Labour pledges £50m to battle ‘bedroom tax’

Labour will pledge to find £50 million in Scotland’s budget in order to negate the impact of the so-called “bedroom tax” in Scotland, its finance spokesman has said.

Iain Gray, newly appointed in the post, used an interview with The Scotsman to call on the SNP government to find the cash, saying they could easily raise the money.

“This is a government that spent nearly £10m to help promote a Disney Pixar movie when the combined weight of Hollywood was already pushing it so I think the money is there,” he said, referring to the advertising campaign last year to back the movie Brave.

The bedroom tax – which reduces the housing benefit given to social housing properties with spare rooms – has been bitterly opposed by both the SNP and Labour.

UK ministers have said the changes will reduce benefit payments in Scotland this year by £50m. Mr Gray said the Scottish Government could provide the sum to Housing Associations and councils so they could reimburse families who have lost out.

He said Labour would work with SNP ministers to find savings in other parts of the £30 billion budget, in order to ensure the payments could be made.

A spokeswoman for SNP finance secretary John Swinney said last night that the Scottish Government had already provided nearly £8m to offer more advice and support for people affected.

She added that the “bedroom tax” would be scrapped in the first year of an independent Scottish Government, in 2016.

Mr Swinney will publish his spending plan for 2014-15 within the next three weeks, with the Scottish Parliament reopening for business tomorrow after its summer break.

He will be opposed for the first time by Mr Gray, the former leader of Scottish Labour, who returned to the front bench this summer following a reshuffle.

Mr Gray said that the “cracks” in the Scottish budget were “increasingly evident”, after three years of cutbacks, and that long-term problems on the funding of public services needed to be tackled without delay.

He said: “We have seen figures which show that although most of the reduction in capital spending is done, only about 40 per cent of revenue spending has. So things are going to get much tighter. My fear is that we get a budget that muddles on because I think that the Scottish Government wants to keep things as smooth as they can towards the referendum.”

He said that, among long-term reforms, ministers needed to examine local tax, saying the current system was “broken”.

It comes with ministers preparing to back another year of a council tax freeze.

Mr Gray said: “We are reaching a point where local taxation is broken. We have had the council tax freeze for seven years. It will be nine years by the end of the parliament. The proportion of money that local government raises is falling year on year.

“Local government is, as a result, becoming a wholly owned subsidiary of central government. There is a point where we have to fix local taxation.”

He said Labour would be coming forward with proposals to reform local tax.

On the pledge to support a £50m package to mitigate the bedroom tax, a spokeswoman for Mr Swinney said: “Labour cannot hide from their failure to commit to scrapping the bedroom tax or their continued support for welfare decisions being made at Westminster despite the clear evidence that they are not in the best interests of the people of Scotland.”

She added: “The bedroom tax is one of the worst decisions Westminster has taken, which is why the SNP will scrap it within a year of independence should we form the first government.”