demonstrate that the "fundamental causes" of health inequalities - the socio-economic inequalities in society - are the most important.

Recent research shows the strong correlation between poor health and poverty[211]. It suggests that the reason for Britain's high health inequalities is the failure of successive Westminster governments to choose to reduce inequality.

Independence will also allow us to do more to tackle major causes of ill-health, which disproportionately affect poorer communities. In March 2006, Scotland was the first country in the UK to enact a ban on smoking in public places. This has resulted in a dramatic reduction in smoking related diseases[212]. We have also led the way in developing ambitious proposals to tackle harmful drinking by legislating for a minimum unit price for alcohol.

We have maintained our commitment to strong action to tackle smoking and alcohol misuse with all the powers available to us. In contrast, the Westminster Government has chosen to put on hold proposals for plain packaging for cigarettes, and abandon plans for minimum pricing for alcohol.

With independence, we will have greater scope and clearer powers to regulate alcohol and tobacco, including through taxation - reducing the opportunities for legal challenge which have held up several of our initiatives to date.

We are already taking a distinctive approach to food standards[213]. Independence will allow this to be linked to tax policy and advertising regulation - allowing a coherent and concerted approach to issues of obesity and poor diet, which disproportionately affect poorer communities.

A major advantage of independence for health and wellbeing in Scotland is therefore to have the ability to use the full range of levers to promote good health. It is matched by the opportunity to grow Scotland's economy for the benefit of all and address inequalities in Scottish society that have not been, and will not be, addressed under Westminster.

After independence, Scotland will maintain a very strong relationship with the other countries of the UK. Scotland will continue to work with other parts of the UK to provide services where this provides access to the highest quality of care and delivers the best outcomes. There are already effective cross-border working arrangements in place, which will provide a strong foundation for continued co-operation, just as there is with Ireland. Partnership arrangements are also in place with a number of European countries, including, for example, Sweden.

Services provided for patients outwith Scotland include highly specialised care for people with rare diseases or conditions, and certain types of transplantation. The rare cases of transplants being conducted outwith Scotland are for lung, small bowel and paediatric transplants. Because there is a relatively small number of these procedures, contracting these services from clinical specialists offers the best health outcomes for Scotland's patients. These arrangements will continue exactly as they are at present after independence.

On independence, Scotland will continue the current arrangements for organ donation across the UK, maintaining one donor register and sharing donated organs. This will ensure that all organs are placed with the best matched patient. The Irish Health Service Executive also co-operates on organ transplantation with NHS Blood and Transplant (NHSBT), who co-ordinate transplant services across the UK. This reflects international best practice in transplantation where groups of countries work together, for example Eurotransplant in mainland Europe (Austria, Belgium, Croatia, Germany, Luxembourg, Netherlands and Slovenia), and Scandiatransplant in the Scandinavian countries (Denmark, Finland, Iceland, Norway and Sweden).

Arrangements for reviewing NHS pay are already devolved but NHS Scotland currently operates within UK structures and modifies UK agreements to reflect Scottish circumstances where necessary. With independence, we will review the machinery for pay determination in partnership, including the potential for improvement across the wider Scottish public sector. The Scottish Government has developed a Scottish GP contract in partnership with the BMA, and with independence we will continue to work with them, and all relevant partners, to ensure that GP contracts are developed to meet the needs and circumstances of the people of Scotland. Similarly, for hospital based doctors and dentists, the Scottish Government will work with all relevant partners in Scotland, and seek to co-operate with Westminster where appropriate, to negotiate pay, terms and conditions.

Scotland is already responsible for the regulation of some health professions - those who came to be regulated after the establishment of the Scottish Parliament. After independence, we will become responsible for all regulation. We will seek to co-operate with Westminster, and the devolved administrations, to ensure that health professional regulation is maintained in the best interests of patient safety and the consistent treatment of healthcare professionals. We will also maintain the existing professional healthcare regulatory bodies, which are funded by fees from registrants, and will continue to operate in Scotland after independence.


The Scotland we can create

Scots are passionate about sport and our country has a long and proud sporting tradition. Tens of thousands of Scots already realise the benefits to be gained from participating in physical activity and we want more people to get active. We believe that by looking at physical activity and sport together will we harness that passion and tradition to make positive changes in our country - improving health, reducing anti-social behaviour and making our society fairer.

Scotland already competes as a nation in our own right in international competition with 11 governing bodies of sports directly affiliated to their International Federation[214]. Scotland competes very successfully and, since 1998, the sportscotland Institute of Sport has helped prepare many of Scotland's best athletes to perform on the world stage.

In 2014, Scotland has the privilege of hosting two of the world's greatest sporting events - the 20th Commonwealth Games in Glasgow and the Ryder Cup in Gleneagles. These events present a wonderful opportunity for us to realise our ambition of helping Scots to become more active. The Games coming to Scotland provide an exceptional opportunity to make our nation healthier, and to celebrate our modern and vibrant culture both at home and on the world stage.

Since 2007, over £73 million has been invested in sports facilities across Scotland. This substantial investment has enhanced the sporting infrastructure of our local, regional and national sporting assets in the following ways:

  • development of world-class facilities such as the new indoor sports arena and Sir Chris Hoy Velodrome in Glasgow
  • a network of new high-quality regional multi-sport facilities including the Aberdeen Sports Village and Ravenscraig and Toryglen centres of sport
  • development of 23 football pitches and 12 new and upgraded swimming pools in communities throughout Scotland
  • a new £25 million National Performance Centre for Sport to be developed at Heriot Watt University that will provide Scotland's first ever dedicated performance centre available to all of Scottish sport. It will offer our elite athletes the facilities and services to train and prepare for competing at international level

In addition, substantial progress has been made to encourage and support the growth of local participation in sports and physical activity. This has included:

  • £80 million investment through Active Schools offering over five million opportunities for Scottish children in over 100 different sports this year
  • an additional £8.5 million of funding to ensure PE is delivered in all schools
  • the establishment of 114 Community Sports Hubs bringing local people together and providing a home for local clubs and sports organisations
  • a £10 million Active Places Fund that will create and improve places in local communities where people can become active
  • £24 million through the CashBack for Communities scheme to improve facilities and provide over 750,000 opportunities for local communities to participate in sport and physical activity
  • £5 million invested in clubgolf since 2003 which has provided 260,000 children in Scotland with an opportunity to try out golf

At an elite level, our athletes are supported by the sportscotland Institute of Sport with training, support and advice which helps them produce world class performances and, through Coaching Scotland, we have a framework which will lead us to a vibrant, highly skilled coaching system that is world renowned.

In an independent Scotland, we will build on this record to grow a world class sporting system at all levels, with real strength in schools, clubs and high performance sport.

Our priorities for action

An expert Working Group on Scottish Sport is considering how sport can develop and take advantage of the opportunities presented by independence.

Membership of the Working Group has been drawn from a broad cross section of interests in sport, physical education, health, education, business and the Third Sector to fully represent all the opportunities sport presents. The early work of the Group has focused on ensuring Scotland can be successful in future Olympic and Paralympic Games. From its work so far, the group has concluded that "….there is no reason that securing National Olympic and Paralympic Committee status should not be a relatively straightforward process for an independent Scotland, recognising that the final decision-making powers and the timescales involved are a matter for the relevant international bodies". The work of the group will conclude in spring 2014 with a final report on how independence can improve Scotland's sporting credentials.

Based on the Group's work and the recent experience of newly independent states, the Government does not envisage any significant barriers to Scotland achieving Olympic and Paralympic accreditation and being able to participate at Rio 2016. For example, Montenegro and the Balkan States received recognition within one year of independence, while Croatia and Slovenia were accredited before securing UN membership.

Independence will mean that more Scottish sportswomen and sportsmen will have the opportunity to compete at the highest level of international competition. It will also mean that the key decisions on athlete development will be taken in Scotland with the needs of the athlete at the centre. This will help many more of our sports-people reach their full potential.

A successful sporting nation, alongside the considerable investment this Government is already making in Scottish sport, has the power to inspire all ages and abilities in all areas of Scotland to get even more active. This will have enormous benefits for Scotland's health and wellbeing.

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