A nice easy one

A nice easy one

Here’s the Scottish Labour finance spokesman Iain Gray on last night’s Newsnight Scotland, discussing Gordon Brown’s speech in Glasgow on pensions because Mr Brown himself refused to answer any questions about it.

As ever with Mr Gray, he packs a lot of entertainment into a short space of time.

The first interesting thing about the clip above is that Gray explicitly admits that pensions are paid from general taxation, rather than from a pensions pot. But it’s the next part that we thought merited checking.

“Quite simply, [the pension system] is more secure, and it works better, if it’s spread over a bigger pot – 60 million pounds rather than five million pounds.”

Bless him. Immediately after saying there’s no pension pot he starts talking about one, and we assume he meant “63 million people rather than “60 million pounds”, so we’ll let that one slide. Because what we’re concerned with isn’t Iain Gray’s bumbling media presence, but the truth or otherwise of what he’s claiming.


The above table (click to enlarge) comes from the misleadingly-named OECD report “Pensions at a glance 2013″, which comprises 364 pages of detailed analysis of state pension provision across the 34 nations of the organisation and eight others – between them making up most of what’s generally regarded as the developed world.

The figures represent pensions as a percentage of average earnings (full definition here), so they already take account of the cost of living in different countries.

Of the 42 countries represented, the UK comes fourth from bottom. Among the OECD nations only Mexico treats its pensioners worse than Britain does, along with only Indonesia and South Africa in the rest of the civilised world.


But that’s a broader point. What we’re concerned with here is Iain Gray and Gordon Brown’s claim of a correlation between a country’s size and its pensions. So let’s rank those countries by population, with each one’s place in the pension table in brackets.

1. China (5)
2. India (18)
3. USA (36)
4. Indonesia (41)
5. Brazil (16)
6. Russia (14)
7. Japan (38)
8. Mexico (40)
9. Germany (30)
10. Turkey (13)
11. France (15)
12. Italy (11)
13. United Kingdom (39)
14. South Africa (42)
15. South Korea (34)
16. Spain (7)
17. Argentina (3)
18. Poland (28)
19. Canada (29)
20. Saudi Arabia (1)
21. Australia (25)
22. Netherlands (2)
23. Chile (31)
24. Belgium (32)
25. Greece (23)
26. Czech Republic (27)
27. Portugal (22)
28. Hungary (8)
29. Sweden (19)
30. Austria (6)
31. Israel (9)
32. Switzerland (20)
33. Denmark (4)
34. Finland (21)
35. Slovakia (12)
36. Norway (24)
37. Ireland (37)
38. New Zealand (33)
39. Slovenia (35)
40. Estonia (26)
41. Luxembourg (17)
42. Iceland (10)

So, Brown’s claim seems to be absolutely clearly nonsense. There’s no discernible relationship between the size of a country and the strength of its pensions whatsoever.

The highest-ranked country for pensions is only 20th by population, and most of the top 10 are in the bottom half of the population table. Meanwhile, 70% of the WORST countries for pensions are in the top half by population.

We’ll add another flat-out lie to the No camp’s long and growing list.

Source: Wing Over Scotland

The empty helicopter

We’re still trying to make sense of some baffling arithmetic in Gordon Brown’s latest doomspeech about pensions, which was delivered this evening at Glasgow University and which we examined in some detail here.


One part in particular had us scratching our heads in bafflement, so we’ve pulled it out for some closer scrutiny by itself. Tell us if we get anything wrong.

“Scotland benefits far more from UK-wide pension credits to top up the basic pension, with £700 million a year paid to 248,000 Scots in credits worth £25 per week to the typical recipient.

And Scottish pensioners receive far more disability benefits. One in four Scots old people – 259,000 – receive disability support, costing £1 billion a year. It is worth an average of £20 a week to recipients.

An alert reader noted that those sums seem wildly off. 248,000 people getting £25 a week is £322m, not £700m, and 259,000 people getting £20 a week is £269m, not £1bn.

So what could be the explanation? The obvious answer would seem to be that the figures have factored in the cost of bureaucracy, but the first sentence appears to refute that, stating explicitly that the £700m figure is paid to the recipients.

Unfortunately that only leaves “Gordon Brown, former UK Chancellor of the Exchequer, is a blundering idiot completely unable to grasp basic arithmetic” as an explanation, and while it’s tempting and offers a lot of comedy potential, it surely can’t be the case.

So we can only assume instead that he’s terrible at English, and the first sentence of the quote is a simple grammatical error which implies something it didn’t mean to.

So let’s operate from the premise that £1bn is the total cost of disability benefits in Scotland, including all administrative costs as well as the actual benefits paid to recipients. That means that for every £1 we pay to a disabled pensioner, we fork out £3 in costs. Which seems like a lot.

Is there some way we could streamline that process?

Well, Brown tells us that “one in four” Scottish pensioners is 259,000 people, which means that there are fractionally over a million in Scotland altogether. A billion pounds divided between every pensioner in Scotland is therefore as near as makes no odds to £1000 each – coincidentally, about £20 a week.

“Helicopter money” is a financial theory proposed by economist Milton Friedman, which says that a good way to stimulate a struggling economy, rather than giving imaginary money to bankers who just hoard it (basically what “quantitative easing” is), you hand it directly to the people. They then go out and spend it on stuff, creating demand and jobs.

We’re not going to go into the detailed pros and cons of the principle here. But if Brown’s figures are in ANY way correct, which is clearly a pretty big “if”, then what we’ve just learned is that Scotland could increase the state pension by £20 a week, across the board, without spending a single extra penny.

There’d be no admin costs, because it wouldn’t have to be means-tested. Everyone who currently gets the pension would just get £20 more a week, pumping hundreds of millions of pounds into the economy every year that at the moment just gets swallowed up uselessly in red tape.

Brown warned tonight that an independent Scotland couldn’t afford its state pension. But what he’s actually just told us is that it could afford to boost it by a whacking 18% overnight, for everyone, for free.

Either that or the former Chancellor can’t multiply two numbers together. Either way, we’re not sure he’s made much of a case as someone who should be listened to.

Source: Wing Over Scotland