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More Powers for the Scottish Parliament: Scottish Government Proposals

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CHAPTER 5

FAIRNESS, EQUALITY AND SOCIAL POLICY

Currently, responsibility for social policy, including employment services and welfare, is split between the Scottish Government and the UK Government. Matters such as health and education are largely devolved, as are aspects of employability training. However, the welfare system is largely reserved to the UK Government, and the DWP also runs reserved employability programmes. Inequalities in health and education are driven by a range of underlying economic factors, which cannot be addressed by existing devolved powers alone.

The UK Government's programme of changes to the welfare system has not taken account of Scottish circumstances and preferences. There are also very close connections between aspects of reserved welfare policy, notably housing benefits, and devolved responsibilities. The policy choices made by the UK Government are also working against Scottish Government objectives - for example, they are increasing the number of children living in poverty in Scotland. Bringing all of the powers that impact on inequality, poverty and employability in the Scottish Parliament would enable coherent policy approaches.

In-work poverty is a worsening problem in Scotland that UK policies have also failed to address. With responsibility for the minimum wage the Scottish Parliament could ensure that it increased at least in line with inflation and could consider increasing it further to match the living wage (as recommended by the Expert Working Group on Welfare).[8]

Increasing the Scottish Parliament's responsibility for social policy and welfare would allow Scotland to become a fairer and more prosperous country, with a coherent approach to welfare and employment. The Scottish Parliament would have the ability to address Scottish priorities, including creating jobs and addressing child poverty. With full fiscal responsibility, the financial benefits of successful initiatives by the Scottish Government - in the form of reduced welfare payments and increased tax revenues - would be retained in Scotland rather than being passed to the UK Treasury.

Specific additional responsibilities could include:

  • Responsibility for the welfare system as a whole, to ensure the system meets Scotland's needs and priorities, and stopping the roll out of Universal Credit and Personal Independence Payments
  • Responsibility for employability and employment law, including all the employability programmes currently delivered by DWP
  • Responsibility for the minimum and living wage
  • Responsibility for all Scotland's tax revenues and public spending which would enable the Scottish Parliament to determine the level of resources devoted to public services such as the NHS and education

Social protection and welfare

Most welfare benefits are currently reserved. However, for too many people in Scotland the current welfare system does not work. Due to UK Government welfare changes, it is estimated that Scottish welfare expenditure could be reduced by around £6 billion in the six years to 2015-16. Almost 70% of this reduction, will be felt in 2014-15 and 2015-16.[9] There are estimates that up to 100,000 additional children could be forced into poverty by the UK Government's policies.[10] We have also seen Westminster take decisions, such as the introduction of the 'bedroom tax' which do not reflect Scottish circumstances and which were opposed by a majority of Scottish MPs.

The Scottish Government believes that Scotland should have full responsibility for its welfare system, to design a system based on Scottish priorities and preferences, and to fit with the delivery of services in Scotland, based on early intervention and responding to individual needs. Such a system could also ensure greater coherence across measures to tackle in-work poverty as well as better alignment across childcare, child benefit and other measures to tackle child poverty.

Prior to responsibility for welfare, or aspects of welfare, being transferred to the Scottish Parliament, the roll out of Universal Credit and Personal Independence Payments in Scotland should be halted to ensure that the practical ability to devolve individual benefits is not compromised, and that the Scottish Parliament has the scope to design a system suitable for Scotland's needs.

Specific proposals and opportunities

  • The Scottish Parliament should take responsibility, over time, for social protection in its entirety. Any financial consequences would be absorbed by Scottish revenues and policy divergence managed within the Scottish budget. This would encompass the full range of benefits and include full operational and policy control
  • Core to any extension of the Scottish Parliament's responsibilities are those which have the greatest impact on promoting jobs and equality. This must allow for the redesign of the system to address Scottish priorities. The key elements are:
    • Working age benefits, including for those out of work, for ill or disabled people, and for those on low incomes
    • Benefits for children and families
    • Welfare payments for older people (e.g. Winter Fuel Payments) that complement the state pension and related benefits

Employment and employability

Employment policy is crucial in co-ordinating and delivering our ambitions for economic growth and social justice. A coherent employment policy requires powers over not only the transitions people make when moving into work, but also how they sustain employment and progress once in work. Ensuring individuals can fulfil their potential while enhancing our productivity requires the capacity within the labour market to respond to distinctly Scottish business and economic demands. Full control over employment law and employment relations would enable the Scottish Government to develop a fairer, more diverse and prosperous Scottish labour market environment that improved the quality of work and more fairly rewarded an increasingly skilled and motivated workforce.

Responsibility for employment policy must enable the delivery of employment services which create a more progressive journey towards work, while mitigating the social and economic risks created by long-term unemployment. It would allow us to meet Scotland's needs on issues such as: tribunal fees and rules; zero hour contracts and gangmaster regulation. Devolving all aspects of employment rights would enable the Scottish Government to develop an employment climate that sits well alongside economic and social welfare aspirations.

The Working Together Review: Progressive Workplace Policies in Scotland[11] found that the economic and social challenges and opportunities in Scotland are more likely to be addressed successfully in an environment where unions, employees and employers work together with an ethos of modern, cooperative employment relations.

Responsibility for employment and welfare would allow the Scottish Government to better address the issue of in-work poverty. More than half (52%) of working age adults in poverty, and an even higher proportion (59%) of children in poverty, live in households where someone is in work.

Coherent powers across a number of areas would help to improve the position of the in-work poor, addressing low pay, a lack of work flexibility and high marginal tax rates within the tax and welfare system.

With control of the minimum wage the Scottish Parliament could increase the Scottish minimum wage annually at least in line with inflation, immediately improving the situation of people in Scotland who currently receive the minimum wage. This would directly support the lowest paid individuals and over time reduce reliance on in-work benefits. The Scottish Parliament could also consider the recommendation of the Expert Working Group on Welfare that the minimum wage should begin to rise (in phased amounts) to equal the living wage.

With responsibility for designing our welfare system, the Scottish Parliament could also change the rate at which benefits are withdrawn and people pay taxes so that lower- income households can keep a greater proportion of the increases in earned income. For example, for a couple with children and one parent in work, increasing the hours worked from 50% to full-time will result in 82% of additional earned income being lost through tax and loss of benefits. This unfairly penalises those who see (and are encouraged to see) employment as a route out of poverty.

Again, the fiscal benefits of any changes to the Scottish minimum wage - in terms of savings in tax credits and benefits - should accrue to the Scottish Parliament and be available, for example, to assist with the costs to business. Otherwise, Scottish employers would be paying for a fiscal saving for the UK Government and there would, in effect, be no incentive for the Scottish Parliament to raise the minimum wage in Scotland. This illustrates why the powers extended to the Scottish Parliament must work together in a coherent way.

Specific proposals and opportunities

  • Responsibility for the minimum wage would allow it to be increased at least in line with inflation, enable consideration of the link to the living wage, and would allow co-ordination with benefits policy
  • The devolution of responsibility for the nature and content of the Work Programme and all other employability programmes currently run by the DWP would provide much needed coherence in Scotland, complementing the training opportunities provided through Skills Development Scotland

Health

Responsibility for health policy is already substantially devolved. The proposals in this paper for enhanced fiscal autonomy for the Scottish Parliament would give Scottish governments greater control over NHS funding. Further powers would offer opportunities to make use of consumer protection and tax powers to advance public health aims and increase consumer protection.

Specific proposals and opportunities

  • Devolution of the remaining reserved health matters in the Scotland Act 1998
  • The transfer of consumer protection powers would provide the opportunity to tackle advertising of, for example, alcohol as well as food labelling and packaging
  • As part of a wider extension of fiscal powers, Scotland should have a say over setting UK excise duties on alcohol and tobacco
  • Full responsibility for health and safety would allow for a more coherent system in Scotland

Education

Responsibility for education is almost entirely devolved but there are still stark inequalities in educational outcomes across Scotland. Giving the Scottish Parliament greater responsibility for tax and welfare would provide the opportunity to address the underlying issues of poverty and deprivation which are the root cause of much of this inequality. The proposals for enhanced fiscal autonomy for the Scottish Parliament would give Scottish Governments greater control over education funding.

A specific issue of concern to Scotland's higher education establishments is post-study work visas, which were abolished by the UK Government in 2012. These visas allowed recent graduates to work or set up businesses in the UK for 24 months, which retained skilled and educated graduates as part of our labour force. The post-study work visa also encouraged individuals to come to Scotland to study, as we know that the ability to stay and work is a factor in the minds of international students when they are choosing a place to study. The Scottish Government believes that reductions in migration to Scotland for formal study have been at least partly caused by the end of the post-study work visa.

Responsibility for some immigration powers would give Scotland the opportunity to reintroduce the post-study work visa and attract talented individuals from around the world to Scotland.

Justice and security

Making the most of devolved powers, Scotland's justice system has been reformed and modernised. Crime is now at a 39 year low, with more than 1000 extra officers compared to 2007. However, Scotland's most deprived communities suffer most from the impact of crime. Full responsibility for the law on firearms, proceeds of crime, road traffic offences, gambling and drugs would enable further progress to be made that would benefit these communities: taking guns off our streets, preventing harm caused by drug dealing, and tackling drink driving. It would allow an integrated and coherent approach to issues that affect Scotland's communities and contribute to tackling inequality. It would also address the current anomalies in the boundaries between reserved and devolved areas.

Statutory responsibility for the administration, organisation and judicial leadership of currently reserved tribunals deciding cases for users in Scotland should be devolved. This includes employment, social security and immigration tribunals amongst others. Devolving powers to legislate would achieve coherence with other powers as it would, for example allow Scottish Ministers to alter existing rules of procedure for appeals and fees for appeals for any welfare benefits which are wholly devolved.

Now that there is a single Police Service for Scotland, the staff and powers of the British Transport Police and Civil Nuclear Constabulary should be brought within its remit to improve coherence and operational flexibility.

The Scottish Government should retain in full the value of court imposed fines and financial penalties. It should also be able to retain the full value of the proceeds of crime, allowing these proceeds to be reinvested in a way that benefits the communities most blighted by crime, helping to provide positive opportunities for our young people and build community cohesion.

Third Sector and equality

The Third Sector plays a major role in Scotland's economy and in the delivery of services to Scottish communities. Scotland should have further powers to support the sector in terms of growth, effectiveness and sustainability. Responsibility for the legal framework for charities is already devolved, but other policy areas and legislation which impact on charities and Third Sector organisations are reserved, such as taxation policy to enhance opportunities for charitable giving, and to alter the tax regimes for Third Sector organisations which are not charities.

Scotland has a strong record in protecting and promoting equality and human rights, and with additional powers would be able to further strengthen this framework. Equal opportunities and equality policy should be devolved. The full transfer of competence for equal opportunities would enable the Scottish Parliament to promote measures that will contribute to making Scotland a fairer, more prosperous and more democratic country.

Specific proposals and opportunities

  • As part of a wider extension of fiscal responsibilities, responsibility for income and corporation tax exemptions, reliefs for charities, tax relief on Gift Aid, investment income, trading profits and Capital Gains Tax would allow the Scottish Parliament to support a capable, sustainable and enterprising Third Sector
  • Scotland should have full devolved responsibility for equalities and be empowered to design and implement equality legislation. This would guarantee the strength of existing legislation and provide the power to make reasoned choices about the use and extension of measures in combination with other devolved responsibilities. More specifically, it will create opportunities to address gender balance on boards and to strengthen the representation and voice of under-represented communities in Scotland's civic institutions and public life