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Trouble ahead as UK carves up welfare budget

You didn’t want any, did you Wales? Shutterstock pie

In the early morning of the day after the Scottish Referendum, David Cameron stood on the steps of 10 Downing Street and pledged devolve further powers to Scotland, including income tax powers and “welfare”. Similar constitutional arrangements would be made for Wales, Northern Ireland and even England, he said.

The social security system in the UK is huge. It accounts for a quarter of all public expenditure and includes pensions, job seeker’s allowance, housing benefit, free school meals, child benefits and disability benefits, to name but a few. It takes hundreds of thousands of people to administer and maintains the living standards of a large minority of the population at any one time, but everyone at some time.

Scotland already has some control over its social security decisions. Council Tax Benefit has become Council Tax Reduction for Scottish claimants, for example, while help paying for prescriptions and eye tests is not means tested as it is in England. The Scottish government has also made discretionary housing payments available and has announced funding measures which effectively abolish the bedroom tax.  

But there is much more to decide. If benefits such as the basic state pension or means-tested benefits are devolved, a number of issues will arise.

Will Scotland pay for them? Can they pay for them? Will there be any agreement to attempt to ensure that the amount of benefits available to English and Scottish citizens are equal? If not, what happens about cross-border entitlements? If Scotland decided to tackle child poverty by increasing benefits, English families might even move across the border to get a better deal.

It has been suggested that one part of the system that could be devolved is housing benefit. But housing benefit is to be replaced by the universal credit – a policy which is very slowly being rolled out by the Department for Work and Pensions. Would that mean that the universal credit in Scotland would be different to the universal credit in the rest of Britain?

The case of Northern Ireland

The situation in Nothern Ireland shows just how tricky these problems can be. This part of the UK currently finds itself in social security limbo because these questions are so difficult to answer.

Since 1920, Northern Ireland has had devolved responsibility for social security. However, its legislators have long been committed to parity – a promise that a citizen of Northern Ireland should receive the same support as a citizen anywhere else in the UK.

But while the benefits system is essentially the same, benefits claimants in Northern Ireland have often found themselves in rather different circumstances. Northern Ireland does not have council tax, for example, so council tax benefit never existed. And because the prices of food and fuel were often higher there than in other parts of the UK, the purchasing power of benefits was lower.

The UK government’s 2012 Welfare Reform Act failed to make it through the Northern Ireland Assembly, so many of its headline measures have not been enacted there. Universal Credit, the bedroom tax, the benefit cap and Personal Independence Payments don’t apply in Northern Ireland – and are unlikely ever to apply.

In retaliation, the UK Treasury is fining Northern Ireland £5m for every month it fails to implement the reform – and other services are already being cut to make up the shortfall. It’s not clear what will happen next but if Northern Ireland continues to stick to its old system, it will do so at its own expense – and it might not be able to afford it.

Stick or twist?

So many elements of the UK government’s welfare reforms are unpopular that Scotland may well decide to go its own way. The Northern Ireland Assembly’s rejection of the changes is a strong indicator of this. Scotland may well decide to be more generous with its benefits if it is given more control over them but it may open up all kinds of problems for itself along the way.

Social security is the base of solidarity in the UK and is more important than education or health. Our right to support is the same, whether we live in England, Scotland, Wales or Northern Ireland. It is the glue that holds us together. But it would be little surprise to see devolved nations wanting to offer a fairer deal than Westminster currently offers families, disabled people and the unemployed. The question is how to make that a reality.

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