How Will People in Debt be Affected if Scotland Gains Independence?

Written by Karen Bryan

scottish border flagsThe September 18th vote on Scottish Independence could herald huge changes for people in the country, but how are people with debt issues likely to be affected if Scotland does go it alone?

The current Scottish government claims that people’s financial situations will at the very least remain the same and may be improved by a ‘yes’ vote. Many people in debt may be worried that their situation could get worse, but this should not be the case if the present government’s word is taken.

Interest Rates

For those people whose finances are already tight, a change in Scottish governance could be a worrying time. The good news is, however, that interest rates should not be affected, as long as Westminster agrees that an independent Scotland can officially keep using Sterling. This is because interest rates will continue to be set by the Bank of England.

Access to Banks & Financial Products

Independence will not affect the right of people to access a wide range of financial services and products. The principles of the EU Single Market will still apply, assuming that Scotland can negotiate entry to the EU, meaning that residents of Scotland will be free to choose services such as Protected Trust Deeds and other financial products from any EU provider. Access to UK-based banking services and banks should also be unaffected.

Job Prospects

The current Scottish government claims that Independence would allow Scotland to create more and better work opportunities and to build an economy focusing on long-term resilience. It will also be able to ensure that the minimum wage at least rises to keep up with inflation, which is something that the government says has not happened since the recession.

The present government is also an advocate of the Living Wage campaign, which aims to provide a fair wage for all employees, including those currently on low incomes. The government has pledged that it will fund Poverty Alliance to create and deliver a Living Wage Accreditation Scheme in an independent Scotland to boost compliance with a Living Wage standard in order to ensure that all Scottish residents receive the pay that they deserve. Currently, more than 400,000 people are receiving less than this Living Wage in Scotland — particularly women.

Consumer Help

The current government claims that independence will allow it to tackle problems of particular concern in Scotland, such as nuisance calls and payday lending. It plans to restrict ‘rolling over’ of a person’s loans, which can lead to even greater debt, and would regulate payday lenders’ advertising. It also wants to introduce a short-term interest rate cap similar to those already in operation in some parts of Europe and the US, Canada and Japan.

Financial services regulation

This will remain consistent across the whole of what has been termed the Sterling Area, including Scotland. According to the Fiscal Commission Working Group, this will work best to fulfil the financial and economic interests of Scotland and its residents. An independent Scotland would have its own regulator to work with its UK equivalent to set equal standards.

Welfare and Benefits

The current government has pledged an independent Scotland will put a priority on helping people to get jobs and protecting vulnerable members of society. There should be no change to benefit entitlement in the immediate future, although there are plans to stop the adoption of the Personal Independence Payment and Universal Credit. The present government says it will get rid of the controversial ‘bedroom tax’ no later than a year after independence is declared, and it will make sure that tax credits and benefits rise along with inflation.

Tackling Poverty

The current administration is proposing to reduce heating bills, increase the State Pension and introduce a childcare and early-learning system for every child aged between one and school age. There is also a commitment to continuing support services such as free personal care and prescriptions, a freeze on Council Tax and concessionary travel.