Scotland braced for ‘unprecedented’ cuts over the coming years, fresh IPPR Scotland analysis reveals

• Changes to Universal Credit will put £50m back into the pockets of households in Scotland, but pre-existing plans for benefits cuts in Scotland were worth £600m per year by 2020, meaning Scottish families are still on course to be £550m worse off (2016/17 prices)
• Autumn Statement makes little difference to cuts for Scotland’s day to day spending budget
• Non-protected departments face cuts of £1.3bn per year between 2016/17 and 2019/20 (2016/17 prices)
• Cuts to non-protected departments will total £1.6bn per year, or 11.3%, by 2019/20 compared to 2015/16 (2016/17 prices).

The Scottish Government faces a huge spending challenge as a result of the Autumn Statement, a leading independent think-tank warns.

IPPR Scotland has released its latest analysis for Scotland’s budget following the UK Government’s spending review last week. The cross-party, progressive think tank shows that cuts to day-to-day budgets (resource DEL) in Scotland remain unaffected by the UK Government’s decisions, leaving unprecedented levels of cuts still to come in Scotland.

In addition, the UK Government’s decision to reduce cuts planned for the Universal Credit across the UK, will see £50m more money into the pockets of households claiming Universal Credit in Scotland. However, benefits cuts overall will amount to £550m per year by 2020, after taking account of the £600m previously planned 2016/17 prices), showing the scale of the cuts significantly outweigh the increases announced last week.

IPPR Scotland finds:

• Scotland’s overall day-to-day budget (resource DEL) is due to fall by £800m between 2016/17 and 2019/20
• Once spending commitments for the NHS and police has been factored, spending on non-protected departments is due to fall by £1.3bn per year by 2019/20
• This will leave unprotected departments 11.3% lower £1.6bn per year (2016/17 prices)) by 2019/20 as compared to the start of this spending period in 2015/16 (excluding how tax revenues perform in Scotland)

The reduction in the taper for Universal Credit is worth an additional £50m per year to households in Scotland. This will benefit the third and fourth deciles the most at on average by around £40 and £30 per year respectively.

[Image not working? Right-click download images]

However, the scale of benefits cuts dwarf this increase, meaning the net cut will still be around £550m per year in Scotland through UK Government decisions to freeze working age benefits and the move from Tax Credits to Universal Credit among others.

Russell Gunson, Director of IPPR Scotland, said:

“The Autumn Statement last week leaves a very significant, and unprecedented spending squeeze for Scotland’s unprotected departments over the coming years. The decisions last week pretty much left Scotland’s budget for day to day spending unchanged, meaning departments outside of health and the police will face cuts of £1.3bn between now and 2019/20, worth 11.3% compared to the start of this parliament.

“The UK Chancellor did announce some lessening of cuts to Universal Credit that will help people in Scotland. However, this small increase is dwarfed by the benefits cuts being undertaken. We find that last week’s announcement will put £50m into the pockets of Universal Credit claimants in Scotland by 2020, but that compares to previous cuts in Scotland that were set to total £600m, leaving families £550 million worse off in total.

“The scale of the cuts coming to Scotland’s unprotected departments are significant and close to unprecedented, and we know Brexit may mean cuts in future years too. If so, it’s clear that we will need to look closely at significant reform of public services and/or increases in tax revenue in Scotland to ensure we can protect the poorest households in Scotland over the coming time.”

Contact:

Russell Gunson, r.gunson@ippr.org, 07766 904 332
Ash Singleton, a.singleton@ippr.org, 07887 422 789


Notes:

We have excluded the potential for Scotland’s tax revenues to perform better or worse than tax revenues in the UK as a whole. Any tax decisions made through the Scottish Parliament budget process will allow us to update this analysis.