New social security powers in Scotland

Issue 251 (April 2016)

Judith Paterson looks at proposals to use new social security powers in Scotland.

Introduction

The Scottish Parliament has gained significant new powers over parts of the benefit system with the passing of the Scotland Act 2016 on 23 March. As an enabling power, the Act is the first stage in transferring responsibility to Scotland. While still deliberating over when and how to use these powers, the Scottish government has committed to some early changes to benefits in Scotland.

Benefits to be devolved to Scotland

The Act devolves powers over:

  • disability and carers’ benefits (attendance allowance (AA), disability living allowance (DLA), personal independence payment (PIP), carer’s allowance (CA), industrial injuries disablement benefit and severe disablement allowance);
  • regulated social fund (Sure Start maternity grant, funeral payment, cold weather payment and winter fuel payment);
  • discretionary housing payments;
  • welfare foods (Healthy Start vouchers).

Universal credit (UC) stays with the UK but Scotland will be able to:

  • change the frequency of payments;
  • split payments between couples;
  • pay housing costs directly to landlords;
  • vary the housing costs element for renters – eg, housing cost contribution, size criteria.

Means-tested benefits, tax credits and all other benefits remain reserved to the UK, although Scotland will be able to top them up and even create new benefits that relate to other devolved policy areas such as health and social care

The Act also confers new powers over employment support (eg, the Work Programme (but not sanctions)) and over income tax, extending the more limited tax powers which came into effect in April 2016.

Use of new powers

The Act sets a broad outline for the scope of the various powers but, within that, the Scottish Parliament is free to shape devolved benefits as it sees fit. In time, we may see new names, new rules and new ways of delivery. For now there is no decision on when exactly each benefit will be transferred to Scotland or how this would be managed. However, the current Scottish government has committed to:1

  • begin to increase CA to the level of jobseeker’s allowance (JSA);
  • give claimants the choice of being paid UC twice a month instead of monthly;
  • pay UC directly to social landlords;
  • abolish the bedroom tax in UC;
  • replace Sure Start maternity grants with a ‘maternity and early years allowance’, which will provide £600 when the first child is born, £300 for other children at birth, and £250 when a child starts nursery and school.

There are elections in May 2016 for the Scottish Parliament. Parties other than the Scottish National Party, which currently forms the government, have their own proposals. For example, for Labour, this includes raising CA to the level of JSA, abolishing the bedroom tax in UC and increasing the maternity grant to £1,030.

There is also some indication from the Scottish government of the direction of travel for other changes.

  • Introduce long-term awards for disability benefits and have paper-based rather than face-to-face assessments wherever possible. Improve consistency across age groups and in the long-term consider whether a single benefit should replace AA, DLA and PIP. Maintain the Motability scheme as arrangements transfer to Scotland.
  • Seek a greater role for employers and insurers in the industrial injuries scheme.
  • Process funeral payments more quickly, within 10 working days of claim, and in the longer term wrap them in a more ‘coherent package ofsupport’, informedby the recom- mendations in Funeral Poverty in Scotland.2
  • Embed Sure Start maternity grants within other services and support.
  • Keep winter fuel payments non-means tested for those already eligible and consider whether to extend to other households or convert to a fuel bill rebate.
  • In UC, having already committed to paying rent directly to social landlords, consider whether to offer private sector tenants the same choice. Consider splitting payments between couples, instead of the current ‘alternative payment arrangements’ in UC, which are only available in limited circumstances.

Making some of these choices in Scotland would impact on entitlement to benefits that remain reserved to the UK. For example, CA is taken into account as income for means-tested benefits such as UC. If CA was £11 a week higher in Scotland, that would, under current rules, reduce means-tested entitlement accordingly. The UK government has given assurances on ‘not automatically offsetting new benefits with reductions elsewhere’ in the system.3 So regulations would need to change to give CA claimants the full benefit of the extra £11.

Working out what these and other policy ambitions might cost is a work in progress. What has been settled is the ‘fiscal framework’ that sets out how much will be transferred from the UK to Scotland for initial implementation costs (£200m) and ongoing administration (£66m) as well as adjustments to the block grant to reflect new tax and welfare powers.4 (The block grant is the normal mechanism for transferring a population share of funding for devolved spending.) The framework also fleshes out the ‘no detriment’ principle intended to ensure that neither government loses out financially as a result of policy decisions of the other.

As things stand, there is no national benefit delivery infrastructure in Scotland standing ready to take on new responsibilities. An important step recently announced is that a new national Social Security Agency in Scotland is to be established to oversee devolved benefits. The choice of name is deliberate. The Scottish government has indicated its desire to use language that does not stigmatise people – hence ‘social security’ rather than ‘welfare’ – as part of a culture of ‘dignity and respect’. There are more decisions to be made about how far this new agency actually delivers benefits itself, and how it will ensure successful intergovernmental working in the many areas where the Scottish and UK systems interact.

More details on use of new powers will emerge over the summer as a consultation is launched on a Social Security Bill to implement changes in the Act.


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