Devolving welfare ‘key to maintaining the Union’

Protesters march against the bedroom tax in Glasgow. Picture: Robert Perry

Control of housing benefit, attendance allowance for the disabled, the child care element of working tax credit and the work programme should be part of a devolved welfare package to be put on the table in the event of a No vote.

A detailed model of welfare devolution has been produced by the Institute of Public Policy Research (IPPR), an academic think-tank that is influential in Labour circles and whose findings have been fed into the party’s Devolution Commission.

This month Labour will publish the conclusions of its Commission, which will play a key part in determining what extra powers for Holyrood will be on offer if Scotland rejects independence.

The IPPR paper, to be published tomorrow, argues that significant devolution of welfare would enhance Scotland’s economic performance and improve social outcomes for the disadvantaged.

However, the paper “Devo More and Welfare” also argues that some key benefits must remain under Westminster control, because managing them on a UK-wide basis reduces risk and enables the redistribution of wealth.

“There are powerful reasons for devolving welfare, both as a way of improving social and economic outcomes and as a way of reinforcing the Union,” said Guy Lodge, IPPR associate director and author of the paper with Alan Trench, professor of politics at Ulster University.

“The UK government provides a strong backbone for the social union – pooling risk and allowing for redistribution – while the devolved governments are best placed to respond to local needs and pressures.”

He added: “Welfare devolution would improve policy without undermining the fundamental level of shared UK-wide social citizenship. This is a win/win outcome, while Scotland going it alone would inhibit ability to provide a stable and resilient form of social protection.”

Among the measures that Labour is expected to take on board from the paper is the IPPR’s proposal to devolve housing benefit, which is worth around £1.7 billion a year in Scotland.

From a political perspective, such a move would enable a future Scottish Government to ensure that David Cameron’s bedroom tax, or similarly unpopular taxes, would not come north of the Border.

But the IPPR also makes the point that giving Holyrood housing benefit would give Scottish administrations the power to take action to divert finances from subsidising private landlords into building more homes and creating jobs.

A recurring theme of the paper is that the introduction of a Scottish Parliament 1999 has already seen large parts of the welfare state devolved to Scotland – notably the NHS and social services.

Therefore, the paper argues, it makes sense for benefits that have a close relationship with the already devolved sections of the welfare state to be transferred.

The UK government’s Work Programme, for example, which provides personalised support for those claiming unemployment benefit, could be transferred to Holyrood.

Retaining the Work Programme at Westminster is “problematic”, because it requires working with devolved agencies such as education and skills institutions, mental health services and local authorities. A similar argument is deployed when it comes to attendance allowance.

The paper said that the SNP’s claim that independence is the way to transform childcare in Scotland was “spurious”. But it said more could be done in that direction if the childcare element of working tax credit was devolved.

If welfare devolution was accompanied by greater tax devolution the financial benefits that would result from getting more women back to work would flow to the Scottish Government rather than the Treasury. The paper also suggests that Holyrood could be given a general power to supplement UK welfare levels.

That approach would enable devolved governments to use additional cash payments – funded from devolved budgets – to deliver social policy while maintaining the social union across the UK.

Making the argument that significant welfare devolution is “vital” to maintaining the Union, the paper argues that more powers would provide an incentive for Holyrood to reduce the welfare burden and would also reduce the politics of “blame” that has seen the SNP government attack Westminster for unpopular policies.

Fundamental to the maintenance of the Union would be continuing to run the state old-age pension, Jobseekers Allowance and the Employment Support Allowance on a UK-wide basis. The IPPR argues that these larger benefits are driven by the performance of the economy.

Keeping these benefits under Westminster control would “pool the risk” for funding these benefits, because the UK government has a wider tax base than the devolved governments and has a greater borrowing capacity.

Labour is expected to unveil the conclusions of its Devolution Commission at its spring conference in Perth, which begins on 21 March.

Last night a Labour Party spokesman said: “We believe the people of Scotland want to see devolution strengthened and we look forward to unveiling our proposals later this month.”

Last night, a spokesman for Nicola Sturgeon, the Deputy First Minister, said: “We look forward to reading this paper but at the end of the day there is no guarantee from any of the anti-independence parties of any more powers in the event of a No vote. None of them have even committed to passing welfare powers to the Scottish Parliament with the Scottish Labour party’s Labour welfare spokesperson opposing a welfare system for Scotland’s needs.”