Independence thinking...

Malachy explains some the subtleties of Shetland's relationship to Scotland amid talk of independenc

As last week’s New Statesman special feature demonstrated, for those of us living north of the border, independence is truly the topic of the day.

But here in Shetland the issue is not just a simple matter of 'yes' or 'no'. These islands have a complex and strange relationship with Scotland. And it is a relationship which, ultimately, could have an impact far beyond these shores.

For most islanders, identity lies at home: we are Shetlanders, whatever that may mean. And while Shetlanders today are usually willing to describe themselves as Scottish, this has not always been the case. Until not very long ago, to be Scottish in Shetland was a more heinous crime even than being English!

Culturally, historically and, of course, geographically, Shetland is different from Scotland. And it has never voted SNP.

Shetland, along with Orkney, only became part of Scotland in 1469, when they were pawned to the Scottish crown as part of a dowry payment from the king of Norway and Denmark to James III of Scotland. The agreement made was that once the full dowry was paid the islands would be returned to Denmark, and until that time Norse laws would remain in place. But Scotland reneged on the deal.

Denmark appealed to the crown several times over the ensuing centuries, but to no avail. Norse law was eventually ended in 1611, though Denmark has, in theory, never renounced its claim to the isles. Following the Act of Union between Scotland and England in 1707, at a time when many islanders still spoke the native Norn as their first language, the vast majority of Shetlanders were forced into serfdom. The people were cruelly exploited by their new Scottish landlords until the end of the 19th century.

This tainted history explains not only the antipathy towards Scotland, which continued well into the 20th century, but also the persistent nostalgia for a romanticised, Nordic past, which is most apparent in the Viking festivals of Up Helly Aa, held around the isles each winter.

But the uniqueness of Shetland identity would hold little interest beyond the pubs and homes of the islands were it not for one, significant factor: oil.

Throughout the 1970s and 80s, while the Scottish nationalists were shouting from the rooftops about “our oil”, there was a faint but significant murmur from the Northern Isles that, actually, it’s ours.

When the North Sea was first being explored for oil, Shetland was quick to see the possibilities. The Zetland County Council Act was passed by parliament in 1974, giving the local council full control over all developments around the isles, and also allowing them to build up a massive oil fund over the following years. It has made Shetland into one of the wealthiest parts of the UK. The oil terminal at Sullom Voe became the largest in Europe, handling, at its peak, 1.4 million barrels a day, and although production has decreased since that time, the terminal is expected to last until at least 2020.

It is no surprise then that an independence movement developed within Shetland. It saw as its models the Channel Islands and the Isle of Man, as well as our closest neighbour, Faroe, an autonomous dependency of Denmark.

Interestingly, the SNP has never rejected the right of the isles to autonomy, and the party did not stand against the coalition candidate of the Orkney and Shetland Movements in the 1987 election. The SNP has promised that, should Scotland move towards independence, Shetland will be free to choose its own path. But what that path will be is not at all clear.

The oil boom, which potentially made Shetland independence financially viable, also, ironically, made it less likely. The population of the islands was boosted dramatically during the ‘70s and ‘80s by Scottish and English oil workers and their families, many of whom have chosen to stay. Culturally and demographically Shetland now looks more like the rest of the UK than ever. But a radical and cohesive independence movement is certainly not out of the question, and, who knows, Denmark might even take the opportunity to try to regain its old territory!

As if in penance for the environmental damage caused by the oil industry, from which the isles have benefited so much, Shetland Islands Council is now developing another hugely ambitious energy project. The largest community-owned windfarm in the world is planned for Shetland – 200 giant mills covering much of the central mainland. It is a project that could potentially supply as much as 25 per cent of Scotland’s power, and it would also see another significant cash-boost for the isles. Our importance as an energy provider to the rest of the country is not set to be diminished anytime soon.

Politicians, both in Westminster and the Scottish central belt, are quick to forget about the little islands in the north, but Shetland holds some interesting cards in its hand, and at the moment it remains anyone’s guess as to how it will choose to play them.

Malachy Tallack is 26 and lives in Fair Isle. He is a singer-songwriter, journalist, and editor of the magazine Shetland Life.
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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: products-and-investments/ pensions/pensions2015/