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Your Scotland, Your Voice: A National Conversation




4.1 Scotland has a strong tradition of striving for a fairer and more inclusive society, combining equality of opportunity to thrive and excel, with support for those in need.

4.2 There are a number of important areas of government policy that should build on those traditional Scottish values. Welfare support and benefits should be responsive to the specific needs of individuals and the country: its economy, housing, geography and demographics. People should be supported back into work, and those who cannot work should not be abandoned to a lifetime of poverty and struggle. Those who suffer from disadvantage or discrimination should be protected.

4.3 Under the current devolution settlement, the major systems for providing social justice - the taxation and benefits systems - are reserved to the United Kingdom, as is the legislation to protect and promote equalities.

4.4 The Commission on Scottish Devolution recognised the close relationship between devolved policy, for example on poverty and housing, and the reserved benefits system. The Commission recommended a formal but very limited role for the Scottish Parliament and Government in these matters. Devolution of greater responsibility for benefits would allow more integrated policy to tackle poverty in Scotland, but would also require devolution of taxation, and full financial responsibility for Scotland.

4.5 With independence Scotland would be responsible for addressing all of these issues, and for designing and implementing a taxation and benefits system integrated with other policies on skills, education and family support to address issues of poverty and exclusion. Scotland would also be responsible for ensuring that all its citizens are treated fairly and equally, and enjoy the full protection of the law.


Social inclusion and poverty inScotland

4.6 Around one in six people in Scotland are living in relative poverty - that is, their income is so far from the norm that they face difficulties participating effectively in society. This means that around 840,000 Scots live in poverty, including 200,000 children and 200,000 pensioners. 90 Poverty levels in Scotland are better than the United Kingdom as a whole, but the United Kingdom is above the average for other European Union countries for child and pensioner poverty. 91 Inequalities in health, education and employment opportunities are passed from one generation to another: children who grow up in poverty are more likely to have children who suffer from poverty, repeating the cycle. 92

Current position

4.7 Scotland is responsible for a number of services which influence employment prospects and life chances, including education, training, skills, healthcare and childcare. However, the major mechanisms for addressing poverty - social security benefits, tax credits, the minimum wage and employment support - are reserved to the United Kingdom Government.

4.8 In important areas Scotland cannot design or deliver policies to address its social needs. For example, Scotland cannot determine eligibility for, nor set the levels of, benefits, and cannot supplement existing United Kingdom schemes for particular social objectives - for example supporting students or providing child care - without the recipient risking the loss of existing United Kingdom benefits or tax credits. Equally, Scotland cannot opt out of changes by the United Kingdom Government which are not appropriate for Scotland, for example broad market areas for Housing Benefit not suitable for Scottish conditions. 93 Scotland is also constrained in developing devolved policies where there are connections with the reserved benefit system, for example local government taxation. The United Kingdom Government withdrew Attendance Allowance from those receiving free personal care, adding £30 million a year to the costs borne by the Scottish Government.

Welfare recommendations of the Commission on Scottish Devolution

4.9 The Commission concluded that the welfare system should continue to be reserved, as it ensures common social citizenship throughout Great Britain, and the complexity of the social security system could lead to difficulties in devolving any one element.

4.10 The Commission recommended:

  • Scottish Ministers, with the agreement of the Scottish Parliament, should be able to propose amendments to the Housing Benefit and Council Tax Benefit systems in Scotland connected to devolved policy
  • a formal consultation role should be built into the commissioning process for welfare to work programmes to take into account the views of the Scottish Government
  • the Deprived Areas Fund should be devolved to the Scottish Parliament
  • the United Kingdom Government should explore devolving the discretionary elements of the Social Fund

4.11 These recommendations recognise the close link between devolved policies and the reserved benefits system, and embody an important principle: that the Scottish Government has a legitimate interest in the development and delivery of these policies in Scotland. However, the recommendations do not give Scotland a substantive role in decision making. There is no obligation on the part of the United Kingdom Government to accept Scottish proposals, even when these have been agreed by the Scottish Parliament.

4.12 Devolution of the Deprived Areas Fund would enable Scotland to plan and spend in a more integrated and strategic fashion, but there is no commitment to a Deprived Areas Fund beyond 2011. Similarly, devolving elements of the Social Fund would present opportunities to align the funding better with Scottish priorities.

Full devolution

4.13 Full devolution would allow Scotland to develop a benefits system guided by a number of key principles to eradicate poverty and reduce income inequalities: 94

  • a fair and transparent benefits system, sympathetic to the challenges faced by people living in poverty and providing confidence in the security of their income
  • benefits, tax credits and employment support systems working in harmony to support those who can move from poverty through work, with financial benefits for working that are significant and sustained
  • transitional support into employment should be transparent, responsive, quick and effective, so successful employment is not undermined by financial uncertainty
  • for those that cannot work, benefits must provide a standard of living which supports dignity, freedom and social unity

4.14 It would be possible for Scotland to develop a devolved benefits system within the United Kingdom. In Northern Ireland social security, child support and pensions are devolved and there is a separate National Insurance Fund.

4.15 However, for full devolution of the benefits system, there would need to be appropriate levels of fiscal autonomy in Scotland. It would be difficult for Scotland to take responsibility for the levels of and eligibility for benefits without being responsible for any resulting costs, or being able to take advantage of any savings. In turn, this would require Scotland to have substantial responsibility for raising its own taxes and designing a system to meet both welfare and wider economic needs. 95 This seems unlikely while the United Kingdom has a one-size-fits-all welfare system. 96


How do you propose to
fund pensions, national
insurance, benefits etc
on independence?

(Haddington National Conversation event, 28 September 2009)

4.16 Independence would give Scotland responsibility for the taxation and benefits system. On independence benefits, tax credits and the state pension would continue to be paid as now in an independent Scotland. It would be for future Scottish administrations to deliver improvements to the system, designed for Scottish needs.

4.17 In both 2006/07 and 2007/08, a smaller percentage of government revenue was spent on welfare in Scotland than in the United Kingdom as a whole: spending on social protection accounted for 34% of total government revenue in the United Kingdom, but 33% in Scotland, including a geographic share of North Sea revenues. 97

4.18 A range of factors would affect the design and delivery of a taxation and benefits system for an independent Scotland, including the overall effect on the economy; the balance between reasonable taxation and minimum standards of care and guarantees of income; incentives to earn and work; and the cost to public finances. These all need to be balanced with the economic circumstances and the priorities and needs of the nation at any given point. For example, the support that might be offered to home owners during a recession might differ from that offered at other times.

4.19 The welfare system of an independent Scotland could also be guided by the key principles to eradicate poverty. For example, a new system of benefits would avoid poverty traps, where little or no financial benefit is gained from employment because means-tested benefits are withdrawn. Those attending training courses or doing voluntary work to improve their employment prospects would not be penalised by losing benefits. Reductions in benefits to reflect people's improved circumstances would be set to match policy objectives, and integrated with the overall taxation system.

4.20 The welfare system could be integrated and different forms of support be made complementary. For example, free child care or personal care would not result in the loss of a corresponding cash benefit. Similar decisions could be made on payments for a particular purpose - for example to support children being cared for by relatives - which currently result in the loss of other payments to support income. 98

4.21 An independent Scotland could develop its own flexible approaches to social issues, such as preparing people to return to work, or bringing together local and national services to meet the different needs of different individuals. A one-size-fits-all rule-based system cannot take account of the diversity of individuals' wishes and needs. For example for some lone parents a voluntary approach to removing barriers to employment may well
be more appropriate than current United Kingdom proposals for obligatory skills training when children reach a certain age.

4.22 A key element of the welfare system is that people are able to understand easily what benefits they are entitled to, and how to access the support available. Greater integration in an independent system would improve people's confidence and their understanding of their entitlement. This would address the current level of take up, estimated at 78-88% for income support; 61-70% for pension credit; 80-87% for housing benefit; 62-68% for council tax benefit; and 52-60% for job-seekers allowance. 99


Current responsibilities

4.23 Many responsibilities for housing and regeneration policy are devolved, including funding, land-use planning, tenancy rights, housing quality, property law and regulation of landlords. Significant progress has been made since devolution, including homelessness legislation, measures to improve the condition of housing stock in the social and private sectors, and introducing the first national mortgage support scheme for homeowners at risk from repossession. Scotland's housing differs from the rest of the United Kingdom: there is still less private housing and a higher proportion of socially rented stock; housing has been more affordable than the United Kingdom average and the housing market less volatile; Scotland's climate affects approaches to energy efficiency and fuel poverty; and there is a different legal system.

What would the Scottish Government do
to address carers' problems financially,
were we to have independence?

(Melrose Summer Cabinet, 28 July 2009)

4.24 However, important policy mechanisms such as inheritance tax, Stamp Duty and social security system are reserved to the United Kingdom. The distinctive features of the Scottish housing landscape mean that an approach which may be appropriate in other parts of the United Kingdom will not necessarily deliver for Scotland.

Housing recommendations of the Commission on Scottish Devolution

4.25 The Commission recommended:

  • that Stamp Duty Land Tax should be devolved to the Scottish Parliament, with a corresponding reduction in the block grant
  • Scottish Ministers, with the agreement of the Scottish Parliament, should have scope to propose new arrangements for Housing Benefit and Council Tax Benefit when these are connected to devolved policy changes

Stamp Duty

4.26 Responsibility for Stamp Duty would be a useful addition to Scottish housing and economic policy. Applying Stamp Duty rates to individual properties within bulk purchases could encourage institutional investment in the private rented sector. Stamp Duty could be used to achieve wider objectives such as incentivising energy efficiency. Stamp Duty holidays could relieve stressed markets. However, if only limited taxes are devolved, it would not be possible to adjust other taxes or borrow to compensate should the base of those taxes fluctuate, as Stamp Duty has recently.

Housing benefit

4.27 The wide array of social security benefits and tax credits available in the United Kingdom are interdependent. Housing benefit is a passport to other benefits such as income support. Changes to any element of housing benefit are likely to impact the coherence and the cost of the overall benefits system. The role recommended for Scotland may be more apparent than real.


4.28 As in other areas, housing and regeneration policy would benefit most from the increased fiscal and economic responsibilities that independence - or full devolution -would bring to Scotland. Housing, particularly the social rented sector, also relies heavily on Housing Benefit to fund initiatives and responsibility for this would assist integrated and focused decision making in Scotland.


4.29 Scotland has experienced a lack of housing, particularly affordable housing. One fiscal mechanism that might address this issue in rural areas is Inheritance Tax. The beneficiaries of a will often need to sell quickly to pay the Inheritance Tax, moving stock from the rental market and reducing options for those who cannot or do not want to buy. This problem affects Scotland disproportionately because of the high proportion of rural areas compared to the rest of the United Kingdom. Responsibility for Inheritance Tax and other taxes would allow Scotland to address this issue.

Funding housing policy

4.30 There are two distinct streams of housing policy being implemented in Scotland, one set at a United Kingdom level through the benefits system and one set at a Scottish level. For example, the Scottish Government subsidises the social housing sector by providing development grants to build new low-cost homes for rent. Housing benefit currently meets about two-thirds of the total rents in the sector, or £1 billion a year. Any significant changes to housing benefit affect both tenants and the devolved policy on investment in social housing in Scotland. As housing benefit decisions are taken for the United Kingdom as a whole, Scotland has little influence on the overall balance between these sources of funding.

With some of the worst housing stock in Europe,
and targets that we have committed to in terms
of achieving zero-carbon homes by 2016, what
is the Scottish Government's role in achieving
zero-carbon development?

(Dumfries Summer Cabinet, 29 July 2008)

How can the government truly facilitate
an equal, equitable Scotland in which racial
equality is maintained?

(Edinburgh CEMVO National Conversation event, 22 April 2009)


Current position

4.31 Equal opportunities is largely reserved to Westminster. There are two exceptions which enable Scottish Ministers to:

  • encourage equal opportunities
  • place duties on Scottish public bodies, and cross-border bodies with responsibility for devolved matters, requiring them to make arrangements to ensure they are operating within the law

4.32 Since devolution, Scottish Ministers have used these responsibilities to advance equality in Scotland. It has also been possible to pursue different policies within the context of the legal framework. For example, equality provisions have been incorporated into Scottish legislation on housing, education and local government. The Scottish Parliament has introduced legislation on hate crime. The Scottish Government's policy on improving community relations with asylum seekers differs from that of the United Kingdom Government. Scottish Ministers have placed a duty on Scottish public authorities to report on equal pay.

4.33 The Equality and Human Rights Commission is a United Kingdom body operating in Scotland with a Scotland Committee and Scottish Commissioner. It is a statutory body with responsibility for equality and human rights, but only reserved human rights matters in Scotland. The Scottish Human Rights Commission has responsibility for devolved human rights matters.

Equality recommendations of the Commission on Scottish Devolution

4.34 The Commission did not recommend new arrangements. However, the Commission's recommendation that the Scottish and United Kingdom Parliaments discuss and agree common social rights could potentially include reference to equality.

Full devolution

4.35 Evidence to the Commission advocated devolution of equal opportunities, as responsibility for equality legislation should not be separate from key devolved policies such as health, education, housing, family law, mental health, local government and justice. There are particular differences in Scotland's demographics and geography and its experience of discrimination and inequality, such as sectarianism. Devolution of equal opportunities would allow legislation on equality as it applied to devolved matters. Equality legislation passed in Scotland would not apply to reserved matters such as employment, and consideration would need to be given to areas where there are reserved and devolved responsibilities, such as transport.


4.36 Scotland is an increasingly diverse nation and its people have differing needs and experiences. Taking responsibility for equal opportunities within an independent Scotland would allow equality legislation to be promoted and enforced. Equality legislation would be developed in the Scottish policy context and to ensure coherence with legislation in other areas such as health, education and housing. In an independent Scotland, it would be possible to establish clear lines of accountability, and to determine distinct mechanisms for securing, promotion and enforcement of equal opportunities.

4.37 To follow international best practice in equal opportunities Scotland would continue current United Kingdom commitments to European legislation and a range of International conventions such as the UN Convention on the Elimination of Discrimination against Women ( CEDAW) and the UN Convention on the Rights of Disabled People. With independence, Scotland could implement the requirements of these conventions taking account of the Scottish context.


4.38 Under the current devolution settlement the major tools to promote a socially just society remain reserved to the United Kingdom. While it would be possible to devolve to Scotland responsibility for aspects of the benefits system, or a role in United Kingdom policies, full devolution would require Scotland to take responsibility for its finances and its taxation system to ensure an integrated approach to those requiring support. The recommendations of the Commission on Scottish Devolution fall far short of this level of competence for Scotland.

4.39 With independence Scotland could address the needs of all in society, combining reliable and transparent support from benefits with opportunities for training, support for housing and child care, and taxation incentives integrated within an overall system that did not impose financial barriers to those returning to work. Scotland could also ensure that it took account of the diverse needs of its population, promoted equality and addressed the barriers which prevent people from playing a full role in society, that its most vulnerable groups, and those suffering discrimination, received protection and that international standards for equality were upheld.