Scotland’s new Welfare Benefit Powers – How will they be used?

Substantial new welfare benefit powers are being devolved to Scotland under the Scotland Act 2016.  While this creates new opportunities for the Scottish Government to help address poverty and inequality, making use of the new powers will also bring challenges.

What powers will be devolved?

Scotland will soon have control over a range of existing benefits that account for about £2.7bn worth of spending (UK Government 2015)  – around 15% of all welfare benefit spend in Scotland (Figure 12) (Scottish Government 2016a).  The Scottish Parliament will be able to decide the structure and value of devolved benefits, or any new benefits which might replace them.

Value of Benefits Devolved by the Scotland Act 2016

Benefits

Source: SPICe

The welfare powers to be devolved through the Scotland Act 2016 are:

  • Powers over benefits for carers, disabled people and those who are ill, including Carer’s Allowance, Disability Living Allowance and Personal Independence Payments.
  • Powers over those benefits under the Regulated Social Fund (Winter Fuel Payments, Cold Weather Payments, Sure Start Maternity Grants and Funeral Payments)
  • The power to legislate for Welfare Foods.
  • Powers to vary housing cost elements of Universal Credit and change payment arrangements for Universal Credit.
  • Powers over Discretionary Housing Payments and Discretionary Payments and Assistance.
  • The power to top up reserved benefits.
  • The power to create other new benefits (except pensions) in areas not otherwise connected with reserved matters.

How will the new powers be used?

The Scottish Government has said that the new social security powers will be founded on a set of five principles that treat people with dignity and respect (Scottish Government 2016b).  More specifically, the Scottish Government has set out plans for how it will initially use the powers. These plans include:

  • Increasing Carer’s Allowance so that it is paid at the same level as Jobseeker’s Allowance (JSA) which would give carers almost an additional £600 per year (Scottish Government 2016c).
  • Abolishing the 84-day rule: families with seriously ill children will continue to receive Disability Living Allowance and Carer’s Allowance (or the new equivalent thereof) for the duration of their child’s stay in hospital.
  • Effectively abolishing the “Bedroom Tax”, using its new powers over the housing element of Universal Credit and discretionary housing payments.
  • Giving UC claimants the choice of having their housing element paid to social landlords and to have their payments made twice a month rather than once a month.
  • The SNP Manifesto (2016) commitments also included: creating a new Maternity and Early Years’ Allowance; restoring housing benefit for 18-21 year olds; increasing Carer’s Allowance for those who care for more than one disabled child, and expanding winter fuel payments to families with children in receipt of the highest rate of DLA.

How will the proposals be taken forward?

A new social security bill will be introduced in the Scottish Parliament by May 2017 (Scottish Government 2016d). This will provide the framework for the establishment of a new benefits delivery agency in Scotland.  The implementation dates for any new welfare powers will be agreed by the Joint Ministerial Group on Welfare, with the Joint Exchequer Committee overseeing the transfer of funding (UK Government 2016).

Future Challenges

  • Finance: the Fiscal Framework sets out the basis on which the transfer of powers will be funded. The block grant will be adjusted by an initial baseline increase equivalent to the existing level of Scottish expenditure by the UK Government on the benefit being devolved (UK Government 2016).   Any changes that the Scottish Government makes to the benefits, or new benefits that result in an increase in benefit expenditure, will need to be paid for by the Scottish Government. Thus, in the context of public spending restraint and other competing priorities, the Scottish Government may have to think creatively about what can be achieved.
  • Complexity: With the introduction of devolved benefits there is potential for a further layer of complexity in the benefit system. Any decision on new benefits that the Scottish Government makes will need to be considered in the wider UK context because of the integrated nature of benefits. From a claimant’s perspective, the Scottish Government has committed to look to reduce the bureaucracy involved in claiming benefits (Scottish Government 2016b).
  • The transition process: Existing claimants of benefits that will be devolved may be worried about their payments and how they might change. A key priority for the Scottish Government is to ensure “a smooth transition” from the existing UK benefits to the new Scottish arrangements (Scottish Government 2016b).
  • Delivery: Questions arise about: how the new benefits agency will work in practice; whether there is a role for local authorities to deliver benefits locally and how the administration of Scottish benefits will link in with existing UK administrative processes.

Kate Berry

Sources:

Scottish Government (2016a) New Social Security Powers, Newsroom. Available at –http://news.scotland.gov.uk/News/New-social-security-powers-230b.aspx [Accessed 27 April 2016]

Scottish Government (2016b) Fairer Scotland, Future Powers, Principles. Available at – http://www.gov.scot/Topics/People/fairerscotland/future-powers/future-powers [Accessed 27 April 2016]

Scottish Government (2016c), Carers Bill, Newsroom. Available at – http://news.scotland.gov.uk/News/Carers-Bill-1f03.aspx [Accessed 27 April 2016]

Scottish Government (2016d) New Benefits Agency for Scotland. Newsroom. Available at: http://news.scotland.gov.uk/News/New-benefits-agency-for-Scotland-2335.aspx [Accessed 27 April 2016]

SNP (2016) Manifesto 2016. Available at http://www.snp.org/manifesto [Accessed 27 April 2016].

UK Government (2015) Scottish Secretary: Scotland wins if Holyrood uses new powers well, Press release. Available at – https://www.gov.uk/government/news/scottish-secretary-scotland-wins-if-holyrood-uses-new-powers-well

UK Government (2016) The agreement between the Scottish Government and the United Kingdom Government on the Scottish Government’s fiscal framework, UK Government and Scottish Government. Available at – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/503481/fiscal_framework_agreement_25_feb_16_2.pdf [Accessed 27 April 2016]