Scottish Independence: What about the benefits system?

Scotland FlagAs the people of Scotland weigh up how to vote in the independence referendum, they are asking questions on a range of topics.

Here, we focus on the issue of benefits, and what might happen to them in the cases of a “Yes” or a “No” vote.

How does the current benefits system work?

Claimants currently receive their payments from the Department of Work and Pensions (DWP) – as welfare benefits is a reserved matter for the UK government.

The welfare system is currently being reformed via the UK Welfare Reform Act 2012, which has introduced significant changes, including….

  1. Universal Credit – This is a new single payment benefit that replaces a number of existing benefits, including: Income Support, Job Seekers Allowance and Tax Credits. Its aim is to encourage claimants to gain employment.
  2. Personal Independence Payment – This replaces the Disability Living Allowance. Its intention is to help with the living costs for people aged 16 to 64 with disabilities or long-term health problems, and is no longer based on the condition claimants have, but how that condition affects their life.

These changes are expected to be completely rolled out across the UK by 2017.

Why does the pro-independence side want this to change?

The Scottish government is concerned about how these changes will impact on the people of Scotland.

It has moved to fully mitigate the impact of the UK government’s controversial housing benefit changes – dubbed the “bedroom tax” by its critics. It’s a policy the SNP says it will abolish if it won power in an independent Scotland.

Also in the Scottish government’s guide to an independent Scotland, it made several other commitments, such as:

  • halting the rollout of Universal Credit and Personal Independence Payments in Scotland to prevent people on Disability Living Allowance losing out
  • removing single household payments and equalising earnings disregards which create barriers for second adults, usually women, from taking employment if they wish to
  • and ensuring that benefits and tax credits increase in line with inflation so they keep up with rising living costs.

Its stated aim is to establish a benefits system that’s “fair, transparent and sympathetic to the challenges faced by people receiving them, respecting personal dignity, equality and human rights”.

An expert working group on welfare reform set up by the Scottish government found that all of the infrastructure an independent Scotland would require to run its own welfare system already exists. To help ensure a smooth transition, it also recommended a period of shared administration of benefits by Scottish and UK governments.

What is Better Together saying about this?

The pro-union side believes benefits are more secure as part of the United Kingdom.

It says the Scottish government’s plan for the benefits system guarantees uncertainty.

Uncertainty over what benefits people would receive, and how a new welfare system would be set up.

Better Together has said on sharing the administration of benefits for a short period in the event of independence: “It is highly unlikely that the UK would agree to share its delivery services as it is hard to see how this would be beneficial for the continuing UK.”

The campaign also points to analysis by the Institute of Fiscal Studies (IFS) claiming public spending cuts worth up to £6bn would need to be made following independence.

How much would it cost to set up a new benefits payments system?

The start-up costs for an independent Scotland would depend on negotiations between the Scottish and UK governments.

Estimates have been made by both sides.

Yes Scotland believes the immediate start-up costs of new administrative structures would amount to £200m.

Better Together cites UK Treasury analysis putting the cost of a new benefit system for an independent Scotland at £400m.

Both figures come from different interpretations of work done by the London School of Economics.

Source: http://www.bbc.co.uk/news/uk-scotland-scotland-politics-29031282



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