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The Social Security (Up-rating) (Miscellaneous Amendment) (Scotland) 2024 Regulations: scrutiny report

The Scottish Commission on Social Security's scrutiny report on the Social Security (Up-rating) (Miscellaneous Amendment) (Scotland) 2024 Regulations

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Contents

1. Introduction

1.1 Overview

The Scottish Commission on Social Security (SCoSS) is pleased to present its report on the draft Social Security (Up-rating) (Miscellaneous Amendments) (Scotland) Regulations 2024 (henceforth referred to as the ‘draft Regulations’).

The Scottish Government published its overall strategic approach to up-rating in 2019¹, having consulted SCoSS on the appropriate inflation measure.² The strategy remains an important point of reference against which to assess variations, bearing in mind the powers and constraints on Scottish Government to set strategy and take action (for further details of powers and constraints see Annex B).

1.2 Human rights and social security principles

Our scrutiny was undertaken with regard to the Scottish social security principles⁵ and relevant provisions of human rights law.

The Scottish Government’s overall approach to up-rating (2019), and the draft Section 86A report accompanying this year’s up-rating regulations, refer to specific social security principles that up-rating is intended to reinforce. These are:

Social security is an investment in the people of Scotland (principle (a));
Social security itself is a human right and essential to the realisation of other human rights (principle (b));
The Scottish social security system is to contribute to reducing poverty in Scotland (principle (e)); and
Opportunities are sought to continuously improve the Scottish social security system in ways in which i) put the needs of those who require assistance first, and ii) advance equality and non-discrimination (principle (g)).

Up-rating contributes to these principles by maintaining the value of social security payments as prices rise. An important distinction can be drawn here between the amount of a social security payment and its value. The purpose of the annual up-rating exercise is to ensure that the value of social security payments is maintained.

As stated in the draft Multi Criteria Decision Analysis report,

“Uprating approaches are not intended to either save Government money or maximise benefit income for clients, but to maintain the true value of payments as prices rise in the economy.”⁶

The Act provides that the amount of the payment must be increased such that it does not fall “materially below” what might broadly be understood to be the general cost of living.

The current measure the Scottish Government uses to determine the change in the cost of living is the 12-month rate of inflation of the Consumer Prices Index (CPI), as calculated in September by the Office for National Statistics (ONS). For the up-rating which takes effect from April 2024, the rate of inflation is based on the 12-month CPI rate for September 2023. The foreword to the Scottish Government’s draft Section 86A report this year also emphasises up-rating as part of reducing inequality and tackling poverty.

However, as SCOSS noted in its 2023 up-rating scrutiny report,⁷ a contribution towards reducing poverty cannot be neatly captured by an average measure of price inflation, and changes in the external environment can affect costs and needs (inflation is also discussed in section 4 below). These factors can also have an impact on groups of people with protected characteristics under the Equality Act 2010, thus also invoking principle (g) (also discussed in section 1.3 below).

1.3 Equality and human rights budgeting considerations

The Scottish Government has previously stated that it does not carry out equality impact assessments for annual up-rating as up-rating makes no changes to the regulations on which such assessments have already been made.¹¹ Officials have told SCoSS that the up-rating process can be understood as administration, rather than policy.

However, a distinction can be made between social security payments where there is a statutory duty to up-rate and those for which up-rating is discretionary, which involves more explicit policy choices (although within the constraints noted in Annex B:), also discussed in section 2 below.

There may be situations where equality and human rights considerations are needed in relation to up-rating specifically. For example, it is possible that the annual up-rating exercise may serve as a prompt for revising impact assessments on social security payments where there has been no recent assessment of equality considerations. Also, a new Equality Impact Assessment is likely to be required if there is any change to up-rating policy.¹² In addition, the approach to up-rating is also part of wider considerations in the context of the Scottish Budget processes. The Scottish Government’s commitment to the human rights principles of transparency, participation and accountability was also reiterated in this year’s Equality and Fairer Scotland Budget Statement.¹³ SCoSS has previously welcomed the Government’s approach to these principles.¹⁴

SCoSS also welcomes statements in the Equality and Fairer Scotland Budget Statement recognising the intersection between people with different protected characteristics and disadvantages, which can compound structural inequality¹⁵ and of a programme to drive overall improvement in the impact assessments.¹⁶

Observation: Given the links with the Budget, future potential changes to inflation measures or to up-rating policy should involve equality considerations. SCoSS would welcome being kept informed about the progress of the programme of improvement to equality impact assessments and its relationship with the Budget and up-rating process.