The Scottish Parliament should be given control of practically the entire welfare budget, says a think-tank.
Reform Scotland said that ‘devolution plus’ should be included as a ‘third option’ on the planned referendum budget to give Scotland greater tax raising powers without leaving the union.
It believes MSPs should have responsibility for spending most of the welfare budget, leaving state pensions and sickness and maternity pay with Westminster.
It said £19.9billion was spent on social protection in Scotland in 2009-10, of which £15billion was spent by Westminster, £4.7billion by councils and just £113million by the Scottish Government.
It is proposing £7.2billion of the £15billion be devolved to Holyrood, with London left responsible for £7.8billion, of which £7.75billion would go towards state pensions.
Ben Thomson of Reform Scotland said “This is to achieve a more coherent and effective approach to allieviating poverty.”
Reform Scotland has put forward its ideas in a submission to the Scottish Parliament inquiry into the Scotland Bill to give more powers to Holyrood.
It said the independence referendum to be held in the next four years must offer a “genuine choice”, not just a straight choice between independence or the status quo.
At present Holyrood controls 60% of public spending but is responsible for less than 7% of funding.
The think-tank called for both income tax and corporation tax to be devolved in their entirety.
A spokesman for Finance Secretary John Swinney said: “The people of Scotland spoke in the election, and it is clear that the provisions of the Scotland Bill in its current form fall far behind the ambitions of the people.”