Chamber and committees

Thank you, convener, and good morning.

The provisions that are laid out in the regulations will ensure that vital support is available to eligible pensioners with their fuel bills this winter. From this winter onwards, all pensioner households will typically receive £203.40 or £305.10, depending on their age, with the vast majority of people receiving the payment automatically.

We are in discussion with the United Kingdom Government to extend the proposed arrangements in England and Wales to recover payments from those pensioners with an individual income of more than £35,000 through the tax system. The tax charge will be brought forward through separate UK Government legislation, and it is our intention that the payment will be recovered automatically and that pensioners will not need to register with His Majesty’s Revenue and Customs for that or to take any further action.

The UK Government has set the income threshold at £35,000, which is broadly in line with average earnings. For this winter, HMRC was not able to deliver a different income threshold in Scotland, but it might be possible to introduce a different threshold in future years and we will consider the options that are available.

This will now be the largest single benefit to be delivered by Social Security Scotland since its inception, and it will require significant planning and resourcing. We are reliant on the Department for Work and Pensions to provide the data that is required for delivery; indeed, we are highly dependent on receiving high-quality data from the DWP and the Ministry of Defence in a timely manner to enable Social Security Scotland to carry out the required period of data assurance and to complete the household matching process to allow us to meet our target of beginning payments by the end of November. Although that will be a significant challenge for the agency, it has been working at pace to prepare for delivery and to ensure as smooth a transition as possible, and we are absolutely on track to start making those payments in November as planned.

As the committee will be aware, since the UK Government’s restriction of winter fuel payments eligibility in 2024, the Scottish Government has consistently acknowledged that other people of pensionable age might also face financial difficulties and would benefit from that support. For that reason, following the UK Government’s autumn budget in October 2024 and the confirmation of the associated budget in Scotland, we worked at pace to consider the options for delivering pension age winter heating payment in winter 2025-26, as well as the mitigations that might be available for winter 2024-25. Within the funding available, we decided that £100 payments for pensioners not in receipt of relevant benefits were affordable and would go some way towards supporting those households in meeting their heating bills through the winter.

On 6 June 2025, the Scottish Government laid regulations to introduce a universal pension-age winter heating payment from 2025-26 onwards.

Forgive me, convener, but I am choked with the cold. I am just going to have to stop and blow my nose a little bit.

The joys of the start of the winter season.

On 9 June 2025, just three days after the regulations were laid, the UK Government announced its intention to expand the winter fuel payment in England and Wales to those with an income of £35,000 or less. Although that belated U-turn from the Prime Minister was welcome, it was disappointing that, yet again, Scottish ministers received no prior consultation on the UK Government’s decision.

As a result of the UK Government’s change in policy, the Scottish Fiscal Commission predicted that the associated block grant adjustment funding for the Scottish Government is expected to increase by £120 million. We considered carefully the importance of prioritising that additional funding for those who needed it most, and we decided to mirror the revised UK Government approach for our pension-age winter heating payment. Our approach will ensure that a higher level of support will be provided to those who are in most need, with more than 880,000 Scottish pensioners estimated to benefit from it.

The Scottish Fiscal Commission estimates that that will be a total investment of £187 million in 2025-26, providing a payment to around 1 million pensioners. It also estimates that around 16 per cent of the eligible pension-age population in Scotland will then have their payments recovered in 2025-26. That equates to around £30 million being recovered from 169,000 pensioners.

We recognise that households across the country feel acutely the twin pressures of rising energy costs and the cuts to social security budgets that have been made over many years by successive UK Governments. The regulations will provide important support to households, but it is not the only support that is available. There is also our winter heating payment and the child winter heating payment. Those benefits are available only in Scotland and provide reliable support to people who have an identified need for additional heat over the winter months, including low-income households and families with disabled children and young people. We continue to prioritise support with energy costs for the most vulnerable households through access to long-term and sustainable measures in our energy efficiency programmes.

I am immensely grateful to the members of the Scottish Commission on Social Security who have given their time to engage constructively with officials on the initial draft regulations that we shared with them in April and for agreeing to scrutinise the regulations before they were laid and after they were laid in draft. Wherever possible, we aim to give SCOSS sufficient time for scrutiny ahead of laying regulations but, in these circumstances, that has not been possible. SCOSS has now responded to our referral of the new pension-age winter heating payment amendment regulations, stating that it has no further comments.

Mr Balfour raises an important point. Regarding the design of the benefit, it is important to consider the cost of the benefit not just in terms of what goes to individuals but in administrating it—and, indeed, the complexity of doing so. As we looked to design the benefit, we were mindful of the costs of administration.

We anticipate that the number of opt-outs will be relatively small. That means that the administrative cost of enabling people to opt out, if they choose to do so, and to opt back in again within the same year will be minimal in comparison with the overall value of the benefit. In essence, the system has been designed so that the opt-out and opt-in process is streamlined and is capable of being delivered within the existing structures. On that basis, the administration costs of the provisions are deemed to be proportionate, and the flexibility ensures that no eligible person is excluded from support should they later decide that they need it.

Mr Balfour raises an important test, and I am satisfied that we considered the cost of administration and the overall complexity of the benefit as the process was designed.

I have nothing to add, convener.

Thank you, convener. I welcome the opportunity to assist the committee in its consideration of the regulations. A key principle in the cross-border regulations is to ensure that, when case transfer is complete, individuals who move from the rest of the UK to Scotland, while in receipt of an equivalent reserved benefit, are able to do so without a gap in their entitlement.

Our intention had been for the cross-border process to mirror case transfer, so that awards could be transferred automatically from the DWP to Social Security Scotland, without the need for the client to submit a new application. Despite our best efforts, that has not proved to be possible, because the DWP was unable to commit to the required data-sharing arrangements. That means that individuals who move to Scotland will be required to submit a new application for Scottish benefits. That will ensure that we have the most up-to-date information when deciding on an award and minimise the need for the client to undergo an unscheduled review soon after the decision. It also future proofs our approach if there is further divergence between our benefits and the UK equivalents.

Our focus has been on making that application journey as easy as possible for the estimated 300 people per month that we expect to apply across all benefits. The DWP will continue to pay clients for 13 weeks after they move to Scotland, and those clients can apply for the equivalent Scottish benefit while they are still in receipt of their DWP benefit.

The regulations make specific amendments to support carer support payment by allowing entitlement to start on a future date if the client is not eligible on the date that they apply on—something that is not currently possible. For adults receiving disability living allowance, we have developed a process to enable them to request an award of Scottish adult DLA, which, otherwise, is a closed benefit with no new applications possible. Crucially, the regulations provide for backdating of an award of Scottish benefits to the date on which the DWP award ends, as long as the client applies in the defined timeframe. We can also apply that backdating to any awards that were missed in the case transfer process or to awards made retrospectively. That design greatly reduces the possibility of gaps in entitlement and minimises the likelihood of individuals losing out on support that they are entitled to.

For carer support payment, the regulations also extend provision for temporary stop in entitlement where the payment has ended because the qualifying benefit of the person who is being cared for stopped as a result of that person moving to Scotland from the rest of the UK. That ensures that carer support payment can be reinstated more quickly and without the need for an application.

Alongside these regulations, we have designed processes to ensure that cross-border applications are identified quickly and can be prioritised. The regulations also include amendments to child disability payment, adult disability payment, pension age disability payment, Scottish adult DLA and Scottish child payment, to ensure that, when a person has continually disengaged with requests for information relating to an on-going award and is found to be no longer entitled to assistance following a period of suspension, the award can be ended from the date on which the award was suspended.

We have also taken this opportunity to make some minor, technical changes to residence and presence conditions, including for the best start grant and best start foods regulations; to update and add references to international agreements; and to remove now-redundant provisions relating to the initial period of applications for disability benefits within the regulations.

Subject to parliamentary approval, the changes will commence from 6 November 2025; for PADP and Scottish adult DLA, they will commence from 23 February 2026.

This is a disappointing part of the regulations that I am presenting today. The priority for the Scottish Government was to make the journey for a client as smooth as possible. From our discussions with constituents, we all know that it is a complex system and that people might be unaware that, for example, they might have to move to a different benefit when they move from England to Scotland or vice versa. We had hoped to make the process easy for clients, as we did during case transfer. Unfortunately, the DWP has chosen not to take that route. If we cannot get the data from the DWP, we cannot have that kind of process. That is disappointing, because it makes the journey more difficult for the client. As I said in my opening remarks, we have endeavoured to put processes in place, which we would like to introduce if the regulations are passed, to support clients through the process as best we can and ensure that cases are prioritised within the agency. The situation is far from ideal, but, given that that is our starting point, we have done what we can to make the process smoother.

The discussions with the UK Government are on-going, and I will update the committee once a final agreement has been reached with the Treasury. In essence, when it comes to recouping the funds, it is more about what happens with the block grant and the Scottish Government than with the agency. The agency will continue to deliver the benefit as planned.

Scottish Government officials continue to engage with their Treasury counterparts to develop the plan with a view to minimising the additional complexity and to looking at the operation of the fiscal framework. This is a new type of discussion that has not been entered into previously, but it is continuing at this point. As I say, once we have a conclusion, we will update the committee on the decisions that have been taken.

This is certainly the process that will be in place. With every benefit, we have a system of support to ensure that we analyse what happens in real time with real people as they go through the process, and that will be an important part of how we can evaluate how big any challenges for individuals are. If there is evidence of issues, we will not be talking theoretically but will be talking about the actual impact as people have gone through the process, so we would certainly go back to the DWP with that evidence, because this is not the position that I want to be in. However, at this point, the DWP’s position is the DWP’s position, so we have to get on with making the best that we can of the situation. I can reassure the committee that we have the process in place to see what is happening on the ground with clients as they go through the process.

Let us consider winter payments in the round. In my introductory remarks, I mentioned in passing some of the differences that we have made. For example, the child winter heating payment does not exist in the rest of the UK. Also, our winter heating payment for low-income people is a guaranteed income, which is very different from what happens in the DWP system.

We have used the devolution of winter heating payments in the round to make different choices in those aspects. It is challenging if, while we attempt to move ahead with our policies, there is a handbrake turn from the UK Government on its policies, particularly if there are repercussions—as has been the case with some of the winter heating payments—for the Scottish Government’s in-year budget and not just for the future. That makes things challenging, and we have to bear that in mind as we make our decisions.

I hope that that gives a demonstration of the difference that we can make with devolved social security when it comes to the winter payments. It is still important to use those powers responsibly within our fixed budget and to make choices that we think will deliver support to pensioners, who are most likely to be struggling.

That is subject to what we get from the DWP—being given that information is what will allow us to function. With the caveat that we are reliant on that data and its quality, we expect to begin the payments by the end of November, as we have planned to do.

The ambition is to have paid the majority of clients by the end of December this year. That reflects the DWP’s payments process, which is similar. We are ready to begin the process for those payments at the end of November, and the agency stands ready to receive the data from the DWP to allow data matching to continue. However, it is dependent on the quality of that data.

It is important to recognise that, although this is the first time that we have had the transfer of this data from the DWP to Social Security Scotland, there have been other data transfers in the past. Lessons learned exercises have been undertaken following those processes, because, sometimes, there has been a challenge in relation to the quality of data from the DWP, leading to further work and further manual intervention being required by Social Security Scotland. I hope that the committee is reassured that, following the experience of previous years, those lessons learned exercises have put in place an even better and more robust process for the DWP to be able to hand over high-quality data to the agency this year, to allow it to get on with its work.