THE Finance Secretary has warned that looming UK Government welfare cuts will put Scotland in a “difficult fiscal position” in future years.
Shona Robison said that reduction in spending by the UK on the personal independence payment (PIP) and Carers Allowance will affect Scotland's Budget.
The UK Government said Scotland will have time to "make their own decisions on changes to devolved elements of welfare support" as the reductions will not take effect until 2026-27.
We told how Labour's Work and Pensions Secretary Liz Kendall announced a £5 billion package of cuts to welfare, as well as changing eligibility for PIP that could see a huge number of people denied.
Previously, the Fraser of Allander Institute estimated that a £1bn reduction in PIP spending through reduced caseload would cost the Scottish Budget around £115m.
In a letter to two Holyrood committees, Finance and Public Administration and Social Justice and Social Security, Robison set out how the changes implemented by Westminster could wipe millions from the Scottish budget by 2029-30.
She said that reforms to PIP and the impact it will have on Carers Allowance due to come in November 2026 will have a knock-on effect for the Scottish Budget.
“UKG reforms which reduce spending on this benefit will reduce our funding,” Robison explained.
She then noted that reductions in PIP would mean a block grant adjustment (BGA) of almost £400m, meanwhile changes to the Carer’s Allowance could cost Scotland £49m.
“Both PIP and Carers Allowance have a BGA which is added to the Scottish Budget, meaning that UKG reforms which reduce spending on this benefit will reduce our funding.
“The Carers Allowance BGA will reduce to £480m from £529m by 2029-30.
“While these forecasts don’t impact on funding for the Scottish Budget 2025-26, they indicate a difficult fiscal position in future years as a result of UKG welfare reforms.”
Earlier, Robison noted that the “true impact on Scotland’s finances” by decisions of the UK Labour Government will not be fully known until the Scottish Fiscal Commission publishes its next forecasts on tax revenue and benefits spending.
She noted this would be outlined in the Scottish Government’s Medium-Term Financial Strategy later this year.
The Department for Work and Pensions (DWP) own assessment said the welfare cuts would push 250,000 people, including 50,000 children, into poverty.
In Scotland, PIP claimants are currently being transferred to the Adult Disability Payment, with the transition set to be complete this spring.
A UK Government spokesperson said: “Changes to Scottish Government funding from the welfare measures will not take effect until 2026-27 through the block grant adjustment.
"This gives the Scottish Government time and certainty to make their own decisions on changes to devolved elements of welfare support.
“The Scottish Government will see an extra £28 million in Barnett Consequentials next year [25/26] – on top of the £47.7 billion settlement announced in the Autumn Budget. This is the biggest budget settlement in the history of devolution for the Scottish Government to spend on Scotland’s public services.”
