Scottish independence: Iain Duncan Smith warning on welfare bill ‘irrelevant’
WORK and Pensions Secretary Iain Duncan Smith’s attempts to use benefits as part of the campaign to keep Scotland in the UK has been undermined after his claims were challenged by one of Scotland’s most respected economic think-tanks.
• David Cameron met with Alex Salmond today to discuss the details of the independence referendum
• First Minister ‘hopeful’ an agreement can be reached in the ‘next three weeks’ to be in place by late October
Mr Duncan Smith used a visit to Glasgow yesterday to claim that an independent Scotland would either have to cut spending or raise taxes to pay for its welfare bill.
But his comments drew a sharp rebuke from First Minister Alex Salmond, who warned that the “nonsense” remarks could “blow the referendum talks between the Scottish and UK governments off course”. Ahead of his visit to Glasgow, the city where he developed many of his ideas on welfare reform after a visit to Easterhouse ten years ago, Mr Duncan Smith said: “If the unthinkable were to happen, a Scottish Government would face a stark choice of raising taxes or cutting services. This is not scaremongering, it’s reality.”
He said official figures showed that pension and welfare spending in Scotland is currently just over £15 billion per annum, £8.5bn more than the amount raised from North Sea oil and gas.
As the row developed yesterday the Scotland Office published figures from the Government Expenditure and Revenue Scotland (Gers) which showed that between 2002 and 2010 the UK government has spent £98.1bn on pensions and welfare in Scotland, while the total revenue from oil and gas was £59.7bn.
But this analysis was undermined by leading economist John McLaren of the Centre for Public Policy for Regions at Strathclyde University, who
said the Tory minister was
making his claim on a false premise.
Mr McLaren said: “We believe Alex Salmond is right on this one. The comparison between North Sea oil revenues and the welfare costs in Scotland is totally irrelevant.
“Mr Salmond is right to say the welfare bill is not funded from North Sea oil but from general taxation.”
The former Labour special adviser added: “What is relevant is whether Scotland’s financial balance is relatively better or worse. Our most recent analysis found that both (economies) were heavily in deficit, but Scotland was relatively better off than the UK.
“However, this is based on an analysis looking back at 2010-11. What the position will be in the year of the referendum is unclear, particularly because of North Sea oil. It also implies that all North Sea Oil revenue is not put into an oil fund for future generations.”
In his comments Mr Duncan Smith, who was born in Edinburgh and describes himself as “a proud Scot”, had also claimed that his reforms would benefit Scotland more than the rest of the UK. His welfare reforms aim to “make work pay” and has involved a £25,000 cap on household benefits as well as a controversial simplification of the system by creating a single universal benefit.
He said: “In many ways, Scotland will benefit more than other parts of the UK when Universal Credit comes in. A larger percentage of people will see an increase in their income through moving into work or taking on more hours.
“I do not believe the picture that some people paint of Scottish towns dependent on welfare.
“Every time I come here, I meet people who are determined to get into work, who with the right help are desperate to get off benefits, support their family and set an example for their children.”
But speaking outside Downing Street after discussions with Prime Minister David Cameron, Mr Salmond was scathing about Mr Duncan Smith’s claims on welfare and said the work and pensions secretary had left people in Scotland “in penury”.
He went on: “I think Iain Duncan Smith is the very last person to aid the ‘save the Union’ campaign because his department is responsible already for a significant suffering among a large
section of the Scottish population.
“In terms of his own argument, it is total nonsense. What on earth has a comparison of the oil revenue got to do with anything?
“As a percentage of GDP, the welfare budget (in Scotland) is less than in the UK as a whole and employment is higher. And the last figures we have – the Gers figures – show a surplus.”
But Mr Salmond also suggested that the comments by the reforming Tory Cabinet minister, who refused to accept a move in Mr Cameron’s recent reshuffle, could endanger the talks on sorting out a referendum.
He said after discussions with Mr Cameron: “There was goodwill within the meeting but it’s possible that noises off, like Mr Duncan Smith, could still blow things off course.”
But the suggestion by Mr Salmond of a threat to the process drew criticism from Labour, who said the First Minister was looking for an excuse to avoid having a referendum.
Labour’s shadow Scottish secretary Margaret Curran said: “Alex Salmond seems to be looking for any excuse not to have the referendum.
“For months we’ve heard that he’s been waiting to meet the Prime Minister to hammer out an agreement. Now he had that chance and still nothing is agreed.
“At every turn, he seems to find another excuse. It’s time that he got on with it.”
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Weather for Edinburgh
Saturday 18 May 2013
Temperature: 9 C to 13 C
Wind Speed: 18 mph
Wind direction: North east
Temperature: 9 C to 18 C
Wind Speed: 8 mph
Wind direction: North east