Welfare reform: annual report 2018

3. How is the social security system changing?

3.1 Key changes in UK Government welfare policy since June 2017

Since last year’s publication, there have been some significant changes to the UK welfare system, most of which were announced in the Autumn Budget 2017. ^[37] These include:

1. The end of the 7 day ‘waiting period’ for UC payments. Since the introduction of Universal Credit, almost all new claimants had to wait around six weeks to receive payment. From February 2018, the seven waiting day period at the start of the claim was abolished, reducing the waiting time for receipt of the first UC payment to five weeks. This means that households are now entitled to UC seven days earlier, which the Department for Work and Pensions ( DWP) estimates would be worth an average of around £160 per household. ^[38]

2. Introduction of 100% UC Advance Payments. Before January 2018 only up to 50% of the UC award could be paid as an advance. From January 2018 onward, new rules increased the proportion of the monthly awards that can be paid in advance to 100%. ^[39] This advance should be paid within 5 days, or on the same day if the claimant can make a case to the DWP that the need is sufficiently urgent. The period of time over which the advance will be repaid has also been extended, from 6 months to 12 months. ^[40]

As shown in table 1, the UK Government has estimated that the changes to the waiting period and advances will cost £895 million over the six years to 2022/23. ^[41]

Table 1 – The estimated cost to the UK Government of Universal Credit waiting period and advances reforms

	2017/18	2018/19	2019/20	2020/21	2021/22	2022/23	Total
Cost of removing the 7 day wait and improving advances	£20m	£170m	£205m	£195m	£160m	£145m	£895m

3. Housing Benefit ( HB) run-on. From April 2018, claimants who are in receipt of HB and move onto UC will receive two further weeks of HB payments, which they do not have to repay. This HB award will be paid on top of their UC entitlement, helping claimants to cover housing costs while they wait to receive their UC payments. Table 2 shows the estimated annual costs of the policy change, which total £540 million over the six years to 2022/23. ^[42]

Table 2 – The estimated cost to the UK Government of paying two additional weeks of HB to HB claimants moving onto Universal Credit

	2017/18	2018/19	2019/20	2020/21	2021/22	2022/23	Total
Cost of allowing a two-week run-on of HB payments for new UC claimants	0	£130m	£125m	£135m	£110m	£40m	£540m

4. Housing Benefit for 18-21 year olds. In the 2015 Summer Budget, the UK Government announced that, with some exceptions, people aged from 18 to 21 would not receive support for their housing costs under UC. ^[43] Last year’s Welfare Reform Report found that, although it would only save around £40 million a year by 2020/21, the average impact on those who were affected was very large, leaving them over £5,000 per year worse off. ^[44] To mitigate this change, the Scottish Government offered support to people in this age group through the Scottish Welfare Fund. ^[45] In March 2018, the UK Government announced it would change the regulations to allow people aged 18 to 21 to claim their housing costs under UC. In August 2018, the UK Government also announced that it would keep HB in place for people living in supported housing. This is instead of them receiving housing costs through UC, or the previous plan to devolve support for such accommodation to local authorities in England, and the devolved administrations elsewhere. The decision to retain funding within HB provides security, after years of uncertainty, for vulnerable users of supported accommodation, and ensures that they can continue to access this support. Homeless households in temporary accommodation also receive support for housing costs through HB.

5. Local Housing Allowance policy. In the Autumn 2015 Spending Review, the UK Government announced that people living in the social rented sector would have the amount of rent covered by their HB capped to the same amount as those in the private rented sector (this cap is called the Local Housing Allowance). ^[46] Local Housing Allowance ( LHA) is meant to cover the full rental cost of living in an appropriately-sized property in the cheaper 30% of the local market (rather than 50% as before). ^[47] However in practice, the benefit freeze has meant that as in many areas LHA rates are no longer sufficient to cover the full housing costs of living in a property in the cheaper 30% of the market. Social sector landlords therefore voiced concerns that applying these rates would result in rent arrears for social sector tenants and increase the risk of homelessness. ^[48] In October 2017, the UK Government announced that this policy would not be implemented. Applying LHA rates to social sector HB claimants would have saved the UK Government £520 million in 2020/21. ^[49]

3.2 Focused update on welfare reforms

3.2.1 The Benefit Cap

With some exemptions ^[50] , working age couples with or without children and single parents can receive a maximum of £20,000 (single people without children can receive a maximum of £13,400) of benefit payments per year even if their circumstances would normally entitle them to more. ^[51] This is known as the Benefit Cap, which was first introduced in April 2013 at £26,000 for couples and lone parents and lowered to the above levels in November 2016. For most capped households, the Benefit Cap is applied by reducing the amount of HB they receive, so their total benefits no longer add up to more than the cap level. Due to the early stage of UC rollout, most claims affected by the Benefit Cap are claims to legacy benefits rather than UC. ^[52]

In May 2018, 3,400 households receiving HB across Scotland were capped, of which 2,300 were living in the social rented sector and 1,100 were in the private rented sector. Nearly 11,000 households in Scotland have seen their payments capped at some point since the introduction of the Benefit Cap in April 2013. ^[53]

Before the new lower cap was introduced, there were around 800 households being capped per month in Scotland. Since the introduction of the lower cap in 2016, this number increased to a monthly average of 3,500 (almost a fourfold increase).

As table 3 shows, lone parents, families with children, young people and women are disproportionately affected by the HB cap.

Table 3 – The proportion of households claiming Housing Benefit affected by the Benefit Cap by characteristic – May 2018, Scotland

Characteristic	Share of all Housing Benefit capped households
Have children	89%
Have three or more children	77%
Lone parents	64%
Female 54	86%
Aged 25 to 34	46%
Live in the social rented sector	68%
Are capped by less than £50 per week	55%
Are capped by more than £100 per week	14%

The Benefit Cap is also applied to UC claimants and as the UC roll out continues, the number of households on UC affected by the Benefit Cap will continue to increase. DWP statistics show that of those households receiving UC, 180 had their award capped in May 2018 across Scotland. Since October 2016, 410 households across Scotland have had their UC capped at some point. Table 4 shows that like households claiming HB, those claiming UC and being affected by the Benefit Cap are disproportionately families with children and lone parents. ^[54]

Table 4 – The proportion of households claiming Universal Credit affected by the Benefit Cap
by characteristic – May 2018, Scotland

Characteristic	Share of UC capped households
Have children	90%
Lone parents	51%
Capped by less than £50 per week	66%
Capped by £50- £100 per week	22%
Capped by more than £100 per week	12%

3.2.2 The Two Child Limit

From April 2017 a new rule restricted the child element of UC and Child Tax Credits ( CTC) to two children. The rule applied to new births after 5 April 2017 for CTC and new claims to UC after that date and is also known as the Two Child Limit ( 2CL). ^[55] In 2018/19 families with three children will lose up to £2,780 each year per child who does not qualify. ^[56] In addition, after 5 April 2017, families with children who make new claims to UC and CTC will no longer be entitled to the family element that is available to older claims, and they are estimated to lose up to £545 of benefit entitlement per year. ^[57]

There are no exemptions to the removal of the family element. However, for the 2CL policy the UK Government has introduced the following exemptions:

• a second or subsequent child born in a multiple birth, but not the first child in a multiple birth;
• children adopted from local authority care;
• children living long-term with family or friends including informal caring arrangements where had this not occurred the child would be looked after by a local authority; and
• children likely to have been conceived as a result of rape or coercion. ^[58]

Over the first year of the introduction of the 2CL across Scotland, 4,000 households in receipt of CTC or UC have added a third or subsequent child to their claim since April 2017. Around 5% of these 4,000 households are exempt and can therefore continue to claim for three or more children. The remaining 95% or 3,800 households cannot claim CTC or UC for the third and subsequent children.

Across the UK, around 74,000 households have been affected by the 2CL between April 2017 and April 2018. Around 865,000 households claim UC or CTC while having three or more children, which means only 9% of families claiming these benefits with three or more children had at least one child born after 5 April 2017.

Of these 74,000 affected families, 2,900 were exceptions. These exceptions comprised of:

• 2,440 (84%) families who had a multiple birth;
• 270 (9%) where the children lived with people other than their parents while otherwise being at risk of being taken into care, or are the children of under-16 year olds living in the household; and
• 190 (7%) were because they were conceived non-consensually (i.e. the rape clause).

Across all countries of the UK, households with a second or subsequent child born in a multiple birth were the most common type of exception. These accounted for 85% of CTC or UC households with an exception in Scotland. ^[59]

Accounting for all exceptions, 70,620 households across the UK were unable to receive the child element for third and subsequent children in their household. Around 59% of affected households across the UK are in-work, ^[60] while 38% were lone parent households.

In 2016, the UK Government published estimated savings as a result of the 2CL. ^[61] Over the first four years of its implementation, the 2CL policy is expected to save the UK Government almost £4 billion cumulatively, as shown in table 5.

Table 5 – Estimated UK-level savings from the Two Child Limit, HM Treasury 2016

	2017/18	2018/19	2019/20	2020/21
Limit child element to 2 children for new births in tax credits and new claims in UC	£360m	£795m	£1,200m	£1,585m

It is important to note that, as time passes, more households will be affected by the 2CL and the removal of the family element. Each year, more children born before the implementation of the 2CL policy grow older and stop qualifying for the child element, while newborns and some new claims will be subject to the 6 April 2017 cut-off. Given that caregivers are entitled to claim CTC and UC child element for children up to a maximum age of 19, theoretically the full effect of the policy may only be felt on 6 April 2037 (when every child under 20 will be born after 6 April 2017), although most of the policy’s savings will occur earlier.

The aspect of the policy that has drawn the most public attention is the exemption for non-consensually conceived children, otherwise known as the ‘Rape Clause’. Despite widespread criticism of the 2CL policy, there has been no indication from the UK Government that it will be changed. When meeting the Scottish Parliament’s Social Security Committee, the Secretary of State for the DWP pointed to how the act of proving exemption from the 2CL due to the ‘Rape Clause’ could help victims of sexual abuse. ^[62]

3.2.3 The introduction of Personal Independence Payment

Personal Independence Payment ( PIP) is a benefit for people aged between 16 to 64 with a disability or long-term ill-health. PIP began replacing Disability Living Allowance ( DLA) for people in that age group in April 2013 and is one of the benefits being devolved to Scotland. ^[63]

At April 2018, there were around 190,000 PIP claims in payment to people living in Scotland. ^[64]
Around 167,000 (88%) were working-age people. As of November 2017, around 90,000 working-aged people in Scotland remained on DLA.

Although people aged 65 and over cannot make a new claim to PIP, they can remain on it if they had a pre-existing claim when they turned 65. As of April 2018, there were around 23,000 over 64 year olds claiming PIP, representing around 12% of the total 190,000 Scottish claimants.

The most recent combinable data from November 2017 showed claims of PIP and DLA combined totalled 250,000 working-age claimants in Scotland, as shown by figure 1.

Figure 1 – The number of working-age DLA and PIP claimants in Scotland from 2013 to 2017

Source: Stat Xplore

PIP is a non-means tested benefit, meaning that eligibility is not dependent on income and savings. An individual’s eligibility for PIP, and the rate of award they receive, is assessed based on how the condition impacts their ability to carry out various daily living and mobility activities. Each of the activities has a corresponding list of statements, referred to as descriptors, intended to capture the extent to which an individual is able to carry out the activities, each of which provides a certain number of points.

After submitting a form detailing how their condition affects them, most claimants will be given an appointment for a face-to-face assessment with a healthcare professional. The assessor will evaluate the individual’s ability to carry out the activities set out in the table below and choose the appropriate descriptor.

A minimum of eight points needs to be scored in relation to the daily living activities to receive the standard rate of £57.30 per week for the daily living component, and the same number of points in relation to the mobility component to receive £22.65 per week. If 12 points or more are scored they will receive the enhanced rate of £85.60 for daily living and/or £59.75 for mobility.

PIP daily activities:
1. Preparing food
2. Taking nutrition
3. Managing therapy or monitoring
a health condition
4. Washing and bathing
5. Managing toilet needs or incontinence
6. Dressing and undressing
7. Communicating verbally
8. Reading and understanding signs,
symbols and words
9. Engaging with other people face-to-face
10. Making budgeting decisions

PIP mobility activities:
1. Planning and following journeys
2. Moving around

For people who are diagnosed as being terminally ill there is a fast track process not requiring an assessment and such individuals will receive the enhanced rate of the daily living component.

Compared to DLA, the PIP system has introduced tighter eligibility criteria and a points-based assessment to determine entitlement and amount of award. ^[65] Between April 2013 and April 2018, 25% of people who had pre-existing DLA entitlement were not awarded PIP following the reassessment process. ^[66]

On average, it takes 11 weeks for a decision to be made on a PIP claim from the date of initial application. ^[67] PIP claimants are notably less likely to receive the mobility component of the benefit than DLA claimants. This is shown in figure 2 which presents the proportions of PIP and DLA claimants receiving the different components of each benefit. However, PIP claimants are more likely to receive the higher Daily Living component than DLA claimants are to receive the Care component it replaces.

Figure 2 – DLA and PIP award components of people aged 16–64 in November 2017

Source: Stat Xplore

By April 2018, around 350,000 PIP claims have been made in Scotland, of which around 200,000 were awarded payment. Around 55% of those awarded payment were new claims, while the remainder had been re-assessed from DLA.

The UK Parliament’s Work and Pensions Committee has criticised several aspects of PIP and noted that there is consistent evidence that claimants do not trust assessors to record what happened during assessments accurately. ^[68]

The committee stated that, “the definition of an ‘acceptable’ report leaves ample room for reports riddled with errors and omissions” and noted that neither Atos nor Capita, the contractors assessing claims on the UK Government’s behalf, have ever met their target to have less than 3% of reports considered as being of ‘unacceptable’ quality. The Work and Pensions Committee also noted that in recent months the quality of 56% of Capita’s reports were found to be unacceptable.

When claimants are not satisfied with their assessment decision, the first step is to request a ‘mandatory reconsideration’. ^[69] By April 2018, a total of 781,000 PIP claims across Great Britain had undergone mandatory reconsideration. Of these claims, 141,000, or 18% resulted in a new decision. ^[70]

Once claimants have undergone a mandatory reconsideration, they are entitled to appeal to the tribunal. ^[71] It usually takes up to six months for an appeal to be heard by the tribunal. Table 6 presents data on PIP and DLA tribunals since 2013/14. ^[72]

Table 6 – UK PIP and DLA number of tribunals and share of decisions in favour of claimants by year

	2013/14	2014/15	2015/16	2016/17	2017/18
PIP tribunals	1,017	20,899	61,529	104,205	112,752
Cleared PIP decisions in favour of claimant	26%	50%	61%	65%	68%
DLA tribunals	46,869	7,983	7,497	8,166	9,708
Cleared DLA decisions in favour of claimant	42%	49%	56%	58%	60%

It is evident from the table that a significant number of claimants are successful in challenging their PIP and DLA award decisions, despite an application form detailing claimants health conditions, a follow-up assessment with a trained health professional and the mandatory reconsideration process.

In November 2017, the High Court ruled against the DWP, finding that restricting the PIP enhanced mobility rate to claimants whose difficulties with mobility were due to “reasons other than psychological distress” was illegal. ^[73] In January 2018, the UK’s Minister for Disabled People, Health and Work announced that the DWP will review the existing caseload (around 1.6 million claimants at that time), at an estimated cost of £3.7 billion. ^[74] The Office for Budget Responsibility ( OBR) estimated that disability benefit spending across Great Britain will on average be
£400 million per year higher between 2018-19 and 2022-23 as a result of this change. ^[75]

3.2.4 Employment and Support Allowance

Since 2011, an estimated 70,000 people who transferred onto Employment and Support Allowance ( ESA) have been underpaid due to errors made by the DWP. ^[76] These people were not paid the additional disability premiums they were entitled to as a result of the DWP placing them into contribution-based ESA, where additional disability premiums are not payable, rather than income-related ESA. Under income-related ESA, these people would have received additional premiums such as enhanced disability, severe disability, carer and pensioner premiums. Affected people lost an average of £5,000 per person, with some losing as much as £20,000. Between 2011 and 2017, Scotland made up around 11% of Great Britain’s ESA caseload, which suggests there could be around 8,000 affected people in Scotland. ^[77]

A recent report by the UK Parliament’s Committee of Public Accounts criticised the DWP for its “culture of indifference to underpayments”. ^[78] Their report suggests that the DWP was aware it was underpaying many ESA claimants since at least 2013. Despite this, DWP continued to underpay claimants for several years, before accepting the underpayments were a result of the department’s error and setting up a team to repay those underpaid.

Initially, the DWP planned to pay back only those claimants who were affected after 21 October 2014, having asserted that social security legislation prevented the DWP from paying back underpayments built up before this date.

That meant claimants would have lost around £100 million to £150 million of underpaid benefits. However, following widespread pressure, including legal action taken against the DWP by the Child Poverty Action Group, this decision was reversed, and the underpayments incurred as far back as 2011 will be repaid.[79, 80] The department expects to pay out up to £500 million of underpayments by April 2019, but do not plan to pay any compensation to reflect the value of lost passported benefits, like NHS prescriptions, dentistry treatment and free school meals.

3.3 What has been the overall change in social security spending?

Social Security spending in the UK has reduced significantly due to government decisions since 2010. In 2016 the OBR estimated the effect that the UK Government welfare reforms would have on social security spending, against a counterfactual scenario of what social security spending would have been without the reforms. The OBR found that social security spending across Great Britain would reduce by £19.6 billion in 2015/16, relative to the pre-existing system. ^[81] This spending cut was estimated to get larger over time, and by 2020/21 the OBR estimated the difference will be around £46.5 billion.

The starkest change is when social security is considered as a share of the size of the economy. The OBR’s 2016 report confirmed that in 2009/10 welfare spending represented 12.4% of Great Britain’s economic output. Their estimates indicate that share will be 10.3% by 2020/21. Unless the UK Government increases the generosity of the system in coming years, the 2.1 percentage point drop in the welfare spending share of GDP is estimated to be the biggest on record across two consecutive parliaments. ^[82] Spending to support children and working-age people would be at its lowest share of GDP since 1990/91.

Scottish Government analysts have estimated the financial impact of welfare reform on Scotland, based on the Scottish share of total UK spending on the benefit/tax credit associated with each welfare measure. ^[83] These calculations are based on the OBR’s 2016 estimates of the financial impact of UK Government welfare reforms since 2011/12, and UK Budget Policy Costings published by HM Treasury. Policies which do not apply in Scotland are excluded from the analysis. The full methodology used in preparing these estimates is presented in Annex II.
Figure 3 shows the estimated financial impact of UK Government welfare reforms in 2020/21.

Figure 3 – The estimated reduction in Social Security spending in 2020/21 from Coalition and Conservative government policy, at UK (left) and Scotland level (right).

Source: SG analysis based on OBR ‘Welfare Trends’ (2016) and HMT Policy Costings since 2015.

The financial impact of the Coalition Government’s welfare reforms has increased each year. From 2016/17 onwards, further welfare reforms introduced by the Conservative Government have contributed to a further reduction in benefit generosity. Successive UK Governments’ welfare reform policies are estimated to have reduced welfare spending in Scotland by over
£2.5 billion in 2018/19, relative to the absence of these reforms. This spending reduction
will reach around £3.7 billion by 2020/21. At the UK level, the welfare reforms have led to
a £32.4 billion reduction in welfare spending in 2018/19. By 2020/21 the combined impact
of the reforms is expected to have reduced benefit spending by around £46.5 billion across
the UK. A policy-by-policy breakdown of the impacts of individual welfare reforms is shown
in Annex II.

3.4 What has been the impact of welfare reforms on child poverty?

Following the publication of the Child Poverty (Scotland) Act 2017, Scotland became the only part of the UK with statutory targets to tackle child poverty.[84, 85] By 2030, the Scottish Government is required to ensure that fewer than:

• 10% of children live in relative poverty;
• 5% of children live in absolute poverty;
• 5% of children live in combined low income and material deprivation; and
• 5% of children live in families in persistent poverty.

Interim targets for 2023 are also set out in the Act.

However, research by Landman Economics commissioned by the Scottish Government forecast that, based on current and existing policy trajectories and without counter measures, all four of these poverty measures would increase by 2030 in Scotland. The report concluded that the “reduction in the real-terms generosity of the social security system between 2016/17 and 2020/21 as a result of planned reforms by the UK Government” was a key driver of these increased poverty rates. ^[86] Relative child poverty rates after housing costs (AHC) were forecast to increase particularly quickly for lone parents, families with three or more children and families with no parents in full-time employment. This is especially concerning given that lone parent and larger families were identified within a group of ‘priority families’ in the Scottish Government’s Tackling Child Poverty Delivery Plan. ^[87]

The Child Poverty (Scotland) Act was introduced because the Child Poverty Act 2010, which set income targets for 2020 for the whole of the UK, was repealed by the UK Government in 2016. The UK’s own welfare reforms since 2010 meant that it would be extremely challenging for the UK Government to meet its 2020 targets. The Equality and Human Rights Commission ( EHRC) found that welfare and tax reforms since 2010 have disproportionately reduced the incomes of people at the bottom of the income distribution. It also suggested that the impact of reforms on households with children was particularly concerning, and that the more children there are in a household, the greater the reduction in its income. By 2021/22, EHRC estimated that 80,000 children in Scotland would be brought into relative poverty AHC as a result of UK Government’s reforms since 2010. Across Great Britain, 1,360,000 children were estimated to be brought into relative poverty AHC. ^[88]

Like Landman Economics, EHRC find that the income-reducing effects of reforms are particularly severe on vulnerable groups. The study estimates that across Great Britain by 2021/22, tax and welfare reforms since 2010 will have led to large income reductions.

• Lone parent households will have lost an average of £5,250 per year, equivalent to around 19% of their net income. Those in the bottom fifth of the income distribution are estimated to have lost 25% of their income (p. 80).
• Households with one disabled parent and one disabled child will have lost an average of over £6,500 per year, equivalent to around 13% of their net income. For a household with non-disabled parents but with disabled children the average income loss is estimated at £4,000 per year (p. 75).
• Households with three or more children will have lost an average of over £5,150 per year. The benefit cap and 2CL policy particularly affected these households, significantly reducing their income relative to smaller families (p. 82).
• Households with a lone parent and at least one child aged under one will have lost an average of over £9,000 per year. By comparison, couples with at least one child aged under one are estimated to have lost around £3,500 per year on average whilst families with a lone parent where all children are aged over one are estimated to have lost around £4,600 (p. 210).

The average loss for each of these groups is stark. However, the negative impact is greater for families with multiple disadvantages. EHRC intersectional analysis has shown that, across Great Britain, households with a disabled lone parent caring for a disabled child will lose, on average, almost £10,000 per year in income, equivalent to almost 30% of their annual income (p. 15).

A UK-level paper by the Women’s Budget Group on intersectional impacts found that, due to welfare cuts since 2010, Black families in the bottom fifth of the income distribution will see their living standards fall by over £8,400 a year on average. Asian families in the bottom fifth of the income distribution were estimated to see their living standards fall by almost £11,700 per year. ^[89]

The Scottish Government has designed a number of policies which can help redress the negative impacts of welfare reforms on families with children, as laid out in the Tackling Child Poverty Delivery Plan. ^[90] This is a cross sector plan which aims to tackle the three drivers of poverty by increasing income from employment for lower income households; reducing costs of living and increasing social security. The plan covers a number of social security measures, including Best Start Grant, a more generous replacement for the UK Government’s Sure Start Maternity Grant and the Job Grant which will provide young parents who have been unemployed for six months or more with £250 when they return to work, to cover the basic costs of doing so. The key social security action is the introduction of a new income supplement for low-income families with children, to be delivered by 2022. ^[91] These policies demonstrate the Scottish Government’s commitment to doing more to reduce child poverty in the future. The Scottish Government’s existing policies which help to mitigate the effects of welfare reform are discussed in section 3.5.

3.5 How has the Scottish Government mitigated the effects of welfare reform?

In 2018/19, Scotland will spend over £125 million on mitigating the impacts of welfare reform and supporting people on low incomes. The breakdown of this spending is shown in table 7.

Table 7 – Scottish Government budget allocations in recent years, rounded to nearest £1 million

SG budget allocations on welfare reform impact mitigation and supporting those on low incomes
	2015/16	2016/17	2017/18	2018/19
Discretionary Housing Payment	£35m	£35m	£59m	£62m
Scottish Welfare Fund	£38m	£38m	£38m	£38m
Fairer Scotland	£8m	£8m	£7m	£26m
Total	£78m	£78m	£104m	£126m

Source: Scottish Government budget allocations

3.5.1 Discretionary Housing Payments ( DHP)

DHPs provide help with housing costs for those on HB or the housing element of UC. From 1 April 2017, these have been devolved to the Scottish Government, and continue to be administered by local authorities.

In the period 2015/16-2018/19, the Scottish Government has allocated a £190 million budget for DHPs to mitigate the bedroom tax. From 2017, in addition to funding the full mitigation of the bedroom tax the Scottish Government also provides funding for other DHPs, which are frequently made in mitigation of the impact of other aspects of welfare reform including changes to LHA and the Benefit Cap. The budget allocated to local authorities for other DHPs is £10.9 million in 2018/19. ^[92]

3.5.2 Scottish Welfare Fund

The Scottish Welfare Fund ( SWF) is delivered on behalf of the Scottish Government by local authorities. It was created to provide a safety net for people on low incomes. It is a national scheme that helps Scottish households in need, by the provision of Crisis Grants and Community Care Grants.

A Crisis Grant aims to help people on a low income who are in crisis because of a disaster (such as a fire or a flood) or an emergency (such as where money has been lost or an unexpected expense has arisen).

A Community Care Grant aims to help:

• people establish themselves in the community following a period of care;
• people remain in the community rather than going into care;
• people establish or maintain a home in the community following an unsettled way of life;
• families facing exceptional pressures with one-off items; and
• people to care for a prisoner or young offender on release on temporary licence.

The SWF is a discretionary, budget-limited grant scheme that prioritises applications according to need. Delivered since April 2013, the scheme was made permanent in April 2016 by the Welfare Funds (Scotland) Act 2015 and subsequent legislation. The Scottish Government provides an annual grant of £38 million to local authorities to deliver the scheme.

Between April 2013 and March 2018, local authorities were awarded £164.8 million of grants. These grants were made to 296,520 vulnerable households across Scotland (a third of which were households with children).

In 2017/18, local authorities received 65,035 applications for Community Care Grants, and awarded £23.6 million. Local authorities also received 174,155 applications for Crisis Grants during this time, and awarded £9.1 million.

3.5.3 Fairer Scotland

In 2018/19, the Scottish Government will spend almost £26 million on measures to build a fairer and more prosperous Scotland, an increase of almost £19 million on 2017/18.

The key actions within this funding include:

• providing £1 million to tackle food poverty, investing £800,000 in Scotland’s Fair Food Transformation Fund and £200,000 in Fareshare;
• investing over £3.6 million in advice services, helping families in need to maximise their incomes and tackle the impact of welfare reform;
• £1.5 million investment in the Financial Health Check guarantee to help low income families maximise their incomes and avoid the ‘poverty premium’ of higher costs for essential goods and services, to be launched in 2018; and
• £5.7 million investment in the provision of free sanitary products, supporting those who menstruate and reducing the anxiety experienced by those who struggle to find the money to buy these essential items.

The Child Poverty Delivery Plan will cover the period 2018-22 and is supported by a new £50 million Tackling Child Poverty Fund. Employability is a key theme, following advice from the Poverty & Inequality Commission. Our new actions on Fair Work include investing £12 million of new funding to enable local areas to deliver additional intensive in and out of work employment support for low income parents who are either ineligible or not ready for Fair Start Scotland and other national/local programmes. This support will help those parents who face barriers that prevent a return to work, with a particular focus on our priority families. It will also help parents already in employment to stay in work and progress through a rewarding career.

3.5.4 Council Tax Reduction

Council Tax Benefit ( CTB) was a social security benefit administered by the DWP which helped claimants meet their Council Tax liabilities. The UK Welfare Reform Act 2012 abolished CTB from April 2013. After this the UK transferred funding equivalent to their forecasted CTB expenditure in Scotland, less 10%, to the Scottish budget. The Council Tax Reduction scheme reduces the council tax liability of households, taking into account their income and any relevant household characteristics.

Between 2013/14 and the end of 2018/19, we will have invested over £1.4 billion in the Council Tax Reduction Scheme ( CTR). There were around 485,000 CTR recipients in Scotland in March 2018, with 58% (280,240 claimants) being in one of the 30% most deprived areas in Scotland. A total of 16% (77,800 claimants) were lone parents. Table 8 shows the level of funding the Scottish Government has allocated to CTR in recent years.

Table 8 – Scottish Government expenditure on Council Tax Reduction in recent years, rounded to nearest
£1 million

SG spending on Council Tax Reduction
	2015/16	2016/17	2017/18	2018/19
Council Tax Reduction expenditure	£343m	£343m	£351m	£351m

Source: Scottish Government budget allocations