Can Scotland afford benefits?

Iain Duncan Smith argued yesterday that an independent Scotland would not be able to afford benefits because of the high dependency of its population. This was dismissed by Alex Salmond on the basis that Scotland generates a higher proportion of revenue, and takes a lower proportion of benefits, than the rest of the UK. Salmond is right, because Scotland pays less to pensioners and Housing Benefit, but it’s still only part of the response. The more fundamental question is whether an independent Scotland would want the same benefit rates and tax rates as the UK; and while there may be pressures to conform to the pre-existing norms, there would be good reasons to do something different. If benefits are capped at existing levels, it will not be possible to make anyone better off without making someone else worse off. Reforming benefits without undermining existing protection is, inevitably, an expensive business; but it could be worth the expense.

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