Major Overhaul of Scotland's Welfare System Proposed in Critical Report
The Centre for Social Justice has issued a damning assessment of Scotland's welfare system, calling for radical reforms to shift focus from benefit payments to improving health and employment outcomes. The think tank argues that the current system is failing taxpayers and claimants alike, with benefits bills spiraling out of control while failing to address root causes of poverty and worklessness.
Current Welfare Spending in Scotland
According to the report, Scotland's welfare expenditure reached £28 billion in 2024/25, with the Department for Work and Pensions administering £21.6 billion of this total. This includes £11.6 billion for State Pensions and £5.2 billion for Universal Credit. Social Security Scotland managed £6.1 billion, covering devolved benefits such as Adult Disability Payment, Pension Age Disability Payment, Child Disability Payment, and Carer Support Payment.
The report states bluntly: "For all the Scottish Government's efforts, there is minimal evidence that its welfare system is succeeding." It highlights that Scotland has the highest proportion of children living in long-term workless households at 11.3 percent, perpetuating disadvantages across generations.
Key Recommendations for Reform
The Centre for Social Justice has proposed eight specific recommendations to transform Scotland's welfare approach:
- Review Social Security Principles: Ensure welfare supports independence and societal participation rather than creating dependency.
- Restrict Adult Disability Payment: Withdraw eligibility for those with less severe mental health conditions, potentially saving £482 million annually. Redirect some savings to NHS psychological therapies and primary mental health care.
- Explore Alternative Support Models: Review in-kind benefits or direct care approaches for disabled people, starting with restrictions on disability payments for less severe mental health conditions.
- Develop New Anti-Poverty Strategy: Identify goods and services lacking in deprived households and implement regulatory changes to increase supply and reduce costs.
- Frontload Scottish Child Payment: Restrict eligibility to children under school age, saving £344-506 million annually. Reinvest savings in employment support for parents.
- Reform Childcare System: Prioritize connections between children and primary caregivers while allowing informal family care options without loss of support.
- Unify Child Benefits: Scrap Best Start Grants and increase the frontloaded Scottish Child Payment by £5 weekly using the savings.
- Boost Family Wellbeing Funding: Increase Whole Family Wellbeing Funding by £150 million annually through savings from other recommendations.
Potential Impact and Savings
The proposed reforms could save over £800 million annually, according to the Centre for Social Justice. These savings would be redirected toward treating mental ill-health, supporting parents into employment, and helping families overcome material deprivation.
The report explains: "The Scottish Government has built a welfare system that is overbudget, overly complex and underachieving. Rather than tackling excess claims, the Scottish Government has copied UK-wide disability benefits, changing only the branding and assessment leniency."
Analysts criticize the current system for creating incentives to claim health-related benefits rather than seek employment, while failing to deliver measurable improvements in health or employment rates. With economic inactivity two percentage points higher than in England and missed child poverty targets, the report argues comprehensive reform is urgently needed.
