Scottish Benefits Roll-out Successful But Challenges Remain

19th May 2022

Audit Scotland's report on Scottish Benefits is published today 19th May 2022.

The roll out of new devolved social security benefits is going well but there is still a lot to be delivered. Comments include the fact that payments will exceed the amount received in the block grant leading to cuts in other areas of expenditure controlled by Scottish Government.

New and complex social security benefits such as the Scottish Child Payment have been launched despite the challenges of the pandemic. People are also positive about their experience of Social Security Scotland.

But substantial risks remain, including:

Delivering the remaining benefits by 2025, which will see Social Security Scotland shift from directly administering around 20 per cent of devolved benefits to over 70 per cent.

A large rise in the benefits cases administered by Social Security Scotland. Adult Disability Payment, for example, is projected to rise from 20,000 this year to 475,000 by 2026/27.

A doubling of the Social Security Scotland workforce within the next year to deal with growing administration needs.

The Scottish Government currently estimates that the full package of devolved benefits will cost around £685 million to put in place. Planning around that figure is ongoing. These implementation costs have not been routinely reported on publicly, making them difficult to track over time.

Benefit spending in Scotland is also forecast to be £760 million higher per year by 2026/27 than the related sum received in the block grant adjustment from the UK Government. For example, the Adult Disability Payment is expected to cost £527 million more than the UK benefit it replaces, the Personal Independence Payment. This is a result of policy choices by the Scottish Government. The Scottish Government needs to plan for how it manages the long-term sustainability of this expenditure and be clearer about how it will improve outcomes for Scottish people.

Stephen Boyle, Auditor General for Scotland, said, "Successfully launching new benefits during the pandemic has been a significant achievement for the Scottish Government, but a huge amount of work remains.

The government now needs to plan how it will manage to pay for greater social security spending alongside other policy initiatives.

To demonstrate how it is achieving value for money, it also needs to be clearer about how this extra spending will improve the lives of people living in Scotland.

Annual benefit expenditure in Scotland is forecast to be substantially higher than the corresponding funding received.
Social security expenditure is a demand-led area of the Scottish Budget. Any spending above the funding received from the UK Government, through the block grant adjustment for corresponding UK benefits, must be met by the wider Scottish Budget. In practice, this means increased spending on areas of social security above the block grant adjustment may result in less funding being available for other parts of the Scottish Budget.

56. The Scottish Fiscal Commission's latest forecasts, from December 2021, project that annual benefit expenditure in Scotland will be £760 million higher by 2026/27, than the corresponding funding received through the block grant adjustment. This will be driven mainly by the impact of changes to the way disability benefits are to be administered in Scotland (Exhibit 3, page 16).

57. In December 2021, the Scottish Fiscal Commission forecast that by 2026/27 the planned changes to how Adult Disability Payment will be administered will result in the direct expenditure on this benefit being £527 million higher than the equivalent expenditure for Personal Independence Payments (Exhibit 6, page 26). Additionally, the forecast increase in Adult Disability Payment cases is expected to increase eligibility for Carer's Allowance, increasing expenditure on this benefit by £40 million. The Scottish Fiscal Commission acknowledges that there is a high degree of uncertainty in its forecasts for Adult Disability Payment, but these still provide a clear indication of the impact that administrative changes can have on benefit expenditure.

58. Scottish Child Payment is a new Scotland specific benefit and is therefore funded entirely by the Scottish Budget. Following the doubling of Scottish Child Payment in April 2022 and the planned roll-out to households with children aged 6-15 at the end of 2022, expenditure will be around £360 million by 2023/24. This forecast does not reflect the Scottish Government's commitment to increase the Scottish Child Payment value to £25 per week, made in March 2022.

59. Fiscal and economic forecasts contain uncertainties and can be volatile. The UK Office for Budgetary Responsibility produced its most recent economic and fiscal outlook in March 2022, which indicates an increase in the social security related block grant adjustment for Scotland compared to previous forecasts. Since the December 2021 forecasts, the Scottish Government has also made additional social security policy commitments which will affect future expenditure forecasts, including the increase to Scottish Child Payment. The Scottish Fiscal Commission is due to publish its updated fiscal and economic forecasts for Scotland on 31 May 2022.

Responding to the report, Minister for Social Security Ben Macpherson said, "I am pleased that this Audit Scotland report recognises the significant progress we have made in building a new public service from scratch since 2018 and delivering 12 benefits - seven of which are completely new forms of financial support that are not available anywhere else in the UK.

“We have successfully introduced a range of benefits that are now supporting carers and low-income families with their living costs, including with heating and we are helping disabled people to live full and independent lives.

“This year will see us deliver even more for the people of Scotland. Our Scottish Child Payment will be extended to eligible children aged under 16 and be increased to £25 per week per child by the end of the year, supporting over 430,000 eligible children; and in winter 2022/23 we will introduce our new winter heating payment for low-income households – a stable £50 payment that will support 400,000 low-income households with their heating costs. We will also continue to roll out Adult Disability Payment, our most complex benefit, and significantly progress transferring tens of thousands of Scottish disability benefit cases from the DWP to Social Security Scotland.

Social Security Scotland currently administers 12 benefits:

Carer's Allowance Supplement
Pregnancy and Baby Payment
Early Learning Payment
School Age Payment
Best Start Foods
Funeral Support Payment
Young Carer Grant
Job Start Payment
Scottish Child Payment
Child Winter Heating Assistance
Child Disability Payment

Adult Disability Payment

Adult Disability Payment is the replacement for the UK Government's Personal Independence Payment. It is being introduced in phases ahead of national rollout on 29 August

21 March - Dundee City, Perth and Kinross or the Western Isles

20 June - Angus, North Lanarkshire and South Lanarkshire

25 July - Aberdeen City, Aberdeenshire, East Ayrshire, Fife, Moray, North Ayrshire or South Ayrshire

29 August - All Scotland

Read the full report HERE Pdf 30 pages