Analysis of written responses to the consultation on social security in Scotland

20. Uprating

Proposals for uprating

20.1 The Scottish Government set out its proposals for uprating in Part 3 of the consultation document.

Question - What are your views on the best way to ensure that devolved benefits keep pace with the cost of living?

20.2 There were 126 responses to this question (78 organisations and 48 individuals).

RPI or CPI

20.3 There were varying views. Many respondents supported the use of the Retail Price Index ( RPI) as opposed to the Consumer Price Index ( CPI). The RPI was felt by many to provide a more accurate measure of the real cost of living, due to including housing costs. Some respondents indicated that the use of the CPI across the UK would result in disadvantage and inequality.

"Parkinson's UK is disappointed that the Scottish Government plans to use the Consumer Price Index ( CPI) as the basis for uprating benefits, as this measure consistently underestimates the true costs of inflation. The latest figures from ONS show that in the last year, CPI rose by 1%, compared with 2% for the Retail Price Index ( RPI), the measure by which benefits were calculated until 2010. This makes a significant difference to the value of benefits for people who are living on very low incomes."
Parkinson's UK in Scotland

"The ALLIANCE recommends that newly devolved payments should be uprated in line with the Retail Price Index (the inflationary measure with constitutes the most accurate measure of the real cost of living)."
Health and Social Care Alliance Scotland (The ALLIANCE)

20.4 However, some local authority organisations and COSLA were content with the use of the Consumer Price Index and cautioned that decisions needed to be made in line with available funding.

"If the general acceptance is that CPI is the "cost of living" inflation measure, then this is an option on its own… This is in line with the UK approach and would ensure a fiscal link with the uprating of the funding due to come to the SG from the UK Government. If Scotland adopted a more generous uprating, then this would have to be funded at the expense of something else."
COSLA

"We must also be wary of agreeing a blanket approach to uprating when the public finances will inevitably require savings to be made across the public sector. An automatic uprating to a benefit could realistically result in a cut to e.g. NHS or Council settlements. This would present a "perverse" outcome of being unable to support the very people we recognise as being in most need."
East Ayrshire Council

Targeted and flexible approaches

20.5 Some respondents talked of more flexible approaches, with uprating of different benefits being done differently - and with targeted approaches to reduce poverty, child poverty, inequality for disabled people and other inequalities. Some were keen to see specific targeted increases aimed at closing the poverty gap. While some felt that meaningful regular reviews should be put in place to allow targeted increases, others felt that the level of benefit should be reviewed at the outset to ensure it was adequate - for example, for funeral payments or carers. A few mentioned particular costs which had risen above inflation - such as the cost of energy, funerals and rural living - which may require specific consideration.

"Whilst we appreciate that there are limited funds and therefore limitations on to what extent payments can be increased we would advocate a creative and flexible approach which, whilst targeting specific groups, does not leave others behind."
Glasgow Council for the Voluntary Sector

Other options

20.6 Some respondents highlighted other potential options for uprating, including:

• a double or triple lock - similar to the uprating on pensions (at the highest of the growth in average earning/ CPI or RPI/ or 2.5%);
• uprating at the same rate as the Living Wage increases;
• a defined minimum percentage increase, with discretionary increases above this (perhaps applied to certain benefits); or
• uprating in line with the Minimum Income Standard ( MIS) developed by the Joseph Rowntree Foundation and determined annually.

20.7 Many respondents felt that whichever option was adopted, benefits should not be either frozen or reduced. A few also highlighted the need to take care that uprating of devolved benefits did not result in individuals receiving a lower level of reserved benefits as a result.

"Our recipients stated the need for yearly increases in benefits awards. There was no consensus between recipients on a link with the consumer price index for benefits. However, everyone agreed the process to settle rises should involve the views of disabled people."
ILF Scotland

"It is essential that benefits are adequately uprated to reflect increases in costs such as inflation. Benefits should also be reviewed as required to ensure that they remain relevant to actual living costs and support a suitable standard of living for claimants in line with the Scottish Government's vision and principles."
Chartered Institute of Housing Scotland

Question - Are there any devolved benefits in particular where uprating based on a measure of inflation would not be effective? If so, please explain which benefits and why.

20.8 There were 61 responses to this question (37 organisations and 24 individuals).

20.9 The most commonly cited exceptions were:

• Funeral payments - with many respondents believing that funeral costs had increased substantially in recent years, and that the payment should be more in line with actual costs; and
• Cold Weather / Winter Fuel Payments - which many felt should be related to the cost of energy (which some indicated could be volatile).

20.10 A few respondents mentioned that there may also need to be different approaches for:

• Discretionary Housing Payment - which may need to be more closely linked to housing inflation;
• IIDB - which may need to be more closely linked to wages;
• PIP core component - which may need to be more closely linked to the cost of care; and
• Best Start and Job Grant - which may not need reviewed so regularly.

"There should be additional flexibility to uprate specific benefits for carers, disabled and older people on areas where they have additional usage or costs above that of the rest of the population. This might, for example, include energy and fuel costs. In these circumstances, it may be appropriate to uprate above RPI."
The National Carer Organisations

20.11 However, a few respondents felt that any differences in how devolved benefits were uprated would be unfair, and a few had concern that benefits reflecting costs may result in some costs being artificially increased.