Benefitting Scotland

Since 2016, the Scottish government has built a welfare system that is over budget, overly complex, and underachieving.

Scotland has the highest proportion of children in long-term workless households in Great Britain, while its rate economic inactivity has gone from below to above England’s over the last decade.

At the same time, the Scottish government has missed its own child poverty targets. Persistent child poverty is almost double its target and relative child poverty is five percentage points too high.

But devolution gives Scotland an opportunity to innovate and steal a march on the rest of the UK.

Only one comparable country outside the UK offers disability benefits as a financial payment unlinked to specific costs or receipts. Scotland should learn from more successful systems abroad and review alternatives, such as in-kind support and direct care offers.

Eligibility to disability benefits for less severe mental health conditions – the group for whom payments have the least obvious benefit and may in fact be detrimental – should also be limited. This would save £480 million per year to re-invest in expanding NHS Psychological Therapies and primary care mental health services to tackle the root causes of mental ill-health.

The Scottish government must also recognise that work is the most sustainable route out of poverty, yet a working parent can lose as much as 79p in every extra pound they earn, through lost benefits, tax and pension contributions. The income that households can get by layering different benefits also gives them little incentive to work at all – a couple with three children in Glasgow can earn as much as £45,500 per year from benefits alone.

Scotland can mitigate this. Frontloading the Scottish Child Payment and merging it with the Best Start Grants would ensure parents are supported to care for their children in their vital early years, while freeing up £340 million to help parents back into work as their children grow and to re-invest in Whole Family Wellbeing Funding to support deprived Scottish families.

These recommendations would save over £800 million to truly benefit Scotland, by treating mental ill-health, helping parents back to work, and supporting families out of material deprivation.