Future of benefits spending in Scotland

Scottish independence – or significant extra devolution of powers – would provide Scotland with a chance to reform the benefits system and reassess some aspects of existing UK-wide policy, says a new briefing from the Institute for Fiscal Studies.

Key points

  • Overall spending per person on benefits (including tax credits and the state pension) is only slightly higher in Scotland than in Great Britain as a whole. Higher spending on old-age and disability benefits is largely offset by lower spending on housing benefit and child benefit/tax credits. Recent years have also seen benefit spending in Scotland grow less quickly than in Great Britain as a whole, narrowing what used to be a much larger gap.
  • However, the projected more rapid ageing of the Scottish population suggests that, all else being equal, benefit spending will grow somewhat more quickly than in Great Britain as a whole in the coming decades.
  • Independence or significant extra devolution would create opportunities for reforming the benefits system in Scotland. But any major redesign of the system would require Scotland to either increase spending on benefits or create large numbers of 'losers'.

Finance Secretary in the Scottish Government, John Swinney, commented: 'Crucially this report shows that it is the poorest in Scotland that have been hardest hit by the UK’s tax and benefit changes and that welfare needs in Scotland are different to those of other parts of the UK. This report confirms that people in Scotland are paying the price for high levels of housing benefit in London with a bedroom tax designed to solve a problem we simply do not have... With independence this government will scrap the bedroom tax and put in place welfare policies that meet Scotland’s needs, including the protection for pensioners offered by the triple lock'.

Source
: David Phillips, Government Spending on Benefits and State Pensions in Scotland: Current Patterns and Future Issues, Briefing Note 139, Institute for Fiscal Studies
LinksBriefing Note | IFS press release | Scottish Government press release | BBC report | Guardian report | Inside Housing report | Public Finance report

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Publication date: 
Jul 31 2013