Scotland's benefits bill not a 'drag', says chief economist
Gary Gillespie rejected suggestions of a ‘fiscal hole’
Scotland's rising benefits bill is not a "drag" and may help to protect people against economic shocks, the Scottish government's chief economist has said.
Gary Gillespie said he did not see the increasing level of social security spending as representing a "fiscal hole".
Spending on devolved social security payments is forecast to rise from £7.4 billion in 2026-27 to £9.2 billion in 2030-31.
According to the Scottish Fiscal Commission (SFC), more than one million Scots are expected to be in receipt of disability benefits by the end of the next parliamentary term in 2031.
It said ministers will either need to raise more in taxes or cut spending in other areas to fund social security payments.
The Scottish Conservatives argue the benefits bill has “spiralled out of control, dwarfing all other areas and creating a black hole in the nation’s finances”.
But speaking at an event hosted by the David Hume Institute in Edinburgh, Mr Gillespie said: "I don't really see it as a fiscal hole, because the way the Scottish Parliament works and the way the fiscal framework works is, in a sense, you have to balance each year.
"And I think if you look at the social security payments in particular, they are targeted at the reduction in child poverty, and the statutory targets around that reduction."
He added: "There's an argument probably, for Scotland, in the sense that in times of shock that actually having a slightly bigger welfare or public sector actually provides a bit more resilience to households and individuals.
"I think ultimately you want more people in employment, you want people paying more tax and you want people able to progress. But I think the safety net, if you put it in that context - I don't think it's necessarily a drag.
“I think you see it in other contexts. We haven’t seen data that it’s having a negative impact on people’s employment perceptions, and the government will publish a child poverty plan this side of the election which will set out the trajectory for that, and I think the benefit part of that is a key part of that.”
Last week, the SFC warned structural trends will “really begin to bite” over the next five years. It called on political parties to be “realistic and open” when making commitments ahead of the Holyrood election in May.
SFC chair Professor Graeme Roy said: “Their manifestos should make clear where additional spending pledges imply higher taxes or reductions in other areas of public spending.
“The new Scottish government must explain how it intends to address Scotland’s fiscal pressures, enabling parliament to debate and determine the most effective response to the challenges set out in this report.
“Whatever priorities it chooses, the next Scottish government must ensure that Scotland’s public finances are on a sustainable path.”
The Tories argue welfare spending must be “reined in”, with the party’s finance spokesman Craig Hoy previously insisting: “It’s unaffordable and unsustainable to have one million Scots on disability benefits alone.”
Comments
Want to join the conversation? Please or to comment on this article.