The parliamentary and wider scrutiny of the Social Security (Scotland) Bill made clear the desire for a new approach to social security, one that delivers as effectively as possible for people of Scotland. In view of this, along with SCoSS’s duty to scrutinise regulations (including on uprating) through the lens of the 2018 Act’s principles and human rights conventions, it is pertinent to consider whether there is scope, in the longer term, for a fresh approach to uprating that would better align with those principles and conventions. Indeed, to do so would be consistent with social security principle (g)17 and human rights to progressive realisation.

Given SCoSS’s duty to scrutinise regulations (including on uprating) through the lens of the 2018 Act’s principles and human rights conventions, it is pertinent to consider whether there is scope, in the longer term, for a fresh approach to uprating that would better align with those principles and conventions. Indeed, to do so would be consistent with social security principle (g) and human rights to progressive realisation.

In a few years’ time it is reasonable to expect that current constraints on the choice of uprating measure will no longer apply. There may be other viable indices available. CPIH should have a longer track record. There may have been work to reform RPI that makes it robust. Work currently underway by the Office for National Statistics (ONS) to explore more targeted approaches to measure inflation may have borne fruit. Benefits will have been transferred and the restrictions imposed by Agency Agreements should presumably cease to exist. There should also be considerable learning from uprating devolved benefits, concerning the areas and issues set out above.

Aside from consulting with SCoSS and the Social Security Committee at the current time, which we welcome, as far as we are aware the Scottish Government has not undertaken wider public consultation on the uprating measures report. While there may be no real choice at the moment about the index to be used, and it is pointless and disingenuous to consult if realistic alternatives do not exist, there are other features of the shorter-term system that perhaps could have been consulted on – and SCoSS may well have done so with more time. However, once current constraints no longer apply, there is a strong case for public consultation and engagement, in line with social security principle (f) that the social security system should be designed with the people of Scotland on the basis of evidence.

Recommendation 15: When current constraints do not apply and when alternatives to CPI become available, we recommend that the Scottish Government conducts a thorough review of the approach to uprating and that this includes public consultation and engagement.

One area that may be worth reviewing is the purpose of uprating.

While the Scottish Government is clear that it is not the purpose of uprating to increase the value of benefits, the uprating measures report suggests that uprating benefits can seek to meet similar, though different, policy objectives. For example, these include to maintain a certain standard of living or to protect the value of the benefit from eroding when prices are rising.

We raised with Scottish Government officials whether there could, even in theory, be a possibility of using uprating to make incremental improvements to the overall value of benefits, rather than just maintain value. In a situation where the income to achieve a standard of living free from poverty has been defined, and where the starting-point level of benefits falls below this, one way of achieving ‘progressive realisation’ could (in theory, even if it presented challenges in practice) be to use annual uprating as a means of incrementally increasing the value of benefits. However, Scottish Government officials have confirmed that increasing the value of assistance is a separate matter to uprating. If Scottish Ministers wished to increase the value of assistance in light of evidence of its inadequacy, this would be done by bringing forward amending regulations to adjust the rates of assistance in the relevant regulations. That being so, if original amounts are inadequate to achieve a standard of living that is not free from poverty, the most uprating could achieve would be not to entrench poverty further.

Recommendation 16: In reviewing its approach, the Scottish Government could usefully consult on the purpose/s and role/s of uprating.

Aside from adherence to the social security principles and human rights, it may be helpful to identify a number of qualities or design principles that it would be desirable to reflect in any approach to uprating, regardless of the specific purpose/s envisaged for uprating and whatever methodological approaches were taken to achieve this. For example, it might be considered always desirable if that approach was:

• Technically robust.
• Capable of inspiring public confidence.
• Transparent – capable of being widely understood and of being scrutinised.
• Best able to maintain household incomes.
• Sufficiently stable to enable meaningful forecasting/ projections.

There is a debate to be had concerning the right balance between the simplicity of using one index for uprating all forms of assistance and the greater complexity that would accompany using different indices that permitted greater precision, given evidence of the differential impact of inflation on different socio-economic groups and regions.

Recommendation 17: We invite the Scottish Government to consider the qualities it would want to ensure should be reflected in whatever future approach to uprating system is adopted.

Subject to precise views on the purpose/s of uprating and of particular benefits, different approaches may, in theory, be taken to the approach to uprating and selection of indices. For example, it would seem fitting to uprate a benefit that has the purpose of addressing the extra costs for a particular group (such as Disability Assistance) or concerning a particular cost (such as towards funeral costs or cold weather payments), in line with relevant prices. There may be a case to uprate a benefit whose purpose is income replacement (such as the replacement to Carer’s Allowance) in line with average earnings rather than prices. Alternatively, a combination of methods such as the ‘triple lock’ may be desirable.

The uprating measures report notes “emerging inflation measures that are household and region specific that could prove more suitable in a Scottish context”.  It flags a number of initiatives to develop new approaches to uprating that might address some of the flaws of existing methods and better reflect the impact of inflation on different groups of people and/ or regions. These are being considered by the Office for National Statistics (ONS). This might lead to the development of different uprating indices that would be applied to assistance for different groups or regions, leading to a more targeted approach. That might facilitate a narrowing of inequalities between groups and regions, in line with social security principle (g). But this requires more debate to ensure such an approach did not reinforce divisions between groups/ regions or lead to unworkable and undesirable complexities.

Another approach to uprating that may be worthy of consideration concerns where particular forms of assistance address particular costs. For example, it might be possible and desirable for Funeral Expense Assistance to be uprated in accordance with inflation occurring specifically relevant to funeral prices. The same approach might be applied to inflation regarding housing costs and energy costs and their application to uprating associated forms of assistance.

Without passing judgement on whether new approaches will ultimately prove worthwhile, there seems to be merit in being proactive in encouraging exploration of approaches to uprating that might lead to improved outcomes for people receiving devolved assistance.

Recommendation 18: We suggest that the Scottish Government actively investigates/ pursues developments in uprating methodology, including engaging with ONS, that may have potential to deliver improvements to approaches to uprating.