Starmer's approach to welfare reform 'appalling' - Swinney

First Minister John Swinney has accused the UK government of taking an "absolutely appalling" approach to welfare reform.

MPs have backed changes to the social security system, but only after Labour ministers made major concessions to rebels that removed the bulk of the proposals for reforming disability benefits.

Swinney said his own administration had taken "hard decisions", including tax rises, to fund a more generous system north of the border.

Prime Minister Sir Keir Starmer said the bill still made the welfare system "better for individuals, better for the taxpayer and better for the economy".

The Labour government's original reforms included changes to Universal Credit and tightened rules for those applying for the Personal Independence Payment (Pip).

But ministers were forced to strip their bill of most of its significant measures under the threat of a backbench rebellion, despite having already watered down the proposals.

The changes to Pip would not have directly applied in Scotland, where the benefit is being phased out for a devolved alternative.

Swinney described the handling of the reforms as "shocking".

He told BBC Scotland News the proposals had "essentially preyed on some of those vulnerable within our society".

The first minister said the UK government had now "essentially deserted their proposals".

He said: "But what we've got to recognise in Scotland is that we must take our decisions and act in a completely different fashion to the process being taken by Westminster."

The Scottish government has used its devolved powers over social security to set up a more generous system than in the rest of the UK - but that comes at a cost.

According to the Scottish Fiscal Commission, social security spending reached £6.1bn in 2024-25. It is forecast to rise to £7.7bn next year and to more than £9bn by 2029-30.

Spending on social security in Scotland is already £1.2bn higher than the block grant funding it receives from the Treasury. The gap is forecast to grow to £2bn by the end of the decade.

To continue to fund the more generous system, Holyrood ministers will have to find £2bn from elsewhere in the budget, or from an increase in taxation.

Scotland already has different income tax rates than in the rest of the UK. Those earning less than £30,300 pay slightly less in income tax than they would south of the border, while higher earners pay more.

Swinney said: "That's the hard decisions we've taken on tax as a government to ask those who earn higher levels of salary within Scotland, to contribute more to our public finances, to make sure that we can run a fair social security system within Scotland."

He accused the UK government of "ducking" the issue of income tax.

Swinney said there were a "range" of options the UK government could use to better "protect the vulnerable", citing taxation or a change to the Treasury's self-imposed fiscal rules.

The UK government's original welfare bill was expected to save £5bn a year by 2030. The last-minute concessions to Labour rebels are expected to have significantly reduced any savings.

Cabinet minister Pat McFadden told the BBC that his government would stick to Labour's pre-election pledge that it would not raise income tax.

Pressed at Prime Minister's Questions, Sir Keir declined to repeat that guarantee.

The prime minister said the bill would end mandatory reassessment of those with severe disabilities, "re-balance" Universal Credit and set out "a pathway to reform" of Pip.

He added: "It's consistent with the principles I set out throughout. If you can work, you should work. If you need help into work, the state should provide the help."

The UK government had initially planned to limit eligibility for Pip, the main disability benefit in England, Wales and Northern Ireland, and freeze the health-related element of Universal Credit.

Pip is being replaced by a devolved benefit, the Adult Disability Payment, in Scotland. However, any cuts to funding for Pip would have had a knock-on effect to the Scottish government's budget.

Universal Credit is paid to Scottish claimants by the UK government, meaning any reforms would directly affect people north of the border.

According to the Labour administration's own impact assessment, the reforms would have pushed an extra 250,000 people, including 50,000 children, into relative poverty by 2030.

But ministers said that figure did not take into account a £1bn package of support to help disabled people and those with long-term conditions into work.

The UK government argued Treasury spending on working-age benefits, forecast to rise by £27bn to £75.7bn by 2030, was unsustainable.

But ministers were forced to water down the plans after more than 120 Labour rebels threatened to vote down the bill, with Scottish Labour MP Brian Leishman calling the reforms "horrific" for disabled people.

Under the government's revised proposals, an estimated 150,000 people would have been pushed into poverty by 2030.

Almost a third of Scottish Labour's cohort at Westminster joined the initial rebellion against the proposed welfare changes.

However, most voted in favour of the bill on Tuesday after the government, in effect, removed some of the most significant reforms at the last minute to stave off defeat.

Four Scottish Labour MPs – Leishman (Alloa and Grangemouth), Irene Campbell (North Ayrshire and Arran), Tracey Gilbert (Edinburgh North and Leith) and Euan Stainbank (Falkirk) – voted against the bill.

The government has promised that it will not change Pip rules until after a review of the benefit.

Labour rebels have warned that if the government does not follow through on its pledge, the bill could still be defeated when it returns to the Commons next week.

Campbell, one of the four Scottish Labour rebels, told BBC Scotland News she felt uncomfortable voting against the government but said she feared the bill would adversely affect her constituents.

"I really think we need to slow down with welfare reform and take a more measured approach," she said.

Campbell added that she could not support the bill as it stood, but did not rule out backing the proposed legislation when it returns to the Commons.

The Scottish and UK governments essentially face the same challenges.

Tight budgets, weak growth, and rising costs – in particular when it comes to social security.

But this is an issue where they have markedly different attitudes.

John Swinney will not depart from the principle that these benefits are an investment in the people of Scotland.

There is no plan to curb the rising cost of them by trimming eligibility or payments.

The choice of having a more generous welfare system is by no means a straightforward one; the Scottish government has had to raise taxes and make billions of pounds of cuts elsewhere to fund this.

Sir Keir Starmer meanwhile had hoped to make reforms which would rein in spending on working-age benefits.

The principles he is determined not to depart from are fiscal – of not raising income tax or VAT, or increasing borrowing.

But after MPs gutted his welfare reform bill, the prime minister is short on options.

Both men will contend they are making the difficult decisions to build sustainable public services. This is an example where those decisions have taken them down very different paths.