Every child, every chance: tackling child poverty delivery plan 2018-2022

Chapter 4: Social Security

"Children would be worried about affording basic things."
Member of the Children's Parliament, age 9

Previous experience at UK level in tackling child poverty has demonstrated that social security is an important part of the solution. However, it is only one part of a much bigger picture and cannot solve the causes of poverty. We will not successfully meet the targets if we do not at the same time address the wider issues of increasing people's incomes via employment and reducing household costs.

The priority for the Scottish Government within this parliamentary term is the safe and secure delivery of the 11 benefits that will be devolved to Scotland; the biggest transfer of powers since devolution. The additional £3.3 billion in spending by the end of this Parliamentary term may only be 15% of total social security expenditure in Scotland but it is vital for the 1.4 million people in this country who depend on the help and support these benefits provide. We are absolutely committed to ensuring that individuals continue to get that financial support on time and in the right amount and that the complex transfer of these benefits, for them, is a simple and seamless transition.

We will also use this parliamentary term to ensure we have improved the benefits we will be responsible for. From increasing Carer's Allowance, to introducing the Best Start Grant, to uprating disability benefits and transforming the disability assessment process. We will also extend the eligibility for the Winter Heating Allowance to families with children in receipt of the highest care component of Disability Living Allowance. We want to better meet the needs of the people of Scotland and ensure that our new Scottish social security system treats people with dignity and respect.

We will also be realistic about what is deliverable now, and what might be deliverable in the future as part of the journey towards achieving the child poverty targets. This section offers a range of new and ambitious ideas and policy proposals demonstrating how we will use new devolved powers to support those on low incomes. These are new policies which will increase incomes for families with children and for carers, helping hard-pressed families and ensuring every child in Scotland has the best possible start in life. That vital support will continue through our proposal for a new income supplement for families. This promises to be a powerful tool in tackling child poverty in the future and we want to ensure that scarce resources are used efficiently and effectively to get money to those who need it most, minimising bureaucracy and maximising incomes.

We need a holistic approach to effectively tackle poverty in Scotland. Social security is one part of a much bigger picture. We want to avoid the mistakes the UK Government made in its previous efforts to tackle child poverty in the 2000s: placing too much emphasis on using social security to top up low wages; paying insufficient attention to the role of employers in supporting decent earnings, skills development and progression; not investing in the infrastructure - affordable childcare, for example - needed for a dynamic labour market; and failing to secure a sustainable and inclusive economy which enables families and local communities to withstand economic shocks.

The benefits being devolved to Scotland are not income replacement benefits and so are less effective as a tool to target and tackle poverty. We also have no responsibility for employment law, including the National Minimum Wage, and policies that could protect workers from insecure, low paid employment. In addition, under current arrangements Scottish people pay the majority of their taxes, including National Insurance Contributions, to the UK Exchequer to provide them with a social security safety net should they need it, but when benefits are devolved the fiscal transfer is limited to what the UK Government currently spends on the transferred benefits. Moreover, while new tax powers give some levers to raise revenues they are not sufficient to row back a decade of austerity imposed by the UK Government. Without control over the fiscal levers underpinning the social security system, this fundamentally limits the Scottish Parliament's ability to build a system that can meet emerging need, go beyond that offered in the rest of the UK and deliver on the underlying rationale of devolution - that Scotland can choose its own way and has the powers to make policy choices of its own.

Further devolution of social security powers to the Scottish Parliament, along with the associated fiscal levers, would enable us to gain control over the benefits that put the most money into family's pockets - Universal Credit and Child Benefit. The current system is causing unnecessary hardship with the introduction of Universal Credit causing increased debt, rent arrears and anxiety for many people. Further powers would enable us to ensure that these benefits (or their replacements) are delivered in a way that is consistent with the culture and principles that Scotland is putting at the heart of its social security system - dignity, fairness and respect for the people who rely on this support.

Further powers would also allow us to target support in a way that more effectively tackles child poverty, focussing on key high risk groups and lifting families with children out of poverty.

We think these are compelling reasons as to why it no longer makes sense for social security for Scotland to be delivered by a Westminster government and will be making a strong case to the UK Government for full devolution of social security.

A New Income Supplement

As we have said above, social security on its own is not the answer, but it does play a key role in meeting our ambitious targets. That's why we're making clear within this first Delivery Plan that we are absolutely committed to introducing a new income supplement for low income families. We welcome the detailed advice of the Poverty and Inequality Commission and will now move to exploring options that will deliver an income supplement for children and families that need it most. We will work towards introducing the supplement within the lifetime of this Delivery Plan, taking appropriate steps to ensure that:

1. The additional income is targeted on those families who need it, and that it's therefore helping to lift the maximum number of children out of poverty;

2. There is a robust and viable delivery route to get the additional income to those families, and that the delivery costs are reasonable.

This will be a substantive undertaking, given the potential scale and reach of the supplement. To move forward, we will examine all available options, including the Commission's advice in relation to topping up Universal Credit ( UC) but also looking in more detail at the caveats stated by the Commission in terms of deliverability and costs. We will also examine what the new Social Security Agency could do through a Scottish Government supplement.

As the Commission notes in its advice, in developing options on how best to use social security powers, we will need to consider a range of issues, including the cost and complexity of delivery, potential take-up rates, income security, and potential disincentives to move into work or increase earnings as well as the likely impact on households. We also want to make sure that any solution uses our resources effectively and efficiently so that as much money as possible goes to those who need it most.

The current devolution settlement means that if we choose to use UC full service as a mechanism to top up incomes, we will be reliant on the Department for Work and Pensions ( DWP) delivering the supplement for us, including scheduling Scottish requirements into their work programme, which is often subject to change and delay. This will introduce constraints, complexity and, importantly, additional cost into the process, over which Scottish Ministers have no control. In addition, Scottish Ministers will have to rely on DWP to make any future or subsequent changes they may wish to make to the supplement, which will cost the Scottish Government each time.

As the Commission and many other commentators have noted, UC is not working well and is causing people on low incomes considerable hardship. We believe it is fundamentally flawed and have called for its roll out to be halted, amid growing evidence of increased rent arrears, debt and food bank use among Scottish households experiencing extreme hardship where UC full service has been implemented. The reduction of support for children through policies like the widely criticised two-child limit and rape clause will increase child poverty levels, according to the Institute for Fiscal Studies. The Scottish Government has limited responsibility for some administrative aspects of UC, and has used those powers to better meet the needs of households on UC in Scotland, but we have no control over UC policy, which means that we could be subject to DWP policy changes down the line that will impact on the new income supplement.

We want to weigh all this against other options open to us, including what our own Social Security Agency could do to introduce a Scottish supplement. In this, we would want to consider how we could identify eligible individuals or households and the potential reach and impact of a Scottish supplement. We will want to consider which options offer best value for money and which make the most impact on child poverty figures. We would want to look into how often payments should be made and administered in the most cost effective way. This could be monthly, or we could look at a model similar to Carers Allowance Supplement where people are paid a number of times throughout the year. We would also want to consider how this supplement might complement other support provided to families with children in Scotland, including other Scottish benefits like Best Start Grant, the expansion of childcare and School Clothing Grants.

The Social Security Agency will have a local footprint in communities across Scotland, which gives us an opportunity to reach the people we are trying to help, offering advice and support, signposting people to the services they need and, perhaps most importantly, treating Scottish families with dignity and respect.

However, if analysis shows that asking DWP to top up UC is the most effective use of resources, and the most effective way to target the families we are keen to help, then of course we will start negotiations with the UK Government to achieve this.

We will also ensure all this work is done in conjunction with what would be needed in terms of legislation - this Government believes that it is right and proper that additional primary legislation should be required for the creation of any new benefit, to ensure the Scottish Parliament has the opportunity to fully scrutinise proposals. We will also consider what would be needed in terms of agreements with any other agencies or governments.

All of this analysis will take time, and we will want to work with stakeholders to develop and then consult on options. Our focus at present is on the passage of the Social Security (Scotland) Bill and establishing the new Social Security Agency. We will then start delivering Wave 1 benefits as promised this year and we will also announce plans for delivering Wave 2 benefits. While the safe and secure transition of the benefits being devolved under the Scotland Act 2016 is, therefore, a priority for this parliamentary term, we will start working on the options for the income supplement this year.

We will provide an update in the first progress report due next year.

Resources

Resources for this work will be considered in future annual budget rounds.

Impact Summary

Potential for impact on all four targets through income from social security.

A New Best Start Grant

From summer 2019, we will provide a new grant providing eligible families with £600 on the birth of their first child and £300 on the birth of any subsequent children, plus two further payments of £250 per child around the time of nursery and a child starting school

In addition to the income supplement, the Scottish Government is already planning a range of measures designed to boost the incomes of families in need of support, using the limited powers we have to better support families with children. Where the Scottish Parliament has devolved powers over benefits, we are showing that we will use them, to make a real and tangible difference to people's lives.

The Best Start Grant ( BSG) will provide lower-income families with financial support during the key early years of a child's life. Introduced by summer 2019, the Grant will replace and expand upon the UK Government's previous programme by:

• providing eligible families with £600 on the birth of their first child and £300 on the birth of any subsequent children ^[9] ;
• not putting a limit on the number of children that are supported;
• giving eligible families two further payments of £250 around the time of nursery and a child starting school, to recognise the additional financial costs during these key transition periods;
• expanding on the DWP eligibility to include anyone on a tax credit or housing benefit, as well as any parent under 18; and
• extending the application window for the maternity payment of BSG from 3 to 6 months after birth, giving parents longer to apply.

This kind of support in the early years is particularly important for all our priority families. Coupled with the practical help and goods and equipment from the baby box, introduced in 2017 for all new-borns, this additional income can make a big difference at key milestones.

In line with the Commission's recommendations, Scottish Government analysts are currently considering options for monitoring and evaluation to help us understand how the benefit is working and assess its initial success.

Resources

The annual investment in Best Start Grant payments is estimated at £17 million ^[9] .

This does not include implementation, set up and administration costs.

Impact Summary

Potential for impact on all four targets through income from social security. In particular, this policy is likely to impact on the low income and material deprivation measure.

New Support for Carers

We will provide a range of financial and other support for carers, with a particular focus on young carers.

Carers are often living on low incomes and have poorer outcomes on average than the rest of the population. Our new social security powers provide the opportunity to boost their incomes. An additional payment will be made to carers of more than one disabled child by the end of this Parliamentary term and, later this year, the Scottish Government will increase the value of Carer's Allowance (currently £62.70 per week) to the rate of Jobseeker's Allowance (currently £73.10 per week), representing an increase of 13% in 2018-19. This Carer's Allowance Supplement will be introduced from this summer, backdated to April, and paid twice a year as a lump sum payment. When the Scottish Social Security Agency takes over delivery of Carer's Allowance the full allowance will also be uprated in line with inflation.

These payments can help support carers, often in households with children, look after their own health and well-being. This in turn could have a positive impact on children during their growth, development and learning.

We will also introduce support targeted specifically at younger carers. From 2019 a new Young Carer Grant of £300 each year will be paid to carers aged 16 and 17, and 18 if still at school, who have significant caring responsibilities but are not in receipt of Carer's Allowance. The aim of the grant is to help young carers improve their quality of life, health and education outcomes, with funds expected (but not directed) to be used to pay for short breaks, or to purchase goods and services. This is part of a new package of support for young carers, including free concessionary bus travel for grant recipients (after piloting from 2020-21) and a bespoke carers' element to the Young Scot Entitlement Card, providing non-cash benefits for young carers aged 11-18.

While our priority at the point of taking over delivery of social security benefits is rightly, safe and secure transition, for the longer term, the independent Disability and Carer Benefits Expert Advisory Group established by the Minister for Social Security will provide advice on options to make further changes to carer benefits which support carers of all ages.

Resources

Young Carer Grant estimated at £500,000 per annum.

Carer's Allowance Supplement - in 2018-19 we will invest £35 million.

(These do not include implementation, set up and administration costs.)

Carers of more than one disabled child - policy detail still to be finalised, therefore estimates not available.

Impact Summary

Potential for impact on all four targets through income from social security.

A New Job Grant

We will provide £250 for young parents out of work for six months to cover the basic costs of starting a new job.

We will introduce a new grant targeted at young people aged 16-24 who are starting work after a period of six months or more unemployed. The Scottish Government has made a commitment to a cash payment of £250 for young parents ^[10] and a three month bus pass.

The Job Grant aims to meet the immediate costs of transitioning into employment, as well as contributing towards longer-term outcomes, such as improvements in employment and health.

The Job Grant is a new policy and, in line with the Commission's recommendation, we will review its impact on young people, and where possible their families, once it has been in operation for a sufficient amount of time to test its impact fully.

We are currently working with stakeholders, including young people, to develop the detail of the eligibility criteria and how the travel element might work in practice, as well as undertaking impact assessments.

Resources

The overall costs, including implementation, set up, and administration will be informed by the Job Grant impact assessments and the final eligibility criteria.

Impact Summary

Potential for impact on all four targets through income from social security, and should support employment and earnings.

Widened Funeral Expense Assistance Eligibility

From summer 2019, we will introduce Funeral Expense Assistance ( FEA) to help more people, including low income families, with funeral costs, thereby reducing funeral poverty.

FEA will replace the current DWP Funeral Payment in Scotland. The Scottish Government will expand on current DWP eligibility to help around 2,000 more people each year. To support widened eligibility, the Scottish Government expects to invest an additional £3 million per annum above current DWP expenditure.

We will improve awareness of the benefit and look to improve the parts of the process that people find difficult at present. We will process applications in 10 working days, reducing the need for borrowing in the short term and the stress that this can cause.

Resources

To support widened eligibility, the Scottish Government expects to invest an additional £3 million per annum above current DWP expenditure (a 60% increase). (This does not include implementation, set up and administration costs.)

Impact Summary

Potential for impact on all four targets through income from social security.