Scotland would be able to mitigate Conservative cuts to tax credits or other welfare under Labour and SNP plans to give Holyrood the power to create new benefits and top up existing payments, the shadow Scottish secretary has said.
Ian Murray said Labour amendments to the Scotland Bill, some of which are backed by the SNP, would effectively give the Scottish Parliament the power to design its own welfare system.
If MPs pass the proposals in the Commons, Scotland would be able to therefore create additional benefits to lessen the effect of welfare cuts by the UK Government, for example reported Tory plans to cut tax credits, Mr Murray said.
Moving a series of amendments, the Labour frontbencher said: “New clause 31 (one of the amendments) is a provision that allows the Scottish Parliament to top up any reserved benefit in the United Kingdom and create any benefit in devolved areas.
“So there would be an ability to create a system that allowed you to mitigate the reduction in tax credits.
“Tax credits in terms of the system as I understand it isn’t a benefit, they are done through the income tax system.
“So in terms of topping up tax credits would be out of the scope of this particular arrangement but there’s no reason why an additional benefit couldn’t be put in place for people who are in work and have children as an example in terms of our new clause 31.”
Mr Murray said that Labour’s amendments would implement the recommendations of the cross-party Smith Commission in spirit and in substance while ensuring the welfare state remains UK-wide and allows the pooling and sharing of resources across the union.
He said: “I want to be clear that fundamentally our amendments will ensure that the Scottish Parliament has the unrestricted power to create any new benefits in areas that are devolved, in addition to the guarantees of the UK benefits and pensions system and the power to top up any benefits that remain reserved to this Parliament.
“This wide-ranging power effectively gives the Scottish Parliament the power to design their own welfare system in its entirety.
“However unlike others we are determined to ensure the welfare state remains an integrated UK-wide system of social security to allow for the continued pooling and sharing of risks and pooling and sharing of resources.”