A report from the independent Institute for Fiscal Studies (IFS) has suggested that independence could allow Scotland to look again at recent “poorly designed” reforms to the U.K.’s welfare system. It believes that “radical reform” could be carried out not just under independence but under a system where benefits policy was fully devolved to the Scottish government.
The Scottish Government wants to abolish the Bedroom Tax
In its report, the Institute pointed out that either under independence or greater devolution, a future administration would be able to change or at least reconsider a whole raft of reforms. For example, it suggests that these could include the “benefits cap” – the capping of local housing allowance rates – and recent changes to the support for low-income families where the payment of their council tax was kept separate from universal credit. It could also change the way in which child benefit is paid – it is currently withdrawn from families when one member of that family runs a higher income.
However the report acknowledges that Scotland could face serious challenges in the years ahead, not least because of an ageing population. It points out for example the people in Scotland are ageing faster than those in the rest of the UK. It stated that this could be “somewhat burdensome” on any welfare budget in the future.
The report gives reasons for this questioning. It points out that the Scottish Government has promised that it will retain the current pledge from the Coalition in London to protect pensioner benefits. This commitment would involve pensions for example increasing at the rate of the Consumer Price Index or 2.5% a year once the new flat rate state pension system has been introduced. In the view of the report’s author, David Phillips, the “slightly more generous” system planned by the SNP could not be sustained without either discretionary tax rises or “further cuts to spending on public services.”
John Swinney
Finance Secretary
Despite many claims from the south-east of England that Scotland had a “welfare culture”, the report actually found that the amount spent on benefits had increased more slowly in Scotland than in Great Britain as a whole. However, at £3,238 pounds per head in the last fiscal year, this was still 2% higher than the UK average. But it was still less than the amount spent on welfare in many other parts of Great Britain, including Wales, the West Midlands and the North of England.
The Scottish Government has already said that, if it had the power, it would abolish the so-called “bedroom tax”. This was the reform introduced earlier this year in which housing benefits are cut its officials decide that spare rooms are being subsidised by the taxpayer. The government at Holyrood believes that this reform is causing unnecessary hardship.
Michael Moore
Scottish Secretary
In his reaction to the report the Scottish Finance Secretary, John Swinney, pointed out that social protection, which includes spending on welfare, “is currently more affordable in Scotland and the UK as a whole. With the boost to the working population that can be delivered by using the full economic levers of independence to grow the economy we can ensure Scotland’s welfare policy fits Scotland’s needs.”
By contrast, the Secretary Of State for Scotland, Michael Moore, claim that “what this report really nails is the fact that under independence, there would be huge cost pressures on an independent Scotland, particularly as our population is ageing, and particularly because of the challenges we have in raising the money to pay for that increasing bill.”