NICOLA Sturgeon yesterday told Westminster to clean up its own welfare mess, revealing the costs of Scotland taking on systems set up by Iain Duncan Smith could run to as much as £660 million.

A letter to David Cameron released by Sturgeon yesterday showed the costs of transferring welfare powers to be a major obstacle in the delayed fiscal framework negotiations.

Offering to visit Cameron in London for 11th-hour talks in a bid to meet tomorrow’s deadline, the First Minister put set-up costs for taking on the distribution of Universal Credit and Personal Independence Payments at £400m-660m, with annual administration costs of around £200m a year.

However, Sturgeon said the Treasury had offered just £50m to cover “all transition costs associated with the fiscal framework”, including tax, welfare and other areas of spending.

Refusing to shoulder the rest of the costs, she added the current proposition “is not acceptable to us and would not be recognised by people in Scotland as fair and reasonable”.

Headed by Iain Duncan Smith, the Department of Work and Pensions (DWP) has come under repeated criticism for delays to the roll out of Universal Credit and other benefits reforms and for failing to provide detailed accounts of costs and information on progress.

Much of this is related to problems with IT systems, with more than £40m written off on software and computing costs in December 2013.

Last year the UK Public Accounts Committee said the DWP – which has defended its spending and claims to be “transforming lives” – had made “very little progress” rolling out Universal Credit despite an outlay of £700m. The transfer of limited welfare powers is central to the Scotland Bill, but the Scottish Government has already said it will walk away if the Treasury fails to agree terms ensuring that any deal is not to the detriment of Scotland, accusing them of planning a £3 billion budget cut.

Yesterday the Treasury shrugged off Sturgeon’s comments, saying the figures “are of a different magnitude to the £200m accepted by Alex Salmond during the referendum campaign as a reasonable cost to set up an independent Scotland” and suggesting that “either the Scottish Government plans on running a remarkably inefficient benefit system, or is not serious about agreeing a deal and doesn’t want the responsibility of using its new powers”.

However, devolution and welfare expert Professor Paul Spicker – who today unveils his report on Holyrood’s benefits choices for the Common Weal think-tank – said the lack of transparency around the costs of DWP reforms and further powers talks is leaving taxpayers in the dark on the facts.

He told The National: “The lack of clarity as to what the arrangements will be and what the costs will be that the Scottish Government are expecting to carry makes it very, very difficult. There are clearly matters of concern.”

John Dickie of Child Poverty Action Group Scotland warned both sides must ensure any deal looks after the best interests of the poorest in society, saying: “It is crucial that the UK and Scottish governments agree adequate resources to meet the costs of setting up the systems needed to ensure that vulnerable families get the social security support they are entitled to in an efficient, secure and dignified manner.

“The fiscal framework must ensure that adequate funding is in place to cover the set up and ongoing delivery of these vital newly devolved benefits.”

In her letter, Sturgeon told Cameron the matter is one of “increasing public concern in Scotland” and urged the Treasury to accept John Swinney’s proposals for block grant changes based on the population north of the Border to avoid “substantial detriment” to the country’s budget. On the welfare costs, she wrote: “Based on information provided by DWP and our own analysis of published data from DWP’s Personal Independence Payment and Universal Credit business cases, we estimate ongoing administration costs to be approximately £200m annually, and set up costs to be between £400m-£660m.

“Smith was clear that the devolution of welfare should be accompanied by an increase in Scotland’s block grant equivalent to existing UK expenditure in Scotland, including administrative savings and a share of the implementation and running costs ‘sufficient to support the functions being transferred’.

“The Deputy First Minister has indicated a willingness to compromise on these estimates – however, I hope you will appreciate why the Chief Secretary to the Treasury’s current offer of £50m to cover all transition costs associated with the fiscal framework (tax, welfare and other areas of spending) is not acceptable to us, and would not be recognised by people in Scotland as fair and reasonable.”

Sturgeon added: “Though time is running out, I remain committed to reaching an agreement.

“However, if we are to do so we must make substantial progress – and see significant movement from the Treasury – in a short space of time.

“It is essential that we reach agreement on the key areas of principle by the end of this week.”

The National View: Sense of theatre may well prevail for fiscal framework