Chamber and committees

It is very important that we listen to stakeholders about their asks of the Government to go further, whether it is on social security policy or elsewhere. I am very conscious of the support that social security provides. We discussed earlier the impact that it has for disabled people, carers and those on low incomes in assisting and supporting them. Given everything that I said at the start of the evidence session, I absolutely recognise the impact that that investment has had and I recognise the calls for us to go further.

This comes down to the decisions that the Government will have to take, looking not just at the calls on us to increase social security payments for people but at the additional asks that are coming in from Government. The calls that come from all political parties are for us to look in the round at our expenditure and assess whether additional expenditure on social security would be the best way to support an individual or a group of people or whether that best way would be an investment elsewhere or a change of policy elsewhere.

Those are the types of discussions that we will be having during the budget to ensure that we are spending the money effectively, because I take very seriously the challenge that is rightly put to Government about the fiscal sustainability of our plans. That is exactly why we have the MTFS there to look at those, because we have additional asks of what people want Government to do but we also have a challenge that we must balance the budget.

That is a benefit that successive UK Governments have effectively not changed in 75 years or so. It is a massively out-of-date policy that is essentially based on industrial injuries sustained in heavy industry. The consultation that we recently undertook gave two options: to effectively lift the outdated system directly into Social Security Scotland; or to ask the DWP to hold that for us while we do the policy work to make the benefit fit for purpose. The results showed that there was a preference for us to look at the benefit in a more holistic sense.

That will take time because, as I said, the benefit has not been touched for decades, which means that there is a lot to unpick. We have established a committee for that which sits outwith Government, although it is supported by officials. It is undertaking a more holistic view of the benefit, given the views that were expressed in the consultation process. The benefit will carry on under an agency agreement in order to ensure that those who receive the benefit at the moment continue to receive it.

The language is very important. It is not just important as we sit in committee in this Parliament, but important for the people that we are here to support. I am reminded of a recent round-table discussion that I had with disabled people’s organisations and others who talked about their worry that the stigma that we had hoped to take away from the social security system in Scotland is coming back. I fear that that is because of the language that is being used, particularly in connection with some of the most recent UK Government welfare changes, some of which have been scrubbed, while others are on-going. The language makes a real difference to how people feel about themselves and how they feel that they are perceived by others.

I think that this is an investment. In my introductory remarks I set out some of the ways in which the investment that we make in social security moves directly into people’s pockets to support them to get out of poverty or to stay out of poverty. It is also an investment to ensure that we are not having to spend the money elsewhere in our public services. We are making proactive decisions: I have sat in front of the committee for every eligibility Scottish statutory instrument that we have had, and we have discussed and debated them. Out of all of that secondary legislation, there are exceptionally few examples where anyone has dissented and voted against the SSI. We have come to the committee and to Parliament with the areas of eligibility and Parliament has voted on them.

There is a number of layers to that. We can start with the evaluation of benefits that we have undertaken to date. There have been 14 evaluations across disability and the five family payments. The disability evaluation showed that we have reduced the barriers to applying for benefits through improving support and making changes to the application process, which I hope that the committee finds to be a welcome change. The five family payments evaluation demonstrated a significant positive impact and showed that the investment that we are making will assist in mitigating the most harmful effects of poverty.

We have been able to provide for people who are in work and people who are out of work—as the committee knows, a large number of people are in in-work poverty. We have evidence that the Scottish child payment is reducing poverty, positively contributing to reducing financial pressures on households and reducing debt, material deprivation and food insecurity.

Work that has been undertaken through the Scottish Government and the Institute for Fiscal Studies indicates that changes that were made to the tax and welfare system in previous budgets have contributed to reducing inequality and targeting financial support to those who need it most. That report points to social security benefits promoting equality for women, disabled people and ethnic minorities, who experience higher rates of poverty.

We are seeing improving health outcomes from the early evaluation of the Scottish child payment, best start foods and best start grants, which are enabling parents to provide more and better-quality food for their children. Professor Linda Bauld has done work to look at the impact of social security, and it showed a very positive evaluation.

We are looking at and acting on that. Yesterday, when the First Minister and I were at the whole-family support event, I was in a workshop with the chief statistician about the work that he is taking forward to ensure that the Scottish Government has access to DWP data, to allow us to drill into such information, which would provide further evidential support and information and help with policy development. I am happy to provide further details of the work that the chief statistician has done.

I know that a number of other projects are being worked on. We are having to work with the DWP and HMRC to get the data, but both the UK and Scottish Governments are working on that. We can provide further information about what we are doing to support evaluation and the evidential base, which will help us with policy formation in the future.

It is always a pleasure to be able to take part in the committee’s pre-budget scrutiny period.

Let me begin by reiterating a fundamental point that I made at the Finance and Public Administration Committee last Tuesday. Investment that we are very proud to be making in the people of Scotland through our social security expenditure is absolutely essential. It is essential to tackle the worst impacts of United Kingdom Government cuts, essential to tackle inequality and child poverty and essential to provide vital assistance for older people to heat their homes, to help disabled people live independent lives and to help Scotland’s unpaid carers, who provide such vital support to those they care for and who, in doing so, contribute over £13 billion to the Scottish economy. Every single pillar of that investment package directly results, of course, from the bold and deliberate policy choices that were proposed by this Government and supported by Parliament, and which are founded on the unanimously passed Social Security (Scotland) Act 2018,

The impact of that spending includes keeping 40,000 children out of relative poverty this year through our investment in the Scottish child payment alone, which stakeholders across the UK are urgently calling on the UK Government to match. A fortnight ago, the children and young people’s commissioners for Wales and Northern Ireland spoke about that at the House of Commons Work and Pensions Committee, with the commissioner for Wales stating that matching the Scottish child payment would be

“one of the most effective ways of getting money right to the places where it is needed the most”.

Meanwhile, the Scottish Government’s modelling estimates that our action to mitigate the pernicious two-child limit will result in 20,000 fewer children living in relative poverty in 2026-27 compared to the situation had the cap not been mitigated.

One of the key points is that investment today to mitigate the harmful effects of poverty can lead to reduced demand for and expenditure on a wide range of other public services, such as healthcare. It can lead to improved productivity through a healthier workforce and greater participation by reducing labour market barriers, particularly for disadvantaged groups. To put that another way, as Emma Jackson of Citizens Advice Scotland said at the committee in May, the cost of not mitigating damaging UK Government policies would be

“astronomical and the long-term impacts would last for generations.”—[Official Report, Social Justice and Social Security Committee, 15 May 2025; c 35.]

While we have set up a social security system that is intentionally fair—and we are proud to have done so—it is also robust, with applications assessed thoroughly so that those who are not eligible for support do not get it, but those who are eligible do. All our benefits are subject to rigorous evaluation to test whether they are working as expected.

In 2025-26, 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 that, £649 million is to mitigate the worst impacts of the UK Government measures, such as the bedroom tax and the benefit cap, as well to address the totally inadequate standard of living provided by universal credit—we established the Scottish child payment to help to combat that. That investment is possible precisely because we have balanced our budget every year despite more than a decade of welfare cuts from successive UK Governments.

We recognise the fiscal challenges facing the public finances and we have a clear strategy and plan in place to ensure that the public finances are on a sustainable path, including actions set out in the medium-term financial strategy and the fiscal sustainability delivery plan. It is important to emphasise here that the proportion of the resource budget that the Scottish Government has chosen to invest in enhancing social security in Scotland compared to the situation in England and Wales is projected to increase by less than 1 per cent by 2029-30 compared to this current financial year.

That provides the context in which to view the latest Scottish Fiscal Commission forecast, based on which the Scottish Government anticipates spending about £8.8 billion on social security assistance by 2029-30. In 2025-26 our spending will support about 2 million people, which is one in three of the population. I encourage those who think that our spending should be reduced to take part in the future budget discussions that the Cabinet Secretary for Finance and Local Government and I will be hosting, and help us by determining which groups among those 2 million people they would like to see help removed from.

Earlier this year, the First Minister said that our decision to invest in Scotland’s social security safety net and to target help at those who need it most reflects the values that are fundamental to who we are as a nation. I could not agree more and it is exactly because of those shared values that we are intent on delivering this vital investment through social security benefits on behalf of so many people and families in Scotland.

You mentioned forecasts and it is very important to recognise that the budgets that we have are based on the Fiscal Commission forecasts. We work very closely with the commissioners, who look at the assumptions for the forecasts that they produce. It is exceptionally challenging to forecast demand-led budgets, particularly for new benefits. The level of error in forecasting is reasonably small but you are quite right to point that out.

There are different ways to tackle the wider aspects of child poverty in particular, as you mentioned. Overall this financial year, we will spend approximately £3 billion to assist those on low incomes and with the cost of living crisis, which is impacting on many families. Social security is just one part of the investment that we make. In the work on the child poverty delivery plan—and we are just going through the drafting of the next one—we will look at different policies from different parts of Government and work out what the impact is and the best way to spend that money. I will bring in Julie Humphreys to expand on that a little bit further.

The budget discussions have not provided me or, as far as I am aware, the Cabinet Secretary for Finance and Local Government with any details yet from any other party about what changes they would like to make on social security, whether those relate to the mitigation measures or other measures. We are still very much in the foothills of those discussions and my door remains open. Clearly, when we are looking at the fiscal sustainability of social security, there are some areas where the expenditure that we have to provide as the Scottish Government could be freed up if we did not have to do the UK Government’s job for it. If the UK Government were to mitigate the two-child limit—and I notice some press activity that suggests that it may be coming to that decision—the First Minister has already said that we would be able to reinvest the money that we plan to spend mitigating the two-child limit on other anti-poverty measures. Imagine what we could do if the UK Government also took away, at source, the bedroom tax, which we currently spend another £80 million on. I could go on about the different mitigation measures. Those are the ones where we could free up money and allow the Scottish Government to invest it elsewhere.

At this point, no.

That is an important aspect for the Government to look at. We also have evidence from disabled people’s organisations, which has come through loud and clear, not because of changes that we were looking to make to ADP but because DPOs were concerned about changes that the UK Government was due to make. They spoke clearly about how taking away a disability payment could reduce disabled people’s ability to get into or stay in employment.

As for what the Scottish Government is undertaking, Professor Linda Bauld is already looking at research on expenditure in the Government on ADP. That requires further investigation and support not just to demonstrate the impact that is being made but to ensure that we have a positive narrative—this goes back to the convener’s first question—about why this is an investment in the people of Scotland that we should be proud of making, rather than something to be chipped away at, as appears to be the case elsewhere in the UK.