The Scottish Commission on Social Security (SCoSS) is pleased to present its report on the Social Security (Up-rating) (Miscellaneous Amendments) (Scotland) Regulations 2023 (henceforth referred to as the ‘draft Regulations’). This report has been completed in accordance with the Commission’s pre-legislative scrutiny function, set out in sections 22 and 97 of the Social Security (Scotland) Act 2018[9] (henceforth referred to as ‘the Act). Section 97 states that the Commission must report on draft Regulations proposed to be made under any section in Chapter 2 of Part 2 or Section 79 of the Act.[10]

The draft Regulations are made under powers conferred by sections within this part and chapter and, for some payments, the Social Security Act 1988[11] and the Social Security Contributions and Benefits Act 1992.[12] Whilst SCoSS is not obliged under the Social Security (Scotland) Act 2018 to set out observations and recommendations regarding changes to regulations made under these specific powers, SCoSS may consider it appropriate to ask for more information on areas which might help inform its broader scrutiny.

The Scottish Government published its overall strategic approach to up-rating in 2019, ^[13] having consulted SCoSS on the appropriate inflation measure.^[14]

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 A).

Each year, the Scottish Government up-rates certain forms of devolved assistance in line with the Consumer Prices Index (CPI) inflation rate for September; this year the CPI inflation rate for September was 10.1% which, at the time, was a forty-year high. Despite the UK Government’s energy price guarantee (EPG) limiting households’ annual energy bill, CPI continued to rise to a peak rate in October of 11.1%. The combined impact of escalating fuel and heating costs and price rises across food and other basic necessities has been significant, particularly on households with low incomes.

The Scottish Government is statutorily obliged to up-rate some forms of assistance if in their opinion it is materially below its inflation-adjusted figure. It can also, if it chooses (constraints permitting), up-rate others. Alongside the draft regulations a ‘section 86A report’ [15] is published setting out the basis for up-rating and associated figures. The Scottish Government also provides a Policy Note, but does not carry out equality or other impact assessments on the basis that up-rating does not represent a change in policy.[16] Impact assessments are, however, carried out as part of the Budget process and the Scottish Government has committed to embed a human rights approach to budgeting.[17]

Observation 1: We welcome the Scottish Government’s approach to human rights and equality budgeting within the wider Budget process which we believe resonates with the social security principles. In particular we welcome the recognition that policies should be assessed throughout their development, implementation and execution and look forward to supporting the Scottish Government’s commitment to the three key principles of transparency, participation and accountability.

This year, in line with statutory requirements and the previously agreed measure of inflation of the Consumer Prices Index (CPI) inflation rate for September, Scottish Ministers propose to up-rate all Scottish social security payments by 10.1%, including all those where up-rating is discretionary; the exception is Scottish Child Payment, whose value has already been increased for 2023-24, to £25 per week. The significant level of inflation has had an impact on the wider economic environment and we welcome the Scottish Government’s decision to up-rate all payments where up-rating is discretionary.

For further information on the contents of the draft regulations see the Policy Note[18] and section 86A report.[19]

The regulations in themselves do not appear to be controversial and SCoSS welcomes the actions proposed. Nonetheless, they raise a number of important issues that we discuss in this report. Our primary focus is on proposals for action additional to up-rating in line with the September CPI. We also flag, but do not explore fully, the role of factors other than CPI in determining what income is required to maintain or improve support for an adequate standard of living and contribute to poverty reduction, and when, therefore, additional supporting data, assessment of impact on equality, and stakeholder engagement may be helpful.[20]

As required by the Act, our scrutiny was undertaken with regard to the Scottish social security principles[21] and relevant provisions of human rights law.

The Section 86A report highlights the relevance of principles (a), (b), (e) and (g),[22] about which further information can be found in SCoSS’s Up-rating Policy Paper and Analytical Report.[23] Action to maintain value by increasing amounts of award in line with a robust measure of inflation is aligned with those principles, since if benefits were not up-rated in line with inflation then over time they would make less of a contribution to poverty reduction and realisation of the rights to social security and an adequate standard of living than they had previously.[24]

However, what is required to maintain or increase support for an adequate standard of living[25] and contribute to reducing poverty can be significantly affected by factors that cannot be neatly captured by an average measure of price inflation.[26] These include changes in the external environment (like Covid-19, the war in Ukraine) that can increase or create new essential needs and hence income needs, changes to one form of provision that offset increases or reductions in another, and how an averaged measure of inflation masks areas where price inflation is a lot higher. These can intersect with the particular needs of groups protected under the Equality Act 2010[27] and so impact on them disproportionately (bringing principle (gii) into play). We welcome where the regulations and material in the section 86A report make some reference to wider factors. For example, it recognises the current cost of living crisis and recession, and cites the impact of price rises outpacing rises in wages.[28] Such factors strengthen the case for additional action in those areas.

The more turbulent the environment, the less straightforward it becomes to identify what is needed to maintain or improve on the status quo, and thus the contribution of proposed action towards the principles and human rights. That is where stakeholder engagement and additional data may be helpful,[29] in line with principle (f) – designing with the people of Scotland on the basis of evidence. For example, stakeholders may shed light on the differential impact of such factors on the income needs of equality groups. We note that stakeholders have been actively engaged in the child poverty delivery plan,[30] which is the backdrop to the increase in Scottish Child Payment (SCP). Conversely, in a stable environment, where the range of inflation rates in different areas is small and up-rating in line with previously agreed policy more closely equates to maintaining value, where action is obviously an improvement or merely minor technical tweaks, the case for stakeholder engagement is weaker.

Regarding the evidence base, the section 86A report is obviously a key source. We have previously recommended that additional evidence, such as equality impact assessments, may be helpful where variation in inflation rates and the external environment apply. We highlight additional evidence below, where relevant, drawn from stakeholder organisation commentary and published government reports. The Scottish Government has said it will look to develop the content of future reports to assist understanding as more types of assistance are delivered.[31]

Up-rating in line with CPI is a means of maintaining devolved social security’s place as an investment in the people of Scotland (principle (a)) and a contribution towards reducing poverty (principle (e)). Principle (b) states that “social security is itself a human right and essential to the realisation of other human rights.” Up-rating in line with CPI remains important to the maintenance of devolved social security’s contribution to this realisation and if a particular benefit were not up-rated for an ongoing period then, over time, it is likely that it would make less and less of a contribution to this realisation. By extension the contribution to the right to social security32 might similarly dwindle.

[9] Social Security (Scotland) Act 2018 (legislation.gov.uk)

[10] Other than in relation to regulations made only for the purpose of the consolidation of earlier regulations (section 97(11)).

[11] Social Security Act 1988 (www.legislation.gov.uk)

[12] Social Security Contributions and Benefits Act 1992

[13] Scottish Government (September 2019) – Uprating policy paper and analytical report

[14] Letter from Cabinet Secretary, 2 September 2019: Scottish Commission on Social Security letters: uprating 2019 (www.gov.scot)

[15] Compiled in fulfilment of section 86A of the Act; formerly section 77, re-numbered following amendments to the Act by Social Security Administration and Tribunal Membership (Scotland) Act 2020 (asp 18).

[16] See Policy note and Scottish Government responses to recommendations 4 and 6 in our February 2021 report: Scottish Commission on Social Security – scrutiny report: Scottish Government response (www.gov.scot)

[17] Scottish Budget 2023-24: equality and Fairer Scotland statement (www.gov.scot)

[18] Policy Note, Social Security (Up-rating) (Miscellaneous Amendment) (Scotland) Regulations 2023 (socialsecuritycommission.scot)

[19] Draft S86A Report, Social Security (Scotland) Act (2018) (socialsecuritycommission.scot)

[20] In its response to recommendation 4 in our February 2021 report, Scottish Government stated: “Whenever possible, any future consideration of increasing the generosity of an existing benefit would involve stakeholder engagement and consultation including impact assessments”: Scottish Commission on Social Security – scrutiny report: Scottish Government response (www.gov.scot)

[21] Social Security (Scotland) Act 2018 asp 9 s 1.

[22] The relevant principles are as follows: (a) social security as an investment in the people in Scotland; (b) a human right essential to realising other human rights; (e) social security as a contribution towards reducing poverty; (g) seeking opportunities to continuously improve the Scottish social security system in ways which put the needs of those who require assistance first and advance equality and non-discrimination

[23] Draft Social Security (Up-rating) (Miscellaneous Amendments) (Scotland) Regulations 2019: policy paper and analytical report (socialsecuritycommission.scot)

[24] For example, this might concern the human right to an adequate standard of living (art 11 ICESCR), or to respect for family life (art 8 ECHR), or to independent living and social inclusion (art 19 CRPD). Principle (g) applies more obviously to improvements beyond maintaining the status quo.

[25] Human right to an adequate standard of living (art 11 ICESCR).

[26] CPI measures the average change in prices over time that consumers pay for a basket of goods and services.

[27] Equality Act 2010, S.4 (www.legislation.gov.uk)

[28] The Social Security (Up-rating) (Miscellaneous Amendment) (Scotland) Regulations 2023 (socialsecuritycommission.scot) s.3.7

[29] In its response to recommendation 2 in our report of February 2020 Scottish Government said it will “look to develop the content and scope of future reports as more types of assistance are delivered”: Funeral Expense Assistance and Young Carer Grant Regulations: response to report (www.gov.scot)

[30] Every child, every chance: tackling child poverty delivery plan 2018-2022, Scottish Government, March 2018

[31] Response to recommendation 7, February 2021 report: Scottish Commission on Social Security – scrutiny report: Scottish Government response (www.gov.scot)