The Scottish Commission on Social Security (SCoSS) is pleased to present its report on the Social Security (Up-rating) (Miscellaneous Amendments) (Scotland) Regulations 2022 (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 20181 (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 of the Act. The draft Regulations are made under powers conferred by sections within this part and chapter.

The Scottish Government published its overall strategic approach to uprating in 2019, having consulted SCoSS on the appropriate inflation measure. It would be surprising, with the arrival of the Covid-19 pandemic, if the Scottish Government had not departed from it somewhat. Nonetheless, the strategy remains an important point of reference against which to assess variations, bearing in mind the powers and constraints on the Scottish Government to set strategy and take action (for further details of powers and constraints see Annex A).

Each year, the Scottish Government uprates certain forms of devolved assistance in line with the Consumer Price Index (CPI) for September; this year 3.1%. It is statutorily obliged to uprate some forms of assistance if in their opinion it is materially below its inflation-adjusted figure. It can also, if it chooses (constraints permitting), uprate others.

Alongside the draft regulations a ‘section 86A report’ is published setting out the basis for uprating 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 uprating does not represent a change in policy.

The Scottish Government has been clear that the purpose of uprating is to maintain the value or purchasing power of assistance, rather than increase it.  That said, the Scottish Government annual uprating regulations to date have included additional measures, whether to increase the value of some forms of assistance above inflation or make other adjustments. This may be a sensible, pragmatic approach although it was not initially expected to be a regular occurrence. Given the possibility that the economic environment may remain unsettled for some time to come, this may be worth reviewing.

Observation 1: It may be worth considering whether there might be a case to explicitly reposition these annual regulations as an opportunity to make minor, straightforward adjustments of various kinds.

This year, in line with statutory requirements and the previously agreed measure of inflation of the September Consumer Price Index (CPI), Scottish Ministers propose to uprate Adult Disability Payment, Child Disability Payment, Carer’s Allowance Supplement, Young Carer Grant and Funeral Support Payment by 3.1%. They propose to go beyond this for:

• Scottish Child Payment, (where a statutory requirement to uprate also applies), will be increased by more than 3.1% to double its current rate to £20
• Child Winter Heating Assistance is to be increased by 5%
• There is also a technical change to the income threshold for Best Start Foods to keep this aligned with changes elsewhere and thus maintain eligibility.

For further information on the contents of the draft regulations see Annex B to this report, the Policy Note and section 86A report.

The regulations in themselves are not controversial and SCoSS welcomes the additional action 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 uprating in line with 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 contribution to poverty reduction, and when, therefore, additional supporting data, assessment of impact on equality, and stakeholder engagement may be helpful.

The Minister for Social Security and Local Government referred the draft regulations to SCoSS, along with the section 86A report and Policy Note, on 09 December 2021. This was the same day the Scottish Government published its Scottish budget for 2022-23. We were given a deadline for reporting of 17 January 2022. Given the interdependencies between uprating, the Scottish Budget, the Westminster budget, and the need to introduce changes by the start of the financial year, there is little flexibility possible in timescales for reporting and the feasibility of consulting stakeholders, should it be felt helpful.

Scottish Government officials helpfully provided a briefing on issues related to the draft regulations at our Board meeting of 15 December 2021. This report reflects information they provided. We also refer to the section 86A report, the Policy Note and, where directly relevant, to SCoSS’s previous reports on uprating and the Scottish Government’s responses.

As required by the Act, our scrutiny was undertaken with regard to the Scottish social security principles10 and relevant provisions of human rights law.

The Section 86A report highlights the relevance of principle (a) on 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 and (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. Action to maintain value by increasing amounts of award in line with a robust measure of inflation is indeed likely to contribute towards those principles.

However, what is required to maintain or increase support for an adequate standard of living12 and contribution to reducing poverty can be significantly affected by factors that cannot be neatly captured by an average measure of price inflation.  These include changes in the external environment (like Covid-19) 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 equality groups 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 cites the impact of the pandemic and high inflation of energy and transport costs. Such factors strengthen the case for additional action in those areas. We discuss this below with regard to action to increase Child Winter Heating Assistance by more than CPI.

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, 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, 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 uprating in line with previously agreed policy more closely equates to maintenance, where action is obviously an improvement or merely minor technical tweaks, the case for stakeholder engagement is weak.

Regarding the evidence base, the section 86A report is obviously a key source of evidence. 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. 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.

None of this is to underplay the importance of uprating in line with CPI as a means of maintaining devolved social security’s place as an investment in the people of Scotland (principle a) and others. Principle (b) states that “social security is itself a human right and essential to the realisation of other human rights.” Previous SCoSS reports have noted the potential contribution of devolved social security assistance to the realisation of certain rights. 16 Casting aside the potential impact of external factors as above, uprating in line with CPI remains important to the maintenance of this contribution. If a particular benefit intended to contribute to the realisation of a particular right were not uprated for an ongoing period then, over time, it is likely that it would make less and less of a contribution to that right. By extension the contribution to the right to social security17 might similarly dwindle. This should be relevant to consider over the longer term.

Observation 2: SCoSS notes that what constitutes maintenance or improvement in support for an adequate standard of living and contribution towards reducing poverty is affected by factors other than uprating in line with September CPI or additional increases. These include external events that increase or create new needs and hence income needs, changes to one form of provision that offset increases or reductions in another, and different inflation rates within the basket of goods comprising CPI, and these may impact disproportionately on particular equality groups.

Observation 3: SCoSS notes that the less stable the environment and the more that regulations go beyond uprating in line with CPI the stronger the case is likely to be for stakeholder engagement and additional supporting data, including financial modelling and assessment of the impact on equality groups.