THE BLOG

Scottish Independence and Welfare Reform

03/09/2014 11:33 | Updated 02 November 2014

We are approaching D-Day for the United Kingdom. Scotland may soon choose to leave the Union and to stand alone as an independent country. One reason given for this bold step is to promote social justice. But what does this mean?

There has been very little coverage of social justice and welfare reform in the independence debate. Instead the focus has been on economic questions - as if there were any doubt that a country of 5 million talented people couldn't run a functioning economy. Although the Scottish Government did establish an Expert Working Group on Welfare there has still been no focus on the real injustices of the current welfare system.

The most important failures of the current UK welfare system are set out in a new report published by The Centre for Welfare Reform this week - Let's Scrap the DWP - The Case for Basic Income Security in Scotland.

This report outlines a series of major problems:

1. Deep and growing income inequality - the UK is the 3rd most unequal developed country in the world. The poorest 10% of families must live on less than £100 per week after tax. Middle-income families earn 5 times more, the top 10% earn 14 times more.

2. Aggressively regressive taxation - the poorest 10% pay nearly 50% of their income in tax - 15% more tax than the rest of the population (see the chart below).

3. Perverse and damaging incentives - the tax-benefit system is a confused mess that places marginal tax rates of 100% on the poorest, damages family life, reduces economic efficiency and reduces social contribution.

4. Incoherent systems - the division of the system between tax and benefits, each working to totally different models, and the existence of the ineffective Department of Work and Pensions, has created a stigmatising, chaotic and unmanageable system.

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There is no need for this. There is nothing rational or inevitable about the current design of the welfare system; and the current UK Government has already shown that you can radically change the welfare system (although unfortunately its 'reforms' are making the system much worse). So it must certainly be possible for Scotland to develop a better system, and in our report we propose one - Basic Income Security.

There is growing familiarity with the idea of a basic income (sometimes called Citizen Income). It means giving everyone - unconditionally - an untaxed income. It is a radically different system to the tax-benefit system we have now - but it is perfectly feasible - and if implemented in the right way it could remove the damaging poverty traps built into our current system.

But the idea of Basic Income Security goes further than this. It proposes that the level of Basic Income be set high enough to end poverty - nobody should have an income which is inadequate and which stops them contributing as a citizen to society. Furthermore, this right to exist with dignity should be enshrined constitutionally - to protect the rights of the poorest. For, as we've seen in the UK, without constitutional protection, welfare rights quickly deteriorate.

Now it doesn't take Scottish Independence to achieve all of this. But if social justice is really important to the debate in Scotland then issues like this should be discussed. If greater social justice is a goal for an independent Scotland then it's important that people believe this goal is really possible - which it is.

These points are also relevant to supporters of the Union. Many advocates of the Union want to see Scotland have increased powers within a reformed Union (despite the fact that the devo-max option was excluded from the referendum by the UK Government). If this advocacy is genuine it would make sense to exploring the purpose of such constitutional reform. Devolution or Independence is not about improving economic management, it is about allowing different countries, places and communities the chance to develop their own solutions, in their own way. It's about freedom and justice.

The UK is the most centralised welfare state in the world. Almost everything is decided in Whitehall. But we continue to ignore this fact. If the Union does finally end then this may be because we have failed, for far too long, to challenge the centralisation and bureaucracy that sits at the heart of the UK's welfare state.