Chamber and committees

The aspects around whether there will be a saving will be dealt with by the learning that comes out of work within the agency, and the wider Government, that demonstrates that changes need to be made to policies, practices and procedures. The budget process and spending review process are exactly where those types of learning points will materialise in changes to budgets. Those will be demonstrated in the publications that will come out in due course.

One point on which we will be happy to provide further details is the operating costs of the agency compared with, for example, those of the DWP. Those costs, which we continually challenge to ensure that the agency is as effective as possible, are very good in comparison with those of the DWP. There is no issue around the operating costs of the agency.

I ask David Wallace to come in on that.

I do not think that the level of social security payments is unsustainable. As a Government, we have to work out—these matters will come to Parliament to discuss and make decisions on—the choices that we will set out in our budget and in the spending review about the decisions that we have made on investing in social security. Others might wish to suggest that we should disinvest from social security and that we should take money away from people. It is fair and right for us to discuss that but, internally, the Government has discussed the importance that we attach to social security as one way of alleviating poverty and supporting disabled people and carers. Those choices will be laid bare.

I fully recognise that there is an increase in social security expenditure. One way of tackling that is to look to reduce it by making changes to eligibility. The UK Government has attempted to do that. After looking at the increases in social security expenditure, it attempted to make changes to reduce eligibility, but it has now backtracked on some of those. It is right and proper for us to discuss who should be eligible for benefits and whether we think that benefits are going to people from whom we, as a Parliament, would be comfortable taking them away.

I am happy to provide information on how that is not a particularly large issue.

I say at the outset that our benefit expenditure is essential investment in the people of Scotland and directly results from conscious policy choices made by the Parliament in accordance with the unanimously passed Social Security (Scotland) Act 2018.

Investing in this way in Scotland’s social security safety net and targeting help to those who need it most is necessary to tackle more than a decade of Westminster austerity and continued cruel welfare reforms. The Scottish Government continues to deliver vital assistance for older people to heat their homes, to help disabled people live independent lives and to support low-income families.

Our social security system is proudly based on dignity, fairness and respect. It is fair, but it is robust, with applications assessed thoroughly so that those who are not eligible for support do not get it, but those who are eligible absolutely do. We are committed to ensuring that our finances remain on a sustainable trajectory.

This financial year, we are investing £1.2 billion more than the block grant adjustments that we are forecast to receive from the UK Government for social security, of which £649 million is to mitigate some of the worst impacts of Westminster policies—for example, the bedroom tax and the benefits cap—as well as the inadequate level of universal credit, which we established the Scottish child payment to combat. By 2029-30, our additional investment is projected to be just less than 3.5 per cent of the total Scottish Government resource budget, which is an increase of less than 1 per cent compared with the current financial year.

The importance of value for money for our benefits investment is set out in the Social Security (Scotland) Act 2018, and is further underlined in our social security charter. It means, for example, that we have delivered £1.4 billion, paid to June 2025, to support children and families through the five family payments, including the Scottish child payment. That support is only available in Scotland. It also means more than £5.5 billion this financial year will go to support disabled people to meet the costs associated with everyday tasks such as washing, going to the toilet and getting dressed—tasks that people who are not disabled take for granted. That stands in direct contrast to proposed Westminster welfare reforms.

The UK Government’s chaotic approach to welfare continues to cause substantial and unnecessary difficulties, such as the intention to introduce a two-tier universal credit system, leaving people with disabilities or long-term health conditions with less money compared with existing recipients. I have been clear that the Scottish Government does not support and will not accept those changes, and we encourage and urge the UK Government to drop those remaining plans.

By contrast, it is estimated that our Scottish child payment, which has been described by Professor Danny Dorling of the University of Oxford as having an impact that is “stunning”, will keep 40,000 children out of relative poverty this year. It is no surprise that many leading charities have rightly called on the UK Government to follow our lead on the Scottish child payment, which could, according to the London School of Economics and Political Science, lift 700,000 children in the UK out of poverty overnight, and to follow our lead on abolishing the punitive two-child limit. Our modelling estimates that our action in that respect will result in 20,000 fewer children living in relative poverty in 2026-27.

On fraud and error, the Scottish public finance manual sets out clear expectations for managing fraud risk. It requires public bodies to promote an anti-fraud culture, maintain strong internal controls and actively minimise risk. Social Security Scotland has published a counter-fraud strategy that outlines its approach to preventing, detecting and responding to fraud. That is especially important given the nature of its work, which delivers public benefits with dignity, fairness and respect.

Protecting the integrity of those benefits is essential not only for financial sustainability but to maintain public trust in the system. The organisation’s approach is grounded in zero tolerance to fraud but is also proportionate, ensuring robust controls without creating unnecessary barriers for clients. Balancing sustainability with our overarching ethos and principles is why I could not recommend legislative consent for some of the overpayment recovery measures in the UK Government’s current bill.

As delivery expands to 19 benefits by 2026-27, the risk of fraud naturally increases. Social Security Scotland has made strong progress in building the systems and capabilities to manage that effectively. Continued investment in technology, skilled people and robust systems will be essential and what has worked well to date must now be scaled and strengthened to meet future demands.

Our social security investment is making a real difference in people’s lives. The children I have mentioned are being kept out of relative poverty. The five family payments I have mentioned will be worth around £25,000 by the time a child turns 16. That is another example of why the Joseph Rowntree Foundation and other projects predict that Scotland will be the only part of the UK with falling child poverty levels next year.

With a backdrop of austerity and a continued cost of living crisis, we know how critical support is for households. That is why the Scottish Government is protecting the vital payments that are available today. Labour and the Conservatives, along with Reform, talk about cutting welfare spend with no regard to the financial struggles that many households face. The Scottish Government will continue to deliver our vital payments with our balanced budget each year, delivered by a system that is robust but fair, and administered to provide support to all our constituents.

Thank you, convener. I very much welcome what is my first time in front of the Finance and Public Administration Committee. I will see whether I still hold that view at the end of the meeting, but it is a pleasure to be able to come and give evidence today.

I will bring in David Wallace to talk through the operational matters around the serious concerted effort within the agency in regard to the benefits that we are responsible for.

First, however, in relation to the item that was in the newspapers, it was particularly disappointing to see the way in which things were portrayed. There is no black hole in the Scottish Government budget and certainly the Scottish Government takes very seriously our responsibilities to ensure that we have firm policies for overpayments, of which fraud is one part.

As a Government, we looked very seriously at whether we should take part in some of the aspects of the UK Government fraud and error legislation because I was concerned about, for example, the ability to take money away from people’s bank accounts without due notice or consideration of their current circumstances. That is a concern for me, because that is not a person-centred approach; it does not take account of the impacts on that individual.

The other aspect is in relation to taking away driving licences. We all have areas in our constituencies—and, I am sure, constituents—where we can imagine that taking away a person’s driving licence would not help them to get a job or to be able to take their children to childcare, for example.

The impact of that on an individual is punitive in a way that does not help them to get into employment, education or training, or to be able to assist with wider family issues. I was greatly concerned about that type of measure. It is a tactic for dealing with overpayments that I did not agree with. What is important is our absolute determination to have strong and robust policies for overpayments, including those related to fraud, but we will not tackle that using the methods that the UK Government was suggesting.

We had a great deal of back and forth with the UK Government about whether we could continue working on historical debt, that is, debt that has been built up. We were unable to do so, which is why I declined further co-operation on that part of the bill. We will move forward to deal with that in a way that fits with the ethos of the social security system, but, as I said in my initial statement, is still very robust.

I am happy to bring in David Wallace if you would like further information about how we deal with issues relating to overpayments, fraud being one of those.

There is an opportunity cost with all budget decisions right across Government. A current example is the mitigation of the two-child cap. The figures that I discussed in my opening statement relate to the current mitigation of the cap but we expect those costs to go up. The First Minister has made it very clear that if the UK Government’s child poverty strategy—which we now think will start at the end of the year after the budget, but that timing is of course up to the UK Government—were to include the scrapping of the two-child cap, we would no longer have to mitigate it and we would use that money on further anti-poverty measures for children. That is one example of the opportunity cost of what we are doing.

I am talking about the additional investment that we are making, which is what we invest above the block grant adjustment.

Perhaps I can respond to the committee in writing with further detail on that, as childcare is not in my portfolio. Overall, however, as we look at childcare, we also need to consider the importance of having an offer that is available to everyone, whether they are in work or not, because it is not just about providing childcare to get people into employment; it is also about supporting young children. That important aspect should not be available only to the children of those who are in work, because it is about early learning as well as being somewhere for people to go.

There are issues with the expansion of childcare down south, which shows the importance of ensuring that staffing levels and supply are adequate. Again, you raise an important point in that, when we are looking at poverty, it is not just about social security. I recently undertook a visit to speak to young mums who are getting support not just on income maximisation but in relation to barriers to employability, such as whether they can access the types of childcare that they require and the fact that that has to work with the support that they get from the wider system.

A great number of people are in in-work poverty, so getting a job is not necessarily a route out of poverty for many—particularly for women, and not just for young women. It is important that we look at providing people with support even if they are in employment, if that work does not lift them out of poverty.