Agenda item 2 is further consideration of the Auditor General for Scotland’s report on adult disability payment. I am very pleased to welcome, from the Scottish Government, Miriam Craven, the director general for communities; Stephen Kerr, the director for social security; and Kevin Stevens, the head of strategic and programme finance for social security. I am also very pleased to welcome, from Social Security Scotland, David Wallace, the chief executive, and Helen Fogarty, the head of performance, analysis and strategy.
We have some questions to put to you, but, before we get to those questions, I ask Miriam Craven to make a short opening statement.
Thank you for the opportunity to give evidence today. This is my first time appearing in front of the committee as the director general for communities and the accountable officer for social security, although I have worked in and around social security for the past number of years.
I would like to introduce—as you have already done, convener—my colleagues who are here with me today. From the Scottish Government, I am joined by Stephen Kerr, the social security director and senior responsible officer for the social security programme, and Kevin Stevens, the head of strategic finance in the social security directorate. From Social Security Scotland, I am joined by David Wallace, the chief executive and accountable officer, and Helen Fogarty, the head of performance, analysis and strategy. Thank you for allowing us to appear together in one session—we think that that will allow you to consider the evidence from officials in the round.
Let me start by saying how proud I am of our achievements on adult disability payment as a result of the hard work by civil service colleagues across the Scottish and United Kingdom Governments, our suppliers and our partners. I am pleased that Audit Scotland has recognised those achievements and our commitment to continuously improve our system.
As you know, adult disability payment is the largest benefit in terms of expenditure that we have delivered so far under the social security programme. We have now established 17 different benefits since the passing of the Social Security (Scotland) Bill in 2018. Adult disability payment, which is now supporting more than half a million people in Scotland, covers the cost of basic, everyday living tasks for people, such as cleaning, washing, cooking, preparing food, getting around, planning journeys and normal social interactions at work, at home and in communities—tasks that many of us take for granted. Adult disability payment is provided to help disabled people to live independent lives, in accordance with the legislation that the Parliament has approved.
Our approach is deliberately designed to ensure that as many disabled people as possible get the help to which they are entitled. With that in mind, I was pleased to hear the Auditor General’s positive endorsement when he was in front of the committee last month, when he said:
“We assess that this has been a successful project. The adult disability payment has been implemented in Scotland, half a million people are now in receipt of the benefit and people are largely satisfied.”—[Official Report, Public Audit Committee, 1 October 2025; c 4.]
I also note that his report recognises that “good early progress” has been made in implementing the delivery of adult disability payment and that the governance arrangements in place are well developed.
As I am sure we will discuss today, in many ways, adult disability payment is still a relatively new benefit. It was launched only three years ago, with the transfer of cases being completed only this year. In that regard, it is worth remembering that nothing of this scale and complexity—ensuring that clients are moved off the Department for Work and Pensions’ systems and on to those operated by Social Security Scotland—has ever been attempted before. I welcome Audit Scotland’s highlighting of the considerable work that has been done to ensure a seamless transition from personal independence payment to adult disability payment for more than 300,000 Scots.
The Auditor General’s report comes at a good point, as we begin the next phase of our work on social security. If the first 10 years were all about the safe and secure transfer of powers, I suspect that the next 10 years will be about the development of Scotland’s devolved benefits system. The next 10 years will also be about the outcomes that are achieved by the investment that the Parliament has voted for and the role that adult disability payment plays in supporting disabled people as part of the overall approach to meeting their needs.
The successful roll-out of adult disability payment—a benefit that was intentionally co-designed with the disabled people it supports—demonstrates that the Scottish approach to disability benefits is working well and is in line with ministers’ commitments to the principles of dignity, fairness and respect. Nine out of 10 people who responded to our surveys said that they recognise those principles.
We welcome your questions today, and we thank you again for the opportunity to discuss the Auditor General’s report.
Thank you very much. At the outset, do you accept the findings and recommendations of Audit Scotland’s report?
Thank you for the question. We recognise the report—
We all recognise it. Do you accept the recommendations and findings?
A number of reports are going on at the moment. We also have—
I am sorry, but I am asking about the report that we are discussing this morning. Do you accept the recommendations and findings of this report?
We are working through the report, looking at the recommendations and impact assessing them in line with the other reports that we have received. We will then decide what the priorities are for the next phase of social security, in line with those recommendations and others.
You mentioned in your opening statement that you are pleased with the key messages in the report.
Yes.
The report talks in very positive terms about “good early progress” and about the transfer from PIP to adult disability payment being on track. Generally, it is quite positive, but it also says—other members of the committee will ask questions about this—that there is not yet a “detailed strategy” for how the Government will manage the overall budget, given that there is a growing gap between the DWP’s bill and Social Security Scotland’s bill. The report also says that performance information is “limited”. Do you accept those criticisms as well as the praise?
As I said, we welcome the report. As the Auditor General has said, the project has been a huge success in terms of how we have delivered the social security system in Scotland, with Social Security Scotland being developed as part of that.
The social security system is fully funded in the Scottish Government’s budget. In the report, the Auditor General says, when talking about funding, that he has taken into account the statement that the UK Government made earlier this year when it reversed its plans for changes to disability payments and announced the Timms review. As I said, the social security system in Scotland is fully funded, in line with ministerial priorities, in the Scottish Government’s budget every year.
We can get into issues relating to performance, and my colleagues are very happy to talk about our work relating to the forecasting of that spend.
Other members of the committee will ask questions about performance and the finances of the adult disability payment system.
Last week, we took evidence from Edel Harris, who chaired the independent review of adult disability payment. Do you have any initial reaction to the report that she produced earlier this year?
We worked very closely with Edel Harris as that report was developed. She produced a very comprehensive report and spoke with a lot of stakeholders and people in receipt of adult disability payment. She also spent some time with Social Security Scotland staff to learn about how they process applications. We welcome how comprehensive her report was. As you know, it contained an extensive number of recommendations. The Cabinet Secretary for Social Justice and other ministers are reviewing the report and taking the time that is needed to impact assess the recommendations in order to understand the priorities for change and the financial impacts.
We were told that it is expected that the Government will provide a formal response by February, six months on from the report’s publication date. Is it your expectation that that is when we will get the Government’s response, or will we possibly get it before then?
The expectation is that Scottish ministers will provide a response by 1 February 2026. As I said, that is to allow time for due diligence to be done and to consider the report and respond to it correctly.
When you publish the Government’s response to the report, do you expect there to be some kind of evaluation of the recommendations, the costs associated with them and so on?
In her report, Edel Harris thought about how her recommendations could be implemented. We will look at that response, and the cabinet secretary will decide how she wants to respond to the report. She will detail her response to the recommendations and the plans.
I have a final question for now. Exhibit 1 in the Auditor General’s report sets out the eight principles, which I do not need to rehearse at this point. Principle 8 is:
“The Scottish social security system is to be efficient and deliver value for money.”
Do all these principles have equal weighting or is that one a prevailing principle?
The principles in the 2018 act were developed as part of the process of looking at the delivery of social security in Scotland. As you will remember, that process involved working with experience panels that were made up of people with lived experience from across Scotland who set out what they expected from the Scottish Government. Those principles were enshrined in legislation and secured cross-party agreement with regard to their implementation. The eight principles were not prioritised; they are all key principles that must be delivered as part of our social security system.
What do you understand “value for money” to mean?
Our approach is about how we make sure that we deliver in line with the act and those principles. It is important that we make sure that people who are eligible for social security funding—including adult disability payment—get what they are entitled to. For us, that is about making proper, efficient and correct decisions for our clients. It is also—David Wallace is welcome to cover this, too—about running an efficient organisation to deliver that social security benefits system in Scotland.
Last week, Edel Harris said her understanding of “value for money” was that it was to be achieved
“not just through running a very efficient system, but also through the value that something brings to society”.—[Official Report, Public Audit Committee, 5 November; c 39.]
Is that your perspective as well?
Yes. For us, adult disability payment is about enabling disabled people to get the money that they are entitled to and will help them live their lives. Stephen Kerr can add to that.
I draw your attention to the work of our distinguished chief social policy adviser, Linda Bauld, who published an interesting report last year that talked about the achievements of adult disability payment, noting the wider outcomes, such as reducing child poverty, creating positive impacts on material deprivation and improving health and wellbeing. The key point is that investment in social security can lead to reduced demand for other public services such as healthcare and to improved productivity by allowing people who have disabilities to enter sustainable, well-paid jobs.
You asked about how value for money is created, and you are right to identify Edel Harris’s point in that regard.
If you look at the evidence of the public value that has been created through the devolved social security system, you will see that we do a lot of work with our clients, and one of our starting points involves asking them about the value that they experience from the delivery of the service by Social Security Scotland. We have a number of indicators that suggest that we are creating public value in that way. For example, when adult disability payment clients who responded to the client satisfaction survey that we ran in 2023-24 were asked about what the impacts of the benefit payments from Social Security Scotland had been on their lives and finances, the average weighting that was given by those who received adult disability payment was eight out of 10 for the statement “It helped me make a difference to my life”; 7.9 out of 10 for the statement “It helped me to control my finances”; and 8.1 out of 10 for the statement “It helped me to pay for what I need”. We also have lots of other indicators about the value that is created by being treated with dignity, fairness and respect.
09:45On the cost of the service that we deliver, you will see that Audit Scotland referenced in the report that operational costs have been lower than the percentage target that was set and lower than the DWP benchmark, which is demonstrated in exhibit 6. Last year’s annual audit report highlights that the 2023-24 operational costs were £4.8 million under budget. We will continue to monitor both the public value that we create and our operating costs.
More broadly, we work with Scottish Government community analysis division colleagues as part of the evaluation strategy. That is a significant part of our work with regard to considering the contribution to the wider outcomes. We are still in relatively early days when it comes to the implementation of adult disability payment, as case transfer has only completed this summer, which means that we are in only the early stages of gathering evidence relating to the much wider outcomes and contributions that may be more apparent in the medium to long term. However, that is certainly something that we are conscious of when we are looking at our evaluation and evidence gathering in relation to our performance and value for money.
There has been a big increase in the take-up of these benefits. ADP take-up in Scotland is much higher than PIP take-up in England and Wales. As of January 2025, 13.6 per cent of Scotland’s working-age population was receiving ADP, which is a huge proportion compared with 5.3 per cent receiving PIP elsewhere in the UK. It is also much higher than the 8.5 per cent of working-age Scots who were receiving PIP in December 2021, prior to the introduction of ADP.
Obviously, that is partly due to there being a more accessible and supportive application process. However, it has also been suggested that it reflects demographic trends and rising rates of long-term illness and disability in Scotland. Those are not small increases; they are quite significant. How is Social Security Scotland working to ensure that those decisions are accurate the first time?
I will bring in David Wallace from Social Security Scotland to answer that. First, however, on that benefit uptake, we expected the number of applications to increase. ADP was introduced three years ago, and we immediately started to see that steady increment of applications coming in, and we have also had the case transfers of people coming over from the UK system to the Scottish system.
Also, in accordance with the principles in the 2018 act, which we have mentioned, we have been ensuring that clients who are eligible for funding know that they can apply for adult disability payment. That is as big a part of our benefit uptake approach as we can make it.
Before I invite David Wallace to talk about those statistics and the difference in uptake, I note that, when Edel Harris was here last week, she talked about seeing that increase in disability applications at the UK level as well as in Scotland.
David Wallace can also address your question about the accuracy of decision making.
I put on record that we welcome Audit Scotland’s report. We have had a good, constructive relationship with Audit Scotland since our agency was formed back in 2018. As you would anticipate, as well as this report and the previous reports that have been done on performance, we also have a regular cycle of financial auditing with Audit Scotland. Like Miriam Craven, we recognise both the positive messages that are in the report and the areas where we would want to improve.
I think that the heart of your question, Mr Beattie, concerns the quality of decision making. Within the organisation, we have a quality control strategy around decisions, so all of those decisions will be checked. There will be sampling of decisions to detect patterns or improvements that we could make. There is a continual learning loop to feed back anything that is found in that decision-making process as benefits launch and are taken up.
I draw out the point that was made by the Auditor General, Edel Harris and, indeed, Miriam Craven: this is still a relatively new benefit. We have only been doing ADP in its entirety for a three-year period. You see different trends and lots of data as you launch a benefit and it comes into a steadier state, and we would describe this benefit as still coming into that state.
The short answer to your question is that those decisions will be made, they will be checked and then, after the event, there will be a cycle of dip sampling and rechecking to ensure that those decisions are valid.
I am interested to know what analysis has been done to understand the real drivers behind the increased uptake. It is okay to say that there is a rising rate of long-term illness and disability, but why is that happening? What is the detail on that?
Again, I think that there is a steadying of some of those numbers, which Helen Fogarty can describe as we go through this. I emphasise the point that Miriam Craven made. When we launched adult disability payment, we expected uptake to increase. Indeed, it would have been odd for us to have launched it as we did, given what is set out in the artefacts of Audit Scotland’s report, and not to have seen the uptake increase.
On that point, did you project an increase of a certain percentage when you launched ADP? You say that you anticipated an increase. What is behind your calculation?
Colleagues from the Scottish Government may want to talk about the preparations in that regard. If you are asking about the operational perspective, I can talk about the staffing of the organisation and our preparations for the launch of the benefit, but I suspect that you are talking about preparations more widely.
I just want someone to explain this. You have said to me that it was expected that there would be an increase, without specifying that. I would like to know the specification of that increase and what its basis was.
I think that what we are talking about here, Mr Beattie, is the legislation that established the social security system, in which there are statutory provisions on benefit uptake. We have produced two benefit uptake strategies. Even as far back as 2017, we indicated in the financial memorandum accompanying that legislation that a system that was designed to support and encourage people to apply for disability payments would likely have a higher case load than the comparable system in England and Wales. Therefore, when we talk about an expectation that the take-up of benefits would be higher, that is what we are referring to.
Did you project how much higher?
The Scottish Fiscal Commission has responsibility for producing forecasts for benefit expenditure. We have been working with it over a number of years now to inform its forecast with the work that we do, the data that we have and the trends that we see.
Where is that forecast?
The Fiscal Commission publishes its forecasts every year to support the Scottish Government’s budget.
You do not know what the forecast was.
I can tell you that the forecast for this year is £3.6 billion for adult disability payment.
That is not really giving me the answer that I want. David Wallace said that when you were launching ADP, there was a calculation that there would be an increase. That must have been budgeted for somewhere. There must be a figure somewhere that started this off. What is that figure?
The figure would have been the initial expenditure on personal independence payment, plus an assessment made by the Fiscal Commission of the policy changes that the Scottish Government introduced to produce the first rounded forecast for adult disability payment. I think that—
What was that forecast?
I do not have the figures for the first year of benefit expenditure with me, Mr Beattie—I am sorry.
We were projecting an increase once ADP was introduced, but we do not know what that increase was.
We were not projecting an increase. We were anticipating, through the framework that the Scottish Government established for benefit take-up, that more people would be attracted into the system. It is the Scottish Fiscal Commission that then produces the forecasts to account for a rate of increase.
I can be a bit more helpful about some of the other aspects that the Fiscal Commission takes account of. For example, in a situation where the cost of living is rising, the Fiscal Commission in its work talks about the eligible population being more likely to apply for a disability benefit. That is an example of a factor that drives an increase in the benefit bill,.
I recognise that, but there must have been a budget from which Social Security Scotland was working, and that budget must have taken into account any estimates or forward projections of increases in uptake of the benefit. What was that figure?
I might bring Kevin Stevens in here. The way that the budget for social security works is that there is a series of block grant adjustments that are based on the underlying benefit at the England and Wales level, which, for ADP, is PIP. That is the budget. Then the Scottish Government decides, in making budget decisions, how much extra investment in social security it wishes to make and allocates those resources from the budget to give the expenditure on adult disability payment.
The forecasts for how the benefit changes over time and the factors that might change the trajectory of benefit expenditure are the work of the Fiscal Commission.
As at December 2021, 8.5 per cent of working-age Scots were receiving PIP, so that would be your baseline. Any projection would be based on that figure, as a percentage above it. Therefore, some calculation must have been made. If you do not have that figure, that is fine—we will move on and we will find the figure.
We can bring Helen Fogarty in. We will not have that precise figure, but let me remind you of the journey that happened when we launched adult disability payment. When you launch a benefit, you start off in just a number of areas and then you start to increase the roll-out across the country. Therefore, you are only receiving applications from particular portions of the country as you do that roll-out. You then move to your national roll-out. That national roll-out happened in the August, so you also think about where that would be in the financial year. When you start the journey, you do not start with the full case load on the first day; it is about how the case load builds incrementally.
Thank you for your question, Mr Beattie. I think that you were essentially asking about two different aspects: one was about benefit take-up and your reading of Audit Scotland’s analysis of the proportion of the working-age population in that regard; and the second was about how we ensure that decisions are correct. If you are content, I can give you more information on both of those.
In terms of benefit take-up, we do not have a reliable measure. The Audit Scotland analysis generally gives us helpful context, but, on benefit take-up, we need something that would be able to tell us definitely the proportion of people who are eligible for ADP—so, people with disabilities; disabled people. At the moment, Audit Scotland’s analysis looks at the working-age population rather than just disabled people, but it does give us helpful information. We are looking at providing that further analysis. Social Security Scotland is working towards providing that type of contextual information to make the analysis more robust so that you can see and compare it.
However, you are right: we have seen a recent growth in the case load in Scotland, which grew at a higher rate than the rate for PIP in England and Wales. In that context, it is important to acknowledge that, from July 2024 to July of this year, the percentage increase in the case load for PIP in England and Wales and the combined case load for adult disability payment in Scotland, which includes the remaining legacy disability benefits, converged at a similar growth rate of 10 per cent. What we saw early on was quite significant, rapid growth in the ADP case load. In the past year, that has steadied and is growing at the same rate as PIP.
I mention that in particular—this goes back to David Wallace’s point—because we have gone back and looked at the PIP statistics for what happened in the growth of the case load and the award rates around that. When it comes to the award rates, which I think you were addressing in your question about decision making—whether we are making decisions that look right and are robust, and how the situation compares to PIP in England and Wales—we saw quite significant changes when we launched the first two quarters of published data. There was a 51 per cent approval rate between April 2013 and July 2014, but even just in the quarter before that it was 59 per cent. Therefore, the rate was quite unstable as well. That goes back to the benefit being still relatively new and, particularly with the influence of case transfers, it is taking a while to stabilise.
There is another point about the award rates. From the launch of adult disability payment in March 2022 to July—so this is our most recent published data—a similar authorisation rate is seen when we compare ADP to PIP over the same period. Forty-six per cent of adult disability payments were authorised; the figure for PIP in England and Wales was 45 per cent. Since the end of December 2023, the adult disability payment award rate has been consistently lower than that for PIP. We are seeing a higher rate of applications in Scotland and an award rate that is now slightly lower than that for PIP, and the case load is starting to settle. In the past year, we see a growth in case load in Scotland that is similar to what we see in England and Wales.
Although we do not necessarily have all the information that you might want, we do have good indicators about how this is working in relation to the quality of decision making.
10:00
But what analysis do you have of the drivers that are increasing the uptake of ADP? We are talking about various things, but, at the end of the day, there is no data.
I would not say that there is no data. Stephen Kerr and David Wallace were right to highlight that we work incredibly closely with the Scottish Fiscal Commission. Kevin Stevens may want to come in on this, too, but it is an on-going conversation—just yesterday, we were preparing for discussions with it. We give it access to our management information—that is, what we see in our operational delivery, such as what is happening in the award levels, our communications and marketing campaigns and any analytical developments that are taking place. We regularly share that information with the Scottish Fiscal Commission to ensure that its forecasting can be as correct as possible. The role of the Scottish Fiscal Commission is then to take that information and do the analysis that gives us forward-looking forecasts.
It is important to acknowledge the language around forecasts. They are not definitive. There is no absolute certainty. They are based on the analysis and the information that we have. We share with the Scottish Fiscal Commission a lot of our analysis of our award rates, our award levels, our case load management and any comparisons with personal independence payment. Its role is to do the analysis and come up with the forecasts.
This is perhaps more a question for the Scottish Government. How is the Government responding to the rising demand with the worsening health trend?
I will bring in my colleagues on the question, too. What we are doing in the adult disability space is ensuring that we have a fully funded scheme, which, like our wider disabilities work, is fully funded in the Scottish Government budget in line with ministers’ priorities. As Helen Fogarty said, we work with the Scottish Fiscal Commission on what the forecast rates will be.
Our work is also about looking more broadly. We gather the evidence for clients to help to ensure that they give the correct evidence to get their application forms, but we also look at public health data when we are looking at what is going on across the Scottish population. The key priority is about ensuring that people who are entitled to adult disability payment are aware of it and have the application form; they can apply online, in person or on paper.
It is important to note that we—Scottish Government analysts and colleagues in the agency—work very closely with the Scottish Fiscal Commission. There is a continual process during the year whereby information is shared, discussions are had and understanding is developed and built. With any forecast, the further out you look, the wider the cone of uncertainty. The more closely you look at the future, there is a much larger number of variables that will affect the position.
The Scottish Fiscal Commission has a good track record in forecasting benefits. Each year, in August, it publishes its forecast evaluation report for the year that has just ended. The percentage forecast error is low. The absolute values that it presents in its evaluation report are relatively low, as well. However, again, the further we look out, the more uncertainty there is. Therefore, it is key that we work together with the SFC on understanding what the longer-term factors are.
It is also important to note that the funding position for the Scottish Government around benefits is complex. We have three different organisations forecasting different things at different times of the year. The Office for Budget Responsibility forecasts PIP, and that forecast drives the block grant adjustment that we receive for PIP. The Scottish Fiscal Commission, independent from the Scottish Government, forecasts all the benefits that it forecasts for us. Therefore, we have different organisations forecasting different things at different times. The operational and in-year information that Social Security Scotland generates and discusses with us and the Scottish Fiscal Commission is factored into that, as well. The further ahead into the future that we look, the wider the cone of uncertainty is—it is important to bear that in mind.
Small changes in the direction of the forecasts for the expenditure and funding sides of the equation can have a considerable effect on the net funding position. I will use some round numbers by means of example. A £50 million increase in expenditure combined with a £50 million decrease in funding is a £100 million difference to the position. We saw that happen in 2024-25; it is set out in the medium-term financial strategy. The 2024-25 forecast for ADP that the SFC set in December 2023 was £3.226 billion. The block grant adjustment was £2.927 billion, which is a difference of £299 million—call it £300 million. That was the position when the 2024-25 budget was set in December 2023.
Eighteen months later, when the Scottish Government published the medium-term financial strategy in June 2025, the expenditure side of the equation from the SFC for ADP was £3.120 billion, which was a reduction, whereas the block grant adjustment had gone up to £2.980 billion. That is a net funding position of £140 million, which meant that the Scottish Government would be investing £140 million more in ADP than it received through the block grant adjustment for PIP. The difference between the £300 million and the £140 million was a £160 million improvement in the net funding position in the space of 18 months.
Again, relatively small changes in the forecasts for both ADP, forecast by the SFC, and PIP, forecast by the OBR, can have a considerable impact on the funding position in a relatively short period of time—and that was just for 2024-25. The further out we look, the wider the cone of uncertainty, as I have referred to.
You are talking about the statistics and funding and so on, which is fine, but I am looking at the upward trend of people who have disabilities and long-term illnesses. We should surely link ADP with a preventative health programme, project or whatever. It is all right putting people on to the system, but how do you reduce that to the benefit of their health?
I will come in on that, Mr Beattie; colleagues can come in, as well. When you go back to the principles of the 2018 act, and we talk about the fact that the social security system is designed with the people of Scotland on the basis on evidence, you see that it looks at what people are living with and what health conditions they have. ADP is not an income-assessed benefit. People might be working as well as receiving their adult disability payment. Under the system, we look at the application criteria to make decisions.
Another principle in the system is that social security is a human right. It is an essential part of our human rights, and social design was involved in how we built the system. Wider within the Scottish Government, there is a “Disability Equality Plan”, which was published this summer. It looks at how Government-wide commitments can centre around disabled people’s voices in policy making.
There is an acknowledgement of the fact that our disabilities are broad and varied, and we need to ensure that we look to take those into account when someone applies for their adult disability payment, and in wider circumstances. Our colleagues across public health and the Government, and our health colleagues, as well, are looking at the different conditions that people have, and we try to address that.
What we see with adult disability payment is a reflection of people who are entitled to apply because they meet the criteria: if they meet the criteria, they will be successful in getting an award; if they do not meet the criteria, we will not make an award to them.
We are short of time, so, instead of going back around the table, I will move things on.
Can somebody help me out here? Does the application process for this benefit ever involve a face-to-face interview?
Exhibit 2 in the report talks about some of the fundamental changes that have been made. I hesitate over the word “interview”. In the UK system, there was generally a face-to-face medical assessment. That has been removed from the process in Scotland. I can say a bit about how we get that medical input to decision making, if that is helpful. However, it would not be seen as an interview; we see it as a consultation.
To go back to what Mr Beattie asked about as well, the role of the organisation is to help people get what they are entitled to. That consultation is therefore designed as the best way to get evidence from individuals, which may or may not then result in a decision. Yes, such meetings happen, but I hesitate over the language of “interview”. We term it a consultation because the language that is used in the social security world really matters, and the purpose of that consultation would be to seek evidence from an individual.
Whether you call it an “interview” or a “consultation”, it is a conversation. What are the criteria for asking someone to come in?
It could also be asked for by the client. There may be circumstances where the client feels that they want that consultation. Again, as has been reflected in the Auditor General’s report, Covid has changed lots of behaviours, one of them being face-to-face meetings, so the conversation could equally be through a video or telephone consultation. From a client’s perspective, they might see that as the best way of getting their evidence across to the organisation, or it could be that we have been trying to look at evidence and we might be unsure about something. We might feel that we do not have sufficient evidence to make a conclusive decision.
It then comes back to an important point that is borne out here about the changes that we have made to the system. Members will be aware that the medical assessment was outsourced under the PIP system. One of the fundamental changes that we have made to the system is not to outsource that medical assessment. Instead, we have brought that expertise in-house. My organisation has around about 300 medical, health and social care practitioners. It comes back to Mr Beattie’s point about how to get those decisions right first time. That is a resource that sits in the organisation. If a decision maker is unsure and wants further information or more understanding about how a condition may be affecting somebody’s lifestyle, they can go to their colleagues and have those consultations as well.
In short, yes, we will do that when either the client feels or we feel that it is what we need to do.
10:15
Correct me if I am wrong but, Ms Fogarty, I think that you gave a figure earlier that just under half of the people who apply for the adult disability payment get it. Is that correct?
I can double-check that for you—it was 46 per cent.
Helen Fogarty also made the important point that that figure has changed significantly as the benefit has stabilised.
Over half of the people who apply do not get it. Why are they not getting it? Have you done any analysis of that?
An important point about that stabilising—sorry to come back to it—is that if you had been speaking to us two years ago, I suspect that you would have been asking us, “Why are you making far more positive decisions than at a UK level?”. Over the past 18 months or so, our percentage or ratio of decision making has been broadly in line with the UK system. Therefore, that question about why half are not getting it applies equally to the existing UK system.
I am not asking about the UK system; I am asking why more than half of the people who apply for ADP do not get it. Is it because they have applied in good faith and have just got things wrong or are there some who have not applied in good faith and are chancing their arm, if I can put it that way?
There will be a combination of all those things. There is a process within the organisation: if a client is unhappy with that first decision, they can ask us to make a new decision. That percentage is for that first decision-making stage. Frequently, further information might then be provided by the client that helps us to make a different decision at the redetermination stage.
It is an important question. We need to try to understand what is going on with those figures. A proportion of the applications will not be followed up with a part 2 application. Part 1 is your identification and verification application. Part 2 is when you give us information about your disability or your health condition. Sometimes, a part 2 will not be submitted within the timescale.
The next assessment could be around your eligibility—for example, “Do you live in Scotland?”. Sometimes there is confusion. We sometimes get applications from outwith the jurisdiction, so another proportion of applications will fall out of the application case load.
If part 2 has been assessed, you live in Scotland, you have passed your identification and your verification steps and so on, we then start going into that process of decision making. As David Wallace was saying, that is about asking, “Have you provided evidence? Have we been able to gather evidence on your behalf from a range of different sources?” The decision is then made on the back of that.
It is also important to acknowledge that we are still at the stage of developing quite a bit of our data infrastructure and our analysis. We would love to have more information around the reasons for denial specifically, rather than the ones that fall out of the case load. What is happening, and why, with denials? For example, is there is an equalities aspect or a language aspect to a denial?
In the part of Social Security Scotland that I work in, which is about the analysis and understanding of our performance, we would really like to understand that. Therefore, one of our priorities for our further development is getting access to that data.
I shall move on. Miriam, the convener always asks the same question at the start of such meetings, so you should have known that he was going to ask at the start of this meeting whether you accept the recommendations. Your answer appeared to be, “We have not considered them yet. We will get around to it”. However, the report was published in September, you knew that you were coming here and I would have thought that you would have had an answer to that very simple question. Why did you not?
I think that what I said, Mr Simpson, is that we have gone through the report. We recognise what the Auditor General has said in the report. We also have a number of other reports that we are looking at, such as the “Independent Review of Adult Disability Payment: Final Report”. We will look at all these reports together. We are already working on some of the work that the Auditor General referenced in his report. We will look at all of these things to decide what the priorities are and give advice to ministers for their decision making in relation to the priorities for the next phase of social security.
I have to say that I do not think that that is good enough if you are coming before the Public Audit Committee and you know that you are going to be asked that question. The Auditor General tends not to produce—and he has not produced—a long list of recommendations. They are pretty straightforward, and you have come here without an answer to that basic question.
I do not think that it is about an answer. For us, it is about how we look to implement and phase in the changes that we need to make. I have said that I recognise everything that the Auditor General has said in the report, including his recommendations. We now need to look at the implementation plan, and work with ministers and their priorities and with Social Security Scotland on how we implement the recommendations.
For me, that involves all the recommendations that we are looking at, not just the Auditor General’s. However, we recognise all the recommendations that the Auditor General has made.
Okay—you recognise them.
I am going to ask you about one of the key messages in the report that leads to a recommendation. Then I am going to put the recommendation to you to see whether you agree with it. It is about the funding gap, which we have already mentioned. The report highlights the funding gap, with spending exceeding what we get in block grant by £141 million in 2023-24—Mr Stevens confirmed that. It is forecast to reach £770 million by 2029-30. Implementation costs have so far exceeded initial estimates. Despite that, the Government has not set out a clear strategy to manage the gap or ensure long-term sustainability. How are you going to manage that gap? You said earlier—repeatedly—that ADP is fully funded.
You are correct. I did say that Scottish benefit expenditure is fully funded in the Scottish budget as a result of clear choices by Scottish ministers. You will note in the report that the Auditor General also says that the forecasts are based on the spring statement that was made at the UK level. We covered forecasts earlier, but I will bring my colleagues from the Scottish Government back in on how we are looking at that spend and what will happen on the back of the UK Government’s decision not to go ahead with its current reforms.
It is also very important that we recognise that, in all the budgeting publications, we see that social security is a priority within the Scottish budget spend. As I said, it is fully funded. Just like any other aspects of devolved expenditure, it is fully funded and aligned with the Scottish Government’s priorities. When you look at the overall funding that the Scottish Government gets through the block grant, you see that it looks at what it will deliver within Scotland. I will bring in Stephen Kerr.
I will try to be helpful, Mr Simpson. I think that there is a difference in emphasis between the Scottish Government and Audit Scotland. The Scottish Government publishes its medium-term financial strategy. The document that it published earlier this year set out that the Scottish spending review, which ministers have committed to publishing alongside the budget in January, will set out its strategic approach to public spending over the next few years and the contribution that is expected from portfolios to achieve that fiscal balance.
The Government always looks at these things in the round, rather than narrowly looking at how a particular benefit will be funded. It is looking at Scotland’s public services, and within that it is looking at the contribution of social security, and within that it is looking at the extra investment that ministers have set out.
This year, the Government has chosen to publish “The Scottish Government’s Fiscal Sustainability Delivery Plan 2025”. As well as the medium-term financial strategy, the Government sets out its plans to strengthen the public finances and it will be reporting on that year on year.
If I may, I will go back to your earlier question around recommendations. Again, I will try to be helpful. The Audit Scotland report talks about how the Scottish Government should be reporting annually the plans to manage the differences in benefit expenditure as outlined in the fiscal sustainability delivery plan. We have said in that plan that we will come back every year and talk about those things.
Again with a view to being helpful, on the recommendation about reporting annually the reasons for the differences in cost compared to the forecasts, as we know and the Auditor General knows, it is the Scottish Fiscal Commission—which is becoming slightly famous in this evidence session, as we are mentioning it so often—that has the statutory responsibility for producing that very information. For the Scottish Government to accept a recommendation such as that, it has to consider whether it is going to risk analyse the Fiscal Commission’s analysis or whether it has anything more to add. That is the reason why, when looking at the recommendations, we see that the Scottish Government puts a slightly different emphasis on these issues from time to time.
I have, I hope, a useful point to make with respect to the actual numbers.
Where does the £770 million difference come from? Earlier, I was describing three different bodies forecasting different things at different times, and that is relevant to this issue. The £770 million difference comes from the fact that, on the expenditure side of the equation, the SFC forecast in May 2025 for ADP in 2029-30 was £5,040 million. The block grant adjustment for PIP that was produced by the OBR for the spring statement was £4,270 million. That difference is, indeed, £770 million in 2029-30.
However, we know that the block grant adjustment figure of £4,270 million includes the projection of the UK welfare reforms that were subsequently withdrawn by the UK Government over the summer. It is, therefore, reasonable to expect that the cut to the BGA will be reversed. The value of that cut is £440 million for 2029-30. Therefore, it will be reasonable to add the £440 million cut back on to the block grant adjustment. If you do that, you get a difference of £330 million, not £770 million.
It is important to say that I am not a forecaster. I am merely doing the maths of the figures that are available in the public domain.
I would like to make reference to what the Scottish Fiscal Commission—the famous Scottish Fiscal Commission—said in its fiscal update report that was published on 26 August. Paragraph 2.17 says:
“Therefore, the savings the OBR had forecast in March 2025 from PIP reforms will be reduced, as will the fall in the associated BGAs. We expect the OBR to produce a costing of the updated policy alongside the next UK budget in the autumn.”
Therefore, I think that the £770 million figure was the difference between two figures at a point in time. As I have referenced, what the SFC said in the report in August adds a bit of colour.
10:30I could add more colour to that. It is worth noting that in the SFC’s December 2024 report, the block grant adjustment for PIP was £4,659 million and the SFC expenditure forecast for 2029-30 was £5,030 million, and the difference between those was £381 million.
If we assume that the block grant adjustment will be added back—we will find that out at the end of the month, of course—the £330 million difference that I mentioned will still be less than the £381 million that was the position in December 2024. There are lots of numbers here, because different organisations are producing different numbers at different times and we have to take a view on that difference at a point in time.
I am sorry if I have thrown about a lot of numbers. However, it is important to demonstrate that there is a lot going on. It is complicated, but we can be clear on what the position is. We will find out for sure at the end of this month when we get the updated block grant adjustments from the OBR.
Thank you; you made a very good go of that. However, the upshot is that things can change but there is still a funding gap. Even you seem to accept that, with your plethora of figures. I am not asking you to come back in at this point.
There is still a funding gap and the Auditor General is very clear that the Scottish Government does not have a detailed strategy for how it will manage that funding gap, whatever the figure is. Do you accept that?
As I said, we fully fund the Scottish benefits system within the Scottish budget. We set out the medium-term financial strategy and there will also be a spending review that will be published alongside the budget this year, which talks about how we manage the social security spend and what we look at. Included in that is a learning system, through which we think about delivery. At Social Security Scotland, we are thinking about not only decision making, but reviews of cases and having a review to ensure that the system is working as efficiently and correctly as it should be. We are looking at spending across adult disability payment.
We know that the number of people receiving the benefit will go up. Edel Harris tells us that, and the Scottish Fiscal Commission also predicts that costs will rise quite significantly over the years.
I will go back to one of the recommendations in the report, which is that the Government should
“set out how the ... financial gap”—
because there is one—
“will be managed over the medium term, including analysis of how this will impact on wider outcomes for disabled people.”
Do you accept that recommendation?
As I said, the medium-term financial strategy does that.
Do you accept that recommendation?
Yes. We cover the social security spend. On the funding for the payment in the budget, Scottish ministers decide how they allocate the budget that they receive, and the benefits are fully funded.
There we are. We have got somewhere. You have accepted a recommendation. Mr Kerr accepted the recommendation that there should be annual reports. That is progress.
We still have two committee members who have questions to ask, so I will move straight along.
I will go back to the start. Dundee was one of the areas where ADP was rolled out first. The perception of my constituents who were in the PIP system was that the purpose of the folk who were doing the assessments was to stop them getting benefit, whether they were entitled to it or not. Whether that is true or not, they felt that those folk had quotas and that it was a success for those who were doing the assessments if they stopped someone getting a benefit. Contrary to that, when Social Security Scotland was set up, the aim of this Parliament was for 100 per cent of the people who are entitled to these benefits to get them. That was the decision of the Parliament, which I think was unanimous; I do not remember anybody saying, “No, we need to try to drive take-up down. We need to prevent people who are entitled to adult disability benefit from getting it.” The aim was that everyone who is entitled to ADP should be able to receive it.
Helen Fogarty said that we do not yet know what percentage of people who should be getting the benefit are actually getting it. That concerns me, because it means that a percentage of people who have disabilities—people who we, as a Parliament, decided should be receiving it—are not receiving it. What is your understanding of that?
I return to the benefit take-up measure, which I do not think that I explained particularly well earlier.
At the moment, we have a general understanding of the Scottish population and the prevalence of self-reported disability, ill health and long-term health conditions. We look at information that is generated by Scotland’s census and by the Scottish health survey, which give us genuinely helpful context. However, they do not give us the benefit take-up percentage or rate—“rate” is probably the more accurate term—because people are self-reporting, which is not the same as actual assessments of eligibility for adult disability payment. Somebody might regard themselves as being disabled, but that might not necessarily match with our criteria, and vice versa. We do not have that definitive take-up rate.
David Wallace and Stephen Kerr may want to come in on this, but, as you are aware, a huge amount of broader work is done in Social Security Scotland on the actual design of the services that we deliver that seek to support benefit take-up. More broadly, the Scottish Government has a benefit take-up strategy, and Social Security Scotland plays a role in implementing that strategy. We do a huge amount of work on that.
We also do a lot of analysis of our equalities data, and we have just published some additional statistics on equalities. When we are looking at the award rates, for example, we monitor that area very closely because we want to make sure we are doing as best we can on that benefit take-up ambition.
To come back to Joe FitzPatrick’s question, that is absolutely the role that we see for the organisation, which feeds back into the take-up point. I am enormously proud that the organisation has that culture, which sets off from the position that we are here to help people get what they are entitled to.
I will not comment on the UK system, but I will say that we spoke to clients who helped to form our system. Stephen Kerr’s programme did a lot of the early work to understand the position, and there were degrees of stigma, with people feeling that they were unable to go forward on to the system and some not wanting to try. I take your point on that.
The general sense of where we are, which I hope that you are getting, is that adult disability payment in particular is a relatively new benefit for us. We want to improve both the data that we collect on it and how we use that data not only to drive some of the elements that are drawn out in Audit Scotland’s report but so that we can start to share at a big data level. I think that a point was made earlier about sharing with health, for example. We want to make those big data linkages with services and local authorities and to use that to drive improvement.
We are also keen to make sure that we get that data so we can share it at a citizen level to help people get other things that they are entitled to. The free school meals entitlement is a very real, recent example of that. Data—not from adult disability payment—that was created as a result of the social security system in Scotland is now helping people to get additional resources that they might not have been able to get otherwise.
That is what I want to move on to. This is probably more for Miriam Craven. The people who are accessing ADP—and those who are not but who should be—are also accessing a number of other benefits and interventions. The Auditor General suggests that maybe the system is fragmented and that we have not managed to embed ADP within the wider system. There is no connection to housing, health and employment. It is good to hear how we are doing that.
Miriam mentioned the “Disability Equality Plan”, but I do not think that that includes ADP. I might be wrong about that, but if it does not, when will we bring those things together? We cannot look at all these things in isolation, because people do not access just one part of the system; they have lives that are more rounded. How are we pulling all that together?
Thank you for the question and for the acknowledgement of the culture shift that has been happening within the benefit system and its delivery in Scotland. I recognise that difference in relation to how Social Security Scotland is delivering. That is reflected in surveys that show what clients say about what they are receiving. As I said in my opening statement, nine out of 10 people recognised the principles of dignity, fairness and respect.
Your broader question is about how ADP fits in. For us, the past number of years have been about establishing a social security system in Scotland and being able to roll out the benefits one by one. Now we are in a phase that is about looking at how that system contributes to wider society in Scotland. Adult disability payment is a part of that journey. The “Disability Equality Plan” was published this year, and an on-going evidence review of it will be published within the next couple of months. The Audit Scotland report is part of the evidence review to see how we are utilising adult disability payment.
Some of the funding that was associated with the plan focuses on advice and on how we ensure that we are getting take-up. Social Security Scotland has a role in that regard, but so do wider advice services. There is also funding support for health and social care, for example, and broader funding to get support out to the clients to make sure that they get what they are entitled to.
Part of the vision in the “Disability Equality Plan” relates to an important broader point. When the Scottish Government is making policy, it needs to put disabled people at the centre of policy decision making. Having that long-term vision allows disability to be treated equally in relation to equalities in Scotland.
Thank you. I will leave it there, convener.
I invite the deputy convener to put a final set of questions to our witnesses.
Good morning. I have listened with interest to the evidence, and I have questions that cover some areas that have already been covered and some new areas. In the interests of time, perhaps the person who is best suited to answer the question could do so, which will allow me to get through more questions. That will be helpful.
My first question is a wider one about ADP in general and the role that it plays in the health of the nation. As we know, Scotland unfortunately has the lowest life expectancy, and the lowest healthy life expectancy, of all UK nations—it is some two years below the UK average. That has been the case for many years. In what way will ADP fix that?
On the broader outcomes, the way in which we deliver adult disability payment is about enabling people to live the lives that they need to live and giving them additional financial support to be able to do that. That might be support with work, with the social side of their lives or with how they live their daily lives and thinking about the basics of how they do that.
The next phase for Social Security Scotland is to look at the outcomes that are being achieved by having the adult disability benefit system in Scotland. As I said, it has been about setting up the system, but the next phase needs to link with the outcomes for people who receive that money.
I will come on to outcomes later—it is an interesting area that we have not covered. I want to go over some ground that has already been covered around sustainability and finances, which are important issues—we are the Public Audit Committee, after all.
The bottom line is that we have heard a lot of numbers and it is very difficult to forecast how much the benefits will cost, how much the block grant adjustment will cover—whether it will cover all or some of that cost—and, indeed, what take-up levels you will get in real time as time progresses and things stabilise. There are a lot of known unknowns there.
However, the bottom line that I think that we all agree on is that the Scottish Government is spending more on social security than it receives. I think that that is a given, and it is forecast only to increase. No matter who you ask, they will tell you that that number is going up. I think that there is a valid question in here. I am not criticising the nature of the devolution of the benefits system but, at the end of the day, ADP is a so-called “fully funded” expenditure in the Scottish budget, so the money has to come from somewhere. I have a question for the Scottish Government. How on earth is the Scottish Government supposed to make ends meet and balance the budget, given that, according to all the forecasts and as Mr Beattie pointed out, the cost of the benefits will increase exponentially over the next five years?
10:45
I will give a very quick response and then I will ask Stephen Kerr whether he wants to add anything. I will avoid figures.
As you have just said, what is key is that Scottish ministers decide their funding priorities, and they are funding in full the social security system and the delivery of our social security benefits. As part of any budget decisions, they will look at prioritising those decisions. We will offer independent advice on decisions that can be taken within the system, but they will also look across their whole Government spend, and they have committed to saying that the priority is to fund the social security system.
I reinforce the point that some of the figures that have been talked about today may never actually transpire because they were forecasts that were looking at a very different system and at things changing, which is now not happening.
We have also talked about the Edel Harris report. We will make changes in Scotland that ministers will have made decisions on, just like they will make decisions based on the Audit Scotland report. The financial impact of those decisions, their implementation costs and what they will mean for spend in budgets will have to be understood. Ministers will also need to make decisions about how much that will cost operationally. I hope that that helps.
That is very helpful. Someone said earlier that there is a school of thought that if you spend more on social security and stop seeing it solely through the prism of its being a cost, there may be savings to be had down the line in other areas of public policy. That is an interesting philosophy and I hope that it is true. However, if it is true, we would also expect to see costs reduce in the primary care budget, for example, because people are getting healthier; we might also expect to see the system get more people back into work, tax intake go up and so on. However, we are not seeing those things. We are seeing a system in which the cost of delivering devolved social security is going up, the cost of delivering primary health care is going up and the cost of other social care policies is going up. They are all rising. I was under the impression that if we make difficult decisions to spend more on benefits compared with spend in other parts of the UK, we get better outcomes, but we are seeing neither better outcomes nor reduced costs in other areas of public policy.
I think that it is too early yet to say what the outcomes are because, as we have said, we have had full responsibility in Scotland for ADP for too short a period of time to be able to understand the outcomes and impacts completely. When Edel Harris was at the committee, she also aired a note of caution: we cannot ask people, “What do you spend your money on?”.
There is also a balance to strike in looking at the outcomes. For us, it is about how we work across government to increase the number of people from a disabled background who are in employment, and that work has been helped by the adult disability payment and the “Disability Equality Plan”.
I will ask about that, as outcomes are important. I am really interested in the idea of long-term sustainability, which is valid and which the committee will look at for years to come, I suspect. However, if you are saying that ADP makes people’s lives better and healthier, in what way does it do that? I am looking for an evidence-based answer; we have to be driven by evidence.
I will bring in Helen Fogarty because, as the analyst, she is better with statistics.
I ask you to remember the intention behind adult disability payment and what it is meant to deliver. I refer to the part of it that is about helping disabled people to live life to the full and, in doing so, to be able to do the tasks that lots of us take for granted. In my opening statement, I mentioned that, for some people, it is about being able to make their meals in their home, get out to work and do things. Adult disability payment is supplementing the cost of doing those things and it is helping people to be able to do them.
Thank you. Deputy convener, you might recall that the Audit Scotland report makes reference to the family resources survey, which the DWP utilises to get into some of the outcomes that you referred to, particularly in relation to things such as employability. It might be helpful to give you an update on that.
Social Security Scotland already shares its data with the DWP through our customer information service, and we have given permission to the DWP to feed that information into its statistical products, including the registration and population interaction database, or RAPID. That database does the data linkage into the family resource survey.
Social Security Scotland does not yet have access to that database to undertake our own analysis, but the DWP is planning to include the Social Security Scotland devolved benefits in data linkage into the family resource survey next year. That should start to give us more insight into the outcomes whose contribution we are genuinely interested to understand.
I know that you want only one person to speak, but Stephen Kerr might want to speak about evaluation. The Scottish Government has an evaluation strategy on the devolution of social security benefits. We are looking at refreshing and updating that strategy—that is exactly what we are looking to gather information on. We recognise that it is early days and that evaluations to date have typically been much more process orientated—for example, they asked whether the benefit was working as anticipated and whether clients’ experience was what we anticipated. However, we recognise the desire to have that much broader information about what the broader outcomes are for our clients, for society and for Scotland.
Let us look at that, then. Before you answer, I am asking about this because it makes complete sense that if you give someone more money, their day-to-day living becomes easier because they have more money in the bank to spend on things such as bills or on food and all the other things that people need. However, I think that the link is unclear. If you create a specific benefit that is designed to help disabled people, in what way does that help the recipient? At the minute, as you say, you—rightly—are not asking what people do with that money; it simply lands in their bank account every month. How do you then do the difficult task of working out whether that big chunk of cash—and it is a huge chunk of money—is actually improving outcomes for people in the real world?
As Helen Fogarty said, we are right in the middle of having those conversations. In the second evaluation strategy that we published, what we are trying to do is understand whether the policy that we have established is actually being implemented on the ground and happening. We have published evaluation work on the transition from child disability payment to adult disability payment, on case transfer and on child winter heating allowance, and we have reports coming soon on decision-making policy and the special rules for terminal illness. When we have that bedrock of understanding, we can use it as a platform to start asking about and looking at the issues that you have been talking about. That is about the more longitudinal impact, if you like, of the amount of benefit expenditure and the broader outcomes that it is achieving. We will need a framework to decide how we are going to do that work and how we present the information to the Parliament in successive years to come.
Okay. Is there a risk, though, that you have created a benefit that simply can never be reduced or taken away because it is politically impossible to do so, as many Governments of many colours have learned over the years? There are difficult decisions to make to try to reduce the benefits bill, which in our case is growing year on year and is projected to rise probably for the next five to 10 years. No one can ever do anything about that, because once you have put that money in someone’s pocket, it is very difficult to take it away from them.
Indeed, off the back of the independent review of ADP, which suggests an expansion of the eligibility criteria, even more people will be coming into the system. We have created this huge beast that will just grow and grow. I am not saying that that is a bad thing, but it has to be paid for.
The Edel Harris review was commissioned as part of looking at how adult disability payment is working in Scotland. Although I hear everything that you are saying, as officials, we provide advice and look at how we can make improvements to our policies and to each benefit, including adult disability payment. We make recommendations to our ministers. As you know, regulatory changes that we make come before a parliamentary committee to look at and decide on.
When we go through that process of change, there are opportunities to make changes to eligibility criteria and to look at different elements of the application form or the information that we gather. It is then about getting our recommendations through and into regulations.
Okay. I will quickly cover off two final areas, one of which is fraud. Obviously, the DWP has been around for a very long time, so there is a substantial amount of fraud in the system—we all know that, and I am sure that it tries its best to deal with it. However, Social Security Scotland is a new entity and it is fully funded by the Scottish taxpayer; therefore, there is an expectation that Social Security Scotland will take the issue seriously. I appreciate that it is at an early stage, but what evidence do we have of any fraudulent activity within devolved benefits? What has been done to tackle it and to prevent it?
In the interests of time, I will let David Wallace come in.
I recognise and agree with the recommendations about fraud in Audit Scotland’s report. To be clear, where the Audit Scotland report talks about fraud and not yet having the tools to deal with that, that is exactly as you say, Mr Greene, in terms of the estimation of it. Since the advent of the agency, we have been putting those counter-fraud measures in place. We have a sophisticated counter-fraud team, and we have the ability to report directly to the Crown Office and Procurator Fiscal Service when we see fraud. The checks that we spoke about earlier are one of the mechanisms by which we can identify applications that we suspect of fraud. So, we have the mechanisms in place to detect, to report and to counter, and we have had successful prosecutions for fraud in relation to our benefits.
I should also say—because I know that there has been some debate about what may feel like a relatively low number of such prosecutions—that we, as an organisation, do not deliberately, under legislation that comes from the Parliament, decide whether or not somebody is a fraudster, to use that language. What we do is report through the system, and it is only when a conviction has come through the criminal justice system that we say that there has been a fraudulent application.
However, we will always identify where we feel that there may have been an overpayment. We can take a new decision on such applications, and we will always seek to recover when we feel that there has been an overpayment. We have full surveillance powers, which have come through the Parliament, in order to ensure both that we have those powers and that we are using them correctly. We have also drawn in expertise from other areas, as you would anticipate, including from the DWP, His Majesty’s Revenue and Customs, Police Scotland and various bodies that have an expertise around this. We would robustly look at any applications that we felt were fraudulent, using the intelligence that we have.
I want to make sure that a distinction is drawn between what is correctly highlighted in the report, which says that we do not have the tools to estimate the level of fraud, which was the basis of your point, and the idea that we are not doing anything about it. The priority is to try to ensure that we do have the tools to estimate the level of fraud. That is really important, because, as you said in making your opening point, there will be fraud in the system—there will always be fraud in the system.
Yes, there will be, but let us be honest: Social Security Scotland was hugely expensive to set up. I would have thought that the tools required to identify fraudulent activity would have been at the core of the start-up costs of the operation. It is disappointing that an Audit Scotland report has identified that those tools are not there.
My final question is about operational costs. What are you doing to keep them down? The cost of delivering the system, before you even put a penny into someone’s bank account, is hundreds of millions of pounds per year. That is obviously of concern to the Public Audit Committee.
I would say that the tools that are being referred to are the tools to estimate, not the tools to identify and prosecute. As I say, we would do that robustly now, and we have been doing it since the advent of the agency. I would draw that distinction between the tools to estimate fraud, which are—in the interests of time, I will not bring Helen Fogarty in—effectively a statistical methodology to estimate fraud in a case load, and the tools to detect, counter and prosecute. As I say, we have been through the entire life cycle of a benefits case, and we have had successful prosecutions as a result of that activity.
Very briefly, if time allows, I will speak about operational costs, which were touched on at the very start with Helen Fogarty. Way back, in the financial memorandum that accompanied the Social Security (Scotland) Bill, a lot of work was done by the Scottish Government to estimate the cost of delivering the benefits that were already in the UK system, and we alighted on the figure of 6.3 per cent for the cost of administering existing benefits. As the report highlights, we would like to do much more to break down the individual costs within the organisation—we absolutely want to do that. However, we have always monitored against that figure of 6.3 per cent.
11:00The latest published figures say that our admin costs are just under 5 per cent of our operational costs. Therefore, the admin costs of delivering the social security system are now lower than the 6.3 per cent that was set out in the financial memorandum. It is important to note that it was not a target or a competition; it was simply an attempt to say what a reasonable and proportionate administration system looks like. However, we are now operating at a level that is below what we set out for a reasonable and proportionate system of delivering social security.
Okay. Thank you.
I have two very quick final questions. My first one is for Mr Wallace, and it relates to the answer that you have just given. It is a hallmark of Social Security Scotland that the private sector is not involved in the assessment process, which distinguishes it from the path that the DWP has gone down. Is the private sector involved at all in the surveillance strategy that you just spoke of?
I am going to say no in the sense that I think you are getting at whether we—
Well, you mentioned Police Scotland, HMRC and so on, which are public sector agencies of good standing. However, there has been an issue with HMRC using private companies to debt collect and things like that. I am just wondering whether you have gone down—
Sorry—I was being too specific and thought you might be asking whether we use a piece of software that was developed in the private sector. In terms of what you are describing, the answer is absolutely not. Those counter-fraud teams are employees in the organisation. They may use some tools, potentially, but they are ours. None of the surveillance that we conduct is outsourced in that sense.
Thank you. My final question is for the director general. Sir Stephen Timms’s review has been mentioned a few times. Are you informally or formally a part of that review?
I will bring in Stephen Kerr as director for social security. We are aware of the review and we have had some conversations at official level to understand the scope of that review. We are aware that he has also spoken with Edel Harris, and there has been a conversation at the ministerial level as well. Is there anything you want to add to that, Stephen?
Not really. We will keep an informal link with the team and the DWP as the review progresses over the course of this year.
Yes, it will be informal rather than formal.
Fine. That is helpful. As Edel Harris pointed out to us last week, there is quite a high level of interdependency between the two systems in terms of passporting to benefits, the fiscal framework and how that works, and the Barnett formula. Earlier, Kevin Stevens was able to give us chapter and verse on why the figure may be less because the planned reductions in PIP eligibility were paused. I think that he said they were reversed, but they were paused or halted, anyway. These things are quite important in allowing us to understand that there is at least an attempt at ministerial and possibly at official level to have some influence on that review.
The connection that you have just mentioned, convener, in relation to passporting into universal credit and how the assessment process that we have for adult disability payment and the work capability assessment works at the moment, is important, although it may change in the future or be removed. It is informal in the sense that there is not a definite link between the work of the review and the work of the Scottish Government, but the implications of that work could be really important for our benefits system. That is why it is important that we keep across it.
Absolutely.
On that note, I will draw this session to a close. I thank Helen Fogarty and David Wallace, from Social Security Scotland, and Stephen Kerr, Kevin Stevens and the director general for communities, from the Scottish Government. Thank you for giving us the full answers that we were looking for on a range of questions. We will consider what next steps we might want to take as a committee, and we will inform you of those in due course.
Because we are going to change over witnesses, I will suspend the meeting for five minutes.
11:04 Meeting suspended.