Clash over extra 'bedroom tax' cash

Updated: 

File photo dated 25/06/13 of houses in Brighton as surveyors saw house sales lift to the strongest levels in nearly six years in the run-up to Christmas as the market began to

The UK Government has insisted legal changes are not needed for ministers at Holyrood to spend extra cash mitigating the impact of the so-called 'bedroom tax'.

Scotland Office Minister David Mundell said the Scottish Government could commit additional funds for this "whether or not there is a change to the cap on funding for discretionary payments".

The Conservative spoke out after Scotland's Deputy First Minister Nicola Sturgeon wrote to the UK Government, calling for rules to be changed to allow an extra £15 million to be spent on discretionary housing payments (DHPs).

But Mr Mundell told MPs: "Seeking that change from the UK Government seems to me to be a smokescreen by the Scottish Government for inactivity over three years to address claims that they said they had in relation to welfare reform.

"I'm afraid I'm tempted to the view that when they were finally forced out of inactivity, they wished to do so on a basis that would cause the maximum amount of conflict with the UK Government so as to force this issue into the referendum prism, rather than into the prism of doing the right thing for the people of Scotland."

In a letter to UK Welfare Minister Lord Freud, Ms Sturgeon said increasing the current DHP funds from £35 million to £50 million in 2014/15 would help the 76,000 "hard-pressed" people in Scotland hit by the so-called bedroom tax.

She said the Scottish Government is currently spending "up to the legal limit" allowed under Department of Work and Pensions (DWP) rules and called for the coalition at Westminster to lift a cap on the amount of money Holyrood can provide.

In order to abolish the bedroom tax, ministers need the powers that would come from independence, she suggested.

Scottish ministers have already agreed to contribute £20 million each year to the DHP budget, which is also getting £15 million from the UK Government, making a £35 million pot.

An extra £15 million in Wednesday's budget would take the total to £50 million, thought to represent the total cost of the "bedroom tax" in Scotland.

The DWP rejects the "bedroom tax" tag and says the reality is that "a spare room subsidy" has been removed from social sector tenants.

Mr Mundell rejected Ms Sturgeon's claim to be constrained by Whitehall as he was questioned on the issue by the Commons Scottish Affairs Committee.

"I'm sure the committee will welcome the fact that Ms Sturgeon's letter confirmed that the Scottish Government wad in a position to make available an extra £15 million to deal with the issues they claim relate to the removal of spare room subsidy," he said.

"Because as recently as January 13, the Scottish Government housing minister told the Scotsman newspaper that such funding could only be achieved by budget cuts and asked what other spending area should be cut.

"I am, this afternoon, in a position to confirm that the money can be used for such purposes, whether or not there is a change to the cap on funding for discretionary payments.

"The UK Government announced its intention to introduce this policy as part of an emergency budget in June 2010, nearly three years before its implementation.

"Since then, and despite its vociferous opposition to the policy, the Scottish Government failed to take any positive steps to plan for the change, including ways in which the impact could be reduced on those likely to be affected in Scotland.

"Lord Freud will reply to Ms Sturgeon's letter in early course but members of the committee, and indeed members of the Scottish Parliament considering the Scottish Government's budget tomorrow, can be assured that if an additional £15 million has now been found to be spent on welfare reform-related issues, subject to the clearly set out constraints of the Scotland Act 1998, then that money can be used for those purposes."

He was asked if it was the case that the Scottish Government has always had the power to mitigate the bedroom tax, and if that amount of money it had under positive payments from Barnett formula would have been enough to cover all the costs.

"The Scottish Government have set out certain views, however what is clear is that those words have not necessarily been followed up with action which it was within their power to take at an earlier stage," he said.

Tax tricks to improve your wealth

Tax tricks to improve your wealth