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SNP fails to account for billions in welfare and pensions pledge, says IFS SNP fails to account for billions in welfare and pensions pledge, says IFS
(35 minutes later)
Nicola Sturgeon has failed to include billions of pounds of extra welfare and pensions costs in her plans to increase UK public spending by £165bn in the next parliament, the Institute for Fiscal Studies has said.Nicola Sturgeon has failed to include billions of pounds of extra welfare and pensions costs in her plans to increase UK public spending by £165bn in the next parliament, the Institute for Fiscal Studies has said.
The IFS told the Guardian that key Scottish National party pledges, including freezing the state retirement age, increasing universal credit payments, scrapping the bedroom tax and retaining child benefit, are not covered in the first minister’s proposal to raise public spending across the UK by 0.5% a year. The IFS has told the Guardian that key SNP pledges, including freezing the state retirement age, increasing universal credit payments, scrapping the bedroom tax and retaining child benefit, are not covered in the Scottish first minister’s proposal to raise public spending across the UK by 0.5% a year.
To pay for the list of promises would require cuts or tax rises of tens of billions of pounds a year if implemented UK-wide, increasing pressure on the SNP to detail the total costs of its pledges and how they affect its longer term deficit reduction target. To pay for the list of promises would require cuts or tax rises of tens of billions of pounds a year if implemented UK-wide, increasing pressure on the SNP to detail the total costs of its spending pledges and how they affect its longer term deficit reduction target.
Gemma Tetlow, a senior IFS analyst, said Sturgeon’s £165bn pledge only covered day-to-day departmental spending on areas such as education, health or transport. Following the publication of the IFS’s original assessement, the Scottish government said their proposals had been misunderstood and contacted the IFS to complain.
“Many of the other explicit policy objectives, such as anything on welfare and state pensions, lies outside [departmental spending] and thus would have to be funded separately,” she said. An aide to Sturgeon told the IFS and the Guardian that the £165bn proposals were intended to be indicative of how much money could be reallocated by increasing overall government departmental spending by 0.5%, adding that they were not designed to limited to that spending.
Gemma Tetlow, a senior IFS analyst, said that if that was the case, it still raised significant questions about how much money would be available for everyday budgeting. “We know how much they want across total spending relative to the UK government’s plans. However, they have also made some new commitments about benefits.
“Therefore, unless they’re planning to raise taxes to pay for all these things, that means the money available for government departments will be less than their illustrative numbers would suggest.”
The SNP has yet to cost any of these pledges, increasing opposition attacks on its economic strategy.The SNP has yet to cost any of these pledges, increasing opposition attacks on its economic strategy.
Kezia Dugdale, the Scottish Labour party’s deputy leader, said: “The SNP’s economic credibility is in tatters. It’s bad enough that the SNP have made billions of pounds of uncosted welfare spending promises without even a hint of how they would be paid for.Kezia Dugdale, the Scottish Labour party’s deputy leader, said: “The SNP’s economic credibility is in tatters. It’s bad enough that the SNP have made billions of pounds of uncosted welfare spending promises without even a hint of how they would be paid for.
“What’s worse is that the SNP’s plan for full fiscal autonomy would break up the UK welfare state, would mean an extra £7.6bn of cuts for Scotland, and remove the safety net from underneath the most vulnerable people in Scotland. It’s a reckless plan that would be devastating for Scotland.”“What’s worse is that the SNP’s plan for full fiscal autonomy would break up the UK welfare state, would mean an extra £7.6bn of cuts for Scotland, and remove the safety net from underneath the most vulnerable people in Scotland. It’s a reckless plan that would be devastating for Scotland.”
The fiscal analysis comes the day after Sturgeon recommitted her party to pursuing full tax, welfare and fiscal autonomy for Scotland within the UK. The IFS analysis comes the day after Sturgeon also recommitted her party to pursuing full tax, welfare and fiscal autonomy for Scotland within the UK, instead of a new vote on independence.
According to the Department for Work and Pensions, postponing an increase in the state retirement age from 66 to 67 would cost £6bn over eight years in Scotland, and £74bn for the UK as a whole. The loss in tax and national insurance payments from those pensioners not then working would be a further £11bn. However, the Scottish government’s new position is different to the explanations implied by its own official documents as well as detailed analyses produced on its plans by the UK Treasury. They referred only to day-to-day departmental spending, known as DEL, not welfare and pensions spending – a distinct part of the budget known as annually managed expenditure (AME).
Abolishing the bedroom tax across the UK – a policy backed by Labour, the Lib Dems and the SNP – would cost £360m a year, rising in several years to £500m. The Tories are debating moving all child benefit payments into Universal Credit, which could save £4.8bn depending on what income cap is introduced. Sturgeon’s aide said that while the Scottish government documents referred only DELand did not factor in AME, she said that did not mean that that extra money could not be allocated to welfare budgets.
A separate analysis by the IFS has already concluded that Scotland would be left with a £7.6bn black hole in its finances if it pursued fiscal autonomy because falling oil revenues would leave the country with a tax shortfall. All the SNP’s proposals for increased or protected spending were affordable, she continued. “It’s all perfectly within that headroom. It’s then up to the party or any government to look at that headroom and spending available, and look at where and how to spend it.”
It remains unclear how Sturgeon could collaborate with other parties at Westminster to slowly cut the deficit and protect welfare spending across the UK, while pressing ahead with her quest for fiscal autonomy. According to the Department for Work and Pensions, postponing an increase in the state retirement age from 66 to 67 would cost £6bn over eight years in Scotland and £74bn for the UK as a whole. The loss in tax and national insurance payments would be a further £11bn.
Abolishing the bedroom tax across the UK – a policy backed by Labour, the Liberal Democrats and the SNP – would cost a further £360m a year, rising in several years to £500m. The Tories are debating moving all child benefit payments into Universal Credit, which could save £4.8bn depending on what income cap is introduced.
A separate analysis by the IFS has already concluded that Scotland would be left with a £7.6bn gap in its finances it pursued fiscal autonomy because falling oil revenues would leave the country with a tax shortfall.
The dispute raises also fresh questions about the viability of the SNP’s plans to collaborate with a minority Labour government and other minority parties at Westminster.
It also remains unclear how Sturgeon could cooperate with other parties at Westminster to slowly cut the deficit and protect welfare spending across the UK, while pressing ahead with her quest for full fiscal autonomy.
Sturgeon told a BBC debate on Wednesday night: “I don’t think it is any secret that I want Scotland to have as many powers over our own economy and our own fiscal levers as soon as possible.Sturgeon told a BBC debate on Wednesday night: “I don’t think it is any secret that I want Scotland to have as many powers over our own economy and our own fiscal levers as soon as possible.
“As Scotland’s voice in the House of Commons, if the SNP is there in numbers we will be arguing for as many powers to come to Scotland as quickly as possible. I would like it as quickly as the other parties agree to give it.”“As Scotland’s voice in the House of Commons, if the SNP is there in numbers we will be arguing for as many powers to come to Scotland as quickly as possible. I would like it as quickly as the other parties agree to give it.”
Meanwhile, Labour attacks intensified after the SNP minister Derek Mackay confirmed on BBC Radio 4’s Today programme that the Scottish government had accepted the forecast of a £7.6bn black hole. Labour attacks intensified after the SNP minister Derek Mackay confirmed on BBC Radio 4’s Today programme that the Scottish government had accepted the forecast of a £7.6bn black hole.
Mackay said: “I’m not challenging the work that the IFS has done,” before insisting that fiscal independence would allow the Scottish economy to grow fast enough to close the gap. Mackay said: “I’m not challenging the work that the IFS has done,” before insisting that fiscal independence would allow the Scottish economy to grow fast enough to close that the gap.
Paul Johnson, director of the IFS, told the same programme that moving Scotland out of the current UK-wide spending system “would leave Scotland with a much more substantial fiscal deficit, and it’s worth putting that in context: [in] the UK context, £7bn would translate into about £70bn, so it really is quite a substantial number.” Paul Johnson, director of the IFS, told the same programme that moving Scotland out of the current UK-wide spending system “would leave Scotland with a much more substantial fiscal deficit, and it’s worth putting that in context: [in] the UK context, £7bn would translate into about £70bn, so it really is quite a substantial number”.
These extra welfare and pension promises have become a key part of the SNP’s strategy for replacing Labour as Scotland’s largest party in the Commons, while the first minister has repeatedly accused Labour of planning spending cuts as deep as the Tories.
Sturgeon won widespread interest and plaudits after she used a speech at University College London in February to set out her alternative plans for public spending and cutting the deficit more slowly. The speech was part of her popular challenge to the Tories’ “austerity agenda”.
Claiming the Scottish government had always “balanced the books”, she said: “We could take a different approach to the crude cuts that reduce work incentives and impact directly on disabled people and families with children. We could manage the deficit down, without destroying the social fabric.”
At the time, Scottish government forecasts said £180bn more could be spent. But her officials revised that down to £165bn at the last budget.