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2
1. The pensions of one million Scots are guaranteed by the UK welfare
system.
2. Spending on pensions in Scotland are higher per head than the UK as a
whole.
3. 258,000 payments are made by the UK social security system to people
in Scotland every day.
4. By pooling our resources across the UK we can share the costs of
benefits across the broader shoulders of more than 63 million people
across the UK rather than 5 million here in Scotland.
5. Scotland faces a particular challenge as our population ages faster than
the UK as a whole, with a larger increase in pensioners alongside a
smaller increase in the working-age population.
6. Spending on pensioner benefits in Scotland will increase by 3.4% of GDP
over the next 50 years significantly more than the 2.3% increase across
the whole UK.
7. 61% of people think that pensions in Scotland should be funded out of
UK-wide tax revenues.
8. The impartial Institute for Fiscal Studies calculate that Scotlands deficit
would be 5.5% of GDP in the first year of separation, 3% of GDP larger
than that for the UK as a whole.
9. The costs of setting up a new state, including a separate welfare system,
has been calculated by Professor Iain McLean of Oxford University to
reach 800 for every Scottish household.
10.Benefit spending in Scotland is around 2% higher per head of
population than for the rest of the UK.

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3
Scotlands social security system has evolved over decades, providing wide-ranging support
to people when they are in need. Initially made up of piecemeal local provision
administered by parishes, landowners, churches and charities, the system became a
universal safety net, provided to everyone across the country.
The purpose of the welfare state is primarily to smooth out risks to individuals incomes and
security over a wider population. This social security system is not something that we should
take risks with: Scots who receive benefits or a pension need to know they are secure.
The facts show just how important the UK welfare and pensions system is in Scotland:
The UK social security system pays 17.7 billion in benefits to 2.8 million people in
Scotland equivalent to 3,335 for each of us.
Over half our population receive UK social security payments and currently rely on these
payments to sustain their household finances.
It makes 258,000 payments to people in Scotland every day.
It processes 4,000 new benefits claims from Scots every day.
Overall, Scotland spends 60 per head more on pensions and benefits than the UK as a
whole this is based on individual need, but the overall costs are also reflected in the
costs of provision. We spent more on pensions, because we have proportionately more
older people, and on things like invalidity benefit because of our industrial history.

If we leave the UK, we leave that UK social security system. The nationalists have talked
about an alternative system. While they have been clear on a number of things they will not
do, they have been less than clear on what they would do and the choices they would make.
The people of Scotland deserve more than vague promises when casting their vote on 18
September. To make an informed choice, we need real information about how a social
security system would operate within a separate Scotland, how continuity would be
ensured, how it would function long-term and where the funding for such a system would
come from.
Part of this paper sets out the principles and facts which support our case that, when it
comes to social security, we are better off together as part of the UK. However, it also
addresses the nationalists proposals, identifying the important questions they raise and
some of the areas where their plans are far from robust.
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4
Our welfare system, paid for by everyone
All of our welfare payments are paid for out of taxation, paid not just by Scots but by
people in the whole UK. This matters.
Today Scotland on its own has a bigger deficit than the rest of the UK. Independent experts
agree that this gap between the money we pay in taxes and the money we spend is likely to
grow in the years ahead, as North Sea oil gradually runs out and our population gets older,
pushing up pension costs.
But despite our bigger deficit, Scotland is able to spend 330 million more in benefits and
pensions a year because the payments are guaranteed by the wider UK economy.
1

The costs
The SNP are unable to say how much independence would cost. They have admitted that
voters would not be given details of the cost of leaving the UK before we vote in the
referendum. Yet just days later they wanted us to believe that a separate Scotland could
afford increased welfare costs.
With so much doubt over what would happen to these payments, how they would be paid
and who would pay for them, the only responsible choice in September is to vote to remain
in the United Kingdom.
Our social union
Through the establishment of the welfare state in the twentieth century, the UK evolved to
become a modern social union. Our welfare state was shaped by broad recognition of the
benefits of pooling resources to provide pensions, benefits and public services across the
whole of the UK. It is an example of the continued development of our partnership across
these islands, with the dimension of social union being added to the founding political and
economic union.
The principle of allocating spending according to need, and regardless of postcode, has for a
long time been an underlying principle of UK social policy. This means that fiscal transfers
support areas with the greatest deprivation, regardless of local tax income. The principle of
this sharing union also applies across the nations, sharing the risks each face and sharing the
costs of pensions, unemployment benefits and health care.


1
Social security expenditure in the United Kingdom, including Scotland
https://www.gov.uk/government/publications/social-security-expenditure-in-the-united-kingdom-including-
scotland
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Through this partnership, the differences between Scotland and England have narrowed to
the point of broad parity. The typical person in Scotland today earns 96 per cent of the
average in England.
Contrast this with the experience of EU countries which form a union without the deeper
fiscal transfers and pooling of resources. The typical person in Latvia, which has one of the
lowest levels of GDP in Europe, has an annual income of just 20 per cent that of the average
person in Luxembourg, which has one of the highest. A similar picture is seen within the
United States, a looser fiscal union than the UK. The average person in Arkansas has half the
income of their fellow citizens in New Hampshire. The UK can therefore justifiably claim to
be an international model of the pooling and sharing of risks and resources across nations. It
is only separation which would put this at risk through ending our shared social partnership.
Benefits are the largest single government programme. As a result, not only are benefits the
main automatic stabiliser of economic activity across cycles, they are also the major
redistributor of resources across regions of the UK. This can be seen in this table showing
regional expenditure on social protection per head. Closer examination shows that spending
on individual benefits varies markedly between regions by need. For example, spending on
housing benefit is higher in London while more is spent in Scotland on disability related
benefits. The table below demonstrates the nature of our social and sharing union across
the UK.
There are both pragmatic and principled reasons to justify this social unity across the UK.
Public spending on Scottish schools and hospitals are protected by the strength and security
of the UK economy. This means that, irrespective of the economic performance of Scotland,
our public services are protected. It also delivers higher levels of public spending protected
from the volatility of oil revenues. This year provides a case study of the principle of social
solidarity in action with Scottish public spending protected even when oil revenues fell by 44
per cent, the equivalent of the Scottish schools budget.
The principled case for
social union across the UK
reflects our history. The
welfare state was drawn
together on the grounds
that people across our
country should have a
minimum standard of
living regardless of where
they live.
This is shown by the young
person in work in London
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6
supporting the child benefit of someone growing up in poverty in Glasgow, and the
revenues from oil receipts off the coast of Aberdeen supporting the person looking for work
in Aberystwyth. We share with those across the UK a single system of unemployment
assistance, a single old age pension, a uniform NHS, and more recently a common national
minimum wage.
These principles underpin our argument for the benefits of pooling resources across a wider
community. This means that risks can be managed and benefits secured in the long term, by
being part of a wider and more diverse economy. Separation would not only introduce risks
into the payment of Scotlands pensions and social security, it would break the social union
which exists across the UK.
The choice we face in September has a moral dimension. We can choose to continue the
pooling and sharing of resources or, contrary to what has been shared within Scotland and
the whole of the UK for decades, we can go it alone.
The SNP administration has formed an Expert Working Group on Welfare and Constitutional
Change (the working group) to advise on welfare policy under separation. It has so far
produced two reports, which form the current basis for the nationalists proposed social
security structure.
People in Scotland will want to hear clear details of how the nationalists intend to introduce
a robust, effective and reliable system that will ensure the continuity of benefits payments
long term and ensure that there is provision for getting people into work.
The working group reports, however, do not consider the details of many of the changes
that they and the SNP administration propose, nor have they been robustly costed. Central
to the working groups recommendations is a National Convention on Social Security, to be
held in 2015, to produce these details. It is clear that, in many cases, real proposals will not
be known until after the referendum.
The resulting framework for a social security system under separation is therefore short on
facts but long on casual promises that it will be improved. While the SNP pledged that their
referendum White Paper would provide a full prospectus for separation, it is clear that -
even seven months later the nationalists have not produced the real answers that the
people of Scotland are entitled to in this area.
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Costings that dont add up
On the subject of cost restrictions in their remit, the working group noted during their
appearance before the Scottish Parliaments Welfare Reform Committee in June 2014 that
we were given none and that we were given no cost constraints by any party.
When asked about the costs of the policies contained within the working groups papers,
Martyn Evans, the chair of the group, replied he believed there would be no significant
increase in public expenditure caused by the policies, including start-up costs.
We do not find this convincing.
Before the committee, Evans suggested savings could be made by getting more people into
work. However no analysis has been done on the employment effects of the policies.
Martyn Evans: Over the transitional period, there will be some savings because people will be better
helped into work and the system will operate better
Ken Macintosh MSP: Immediately?
Martyn Evans: Yes, I would hope so, over the transition period
The UK Government has estimated a separate welfare IT system alone would cost around
400 million, a figure that has been widely accepted as reasonable.
It is difficult to see how this figure could be raised over the transitional period, given the
falling levels of unemployment in Scotland in present. June 2014 figures show 183,000
people unemployed in Scotland, with 100,500 Jobseekers Allowance claimants. Even
significant reductions in unemployment if they were to happen would not produce a
sufficient amount of additional tax revenue to fund these extra costs.
Affordability
The working group report points to affordability of welfare by relation to the Gross
Domestic Product (GDP) of Scotland. However GDP is not an accurate calculation of the tax
revenue or public spending capability of a country.
John Kay, the First Ministers former adviser, warned the Yes campaign that GDP measures
were an inappropriate measure of Scotlands wealth--
what is produced within a countrys boundaries regardless of whom it produced by or for [] so
resource producers look richer than they are
He further concluded that Scots would make a mistake if they thought that calculation
showed independence would make them better off.
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8
Professors Jo Armstrong and John McLaren have confirmed in a report by the Centre for
Public Policy for Regions that GNI, rather than GDP, would be a more accurate measure of
Scotlands wealth and ability to afford public services.
2

The Institute for Fiscal Studies have shown how Scotland would have a considerably tighter
fiscal position outside of the UK.
However Martyn Evans said that
A simple affordability measure is whether there is a gap between what is raised in Scotland and what
is paid back through the DWP. That is the simplest measure of affordability. There is no such gap
and--
the taxes that are raised in Scotland pay for our system already
Welfare benefits are drawn from general taxation. Scotland has run a budget deficit a gap
between tax revenue and spending in 22 of the last 23 years. In the last recorded year,
53.2 billion was raised in tax from Scotland (including a full geographic share of North Sea
revenue), while 65.2 billion was spent on our public services, leaving a spending gap of just
over 12 billion. This represents a deeper level of deficit than the UK.
Position on sanctions
Sanctions in the welfare system - where claimants are penalised for failing to fulfil certain
requirements - have been a significant part of the political debate in Scotland and the rest of
the UK.
The working groups position on this is not yet given in detail. They have said that they
would retain a conditionality system, but with certain changes. The details of these changes
have been put off until after the referendum.
The chair, Martyn Evans, asked
Could we have a system in which people receive benefits without condition, so people could receive
benefits and work or go abroad and so on? No. There is clearly some level at which society must
impose conditions on the receipt of benefits
In accepting some form of sanctions would be essential, he then considered the changes, in
finding a new language to talk about sanctions
We are trying to find a new language to talk about the issue in a much more positive way. A cynic
would say that it would be sanctions by another name, but we are saying that work activation is
critical, and that conditionality is critical for trust.


2
CPPR Analysis for the Guardian newspaper May 2014
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9
However any changes would be delayed until after the referendum, with the admission
that
We would put it to the 2015 wider-society group to work out.
It is clear that, regardless of the nationalists words in this area, there are no solid policies
for reform to the sanctions system other than maintaining that sanctions will continue to
exist.
Reassessment
The working group does not make clear what its suggestions are for transitioning benefits
like ESA and DLA/PIP, both of which require assessments.
Any changeover would inevitably lead to reassessment of existing recipients, which would
not only result in costs, but also additional burdens on claimants.
Sharing services
The groups first report suggested the sharing of systems with the UK for a transitional
period. The Scottish Government subsequently announced its wish to make priority changes
to social security immediately following separation.
It has not yet set out how it would be able to consult, legislate and then design, build and
test systems within such a short period. The UK Governments Work and Pensions Scotland
Analysis paper sets out why it does not believe that this timescale is realistic and also why it
is highly unlikely that the UK would agree to share its delivery services as it is hard to see
how this would be beneficial for the continuing UK.
If a separate Scotland was to find itself using a different currency from the continuing UK, it
would not be possible to share a benefit system even for a transitional period.
Scotland's public spending is over 10% higher than the UK average. But public spending
would have to be cut in an independent Scotland. Analysis by HM Treasury came to the
same conclusion as experts such as the Institute for Fiscal Studies (IFS) and the National
Institute for Economic and Social Research (NIESR).
If we go-it-alone experts say we can expect a larger gap between the money we spend on
benefits and other services and the taxes we collect than the gap faced by the rest of the
UK. This is driven by two main factors.

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10
1. The decline of North Sea Oil revenues
North Sea oil has been a great boon for Scotland, but it is declining and getting more
expensive to extract. This means there will be much less tax revenue in the future than in
recent decades. Independent forecasts by the Office for Budget Responsibility estimate the
oil revenues will fall by 95% (as a share of the economy) over the next 2 decades. Even the
latest SNP Government figures show a big drop in oil taxes. In 2012-13 there was a 4.4
billion drop in oil revenues. That is more than the cost of all child and working tax credits
(2.2 billion) and all disability living and attendance allowance (1.9 billion). Oil revenues fell
again, by a quarter, in 2013/14, but we did not have to cut pensions or benefits to make up
the difference.
This is because, as part of the UK, the budget that pays Scottish benefits and pensions is
protected from the volatility of North Sea oil taxes. North Sea oil makes up only 1 -2% of UK
taxes, but around 20% of taxes in an independent Scotland would be accounted for through
this volatile source. It is not difficult to see how the budget for benefits is better protected,
year on year, as part of the bigger UK. Our benefits are better protected as part of a nation
with around 30 million taxpayers and 4.8 million businesses than 2.7 million taxpayers and
320,000 business taxpayers. That is the security the UK offers.
2. Scotlands population challenge
The number of Scottish pensioners will
grow from 1 million to 1.3 million over
the next 20 years.
In Scotland we have a shrinking
working-age population. This puts real
pressure on the cost of pensions but
also reduces the budget available for
benefits.
The SNP have tried to deny this but
have been caught red-handed. The UK
Statistics Authority have even rebuked
the SNP Government for their use of
statistics on this matter.
3

Despite the public statements of the


3
For details of the rebuke from the UK Statistics Authority see here http://bettertogether.net/blog/entry/the-
facts-on-pensions-the-snp-didnt-want-you-to-see
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SNP, John Swinney confirmed the truth of our argument in the leaked SNP cabinet paper
from 2012. It is worth quoting the SNP Finance Minister at length:
An important consequence of independence is that responsibility for benefits and welfare will be
discharged in Scotland in response to Scottish conditions and priorities. While expenditure on welfare
benefits is influenced by demand, especially recently when the Scottish economy was in recession,
demographics is an important factor within this for Scotland given the ageing profile of our
population.
At present HM Treasury and DWP absorb the risk of growth in demand in the widest sense and
therefore all associated costs. In future we will assume responsibility for managing such pressure. This
will imply more volatility in overall spending than at present, especially as there is little we can do
from a public policy perspective in the short to medium term to manage Scotlands demographic
position.
4

John Swinney, Leaked SNP Cabinet Paper
The Institute for Fiscal Studies, in a major piece of research on Scotlands pensions and
benefits, came to a similar conclusion to John Swinney, reporting that
5

the more rapid growth in the elderly population in Scotland, combined with the greater amounts
spent on benefits for older people (largely in the form of state pensions, but also disability benefits)
can clearly be expected to lead to more rapid growth in benefit spending in Scotland than in Great
Britain as a whole
In the longer term,
Scotlands projected
more rapid ageing is
likely to push up
benefit spending more
quickly than in the rest
of the UK, putting
Scotlands public
finances under
substantial pressure.


The IFS conclude -
This means that funding the benefits system in the decades ahead may prove somewhat more
burdensome for an independent Scotland. It will also make undertaking major reforms of the benefits
system perhaps even more difficult for Scotland than for the UK as a whole, as such reforms are either
costly or create many losers.
In their landmark report into Scotlands finances, the IFS predicted that simply to keep pace
with the UKs finances, Scotland would require spending cuts or tax increases of about


4
For a copy of the leaked Cabinet Paper see www.bettertogether.net/secretpaper
5
IFS, 2013 http://www.ifs.org.uk/bns/bn139.pdf
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12
6billion. These are not distant projections but rather would need to be implemented at the
end of the first parliament of an independent Scotland in 2021-22.
We estimate that Scotland would require a permanent tax increase or spending cut (or a combination
of the two) equal to 4.1% of Scottish national income (or about 6 billion in todays terms), to be
implemented in 2021 22, to put Scottish public sector debt on course to reach 40% of national income
by 2062 63.
6

With a significantly higher gap between Scotland as a separate country and as part of the
UK, we would be faced with the prospect of additional tax rises or bigger cuts to public
expenditure (over and above measures currently planned at a UK level). However the
nationalists have been strident in their refusal to accept the need for tax rises in an
independent Scotland:
I dont envisage increases in personal taxation in an independent Scotland.
John Swinney BBC Radio Scotland 7 February 2013.

It is not inevitable or necessary for Scotland to fund the current services we have in Scotland for tax
rates to go up.
Nicola Sturgeon BBC Online, 1 July 2013
7


Given the lack of revenue raising measures within the SNPs White Paper, not to mention
the huge spending commitments contained within that document, what would meeting the
bigger fiscal gap by cuts alone, rather than a mixture of cuts and tax rises mean?
Independent experts, including the IFS, the CPPR at the University of Glasgow, Citigroup and
Nomura, have forecast Scotlands fiscal position in the first year of independence to be over
five per cent of GDP in deficit in 2016-17, while the UKs deficit is forecast to be less than
half this level and falling. This is equivalent to a gap of 1,000 per person in Scotland, on day
one of independence.
The 6 billion of cuts or tax rises projected by the IFS, given that around 30 per cent of the
Scottish budget is made-up by welfare, would have to fall on the benefits budget. The tables
below show an outline of current spending on social security in Scotland. To put the 6
billion of cuts or tax rises in context, that figure is equivalent to almost the entire cost of the
state pension today or 2/3rds of the working age welfare budget.


6
IFS 2013 http://www.ifs.org.uk/comms/r88.pdf
7
BBC recording at 5m45s http://www.bbc.co.uk/news/uk-scotland-23126622
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Clearly a fiscal gap of this size could not be made-up through cuts alone. But even if we
assume half cuts and half tax rises, 3 billion is equivalent to the total cost of all Scottish
housing benefit and incapacity benefits combined.
Benefit Number of Scottish
claimants
Expenditure in Scotland
(billions in 2012/13)
State Pension 1,020,000 6.8
Pension Credit 248,000 0.7
Housing Benefit for
Pensioners
162,000 0.5
Disability Benefits for
Pensioners
259,000 1.0
Other Pensioner Benefits - 0.3
Share of Benefits Paid
Overseas
- 0.3
Total Costs of Scottish Pensioner Benefits 9.6

Benefit Number of Scottish
claimants
Expenditure in Scotland
(billions in 2012/13)
Incapacity Benefits 273,000 1.5
Income Support 118,000 0.2
Jobseekers Allowance 141,000 0.5
Housing Benefit 322,000 1.2
Disability Benefits 227,000 0.9
Personal Tax Credits 361,000 2.2
Child Benefit 1,023,000 0.9
Other benefits - 0.5
Share of Benefits Paid
Overseas
- 0.0
Total Costs of Working Age/Childrens Benefits 8.1

Source: DWP & HMRC
Keeping the state pension sustainable
Below is the graph which the nationalists didnt want you to see, from the impartial Office
for National Statistics. It is one of the most important statistics you will read in terms of the
affordability of Scotlands welfare system.
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14
Statisticians use a dependency ratio to calculate the number of pensioners in the population
as a proportion of the overall working age population. Scotlands dependency ratio is
increasing faster than the UK as a whole.
The nationalists have previously suggested a policy of delaying the increase in the state
pension age to 67. This does not simply cost extra in increased pension pay-outs, but also
reduces our national output as people are removed from the labour market. The cost in
additional pensions costs would be around 6 billion over ten years on their own, but the
additional reduction in our gross domestic product (GDP) would be around 9 billion.
The UK Government has stated its intention to raise the state pension age to 67 by 2028.
This is broadly in line with increasing life expectancy. In Scotland, the life expectancy for a
man after reaching the age of 65 was 14.6 years by 2030, it is expected to be around 22.1
years.
Expenditure on overall pensioner benefits is almost 80 higher per working-age person per
year in Scotland than in the UK. This differential increases over the next 20 years to almost
200. This does not take into account any additional costs of changing the state pension
age.

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Costs of administering the welfare system
The costs of administering the welfare system are considerable. In 2012-13, these costs
amounted to around 7.4 billion, with 720 million in Scotland. These operating costs
benefit from integrated service provision across the UK. A number of benefits, like
Individual Injuries Disablement Benefit, are delivered from bases solely outside of Scotland
and the infrastructure to provide them would have to be created in Scotland from scratch.
Initial costs of dividing our welfare system would also be high. The Treasury has estimated
the one-off expenditure for developing new IT systems is around 400 million.
On 3 June 2014, the Institute for Fiscal Studies published two comprehensive reports on a
separate Scotlands finances. These reports provide an update to their landmark report on
Scotlands public finances and goes further to reveal the costs of separation.
In a blow to the nationalists claims, the IFS reiterated that public spending in Scotland is
higher per person than the rest of UK average. Much of our extra welfare expenditure is
made up of benefits, such as disability allowance, which are proportionally higher in
Scotland.
What this means for every person in Scotland is higher public spending by 1,267 every year
with tax contributions 157 below the UK average.
The IFS said:
The government of an independent Scotland would likely need to make further
spending cuts and/or tax increases after the date of independence if they wanted to
bring borrowing in Scotland down to sustainable levels.
In the late 2020s and early 2030s, a slightly higher fraction of people in Scotland will
be aged 66 (1.3%) than in the UK as a whole (1.2%), suggesting the policy may
actually be somewhat more costly for Scotland.
If an independent Scotland were to retain the state pension triple lock it would
lead to the state pension increasing by more than both prices and earnings, but in an
un-transparent way. OBR projections suggest that keeping the policy long-term could
be expected to cost Scotland close to 1.5 billion a year in todays terms by the
2060s.
Total public spending for the benefit of Scotland amounted to 65.2 billion in 2012
13, or 12,265 per person. This was 11.5% higher than per capita spending across
the UK as a whole, which stood at 10,998. This is similar to the difference observed
in 201112.
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16
Onshore revenues in Scotland totalled 47.6 billion in 201213, or 8,952 per
person. This was slightly lower than the 9,109 per person raised across the UK as a
whole. This gap is similar to the gap in 201112.
Better Together is a cross-party campaign supported by the three pro-devolution parties:
the Scottish Labour Party, the Scottish Conservatives and the Scottish Liberal Democrats.
Our argument is that Scotland can avoid the huge financial risks to benefit recipients and
taxpayers and that Scotland can have more power over welfare.
All three parties have set out radical plans for increased devolution, including on welfare,
with aim of delivering the best of both worlds for Scotland: more decisions made here in
Scotland without losing the strength, security and stability that comes from having the back-
up of being part of the bigger United Kingdom. In some cases, welfare can work better and
examples of more joined-up working where reserved welfare powers are closely related to
devolved powers over things like housing or skills development are a common theme
throughout these proposals.
All three parties are clear that the social security system remains a key element of the social
union that binds the UK together. They believe that the pooling and sharing of resources
across this country is the right thing to do, and works to Scotlands advantage.
Each of the parties have broad areas of agreement such as an old-age state pension which
is applicable across the UK and paid on that basis. By doing so, we continue to enjoy the
support provided by spreading pension costs across the whole of the UK.
More Powers on Welfare Guaranteed
Here is what the three pro-UK parties have to say on welfare
Scottish Labour
Scottish Labour strongly support the continuation of the comprehensive UK welfare state,
believing in a system of pensions and cash benefits distributed largely on the same basis
across the country, especially those benefits which people have contributed to through
national insurance.
This endorses a social union as part of a sharing union, while recognising that
partnership agreements should be reached between various levels of government, with a
duty to produce common welfare objectives.
On powers related to devolved services, the Labour Party has said thatHousing Benefit,
which is linked to devolved responsibility for housing and homelessness in Scotland, and
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17
Attendance Allowance, which exists to help the elderly with the additional costs they may
incur, and which has obvious links with the devolved health and social care agenda.
Certain benefits are to remain UK-wide, in line with the belief in continuing a social union
between the various parts of the UK
Certain key benefits, notably the old-age pension, are related to national insurance contributions.
These key elements of the social union should remain reserved: the basic state pension, the additional
state pension, the contributory element of jobseekers allowance, the contributory elements of
employment and support allowance, maternity allowance, bereavement benefits and incapacity
benefit. There is an overriding argument for reserving other, explicitly redistributive but non-
contributory benefits, such as the non-contributory elements of jobseekers allowance, the non-
contributory elements of employment and support allowance, income support and pension credit.
Scottish Conservatives
The Scottish Conservatives have pointed out that our social union underpins economic
union and we believe it is important that the two are not detached from each other and
that it is a key plank of our social union that social security payments are paid according to
need, and not geographical region.
They have also suggested that welfare powers relating to devolved areas should themselves
be devolved, observing that where a particular cash benefit is closely related to a devolved
policy area, there is a stronger case for devolution. This particularly applies to Housing
Benefit and Attendance Allowance, although with the former their report notes that there
may be administrative hurdles as the benefit is incorporated into the Universal Credit
payment.
However Scottish Conservative proposals note that there is no public appetite for certain
benefits such as Jobseekers Allowance, maternity pay and Disability Living Allowance to be
devolved.
They have held that everyone in the UK wherever they live should be entitled to at least
the social security provided for in UK legislation at Westminster but that, if the Scottish
Parliament wish to supplement payments, it may be that Holyrood ought to be able to
legislate accordingly.
On the subject of the state pension, there is a conclusion that this should remain reserved
and that, drawing on Social Attitudes research, there is not particular desire in Scotland for
the state pension to be different, observing that it is an important component of the
freedom of mobility within the UK that citizens should be free to retire wherever they wish.

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18
Scottish Liberal Democrats
The Scottish Liberal Democrats have stated that the strategic planning of welfare should
become a joint responsibility of both the Scottish Parliament and the UK Parliament, with
partnership powers building towards common objectives that would be agreed at joint
meetings between governments.
One level of government would have a legally binding power to consult the other, and a
power of initiative would allow one to formally request action from another in line with
common objectives.
There would also be a constitutional duty to tackle poverty through efforts at every level of
government.
Their proposals have outlined the devolution of a number of bodies that promote work,
such as the Jobcentre Plus network and the governments Work Programme. They further
note that the cash payments to those seeking work would continue to be made by the UK
Government but full responsibility for skills and training would pass to the Scottish
Government.
These proposals also agree that pensions should continue to be paid at the UK le
Scotland would require to set-up our own separate benefits system, employment support
service, tax credit system and pensions system. However, with less than 2 years until we
would become a separate country, it is astonishing that the SNP have no firm plans for the
delivery of benefits and pensions in Scotland.
Criticism of the lack of any plan from the nationalists has even come from their own
advisers. The first report of the SNPs Expert Group on Welfare found that there was a
serious risk of disruption to benefits payments if we were to leave the UK benefits
system.
8

The SNP simultaneously claim that Scotland could continue to use the welfare system of the
rest of the UK during any transition period while also claiming that Scotland would pursue a


8
Expert Working Group on Welfare and Constitutional Reform, 4.52 Immediately separating these services
would present serious risks to the continuity of payments to people in both Scotland and England
http://www.scotland.gov.uk/Resource/0042/00424088.pdf
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radically different welfare structure as a priority. However, their own Expert Group warned
that it could take years to establish a separate Scottish welfare system.
9

The SNP have not yet set out how they would be able to consult, legislate and then design,
build and test a new welfare structure within 18 months. The UK Governments Work and
Pensions Scotland Analysis paper sets out both why it does not believe that this timescale is
realistic, as well as the barriers to sharing services with the continuing UK. If Scotland did
not use Sterling as its currency, it would not be remotely possible to share a benefits system
in any way.
Complex new IT systems would need to be established. There would have to be migration of
data across systems. Creating the new system would take expertise and great expense. Set
up costs for IT alone are estimated by the DWP at 300million-400million. This means the
cost for establishing a welfare IT system could be larger than the entire start-up costs
suggested by the First Minister recently.
In terms of commitments, many of them have not been costed or detailed. The SNP have
said they seek to abolish the Work Capability Assessment, but have not provided detail on
what they would put in its place. They have indicated they wish to move benefits uprating
to the CPI inflation index without considering the cost implications.
Even where costings are made for example, an additional 60 million a year increase in
the Carers Allowance these are unfunded. That would not be acceptable in a political
partys manifesto for a single general election, never mind a plan to create an entirely new
state.
Leading nationalists also claim that, because there are elements of the UK delivery system
located here, Scotland already has the entire infrastructure we need to run a welfare
system. However, this completely misunderstands the nature of DWPs operations in
Scotland. For example, 450 Scottish workers at the Dundee Pensions Centre service the
North and East of Scotland, the Highlands and Islands, but much of their work covers
Yorkshire and Central England. Likewise many benefits paid in Scotland are only
administered from DWP sites in England and Wales.
The SNP Government have made clear that they plan to stop the implementation of
Universal Credit
10
and that 370,000 households would instead by transferred to some, as yet
undefined, alternative benefit, at some undetermined point in the future, presumably after
wholesale re-assessment of everyone on these benefits.


9
http://www.scotland.gov.uk/Publications/2013/06/8875/6
10
White Paper Q&A http://www.scotreferendum.com/questions/what-will-happen-to-universal-credit-and-
the-personal-independence-payment-introduced-by-the-westminster-government/
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The SNP are effectively asking the hundreds of thousands of Scots who depend on these
benefits to vote for independence without any information about which benefit they would
be transferred to, when they will be assessed for this new benefit, or what rates this new
benefit would be paid at.
Case Study: Ireland
In 2013 Ireland announced cuts to the government budget totalling 2.5 billion (2.1
billion). These measures have been forced on the government in an attempt to reduce its
deficit which increased rapidly following the financial crisis. Pensioners will be hit hardest by
these measures.
The transitional state pension, paid to those about to reach the pension age, was scrapped,
leaving many due to retire out of pocket.
Non-pension benefits have also been cut for Irish pensioners. 1 in 10 of the over-70s will
lose their full medical card entitling them to free healthcare. Furthermore, a subsidy of 114
per year to pay for pensioners telephone bills will be scrapped and an 850 death grant to
pay for funerals will be abolished.
The Irish case is instructive for Scotland. With a higher deficit projected if we were to leave
the UK, huge financial sector and a rapidly ageing population there are key similarities
between the two countries. For example, in Ireland, there are about six people working for
every retired pensioner. In 50 years time, this will drop to just 2.3 working people per
pensioner. Compare this to Scotland where the proportion is set to be similar to Irelands,
unless immigration can be increased, in just 20 years time.
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A new poll across the UK shows that there is overwhelming support for continuing the UK
social security system, where the taxes paid by everyone across the UK support an equal
right to, and level of, benefit payments to citizens everywhere in the UK.
Three quarters of people in Scotland believe that welfare payments should be the same
throughout the UK, with only 2 in 10 believing they should diverge. Similarly more than 6
out of 10 people in England and more than 7 out of 10 people in Wales share this strong
support for equal provision throughout the UK.




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The broad support for equal levels of payment is complemented by the clear belief that the
costs of pensions and unemployment benefits should be met across the UK as a whole. Two-
thirds of people in Scotland support the view that old age pensions and welfare should be
funded from taxes across the UK.
The similarities in views across the UK are again evident. More than 6 in 10 people in
England support pensions and welfare being funded across the UK, with around 8 in 10
people in Wales sharing this view. This underlines the overwhelming support for pooling
resources across the UK.








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Independent experts and official projections are clear: not only would an independent
Scotlands finances be less sustainable with separation, the costs of our welfare budget
would increase.
The long-term sustainability of our social security system is important. Making realistic
future projections for demographics and spending are one of the main responsibilities of
any government.
The nationalists still have few answers on welfare. But we can be sure that going it alone
would mean
Less to spend on our welfare system
Additional costs spent on administration
A population time-bomb ready to hit just as our public finances are projected to
decline
The silence from the nationalists on some of the central components of welfare expenditure
represents a major concern for some of the poorest in our society. It is entirely reasonable
to assume that a separate Scotland would lead to considerable cuts in the safety net
provided to all of our citizens.
One of the biggest concerns must be that the SNP administration has refused to outline the
costs of setting up a separate welfare system for Scotland. Based on the costs of previous
changes to welfare structures, we can be confident this would run into the hundreds of
millions at the very least.
But without the nationalists outlining their own plans, and how they intend to pay the
additional costs, we simply cannot know what their proposals entail.
Within the UK, we benefit from pooling and sharing our resources across a larger economy
making our welfare system much more affordable. The nationalists only answer on welfare
is uncertainty.
Our welfare system is better as part of the United Kingdom. We want to keep it that way.