SNP politicians have renewed calls for welfare powers to be devolved to Scotland after a new report claimed Scots would be disproportionately hit by the Conservative Government’s austerity policies.
In its report into the regional impact of renewed austerity, independent research firm Capital Economics said Scotland, the north-east of England and Northern Ireland will be adversely affected by the “next stage of fiscal condition”, as in these regions benefits make up a relatively high share of household income.
Families in Wales and London will also be vulnerable, and Londoners in particular will lose out because of housing benefit cuts.
The report said: “No region is likely to come through the squeeze unscathed, though. Accordingly, renewed austerity is likely to prompt a dip in most regions’ growth rates next year.
“However, with other factors generally supportive for growth, this should be just temporary.”
The SNP said the report showed that amendments must be made to the Scotland Bill to allow additional economic powers to be devolved.
SNP MSP Linda Fabiani said: “This report highlights the disproportionate impact Tory austerity is having on the UK – and shows exactly why the powers to strengthen and grow our economy need to be included in the Scotland Bill currently making its way through Westminster.
“With these powers we could take action to close the gap between rich and poor and support those currently facing in-work poverty at the hands of the Tories.
“The Tory plans aren’t just economically illiterate – they are morally wrong. With these key economic and social powers in Scotland’s hands, we can take real, decisive action to deliver a strong economy which works in everyone’s interests and a fair society in which people who need help are supported and empowered rather than punished by the Tories.”
Responding to the report, Labour’s Jackie Baillie said: “Next week’s Tory Budget looks set to hit working families the hardest, at the same time as the Chancellor is refusing to rule out another tax cut for millionaires.
“This damning report confirms what we suspected – that Tory cuts will hit Scotland hard.
Labour introduced tax credits to lift the incomes of working people, and it worked. We can’t afford to see them demolished.
“The Scottish Government needs to prepare to take action, and new powers for the Scottish Parliament will help, but the Scottish Government could take action now by revisiting Labour’s plans to extend the living wage to low-paid workers on public contracts and ban rip-off rent rises in the private sector."
“We have an opportunity to work across political parties to deliver more powers for Scotland and protect those who will be hardest hit by cuts. It is not an opportunity the SNP should pass up.”
A spokesman for the Scottish Government said it had been warning for some time that UK Government’s proposed £12 billion cuts would have a detrimental impact in Scotland. “Deeper cuts will impact most of all on some of the most vulnerable people in our society including children who are the real victims of the UK Government’s austerity agenda," he said.
“Despite these challenges from Westminster, the Scottish Government continues to tackle poverty head-on. We appointed our first independent adviser on poverty and inequality, who will be looking at what more we can do to address inequalities and help lift people out of poverty.
"We have also invested £296 million in welfare mitigation measures, extending to childcare and our work to encourage employers to pay the living wage, thus helping to increase income levels in Scotland.”
Although much of the £12bn in cuts planned by Chancellor George Osborne will come from the welfare budget, there will also likely be cuts to come in government departmental spending.
Capital Economics warned this will likely have an affect on Scotland: “Although welfare cuts will be sizeable, it is departmental spending that will bear the brunt of efforts to plug the rest of the hole in the public finances.
“And public sector employment is one obvious way to gauge which regions are most vulnerable to these.
“The three devolved regions have the greatest dependence on the public sector for employment, while the south-east and east of England have the smallest.”
The Office for Budget Responsibility predicts a further 640,000 public sector job losses between 2014-15 and 2019-20, equivalent to a 12 per cent drop.
Today is the third day of detailed scrutiny of the Scotland Bill in the House of Commons. Both Labour and the SNP have tabled amendments that, if passed, would see a transfer of welfare powers to Holyrood.
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