Chamber and committees

As we set out in the debate on Tuesday, the draft budget prioritises much of the work on child poverty, whether that is the increased investment in breakfast clubs and employability services or mitigation of the two-child cap.

Due to the Government’s mission to eradicate child poverty, and in recognition of the on-going cost of living crisis that many people are feeling across the country, we are continuing to allocate more than £3 billion per year to policies that will tackle poverty and the cost of living.

As we have done previously, we will publish a detailed analysis of the breakdown of that as part of our annual progress report, which is due to be published at the end of June. The estimates at this point suggest that we will allocate more than £3 billion to assist low-income families amid the cost of living crisis.

If I can put it simply, we base our budget on the Scottish Fiscal Commission’s forecast, and the only way that the benefit forecast will go up is if the assumptions that we are looking at in that work suggest that more people will be entitled to and claim the benefit, meaning that benefit take-up will go up. Those are the reasons for that.

We can certainly provide the assumptions that underlie the Scottish Fiscal Commission’s forecast for that increase. In essence, our budget is based on the assumptions in its working.

Good morning, convener. This budget will protect and build on the substantial investments that this Government has already delivered for the people of Scotland. In total, the budget will deliver almost £64 billion of funding in 2025-26.

The budget protects the social contract at the heart of this Government’s approach, continuing free prescriptions, ensuring that no Scottish student pays tuition fees and providing access to free bus travel for almost 2.3 million people. It continues to deliver a social security system that is based on dignity, fairness and respect, and a national health service that is free at the point of use.

It will also go further, renewing and reinvesting in Scotland. The draft budget allocates an additional £1 billion for social justice, which will take our budget to £8.2 billion in 2025-26. The budget mitigates where United Kingdom Government policies undermine our efforts to tackle poverty. We will reinstate a universal pension-age winter heating payment and provide funding to begin work to develop the systems to deliver the mitigation of the two-child cap, which could lift 15,000 children out of poverty.

In line with Scottish Fiscal Commission forecasts, we are investing a record £6.9 billion for benefit expenditure in 2025-26, providing support to around 2 million people—that is one in three people in Scotland—and the money will go directly to those who need it most.

We are investing around £750 million more than in the 2024-25 budget, supporting disabled people, supporting older people to heat their homes in winter, and helping low-income families with their living costs. That investment is £1.3 billion more than the level of funding forecast to be received from the UK Government through the social security block grant adjustment.

The budget invests an additional £172 million in affordable housing, which will help to keep rents lower and will benefit around 140,000 children in poverty each year. That investment contributes not only to tackling the housing emergency but to our target of 110,000 affordable homes by 2032. Although individual projects require to be identified locally by councils, the budget provides enough for around 8,000 homes.

We invest more per person than any other UK nation in measures to help people remain in their homes. We will provide approximately £97 million in discretionary housing payments in 2025-26, which is an increase of £7 million, to enable councils to offset the UK Government’s bedroom tax and benefit caps and to cover shortfalls between housing benefit and rent. That is in addition to homelessness funding provided through the local government settlement.

I recognise the financial pressures on the third sector and the additional pressure that the UK Government’s decision to make changes to employer national insurance contributions places on many organisations in the sector. The 2024 programme for government commits the Scottish Government to making improvements to grant making, including greater clarity and consistency of existing arrangements.

I thank the committee for its pre-budget scrutiny and look forward to its questions.

We must ensure that the system is based on the right decisions being made. If people are staying on the case load, it is because they are entitled to be on it. Nobody stays on the case load if they are not entitled to be part of it. That is a very important aspect of our work.

In the past, under DWP systems, the review process was exceptionally onerous and a barrier to people continuing to receive money to which they were entitled. We have reviewed our review process for child and adult disability payments, so that will have an impact.

However, we should get back to first principles. The important aspect is whether people on the case load are entitled to their benefits. If they are, they should not come off it.

As Liz Smith knows, the Government must produce a balanced budget every year, so budget decisions will need to be taken every year to ensure that that commitment is met. We are continuing to make that important investment in families that are in deep poverty. There is much evidence and research from stakeholders that demonstrate that lifting the two-child cap would be the single biggest policy change that we could make to lift children and their families out of poverty.

With respect, I am talking about the priorities that the Government is setting and the fact that what anti-poverty campaigners have said is the reason behind the Government stating that we will invest in that policy, and we will need to make changes to the budget to ensure that it is delivered. As Liz Smith knows, we are required to have a balanced budget every year. We know that the policy will result in an additional cost to the Government, but it is an investment in people, and it is therefore important that we consider that cost as part of our balanced budget process.

That is an exceptionally important point. A number of the main contracts in social security are already set. As I alluded to earlier, we are coming to the end of the social security programme, so we are thankfully not at the point of establishing large new contracts in the social security agency or programme.

However, you raise a concern that we will have to consider across Government. Whether it is in relation to the agency in my portfolio or other parts of Government, the increase in costs in the supply chain and in contracts will also need to be factored into decisions.

The third sector aspects are very important. The number of organisations that signed the letter from the First Minister and COSLA leader demonstrates the level of concern. The Scottish Government is not in a position to respond as fully as we would like to assist the third sector. We would dearly like to be in a position to do so, but the overall financial constraints that the Government remains under make that exceptionally difficult.

To touch on some of the points that the committee considered in its pre-budget scrutiny, we are keen to assist in other areas of funding for the third sector to perhaps provide support and more stability. However, that will provide stability only in relation to what the Government can give out; it will not help with a change that, in essence, will have a significant impact on the third sector and on services.

We will also have to write to the committee on the analysis that informed the decision to extend the contract for a year.

If you will forgive me, Jeremy, I will respond to all those questions in writing.