Scotland faces second budget black hole over £3.5bn benefits bill

MSPs will take control over a raft of new benefits next year
MSPs will take control over a raft of new benefits next year
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Scotland may be facing a second black hole in its budget after the country's economic watchdog warned the predicted £3.5 billion benefits bill could be "significantly" out.

Holyrood is to take control of a raft of new benefits such as Attendance Allowance, Disability Living Allowance and Personal Independent payments next year.

Read more: Tax rises forecast as Scotland faces £1bn spending black hole
It will see spending soar from £447 million this year to an estimated £3.5 billion, but bosses from the Scottish Fiscal Commission told MSPs on Holyrood's Finance committee today that the final bill may be a lot higher or lower.

It comes after the Commission warned last week that Holyrood's devolved budget is facing a £1 billion spending black hole over the next three years over a shortfall income tax levels.

Read more: Get used to low growth in Scotland, warns commission
Nationalist MSP Tom Arthur today raised concerns about the looming benefits bill and "how confident" Commission members are in the figure

"Forecasting social security benefits is difficult," said Commission chief executive John Ireland.

"I would expected there to be some significant forecast errors - I can't say which way but it's a pretty uncertain forecast."

Mr Arthur asked whether the Commission could set out the potential "percentage" for errors to provide an idea of the likely impact.

But commission member Professor Alasdair Smith added: "I don't think we're in a position to do that but it's one of the highlights of our report that we think the social security budget of £3.5 billion, with the possibility of eligibility changes coming into that, is a sum of money with a high degree of risk.

"That's one of the highlights of our report - we're drawing attention to the fact that there's a very significant fiscal risk in this."