Chamber and committees

Good morning. The 2026-27 budget invests funding of almost £68 billion to secure a fair, healthy, safe, prosperous and green society, to tackle the cost of living crisis and to deliver on the priorities of the people of Scotland. Thanks directly to the decisions that we have taken, 55 per cent of Scottish taxpayers are now expected to pay less income tax than they would if they lived in England and, unlike taxpayers in England, they will continue to benefit from free university tuition, free prescriptions, no peak-time rail fares and expanded childcare provision.

We are, of course, having to operate in a highly challenging financial environment, exacerbated by a United Kingdom budget that failed to deliver for Scotland—a budget that will not move the dial on the cost of living for squeezed households and which has left us with resource funding that is expected to grow by an average of only 1.1 per cent in real terms during each year of the forecast period, which is not enough to change the difficult fiscal position that we face.

Despite those constraints, we have again put child poverty at the heart of the budget, with a package of co-ordinated investment that includes £61.5 million for our tackling child poverty fund to supercharge action on child poverty across the life of the next Parliament, with the detail to be set out in our forthcoming tackling child poverty delivery plan, and more than £100 million over three years to support the delivery of a universal breakfast club offer for primary school-aged children by August 2027.

Meanwhile, the budget provides for an increase to £28.20 per week in 2026-27 in our transformational Scottish child payment, which has been increased by more than 180 per cent since its launch. Additionally, we will increase the value of the Scottish child payment to £40 per week for children under the age of one from 2027-28 onwards to provide increased support in the critical first year of a child’s life. The budget also sets out how the £141 million that would have been spent on our payment to tackle the two-child benefits limit will be reinvested next year to tackle child poverty, in keeping with the commitment to do so given by both the First Minister and me.

Overall, we are investing around £7.2 billion in social security assistance in 2026-27. That fully funded investment will support around 2 million people. Not only will children be kept out of poverty, but there will be support for disabled people and their carers and essential help for pensioners and others via winter heating payments.

As I set out in my letter to the committee last month, there have been a number of significant developments since the committee’s pre-budget scrutiny was carried out. Most importantly, updated Scottish Fiscal Commission forecasts reflect a number of key changes, the most notable of which is the UK Government’s welcome, but belated, reversal of the wholly unacceptable cut to personal independence payment that was announced in July last year. As a result, our overall additional investment in Scotland’s social security system is expected to fall from £1.8 billion to £1 billion by 2029-30, which is a 45 per cent reduction when compared with the June 2025 forecast.

Meanwhile, the proportion of the overall resource budget that the Scottish Government has chosen to invest in Scotland’s social security system, over and above the funding that we receive from the UK Government through the block grant adjustment, will be around 1.7 per cent each year from 2026-27 to 2029-30. Compared with the position that was set out in the medium-term financial strategy in June last year, that is a reduction of 0.8 percentage points in 2026-27 and of 1.4 percentage points by 2029-30. The updated position as set out in the SFC forecast demonstrates very clearly, in my view, that our social security investment is sustainable and that we in the Government produce costed financial programmes that deliver real benefits for the people of Scotland.

On adult disability payment, I must say that the proposals that were put forward last week by the Scottish Conservatives to overturn the eligibility criteria, which were unanimously approved by the Parliament, and to remove assistance from people with mental health conditions are wholly unacceptable, abhorrent and barbaric. I am also deeply concerned by the stigmatising rhetoric that we have heard about mental health, which completely ignores the fact that adult disability payment supports disabled people with the everyday tasks that many of us take for granted.

Importantly, the latest Scottish Fiscal Commission forecast now shows a 70 per cent reduction in the additional investment that will be required for adult disability payment in 2029-30, over and above what is received in block grant adjustments. That means that the £770 million that was originally forecast by the Scottish Fiscal Commission in June 2025 is now reduced to £287 million.

The causes of increased demand for disability benefits are analysed in a detailed report that was published last Thursday by the chief social policy adviser. The report sets out that the evidence that is currently available does not indicate that the conscious policy decisions that we have taken in Scotland to deliver a better system of disability benefits are the primary driver of increased spending. Instead, the report sets out that the two main contributors are rising ill health and the UK Government’s raising of the state pension age, which means that more people can get adult disability payment for longer in an ageing population.

Equally significant, in my view, is the “Delivering dignity?” report that was published by the Resolution Foundation in December, which explicitly stated:

“the introduction of ADP shows that improving the claimant experience is not at odds with keeping caseloads and costs under control”,

and, contrary to much of the ill-informed commentary of the previous week, that

“there is no evidence that ADP is a more leniently-awarded benefit than PIP”.

A value-for-money Scottish social security safety net, which all of us might need at some point in our lives, is something that, in my view, the Parliament should be enormously proud of—I certainly am.

I thank the convener again for the opportunity to take questions from the committee this morning.

It is important that we continue to work closely with the UK Government officials as we monitor the policy’s impact. As we have said many times in committee, Department for Work and Pensions ministers and Scottish Government ministers disagree vehemently on a lot of policy issues but, alongside that, we have a good working relationship on the practicalities of issues such as this. We will continue to liaise regularly with our counterparts in the UK Government at the ministerial and official level to ensure that we monitor how the policy is working in practice.

The social justice portfolio budget that I have is an exceptionally important part of the Government’s work to tackle child poverty. The portfolio includes social security and the fairer futures partnerships, and it has important oversight right across Government. I appreciate and understand the focus on how we are spending the money that we were going to use to mitigate the two-child limit. The details of that have been laid out in the budget.

Money elsewhere in the Scottish Government budget—outwith my portfolio—is also an important part of this, whether it is for work on breakfast clubs in the education portfolio, on employability in the Deputy First Minister’s portfolio, or on other things. Our oversight work in the Cabinet sub-committee on child poverty that is chaired by the First Minister is an important way that we challenge ourselves right across Government to look at how not simply my budget but every budget can impact on child poverty. That is how I have the reassurance, when looking at the spending review, that every cabinet secretary—it is not just me—has been looking at the impact that we can have on delivery against the 2030 targets and the role that we can play in drafting the plan that will be published in March.

It is disappointing that the UK Government’s child poverty task force did not commit to learning from the project that was taken forward by Fife Gingerbread and One Parent Families Scotland, because a tremendous amount of work went into that. It is a reserved area, so I would have hoped for better shared learning to have come from the UK Government’s child poverty task force when it concluded, including through a discussion with us about what could be learned from the work that was done.

Child maintenance is reserved. Some changes within the UK strategy have been announced, but they fall short of the transformation that stakeholders were looking for. We are still engaging with One Parent Families Scotland and Fife Gingerbread to learn from the action that they have taken to date and to understand whether we can do more.

Within the Scottish Government’s budget, we include provision for advice on welfare, debt, income maximisation and so on, so there are ways in which we can assist people. However, the issue that you raise is an example of how poverty can continue for some families because of a reserved policy decision. Another issue that we heard about only yesterday, when we had a meeting between the Cabinet and disabled people’s organisations, is the failure of the access to work scheme to assist disabled people expeditiously. That has caused disabled people real difficulties in either staying in employment or taking up an employment opportunity. There are examples of where a devolved system may assist people—and we do so as much as we can, and with the best will in the world. However, if the underlying reasons are with the part of the system that is reserved and run elsewhere, it is very difficult to lift particular families out of poverty if changes are not made there.

I will discuss any innovation with the UK Government, but the examples that we have seen so far illustrate that the UK Government makes decisions about issues without any consultation with the Scottish Government. We offered to run pilots up here in Scotland to assist with universal credit and childcare, and we have offered up learning that we have had in Scotland. It takes two people to have such conversations, and we can get only so far by writing letters and submitting evidence, as we did to the task force. There does not appear to be evidence that the UK Government is willing and able to have those conversations.

If the UK Government would like to prove me wrong on that, I would be delighted to take a call from any UK Government minister who wishes to run a pilot or to do such work here in Scotland in a joined-up and collaborative manner. That would be a first, I think.

The important point is that last point. The review of reviews, if you like, was a test against the principles in the Social Security (Scotland) Act 2018, which, I remind the committee, everyone in the Parliament signed up to. It is very important that the principles in the 2018 act are adhered to. That does, of course, include ensuring that the system is efficient and is delivering value for money, which are also important principles.

The work that has been undertaken wraps up the Edel Harris recommendations with the work that we committed to do as part of fiscal sustainability, to ensure that we look at reviews in the round and test them against the principles that we set out in the 2018 act, which everyone voted for, and to ensure that the system is delivering value for money and efficiency.

I am in the final stages of signing off the response to the Edel Harris review, which will wrap up the thoughts on the review of reviews as well. We are running a number of pieces of work concurrently, and I thought that it made little sense to respond on each one individually; I would rather respond to all of the points together.

That is very kind, Mr Balfour.

At the joint meeting between the Cabinet and disabled people’s organisations yesterday, a conversation took place around why PIP was initially brought in. I was not involved at that time, but it was pointed out to me and to the First Minister that the discussions in the House of Commons at the time were around the additional costs of having a disability or a long-term condition.

It is important that we continue to remind people that ADP is available whether they are in work or out of work. Indeed, I heard directly from people yesterday that ADP had helped them to get work or sustain employment. I am keen that nothing should suggest that if you are in work you can get ADP and if you are not in work you cannot get it, or vice versa. That would be unhelpful. This is about recognising additional costs and the fact that ADP might help people to sustain or get into employment.

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There are important linkages. It is an ambition of the Government to reduce health inequalities and support people to live longer and healthier lives. There are a number of reasons why health inequalities are present in our communities. There is a challenge around the number of low-income households and those who are finding life particularly challenging financially, where health inequalities are brought to the fore. Poverty is often a driver of ill health. It is important that we tackle poverty, not just because it is the right thing to do, but because it is part of the way in which we can tackle health inequalities.

The population health framework, which was published in 2025, has a focus on prevention. The framework is an important part of our work to galvanise action throughout the system. It talks about

“enabling access to income maximisation for families … achieving consistent delivery pathways, including in universal services”

and

“strengthening the NHS’s contribution to maximising the incomes of service users, with a focus on families at greatest risk of poverty”.

Those are some of the ways in which those aspects are tied together across Government.

He answered a question about those transitional arrangements, which I hope gave some detail.

The Government recognises that it is important to communicate with organisations as much as possible when we are looking at budget decisions. The timing of the budget made that exceptionally challenging, and this is one example of the need to have a solution to present to organisations. I hope that Mr Balfour will be satisfied with a further answer in writing, either from me or from one of the other cabinet secretaries with responsibility for the transitional arrangements that are in place.