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We are not statutorily obliged to mirror any changes, but we have to face up to the financial realities of the implications of the UK Government’s decisions. We are also challenged by the speed at which the UK Government makes decisions. For example, the challenge with the winter fuel payment was that the changes were made in-year, so we had to make in-year savings, and money could not be found immediately because we were well into the financial year and budgets had already been committed.

We have made the point to UK Government ministers that making such changes at speed has implications, particularly for devolved budgets, so we need to find a better way of working. I fully respect that the UK Government can make decisions in whichever way it wishes, but it needs to bear in mind that such decisions, particularly if they are taken at speed, have implications for what happens in Scotland.

I remain concerned about Rachel Reeves’s plans. What we are hearing are still rumours, so a bit of guesswork is involved, but it appears that much of the cuts will be to reserved benefits, so there might not be implications for PIP and, therefore, CDP and ADP. However, the chancellor might choose to look at benefits that have been devolved to Scotland.

We would not be obligated to make such changes, and I would in no way wish to make them, because I know the difference that the benefits make to people. The Scottish Government has no intention to change its approach to CDP and ADP. We worked very hard with people who were on DLA and PIP to make the changes that we made, and I know that people wish us to go further with changes. We do not intend to follow Westminster’s approach, because that would be exceptionally detrimental to people who receive those payments and are entitled to them.

Clearly, if there were implications for the Scottish Government’s budget, we would need to consider those at the time and work out our strategy for dealing with them, but we would not do that on the back of disabled people.

Good morning. I welcome the opportunity to assist the committee in its consideration of the draft Social Security Up-rating (Scotland) Order 2025 and the draft Social Security (Up-rating) (Miscellaneous Amendments) (Scotland) Regulations 2025.

The people of Scotland continue to face financial challenges in the economy. With energy and food bills continuing to rise, the support that the Scottish Government provides can be pivotal in helping people to make ends meet. The Government has taken a conscious decision to invest in social security for the people of Scotland. That investment is key to our national mission to eradicate child poverty, and to assist people with the cost of living crisis. Our commitment remains to help low-income families with their living costs, to support older people and unpaid carers and to enable disabled people to live full and independent lives. It is precisely because we know that that investment is working that we will continue to ensure that it has maximum impact.

The Government recognises the importance of maintaining the value of all social security payments. Payments such as the Scottish child payment, best start foods and best start grants are integral to the First Minister’s mission to end child poverty. That is why, this year, we amended the Social Security (Scotland) Act 2018 to require that all payments delivered under the act be increased in line with inflation every year. That is a significant divergence from the UK Government’s approach, whereby, in addition to pensions, only disability, carers and industrial injuries benefits are required to be uprated each year, with other payments uprated at UK ministers’ discretion.

Even before the legislative change, we frequently chose to uprate all benefits, not just those that we were legally obliged to uprate, despite tremendous budgetary pressures. We made those decisions because we understand the difference that those payments make and the positive impact that they have on the lives of people who receive them. For example, best start foods payments are designed to tackle the impacts of child poverty by improving access to healthy food for families on low incomes; best start grants help to give children the best start in life by providing eligible families with additional money at key stages in the early years; and winter heating benefits provide targeted and reliable financial support to those who are most in need of help with their energy costs every winter. Those payments matter to those who receive them and, as such, increasing all payments in line with inflation helps to protect their purchasing power as prices rise in the economy.

The main purpose of the uprating regulations and order is to increase all social security payments by 1.7 per cent, in line with the 12 months to September 2024 rate of the consumer prices index, which is a leading measure of inflation. The exception to that is the industrial death benefit, which will increase by 4.1 per cent, in alignment with the DWP’s approach, to reflect the growth rate of average weekly earnings in the UK from May to July 2024.

The regulations make other much-needed changes, such as increasing the earnings limit from £151 to £196 for the carer support payment and carers allowance. That means that carers will be able to earn an additional £45 per week while still receiving the payments, which will help to remove barriers to work and provide more stable financial support.

Another amendment contained in the regulations reflects a new UK entitlement that will be introduced from April 2025: neonatal care leave and pay. The amendment will allow neonatal care pay to be treated as earnings for the purposes of entitlement to the carer support payment—in the same way as is the case for maternity, paternity and adoption pay—and that treatment of the new entitlement will be mirrored in relation to carers allowance.

Finally, a small change is being made to the Scottish adult disability living allowance regulations to make a correction after a word was unintentionally omitted, in order to bring the provisions in line with those for disability living allowance, as intended.

Subject to parliamentary approval, in addition to the increases to the rates of all social security payments, those changes will commence from April 2025.

I thank the committee for its scrutiny of the instruments today.

That is a very fair point. I will break the issue down into two areas. The Scottish Fiscal Commission’s work is clearly set out, including its role in forecasting social security and tax. Over time, as we all gain more experience of the devolved social security system, the nuances of aspects of that are changing. We work very closely with the SFC to understand the assumptions that underlie its forecasting.

The work to which Mr Doris refers does not have to be done by the SFC. Clearly, if we in the Scottish Government have concerns about an area—heaven forfend that we might at some point feel optimistic about a change by the UK Government—we would be able to do such work internally. People might not feel that that work would be as robust as work by the SFC, but that does not stop our analysts doing such work, nor does it mean that it would not be robust.

There is a specific role for the Scottish Fiscal Commission to play, but there is also a role for the Scottish Government to play, and I reassure Mr Doris that we can do that work within the Scottish Government.

This is the first opportunity that I have had to pay tribute to Liz Smith in a public setting. I am incredibly sorry to hear the news that she will be standing down at the next election. She and I may disagree on a number of political issues, but I have watched her in the chamber over many a year and have certainly felt that she genuinely added to the debate in the Parliament. I therefore pay tribute to her for the work that she has done, and I am sure that she will keep scrutinising me up until the last moment of this parliamentary session.

The measurement of inflation is a very important issue, and we are committed to continuously reviewing it. We recently undertook another review of the rate that is used in social security. When we were initially starting out, of course, we had to bear in mind that we used the same measure as the UK Government, because of case transfer and not having a two-tier system. Regardless of that, however, I think that it is the right method for us to use at this stage, as we move to the point at which case transfer will be reaching its conclusion.

It is important that we keep that under review. I know that people have alternative views. There are views on other measures that are not yet classed as official statistics but that people think are a better measurement of inflation. However, if they are not official statistics, they would not be used. I mention that simply to note that we are looking not only at RPI and CPI but at a range of inflationary measures. We will keep that continuously under review.

We very much welcomed the UK Government’s decision to increase the earnings threshold to the level of 16 hours at national living wage. That was similar to the approach that we proposed in our 2022 public consultation, so it was certainly a welcome change. The regulations that are before the committee would increase the threshold in line with what the UK Government is doing.

Once case transfer is complete, we have the opportunity to make further improvements. We will clearly need to do that in consultation with carers, but the consultation that we have already carried out pointed us in the direction of a number of changes that we will make, including introducing a new extra payment for people who have multiple caring roles, extending support for carers when a caring role ends due to a bereavement and changing the way that we pay carers allowance supplement, as I mentioned to Marie McNair, so that carers get the extra support more regularly.

Those are the changes that we will make and the further assistance that we will provide to carers through the devolved payment. As Paul O’Kane rightly pointed out, once case transfer is complete, we can consider a different approach to setting the earnings threshold than the one that the UK Government takes. We have had public consultation and people have different views on that, so it is important that we look at it.

I know that I say this for every benefit but, for carers support payment in particular, there are exceptionally complex linkages with the DWP and His Majesty’s Revenue and Customs. We would want to go through those in extreme detail to ensure that there would be no unintended consequences from a change that might look like the right thing to do but would leave carers worse off or no better off. We would have to carry out those in-depth discussions.

In the short term, our concentration is on the aspects that I mentioned. Over the longer term, we can consider expanding the earnings limit.

You asked whether it matters if the UK Government makes changes. It matters in so much as, if it makes changes that increase the support to carers, that will clearly increase the block grant adjustments and assist the Scottish Government to determine whether we wish to use that money in the same way. If the UK Government does not make any changes but we look to make changes to the earnings threshold, that would be something else to come out of the Scottish Government budget that is not covered by block grant adjustments. In that way, it matters because it has an impact on the Scottish Government’s overall financial envelope. Therefore, those things would need to be considered in the round.

The further improvements and changes that I have mentioned are based on a consultation a few years ago in which we laid out our immediate priorities for change. I reassure carers and carers organisations that we are not set on making just the three changes. We know that carers organisations would like us to go further on some aspects, which we will consider, as Mr Doris would expect us to.

We have been able to make other helpful changes to the way that the benefit is set up through Social Security Scotland. For example, we are making the information on earnings rules clearer; we can average out carers’ earnings to provide more stable support, which is helpful when compared with the previous DWP system; and we are using HMRC data and scheduled reviews to check and track earnings. We have already improved our system to help solve the real difficulty, which is, as Mr Doris rightly pointed out, the cliff edge of earnings thresholds.

That said, the carers support payment rules around earnings were designed to mirror the carers allowance rules, which is in line with our commitment to avoid a two-tier system. We need to bear in mind the complexity of our relationship with things that remain reserved. However, we are keen to get feedback from carers who are going through the new system. Having gone live, the carers support payment is still in its very early stages, but we continue to get feedback from carers and stakeholders on how the benefit and the improvements that we have made are working in practice so that we can determine what more we can do on information, guidance and processes.

As is the case with all our social security benefits, I am exceptionally proud of what we have introduced, but I am always conscious that it is the payment at the point of introduction. Everything to do with the benefit, which includes its administration, must be open to scrutiny and continuous improvement.

We can cast our minds back only a few years to the time when the Scottish child payment came into being. As Mr MacDonald will remember, the payment was based on the give me five campaign by anti-poverty organisations. I was very pleased to work with my then colleague Aileen Campbell on the introduction of the Scottish child payment, which came in not at £5, which is what we had been asked for, but at £10. The payment will increase to £27.15 from April so, if my reckoning is correct, that is an increase of more than 170 per cent since its launch at £10.

We know that it makes a difference—we absolutely see that it makes a difference—but we must also bear in mind that the Scottish Fiscal Commission forecasts that we will invest £471 million in the Scottish child payment in 2025-26. That benefits the families of more than 330,000 children, so it is making an impact on families. As Mr MacDonald will know, part of our work in relation to “Best Start, Bright Futures: Tackling Child Poverty Delivery Plan 2022-2026” is about social security, but it is also about the drivers of poverty. That is why, as well as investing in the Scottish child payment, we need to invest in early learning and childcare, employability and so on. Therefore, this is one part of the work that we are doing. I mentioned the figure of £3 billion in my opening remarks. The Scottish child payment is important, but it is one part of our policies to help those on low incomes, particularly those with children.

I read with concern some of the reports about what has apparently gone to the Office for Budget Responsibility. I accept that Governments make choices; this Government has to make difficult choices. The challenge is to not make those difficult choices on the back of the most vulnerable in our society, which is why I was concerned that some of the first savings that were made were against pensioners, with the taking away of the universal winter fuel payment. Of course, we will reintroduce that payment in Scotland. However, it would clearly be a concern if tough decisions in Government were to be made on the backs of disabled people and those on low incomes.

Any of the changes that the Chancellor of the Exchequer makes will have implications for the Scottish Government’s block grant. If changes are made in social security to those aspects that are devolved, there will clearly be an implication for our block grant in relation to the adjustments in social security. All that matters, because I am very conscious that many members—and many organisations—wish the Government to go further. We have to keep an exceptionally close eye on Rachel Reeves’s decisions, because they will have an impact on the overall Scottish budget, particularly if she makes changes to certain aspects of welfare. That would be extremely concerning but, most importantly, it is extremely concerning for those who rely on those payments.

I am pleased that Mr Balfour will support the regulations, particularly on the basis that, at stage 2 of the Social Security (Amendment) (Scotland) Bill, he moved an amendment that was very similar to what I am proposing, so I would have politely pointed out that there had been a slight U-turn, had he said that he would not vote for the regulations.

However, I take Mr Balfour’s point on the fiscal sustainability of social security. We recognise that a great deal of work needs to be done to ensure that we are fiscally sustainable. Social security is an investment in the people of Scotland, and we need to bear in mind that, when people talk about cutting social security benefits in Scotland, they are talking about taking money away from low-income families, disabled people or carers, so people would need to find the money for those areas.

Social Security Scotland officials are working alongside exchequer colleagues to feed into the fiscal sustainability work, and I am working closely with the Cabinet Secretary for Finance and Local Government on that. The delivery plan will be published alongside the medium-term financial strategy. As part of that work, we must challenge ourselves in relation to how to run the system as efficiently and effectively as possible, so there is work to be done that involves not cutting benefit expenditure but ensuring that our system is fit for purpose.

In 2025-26, 82 per cent of social security benefit expenditure was funded through block grant adjustments. Therefore, I note that, when we look at increases in the level that is spent on social security in Scotland, a substantial proportion of that will be covered, because the Scottish Fiscal Commission’s forecasts are based on things that are happening right across the UK. Not all of the increase in social security expenditure has to be found through the Scottish Government’s budget, without that money coming in.

The caveat is that there are two different areas here. When it comes to areas in which we make additional investment over and above the Scottish block grant adjustment, the easiest way for the Scottish Government to be able to review the costings that we have on social security would be for the Westminster Government to relieve us of the burden of mitigating some of the worst excesses of the UK Government’s system, such as the two-child cap, the benefit cap or the bedroom tax. If Mr Balfour is looking for an easier solution that would enable us to reduce our social security expenditure, that might involve the UK Government ending the need for us to mitigate, or at least reducing the amount of mitigation that we need to do, in order to protect people from the worst excesses of Westminster.

The Government frequently produces and publishes information giving a breakdown of social security payments and the reasons behind them.

The convener rightly points to something that I see when I go out on visits. I am mindful of a visit to the Royal National Institute of Blind People last year, when I spoke with an adult but about the same type of process. That individual’s condition had deteriorated, but he had not raised that with the DWP because he was so fearful, given his experience of applying for benefits in the first place, that what he got might be taken away rather than being increased. However, he did share that change in his circumstances with Social Security Scotland and is now receiving support that he has probably been entitled to for quite some time.

That is not the only conversation I have had that shows that discussions in the community encourage other people to come forward. We will see more people coming forward because of others’ positive personal experiences, which takes us back to the idea of encouraging people to come forward to get what they are entitled to. I am pleased that that is an issue. Yes, it presents budgetary challenges, but we cannot try to cut the social security budget by increasing stigma or barriers. We need a social security system that works for people, and you have given some examples of that, although we must take account of the financial implications.