Devolved Social Security assistance: up-rating for inflation in 2024-2025

2. Background

2.1 In 2019, the Scottish Government prepared an analytical report that provided a detailed review of relevant inflation measures to inform the options available to Scottish Ministers for up-rating devolved social security assistance. The analytical report explored in depth the methodologies of inflation measures and drew on a range of evidence including recommendations from the UK Statistics Authority and the Office for National Statistics, an independent review led by the Director of the Institute of Fiscal Studies^[6] and the House of Lords Economic Affairs Committee's report 'Measuring Inflation'^[7].

2.2 The analytical report informed a policy paper that set out the Scottish Government's approach to up-rating social security assistance. Both papers^[8] were provided to the Social Security Committee and the Scottish Commission on Social Security on 2 September 2019.

2.3 The policy paper recommended that the annual September rate of the Consumer Price Index (CPI) be used for up-rating devolved social security assistance in the short-term, with the assistance payment rounded to the nearest five pence. The annual rate of CPI to September 2023 published on 18 October 2023 was 6.7%.

2.4 Overall, the Scottish Commission on Social Security was supportive of the Scottish Government's up-rating policy of using the annual September CPI rate to up-rate social security assistance at least in the short-term. The Scottish Commission on Social Security set out recommendations^[9] for the Scottish Government approach to benefit up-rating in terms of the significance of Social Security principles and human rights, the shorter-term and the longer-term approach to up-rating. The Scottish Government responded^[10] to these recommendations and will keep the recommendations under consideration to inform the development of future up-rating as more forms of assistance are introduced and reported on.

2.5 The Social Security Committee noted the Scottish Government's position on up-rating of devolved assistance and had no further views to report beyond the discussion at the Committee on 10 October 2019^[11].

2.6 On 29 January 2024, the Scottish Government published a report setting out a Multi-Criteria Decision Analysis in accordance with HM Treasury Green Book guidance of the options of inflation metric and period available to up-rate devolved social security assistance. After assessing the various options against a set of carefully chosen criteria, it was recommended that devolved social security assistance should be up-rated in April 2024 (where Scottish Ministers are required to up-rate under section 86B or where they choose to do so for those benefits which are discretionary to up-rate) using the annual September 2023 rate of CPI, ranking highest in the scoring of multi-criteria options.

2.7 The following sections provide detail of how the inflation-adjusted levels of assistance were calculated, what the inflation-adjusted levels of assistance would be and what the Scottish Ministers intend to do.