Scotland may face an increase in taxes to pay for social welfare after
independence, a new report claims

Scottish Independence: Welfare bill after independence

by Jo Edwards

Scots would face tax rises to pay for the country’s growing welfare bill if it became independent, an academic has claimed.

The benefits system costs relatively more in Scotland than in the rest of the UK, because there is a higher proportion of pensioners and people on disability pay, according to economist Professor David Bell.

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The welfare system has become a key battleground in the independence debate, with Nationalists claiming Holyrood could protect against the worst impact of benefits cuts being imposed by the UK coalition, such as the “bedroom tax”.

Finance secretary John Swinney insisted earlier this month there would be no need to raise taxes after independence.

But Prof Bell’s new paper looking at spending on welfare in Scotland contests this claim.

“If Scotland acquires new fiscal responsibilities, including control over welfare benefits, there will be a need to raise revenues to meet the increased costs of state pensions,” he said.

However, First Minister Alex Salmond said in a keynote speech last year that reforms and cuts in the welfare system under the coalition served to “exemplify” why Scotland needed control over this policy area.

In 2010/11, the most recent year for full figures, £21bn was spent on social protection in Scotland - three quarters of which was spent by the UK Government.

Nationalist MSP Annabelle Ewing, who sits on Holyrood’s welfare committee, yesterday commented that: “people in Scotland should not be paying the price for Westminster’s detachment from reality”; a comment compounded by Nick Clegg’s suggestion on Monday that "an orthodoxy” is emerging within London centralising the UK’s economy.

A Scottish government spokesman claimed figures had shown 40 percent of Scottish tax revenues were spent on social protection, compared with 42 percent for the UK as a whole.

“With a lesser share of Scotland’s tax revenues needed to support welfare and pensions than across the rest of the UK, Scotland is in a stronger position to support our pensions and welfare system than the UK as a whole,” he said.

The SNP government has finalised the establishment of a panel to examine the cost and delivery of welfare in an independent Scotland. The group is due to report in May.

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