Publication - Corporate report

Fiscal framework outturn report: 2020

Published: 1 October 2020
Directorate: Tax Directorate
Topic: Economy, Money and tax, Scottish Budget
ISBN: 9781800041226

The Fiscal Framework Outturn Report 2020 publishes outturn and reconciliation information for Scottish Income Tax, Scottish Landfill Tax, Land and Buildings Transaction Tax and devolved Social Security benefits, as well as updates on borrowing and the Scotland Reserve.

Supporting documents

7. Social Security

7.1 This section contains the latest outturn and forecasts available on expenditure and BGAs for Social Security benefits from 2019-20 onwards, and the net effect on the Scottish Budget. This report uses provisional 2019-20 outturn expenditure data for Carer’s Allowance. The final expenditure data will be published as part of Social Security Scotland’s Annual Reports and Accounts later in the year.

7.2 For social security benefits, forecasts are of spending rather than revenues and Block Grant Adjustments are additions rather than deductions. Otherwise, the process of reconciling forecasts to outturn data functions in the same way as for the fully devolved taxes.

7.3 Executive competence for Attendance Allowance, Disability Living Allowance, Industrial Injuries Disablement Allowance, Personal Independent Payment and Severe Disablement Allowance were transferred at the 2020-21 Scottish Budget and therefore BGAs for these benefits were calculated for the first time.

7.4 As the new benefits were only introduced in 2020-21, the first set of in-year BGA reconciliations will not take place until later this year, impacting the 2020-21 Budget. Carer’s Allowance, which has been in operation since 2018-19, is the only Social Security benefit to require a reconciliation from 2019-20.

7.5 Table 15 shows the SFC’s latest expenditure forecast for the Social Security benefits that have been devolved so far and the Block Grant Adjustment estimates provided at the UK Budget 2020.

Table 15: Forecasts of Social Security Expenditure and Block Grant Adjustments (£ million)
		Outturn		SFC Forecast
		2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
Carer's Allowance	Expenditure	-152†	-284†	-292	-311	-336	-355	-375
	BGA	157†	283†	292	307	328	352	379
	Net effect on Budget	+5†	-2†	+1	-4	-9	-3	4
Attendance Allowance	Expenditure	N/A	N/A	-532	-546	-562	-582	-601
	BGA	N/A	N/A	544	560	577	599	616
	Net effect on Budget	N/A	N/A	+12	+14	+16	+17	+15
Personal Independence Payment	Expenditure	N/A	N/A	-1,583	-1,650	-1,714	-1,776	-1,841
	BGA	N/A	N/A	1,481	1,602	1,763	1,936	2,052
	Net effect on Budget	N/A	N/A	-102	-47	+49	+160	+211
Disability Living Allowance	Expenditure	N/A	N/A	-718	-720	-714	-704	-692
	BGA	N/A	N/A	626	549	449	332	284
	Net effect on Budget	N/A	N/A	-92	-171	-266	-372	-408
Industrial Injuries Disablement Allowance	Expenditure	N/A	N/A	-80	-79	-78	-78	-77
	BGA	N/A	N/A	81	80	80	80	79
	Net effect on Budget	N/A	N/A	+1	+1	+2	+3	+2
Severe Disablement Allowance	Expenditure	N/A	N/A	-7	-7	-6	-6	-5
	BGA	N/A	N/A	8	8	8	7	7
	Net effect on Budget	N/A	N/A	+1	+1	+1	+2	+2
Total Social Security Benefits	Expenditure	-152†	-284†	-3,213	-3,312	-3,411	-3,500	-3,592
	BGA	157†	283†	3,033	3,107	3,204	3,307	3,417
	Net effect on Budget	+5†	-2†	-180	-206	-207	-193	-175

† Indicates outturn; BGAs are shown as positive as they represent additional funding.

Carer’s Allowance

7.6 There is no reconciliation required for Carer’s Allowance expenditure, as the Scottish Government manages any variance between forecast and actual expenditure in year.

7.7 As with the fully devolved taxes, the BGAs for benefits are reconciled in two stages. An in-year reconciliation is made within the financial year at the UK Autumn Budget on the basis of the most recent OBR forecasts, and once outturn data is available in the following financial year, a final reconciliation is applied to the block grant for the financial year thereafter.

7.8 Table 16 shows the provisional net budget position for Carer’s Allowance for 2019-20.

Table 16: 2019-20 Carer’s Allowance Provisional Outturn Compared with Forecasts (£ million)
	Expenditure	BGA	Net effect on Budget
Forecast as of Budget Act 2018	-283.1	289.6	+6.5
Provisional Outturn	-284.4	282.6	-1.7
Provisional Outturn against forecast	-1.3	-7.0	-8.2

7.9 A negative BGA reconciliation of £3.3 million will be applied in 2021-22, as shown in table 17. £3.7 million was subtracted in the in-year reconciliation but the outturn in table 16 shows that the ultimate reconciliation amounts to £7.0 million, leaving a final reconciliation £3.3 million.

Table 17: Carer’s Allowance 2019-20 BGA Reconciliation (£ million)
Forecast BGA - UK Autumn Budget 2018	289.6
Forecast BGA – Scottish Budget 2020	285.9
In-year reconciliation applied to 2020-21 Block Grant*	-3.7
Outturn BGA	282.6
Reconciliation to 2021-22 Budget	-3.3

* 2019-20 in-year reconciliation delayed to impact 2020-21 due to late UK Budget.

7.10 The latest forecasts of the net effect on budget for 2020-21 Social Security Benefits are shown in the tables below. These figures are indicative only. As with the fully devolved taxes, there have been no updated forecast of expenditure since the Scottish Budget in February 2020. The difference between the BGA forecasts in the table reflects the difference between the provisional BGA on which the Scottish Budget was based in February 2020 and the updated BGA position as of the UK Budget in March 2020. Updated BGA forecasts will be provided for the next Scottish Budget which will form the basis for the in-year BGA reconciliation.

Table 18: Forecast Carer’s Allowance Budget Position for 2020-21 (£ million)
	Expenditure	BGA	Net effect on Budget
Forecast as of Budget Act 2020	-291.6	303.3	+11.6
Latest Forecast	-291.6*	292.3	+0.6
Change	N/A	-11.0	-11.0