This report considers both the practical and policy problems with devolving some or all aspects of welfare, and the reasons why devolving some aspects of it would be a good - and union-reinforcing - thing to do.

Focusing on the Scottish case, the research presents a set of recommendations that would enable each of the UK's devolved governments to deliver better social and economic outcomes for their electorates, while continuing to benefit from UK-wide risk-pooling.

The devolved administrations are now free to pursue their own distinct policy agendas in core welfare areas such as personal social services and housing, and consequently both policy and welfare entitlements have started to diverge across the nations of the UK. However, welfare benefits remain a reserved matter, and are uniform across the UK: they therefore take no account of local conditions such as the cost of living. Essentially, the main outcome of devolution in the late 1990s was to hand control of 'distributive' public services to the devolved administrations, but not the 'redistributive' functions of the state.

This report demonstrates why such a division of powers is, on the whole, desirable, and explains the powerful economic logic for the nations of the UK coming together to pool risks and share financial resources across the largest possible area. Social citizenship is shared between the devolved and UK governments - as is common practice in many federal and decentralised systems - and this is part of running a decentralised United Kingdom.

While there is scope and public support for devolving some welfare functions, there is a limit to how far this can go. Furthermore, any move in the direction of welfare devolution has important implications for fiscal policy. If devolved institutions are to take on a greater role in welfare, they need to be able to raise at least some of the resources to pay for this.

The proposals set out in this report are intended to strengthen the union by addressing Scottish concerns regarding welfare in a way that does not undermine the interests of the rest of the UK; creating a better, less dysfunctional politics within the union by increasing devolved autonomy and clarifying the intergovernmental politics of welfare; and fostering greater public awareness of which government does what for its citizens.