The Scottish Government previously committed to using CPI for the ‘foreseeable future’. SCoSS accepted this when it reported to the Scottish Government in its 2019 uprating report while acknowledging that CPI could potentially be improved upon. Section 4 of the Section 86A report sets out the Scottish Government’s policy position and current information on possible alternative indices. Having further discussed this with officials18 we can see no grounds to change from CPI currently and recognise that constraints such as agency agreements with DWP may apply (see Annex A), but agree with the Scottish Government that this should remain actively under review in light of developments concerning other indices.

In September 2020 the CPI inflation rate was 0.5%. This had increased to 3.1% in September 2021. The CPI measure of inflation has since reached 5.1% in the 12 months to November 2021 (latest figures at the time of writing), up from 4.2% in October.

Such a steep rise is concerning, particularly should this trajectory continue. It could mean that, by April 2022 the uprated value of assistance falls well below actual costs, representing a reduction in support for an adequate standard of living and contribution towards reducing poverty (principle e). In response to a previous SCoSS recommendation that the Scottish Government present plans to mitigate the adverse effects of volatile inflation on people receiving devolved benefits, should this occur the Scottish Government said it would consider how this could best be achieved if inflation became volatile in the future.20 Again, it is helpful to acknowledge the constraints on action that might apply (Annex A).

Recommendation 1: In view of the rapid and substantial rise in inflation since September 2021, and the possibility that by April 2022 a 3.1% increase could fall well short of CPI, we invite the Scottish Government to set out its thoughts on the need for mitigating action and its strategic approach to adjustments in light of inflation volatility.