back to top
Politics

Mundell Denies Benefits Topped Up In Scotland Will Be "Clawed Back" By The UK Government

The SNP demanded clarity on whether the Treasury would treat benefits topped up by the Scottish government as income and take them back in taxes.

Posted on

David Mundell, the secretary of state for Scotland, denied SNP claims that the UK government intends to "claw back" tax credits topped up by the Scottish government.

During Monday evening's Scotland bill debate, which set out which new powers will be devolved to the Scottish parliament, Mundell was asked to rule out the possibility of payments from the Scottish government to mitigate tax credit cuts being treated as income and taxed by the UK Treasury.

The SNP said Mundell's answer "failed to guarantee" that such action would not be taken, with Eilidh Whiteford MP demanding "absolute clarity" on the issue. Speaking to BuzzFeed News, Mundell said he was "committed" to not taking back funds topped up by the Scottish government, but didn't rule it out entirely.

"It will partly depend on what Nicola [Sturgeon] intends to do and she's been quite vague about that," said Mundell. "That's why Iain Duncan Smith hasn't given a definitive answer as to how the topping up would fit into the wider benefits system, because we don't know what it is they're proposing to do.

"But we are committed to not clawing back funds, that's what the Smith agreement said and that's what we are committed to."

Asked whether it was impossible that topped-up benefits in Scotland could be taken back by the UK Treasury when the new powers are introduced in 2017, Mundell said it was a "general principle", agreed by the cross-party Smith Commission, that the top-up payments will not be taxed.

"It's not going to happen automatically," he said. "Whatever mechanisms are introduced, you have to understand what they are. In my answer [during the Scotland bill debate] I said you have to take everything into context, so in some sense it depends on how they do things, but the general principle is that they should not be clawed back."

The Scotland secretary said that with the Scotland Bill now passed by the House of Commons to be reviewed by the Lords, the pressure will turn to the SNP to make the most of the new powers over income tax and some benefits, and he hopes the Holyrood election campaign will be dominated by those issues rather than arguments over independence or further devolution.

"The SNP have been very critical of disability living allowance being changed to personal independence payment, they'll now have complete control over disability benefits," said Mundell. "They'll be able to change tax rates, tax bands – there's a lot of things they'll be able to do.

"As people come aware of the things they can do, they'll have to focus more on that rather than the things they can't do, which has been their constant retort. I hope next year's Scottish parliament election will be about that, and not about another referendum."

Jamie Ross is a Scotland reporter for BuzzFeed News and is based in Edinburgh.

Contact Jamie Ross at jamie.ross@buzzfeed.com.

Got a confidential tip? Submit it here.