The UK Government has backtracked on welfare devolution - but not on the Smith Commission

Published: 1 July 2015
Author: Craig McAngus
The Conservatives rejection of devolved top ups for welfare payments isn't a breach of the Smith Agreement, says Craig McAngus, but it certainly seems to throw away the party's own Strathclyde Commission report. 
Scottish National Party MPs tabled a number of amendments to the Scotland Bill currently before the House of Commons. All of them have been defeated, with the Conservative UK Government sticking quite rigidly to the command paper published in January which emanated from the Smith Commission report. Amendments relating to the devolution of welfare have proved particularly contentious with their proponents alleging that the Government’s actions breach the Smith Agreement. 
The issue is one of legitimacy.  Having secured a majority, the Conservatives, can naturally govern as they see fit.  Their 'Vow' to the Scottish electorate immediately before the referendum promised further devolution and, they argue, are delivering it.  The SNP, having won 56 of Scotland's 59 seats and captured fractionally less than 50% of the vote, asserts that it won those votes on the basis of a manifesto that promised to push for the full devolution of social security as part of the journey towards Full Fiscal Autonomy.  The SNP argue that the Scottish electorate, who returned just one Conservative MP, has voted for more devolution than proposed by the current legislation.
One of the proposed amendments to the draft legislation would have allowed the Scottish Parliament to top up existing UK benefits.  The SNP (and Labour, incidentally) argued this would allow the Scottish Parliament, for example, to mitigate cuts to the Child Tax Credit resulting from the Conservatives' quest to shave £12billion from the welfare budget.  The amendment was defeated but still raised the question of whether preventing the Scottish Parliament from topping up UK benefits represents a breach of the spirit of the Smith agreement.
A quick reminder of what the Commission actually said on welfare top-ups is a good starting point: 
54: The Scottish Parliament will have new powers to create new benefits in areas of devolved responsibility, in line with the funding principles set out in paragraph 95. The Scottish Parliament will also have new powers to make discretionary payments in any area of welfare without the need to obtain prior permission from DWP…
55: Any new benefits or discretionary payments introduced by the Scottish Parliament must provide additional income for a recipient and not result in an automatic offsetting reduction in their entitlement to other benefits or post-tax earnings if in employment.
New benefits then can be created but only in 'areas of devolved responsibility'.  Tax Credits, Pensions and Job Seekers Allowance, for example, are not devolved.  Discretionary payments, by contrast, allow for payments over and above existing social security arrangements.  However, they exist to alleviate hardship at a particular time under particular circumstances, and so by definition do not represent a top-up with regards to reserved benefits.  In other words, Holyrood cannot add on 10% to tax credit payments, effectively countering a cut to an existing benefit.  In short, the UK Government has not transgressed the spirit of Smith in this regard.  
Curiously enough, although not in breach of this aspect of the Smith Agreement, the Conservatives may still be breaching their own report into further devolution published in the run up to the referendum.  The Strathclyde Commission was quite an important document for the Conservatives in that it brought them to a position where they outflanked Labour in terms of the powers to be devolved to the Scottish Parliament.  To quote the report:
…if the Scottish Parliament were to take the view that, from its own resources, the UK entitlement should be supplemented in Scotland, it may be that Holyrood ought to be able to legislate accordingly.
So, the Conservatives are not breaching the result of the Smith negotiations but they are ignoring the very document that framed their thinking going into that process.  One possible explanation for this reversal is that the report was largely written in a Scottish context whereas, when it comes to implementation, powerful UK departments such as the DWP will effectively have a veto.  Nevertheless, the Conservatives have backtracked from where they were on this issue a year ago.

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