What does the UK benefits crackdown mean for Scotland?

After weeks of speculation, the UK Government’s work and pensions secretary Liz Kendall has unveiled a series of reforms to the welfare system that will significantly change the support that disabled people or those with long-term health conditions get from the state – particularly if they’re young.

Leaks and rumours about the plans have caused worry for disabled people, and unhappiness for Labour MPs. It’s just the latest of the tough decisions the Labour government has announced, to try and balance the books – and it won’t be the last tough decision, either.

In Scotland, disability benefits are devolved, and the Scottish replacement for Personal Independence Payment (PIP) has an application and assessment process designed to treat disabled people more humanely.

People in Scotland won’t be directly affected by UK Government plans to reduce eligibility for PIP, saving £5bn a year.

Even so, many watching in Scotland will be worried for the future.

As conditions to access PIP in England and Wales get tougher, Scotland’s disability benefits system will diverge further.

That means it will get relatively more expensive to run. Disability benefits are claimed by more people in Scotland and, therefore, cost more – a legacy of long-term poverty and poor health.

Cuts to the PIP budget will eventually mean cuts to the Scottish Government’s overall budget, via the Barnett Formula.

Even though they won’t want to, Scottish ministers in Edinburgh may be forced to make changes to devolved disability benefits to bring down that cost.

Kendall also announced significant changes to Universal Credit, a benefit that’s reserved to Westminster, and therefore will affect people in Scotland.

Top-ups to Universal Credit that go to people with a long-term health condition that limits their ability to work, are being frozen for existing claimants.

Over time, inflation will eat away at the value of those top-ups – although the main rate of Universal Credit is being raised, which the UK Government says will offset the losses.

For new claimants, the system is being shaken up to remove the incentive to be declared unfit to work.

The health top-up to Universal Credit will be cut going forward and the work capability assessment – which declared people either “fit” or “unfit to work” – is being scrapped.

Instead, anyone with a health condition will go through a single process to assess the support they need in their day to day lives – not their ability to work.

One of the Government’s main objectives with the changes is to reverse the rise in the number of young people being signed off work, particularly with mental health conditions – and these reforms will feel particularly tough to young people.

The UK Government will consult on removing Universal Credit health top-ups from under-22s, and ministers will also consult on a new “unemployment insurance” to replace Jobseekers’ Allowance and Employment Support Allowance.

It will pay more to people who have paid more into the system through past National Insurance contributions, something that could disadvantage younger people.This unemployment insurance would be time-limited, and based on making effort to find a job.

These changes will require legislation, which means a vote – and that’s shaping up to be the biggest rebellion of Keir Starmer’s premiership. Labour MPs are deeply unhappy at being asked, yet again, to do something unpopular that they feel goes against their principles, and what they told voters at the election last year.

Speaking to Scottish Labour MPs, the main feeling is frustration. They believe a carefully-presented package of welfare reforms would go down well with voters. But this announcement has been the subject of weeks of leaks and rumour.

Every Labour MP was invited into Downing Street last week to meet with Keir Starmer’s advisers, in an effort to win them over, a few dozen at a time. In the end, those meetings ended up being a chance for MPs to vent. Scottish Labour MPs told Number 10 that they failed get the key message out, when news of these cuts first emerged – those who are two sick to work, will be protected. No ifs, no buts.

Just like when the UK Government announced it would means-test the Winter Fuel Payment, making a huge cut to that budget, the Scottish Government will be left scrambling to cover the cost. That means a political blame-game, with a year to go until the Holyrood elections.

With Winter Fuel Payment, the cut was followed by a historic Barnett Formula windfall, thanks to a spending boost in the UK Budget, allowing the Scottish Government to re-introduce a devolved payment for all pensioners.

Next week, the Chancellor will deliver the Spring Statement – a health check on the economy and public spending. It isn’t going to contain much good news, and there aren’t likely to be any more windfalls in future – economic growth remains stagnant, in part thanks to the destabilizing trade war launched by Donald Trump.

Filling a hole in the Scottish welfare budget will be much harder. For Scottish Labour MPs – and Scottish Labour voters – the disappointment may be even deeper, too.