Tag: welfare state

“Out of control, complicated and failing” – new report on Scottish benefit system

  • Scotland spent almost a sixth – £1 billion – more on welfare than the funding provided by the UK government in 2024/25
  • Scotland has the highest proportion of children in long-term workless households in Great Britain with child poverty targets missed
  • Jobless couple with three children can receive combined benefits worth £45,500 a year in Glasgow, equivalent to a salary of £69,000
  • New plan ahead of Holyrood elections sets out reforms to save almost £1 billion a year and refocus support on work and mental health treatment
The case for reforming Scottish welfare

The Scottish Government has poured billions of pounds of taxpayer cash into the country’s welfare state “with abandon”, according to a new report.

The research, entitled Benefitting Scotland?, finds that nearly a decade after major welfare powers were devolved, Scotland is spending significantly more than the rest of the UK on a “smorgasbord” of conflicting benefits and entitlements.

There is “minimal” evidence that the system is succeeding even on its own terms, warns the Centre for Social Justice. Persistent child poverty is running at 23 per cent, more than double the Scottish government’s eight per cent target.

At the same time, Scotland has the highest proportion of children living in long-term workless households in Great Britain at 11.3 per cent, and its rate of economic inactivity has gone from below England’s before 2016 to persistently above it.

The £28 billion annual welfare budget – almost a quarter of which is administered by the Scottish government – has ballooned out of control.

Last year Scottish ministers spent above and beyond the “block grant adjustment” – a grant allocated by the UK government to match non-devolved benefit spending – by almost £1 billion.

The cross-party think tank argues that Scotland could save hundreds of millions of pounds while achieving better outcomes.

Restricting eligibility to disability benefits for those with less severe mental health conditions and frontloading the Scottish Child Payment would save at least £800 million for the Scottish government to re-invest in treating the root causes of mental illness and supporting families directly through Whole Family Wellbeing Funding.

The report also highlights the scale of work disincentives in the system.

A couple with three children living in Glasgow can receive almost £45,500 per year by combining benefits. To match that income from work alone would require a salary of roughly £69,000 before tax from a single earner.

Even when parents move into employment, they can lose up to 79p of every additional pound earned once benefit tapers, income tax, national insurance and pension contributions are combined.

They also risk losing access to the myriad supplements layered on by the Scottish government, including the Scottish Child Payment, several Best Start Grants, a Carer’s Allowance Supplement, new Winter Heating Payments, and a plethora of one-off grants.

Ben Gregg, Head of Welfare at the Centre for Social Justice

Ben Gregg, Head of Welfare at the Centre for Social Justice, said: The Scottish government has missed its own child poverty targets, while pushing economic inactivity in Scotland from below to above England.

“The welfare system is over budget, overly complex, and failing on its own terms. With Holyrood elections this year, there is a real opportunity to create a much leaner, far more effective system, focused on changing lives and tackling the root causes of poverty.”

CSJ-Benefitting_ScotlandDownload

Strong welfare states and sustained economic dynamism can go hand in hand, think tank finds

Challenging the myth that higher social spending is incompatible with economic success, new IPPR Scotland analysis confirms that many European countries with high spending on social protection measures such as benefits, childcare and training, also sustain highly productive, innovative and dynamic economies.  

Researchers found that countries like Germany, the Netherlands, Sweden, Finland, France, Denmark, Norway, Belgium, Austria and Switzerland spend much more on social protection per person than the UK and Scotland and have also had far superior economic and social outcomes sustained over the long run.  

The UK has had lower GDP per capita throughout this past decade. Scotland’s GDP per capita, meanwhile, has been very close to the UK’s, and well below that of the 10 countries that the researchers focussed on.

This research demonstrates that high spending on social protection does more than just place a safety net for the economically disadvantaged; it helps economies to become more productive. For example:

  • Higher unemployment benefits give people the security and support to retrain, upskill and re-enter the workforce in a job that matches their skills, interests and expertise.  
  • Measures like generous childcare investment enable high employment rates for women.
  • High spending on social protection can also encourage entrepreneurial risk-taking and help facilitate economic change.  

The research shows that high-spending countries also perform well across a range of international indices of competitiveness and innovation. For instance, all the high social spending countries achieve a ranking in the top 25 nations in the 2024 Global Innovation Index, with six appearing in the top 10. Switzerland and Sweden fill the top two places.  

Ahead of this year’s election, IPPR Scotland is urging the Scottish government to take learn from these countries and lead a renewed drive to build a national consensus on economic development. The next government should also examine ways in which spending can shift towards areas such as employability, childcare, and labour market support, that directly address both social and economic objectives.

IPPR Scotland director Stephen Boyd said: “The experience of other countries shows – unambiguously – that it is possible to create a virtuous cycle between high social protection spending and economic dynamism.

“Scotland’s political parties should bear this in mind when developing manifestos and engaging in debate around this year’s election. The next Scottish government can and must build a new policy agenda. By focusing on areas like employability and childcare, we can tackle social challenges and boost the economy at the same time.”

Reacting to the report, Professor Patricia Findlay, Scottish Centre for Employment Research, Strathclyde University, said: “This report is a timely reminder that there are no necessary trade-offs between economic growth and high social protection spending – and the many wider social benefits from the latter.

“The report carefully avoids a suggestion of causation between social spending and economic growth, though a positive causal relationship has some intuitive plausibility. The challenge, of course, is in the transition – what should Scotland do now to move from a vicious circle of low relative social spending and stagnant growth to a more virtuous circle present in other successful economies?

“There is no silver bullet, but the recommendations of investing in collective design of economic strategy, more active labour market policies and, crucially, stronger structures of social partnership and dialogue, would represent important steps towards better longer-term outcomes.”