£2bn benefits black hole faced by SNP ministers blamed on 'reckless spending'

Warnings have been issued about a £2 billion welfare spending gap for Holyrood ministers.

Holyrood ministers are facing a welfare spending black hole of more than £2 billion by the end of the decade due to “reckless spending” and “broken election promises”, the Scottish Conservatives have claimed.

The Tories have issued the warning as the social security bill for the Scottish Government is poised to soar to £9bn by 2030, with the spending already making up around 14 per cent of Holyrood’s Budget.

Scottish Social Justice Secretary Shirley-Anne Somerville and UK Chancellor Rachel Reeves | PA

SNP ministers have warned the UK government’s cut to disability benefits will have a knock-on impact on Holyrood’s finances by the end of the decade. The Scottish Government will also need to find up to £200 million a year to pay for a pledge to mitigate the controversial two-child benefit cap.

Analysis by economists at the Fraser of Allander Institute has suggested there will be a small £28m boost to this year’s Holyrood Budget. But the cuts to welfare by the UK government will lead to a £177m reduction to block grant adjustments in 2027/28, rising to £455m by 2029/30 - with an overall loss of around £900m for Scottish ministers.

READ MORE: SNP set for benefits spending collision with Labour to rescue poverty targets

However, the Scottish Conservatives have pointed to findings by the Scottish Fiscal Commission showing the welfare bill was poised to soar by £9bn - £1.7bn more than it was due to receive to spend on benefits in 2029/30 - suggesting the spending gap could total more £2.1bn.

Liz Smith, the Scottish Conservative shadow social security secretary, said: “The SNP’s reckless spending on welfare was already set to saddle Scottish taxpayers with a colossal £9bn bill.

Scottish Conservative MSP Liz Smith has been named on the King's New Year's Honours List 2024. Photo by PA.

“The broken election promises and budget cuts of the UK Labour government have just made that even more unaffordable. What was a mammoth £1.7bn black hole in the welfare budget is set to soar to over £2.1bn.

“This black hole is completely unsustainable and yet the nationalists are apparently doing nothing to rein in Scotland’s enormous benefits bill. And it’s Scottish taxpayers who will pick up the tab. They are being hammered by two high-tax, high-spend left-wing governments.

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“Only the Scottish Conservatives are arguing for policies that would balance the books and put money back in people’s pockets.”

Social Justice Secretary Shirley-Anne Somerville dismissed the concerns, saying: “Our investment in social security will provide vital assistance to enable older people to heat their homes, to help disabled people live independent lives and will keep thousands of children out of poverty.

Social Justice Secretary Shirley-Anne Somerville | PA

“The Scottish Fiscal Commission’s December 2024 forecasts show that our investment in social security over and above the money we get from the UK government is projected to be less than 3.5 per cent of the total Scottish Government resource budget by 2029/30.”

Ms Somerville added: “By contrast, in pursuit of its self-imposed fiscal rules, the UK government is determined to impose austerity and its own analysis estimates its welfare changes announced last month will push a further 250,000 people, including 50,000 children, into relative poverty. They should change course and abandon these cuts.

“We will publish our next medium-term financial strategy later this year, alongside a fiscal sustainability delivery plan. Those calling for cuts in Scottish social security spending should spell out exactly which groups of people they would remove help for.”

The UK government has been approached for comment.