Hansard

I will put party politics aside for a minute, Presiding Officer. The recent debates about Labour’s welfare changes, highly charged as they have been—and I am sure that there will be more of the same during this debate—have also raised questions about the administrative relationship between reserved and devolved social security policies. That is because there are legitimate questions to be asked about how well benefits can be delivered in what has become a highly complex system in which many claimants are dependent on benefits that are paid by both Westminster and Holyrood.

Of course, what matters is how effective we are in delivering benefits to help those who are most in need, in ensuring that the system is fair and non-discriminatory, in providing a genuine helping hand rather than a disincentive to work for those who are able, and, of course, in ensuring that the system is affordable. A great deal of debate has taken place around that topic and will continue to do so.

As my colleague Jeremy Balfour has said on more than one occasion, we find ourselves in a tangled web of payments from one agency that are contingent on the claimant’s receiving benefits from another agency. Despite the better working relationship between Social Security Scotland and the DWP, that entanglement makes difficult the possibility of some changes to benefits in Scotland, because of the impact on reserved policy making. For example, under the changes to PIP, which are designed to save £5 billion in 2026-27, claimants must score more than four points in at least one activity area to qualify for the daily living component. At the same time, the eligibility criteria for the health aspect of universal credit will now be determined by PIP assessment. That risks a conflation of the additional cost of disability with out-of-work income replacement payments.

As we know, the eligibility criteria of the DWP and Social Security Scotland have, largely, been the same, irrespective of the process of engagement between agency and claimant. However, there is now a question whether the DWP will be able to effect a transfer to the adult disability payment or will reinstate PIP assessment in Scotland.

All of that might seem very technical, but it matters hugely to our constituents. There has been very unhelpful confusion and uncertainty, which means that many constituents—rightly, as the cabinet secretary has said—are unsure of where they stand.

This is where we come to the politics. Some believe that the problem would be resolved if social security was fully devolved to this place. Others take the opposite view, thinking that the issue should be rolled back to Westminster. We can all argue about our different perspectives—no doubt, those will be part of the manifesto discussions for the forthcoming 2026 elections. However, the fact is that, whatever our views, here is where we deal with the current status quo. It is therefore important that, in today’s debate, we focus on that context.

As we do that, we must have in mind two things: our ability to help those who are to most in need and our ability to ensure more sustainable routes back into employment. What is important in that regard is that the assessment of the evidence—and not just our party-political perspective—tells us what the answer should be. Which benefits are working well when it comes to better outcomes and why, and which benefits are not working so well? To be honest, as we must be, it is a very mixed picture, as members of the Social Justice and Social Security Committee know only too well.

I come to Labour’s welfare reforms. I agree with Liz Kendall that there are very serious issues in welfare. The first is the growing number of claimants and therefore the speed of the increase in the benefits bill. We should not forget that the backdrop to that in Scotland is the fact that we will face a deficit of £1.3 billion in the block grant adjustment.

The second issue is that the current system is not addressing the growing problem of economic inactivity. We know from the Organisation for Economic Co-operation and Development that only a fifth of countries have a higher rate of inactivity than was the case pre-pandemic, and we are on the wrong side of that line. Our economic inactivity rate is a problem.

We also know that, in the results of the Scottish health survey and the DWP family resources survey, both conducted two years ago, 34 per cent of Scotland’s population was classified as having a disability, compared with 24 per cent in England. Liz Kendall is quite right to raise the concerns that she has raised, and I do not believe that anyone in any party should deny that, because it is high time that we addressed the issue of how the current system is creating perverse incentives. That is something that we cannot have.

If social justice is the defining philosophy of the Labour Party, as many of its founding fathers and current members of Parliament have claimed, it is pretty hard to square that with the spring budget—or the mini-statement, as many commentators rightly prefer to call it. That is because, as virtually all social policy commentators have said, the Government’s policies are disproportionately hitting the poor and the more vulnerable.

The issue goes further than that, however, as there is a lack of coherency and planning around Labour’s policy making. For example, as moves are made to get more people back into work in some areas, why would we burden employers with higher national insurance charges, which serve only to increase their costs, making it more difficult to hire new labour, and why would we allow new employment legislation—the Employment Rights Bill—to make it more difficult for employers to take on workers? That does not make sense to me, nor does it make sense to people who genuinely want to get back into the labour market or to all those entrepreneurs who are willing to invest in the necessary training schemes. Craig Hoy was quite right to point out the employability aspect of the issue that we are discussing.

As well as that, there is a lack of coherent strategy for the future role of the state, especially in terms of public sector reform. Our Finance and Public Administration Committee knows all about that because, of course, the same can be said about the situation in Scotland, where there is a lack of joined-up thinking when it comes to industrial policy. All of that leaves the public rather bewildered and, in some cases, very angry.

I do not pretend for a minute that the previous Conservative Government can take any of the moral high ground when it comes to stimulating necessary economic growth, which is so desperately needed to increase gross domestic product. I have spoken before about the damage of the Johnson and Truss years with regard to the relationship between Government and financial institutions—exactly the same problem that is now to the fore in the United States, with politics getting in the way of sound economics. That is what is happening with regard to the current serious debate about higher education funding in Scotland, where sound economics tells us exactly what should be happening but, because of politics, it is not happening.

Last Friday, the latest quarterly economic indicator from the Scottish Chambers of Commerce, published in partnership with the Fraser of Allander Institute, revealed that business confidence has taken a serious dent as a result of soaring taxes, increased labour costs and increased energy costs, to say nothing of the impacts of the international trade wars. Doug Smith, the vice-president of the Scottish Chambers of Commerce, went as far as to say that

“The cost of doing business is simply unsustainable”

and that

“Employers are being punished in every direction”.

Doug Smith believes that Scotland is losing out on major UK and international contracts because we are increasingly seen as uncompetitive. He also cites severe warnings about the fact that Scotland does not have anywhere near the trained workforce that we need to have in order to ensure that we can move forward.

It is all very well for the SNP to have a go at the Labour Party about its welfare reforms—I agree, up to a point—but it also needs to look closer to home, not just in terms of the ballooning welfare bill in Scotland, about which Scottish ministers seem remarkably complacent, given the effect on the Scottish budget, but with regard to the news that, in the current economic conditions, we are struggling to bring people back into the workforce, which is not acceptable to me.

Finally, the Scottish Fiscal Commission has warned of the introduction of light-touch reviews in Scotland and the deliberate avoidance of in-person checks, which is a big factor in rising costs. It points out that only 2 per cent of reviews in Scotland are turned back, whereas 16 per cent are turned back in England.