John Swinney, Scottish Finance Secretary: "Spending on social protection, which includes state and public pensions, is more affordable in Scotland than for the UK. Bringing control of pensions in Scotland to the Scottish Parliament would ensure future pension policy is set in the interests of the Scottish population and takes account of key issues affecting Scotland."
Michael Moore, Scottish Secretary: "84% of mortgages supplied by Scottish firms are provided to people living in other parts of the UK and 70% of the pensions bought in Scotland are provided by firms based in England, Wales and Northern Ireland. If you put a border in the middle of that market, if you introduce different tax and regulatory regimes, it's wishful thinking to think it's not going to have any effect on the range of products you and I can buy to protect our families and our futures."
The Scottish government plans to hold a referendum on the issue of independence on Thursday 18th September 2014. Scots will be asked to vote on whether Scotland should be an independent country with independence being supported by the Scottish National Party.
A recent paper from the Treasury has argued that a vote in favour of Scottish independence could see borrowing costs pushed up which would result in higher mortgage rates for Scottish consumers. On pensions, the paper claimed that UK-wide pension protection was easier to fund by spreading the risks across a much larger number of levy-paying schemes.
In the event of independence, Scotland would have to set up a separate financial regulatory system and its own deposit guarantee fund, to compensate savers if a bank crashed. The Treasury report has called into question whether an independent Scottish state could set up a sufficiently well-funded financial compensation scheme. Without this, the Treasury believes that there could be a loss of confidence in Scottish banks, resulting in customers making fewer deposits to fund mortgages.
"In the event of Scottish independence, the Treasury doesn't believe that the country would be able to set up a sufficiently robust compensation scheme," said Keith Osborne, editor of WhatHouse.co.uk. "This means that Scottish banks and mutuals would have to offer better savings rate to attract deposits or fund their mortgages through greater use of the wholesale markets. Without the support of UK financial institutions, the Treasury argues that the cost of funding for Scottish lenders would be more expensive and these costs could be passed onto borrowers through higher mortgage rates."
The Treasury calculates that a 1% rise in mortgage rates would cost the average Scottish household with a 75% loan-to-value mortgage around £1,300 in increased payments in the first year.
John Swinney, the Scottish finance secretary, dismissed the claims. He said: "The Tory government and their Lib Dem followers will use this paper to make all sorts of implausible claims about things like mortgages, when the reality is that many countries around Europe, including those of similar size to Scotland, have substantially cheaper mortgage rates than the UK."
The Treasury paper was launched by Scottish Secretary Michael Moore and economic secretary to the Treasury, Sajid Javid, in Edinburgh. It was the third in a series of UK government papers on Scottish independence and claimed that Scotland would find it "difficult and expensive" to provide protection for savers and pensioners. It claimed that schemes such as the Financial Services Compensation Scheme (FSCS) and the Pension Protection Fund (PPF) provide safeguards for deposits in UK banks and UK pension schemes.
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