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Developing a Scottish benefits system


Ahead of tonight's TV debate on the Scottish Referendum, David Cameron, Ed Miliband and Nick Clegg have agreed that Scotland will be allowed to set its own levels of income tax and benefits if the country rejects independence. Professor Paul Spicker of Robert Gordon University explores the issues for social security after the vote.

money Benefits are complicated.  Despite what we read, they’re not just about worklessness, and we are spending rather less on out-of-work benefits than we used to.  Most of the money spent on benefits goes to older people. Most of the rest – tax credits, child benefit, housing benefit and disability living allowance/personal independent payment – is available whether or not people are working.

If Scotland became independent, or even if it were to gain many more devolved powers – “devo max” – it would need to make decisions about its priorities. The Expert Working Group on Welfare believes that this  “provides Scotland with the opportunity to design a social security system afresh”. But it’s difficult, if not impossible, to redo benefits from scratch. Over-simplified ideas – like those behind the universal credit scheme, or the Expert Group’s own proposal for a unified working-age benefit – inevitably come to grief over the details.

The housing benefit system, which is a prime candidate for devolution, is an example. It tries to do three main things at once, and it doesn’t do any of them particularly well: helping people on low incomes, paying for social housing, and shoring up the private rented sector. It’s hard to reconcile other objectives with the scheme, such as social inclusion, work incentives or rent policy. The scheme has never worked as it should: it’s complicated, expensive and often unfair. If we were building a system from scratch, we wouldn’t do it this way - there are too many moving parts. But that doesn’t mean we can just scrap it and start again.   Benefits like housing benefit matter; they are a lifeline for vulnerable people. Any changes need to be slow, considered and careful.

Nothing can start with a blank slate. If a new Scottish scheme paid the same amount as the current system, it would either have to pay the same benefits, or it would have to justify paying less to some people so that others could get more. The more commitments that parties make to protect different groups, the less room there is for manoeuvre. The only practical way out of the bind is to pay substantially more, so that people do not lose out. There may also be scope to buy out some existing rights, to avoid complex transitional arrangements. It seems, though, that a Scottish scheme would probably look a lot like the benefits system looks now.

Developing a social security model for Scotland - read Professor Spicker's full briefing 

More Referendum briefings:

The Referendum and prospects for public expenditure

Housing taxation reform and the Scottish constitutional question

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