Why are we paying £1.3 billion in benefits to highest-earning 10% of Scottish households? – Ian Johnston
In straitened times, a universal income cap on welfare should be introduced
In December 1980, during Margaret Thatcher’s first term of office, the then Conservative MP for Perth and East Perthshire, Bill Walker, told the Commons: “It is important that we do not condemn the majority, who are good workers and want to do their best, but whose attitudes are very much influenced by those of the spongers and the scroungers.”
This caused outrage on the Labour benches, with one MP saying “those in the dole queues are not, never were and never will be social security scroungers”. However, if once a minority of people faced slurs like this, Bill Walker’s ghost might apply the same unjust insult to virtually the entire nation today.
An analysis by the Scottish government’s chief economist shows benefits payments are not just made to the poorest households or even the poorest half of the population. Instead, money is handed out to poor and rich, up to and including highest-earning 10 per cent.
I should stress that I’m not calling anyone a “scrounger” – and certainly not the poorest. After all, the welfare ‘safety net’ was designed with them in mind. But should society really be paying social security to some of its wealthiest members?
60% of households get more benefits than they pay in tax
It’s important to recognise that the analysis shows the top 10 per cent, the highest-earning ‘decile’, pay by far the most tax – and far more than they receive in benefits (thankfully, as somebody has to). Indeed, the government’s dependence on the better-off is underlined by the estimate that “households in the first six deciles are net beneficiaries of the system, on average”.
For context, the average household disposable income, before housing costs, of people in the sixth decile is £38,700 a year and yet, as a group, they receive more in social security than they pay in personal taxation, according to estimated figures for 2026-27. Is that really where the balance point should be?
The average disposable income of the highest-earning decile is £112,800, and each household within it receives an average of £5,200 a year in benefits – making a total of £1.3 billion. The second-highest earning decile is on an average of £68,400, and they get £4,700, while the third, on £56,100, receive £5,700. Some of this will be paid to low-income individuals living in households with a high earner, but by no means all.
These figures compare to the lowest-earning 10 per cent, who receive an average of £7,300 a year, for a total of £1.85bn, the second-lowest who get £13,900, and the third-lowest who, at £14,100, get the highest social security payments – sums which likely reflect different types of household.
The ‘deserving rich’
The idea of the ‘undeserving poor’ was once used by the well-off to salve their consciences about poverty. Happily, attitudes have changed. But is it really possible to make an argument for the ‘deserving rich’ – people who, despite a high income, need a bit extra from the state to top up their finances?
Some of the money given to those in the upper income deciles – which is mostly from the UK government rather than Holyrood – will be child benefit which, for the firstborn, is worth £1,406.60 a year. This is paid in full to people earning up to £60,000, but you then “pay back 1 per cent of your child benefit for every £200 you earn over £60,000” and “if you earn over £80,000, you’ll pay it all back”, according to the UK government’s website.
This conjures up a self-parodying image of bureaucratic ping pong in which people pay tax to the government, the government then gives some of it back, and then the people return some of that money to the government. Fortunately, you can opt out of this system if you prefer.
Some, particularly the hard-left, might find it appalling – maybe even worse than Keir Starmer’s seemingly outrageous yet also sensible attempt to means-test pensioners’ winter fuel payments – to suggest the withdrawal of child benefit, of all things, from anyone.
However, surely the key test is what would happen if you did. If the children end up going without fundamentals like shoes or food, they should keep the benefit. If the second family holiday to Spain gets cancelled, then this is what, in reality, the money is being used for and that’s just not a sensible use of taxpayers’ hard-earned cash.
READ MORE: I'm a Labour MP who rebelled over benefit cuts. Here's why I've changed my mind – Elaine Stewart
Free stuff for millionaires?
At the weekend, Conservative leader Kemi Badenoch announced she would abolish the rule that sees parents in England lose most of their entitlement to state-funded childcare if one of them earns more than £100,000. If there is a genuine economic argument for doing this – if it boosts the economy by enabling more people to work – it might be justified. But giving free stuff to millionaires requires a cast-iron case.
Politics is about choices. The sum total of social security paid to the three highest-earning household deciles in Scotland is just under £4bn. In straitened times, a universal income cap on welfare, at a level to be defined, seems sensible. The savings could then be used to deliver an economy-boosting cut to income tax or business rates that might ‘benefit’ us all to a far greater degree.
Alternatively, it could be spent on repairing Scotland’s crumbling public services. This year’s Scottish Ambulance Service budget is £471.5m. Over the last five years, more than 1,500 of the two highest-risk categories of patients have waited more than an hour for an ambulance. Tomorrow, if you get hit by a car, that could be you, whatever you earn. Or you might end up being a cancer patient who dies because of delays in getting treatment.
In a democracy, the choices are ours. We need to make the right ones.
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