Fiscal framework outturn report: 2022

7. Social Security

53. This section contains the latest outturn and forecasts available on expenditure and BGAs for Social Security benefits from 2021-22 onwards, and the net effect on the Scottish Budget. This report uses provisional 2021-22 outturn expenditure data for Scottish Social Security benefits expenditure; the final outturn data will be available as part of Social Security Scotland’s Annual Reports and Accounts, published by November 2022. The Block Grant Adjustments are based on provisional UK Government Social Security benefits expenditure; final outturn data will be confirmed when the UK Government publishes its Local Authority, Parliamentary, and Country and Regional Tables 2021/22 later this year.

54. For Social Security payments, forecasts are of spending rather than revenues and Block Grant Adjustments are therefore additions rather than deductions. Otherwise, the process of reconciling forecasts to outturn data functions in the same way as for the fully devolved taxes.

55. Table 14 shows the SFC’s latest expenditure forecasts for the Social Security benefits expenditure that have been devolved so far, as published in the SFC’s Scotland’s Economic and Fiscal Forecasts on 31 May 2022^[12], and the Block Grant Adjustment estimates provided at the UK Spring Statement on 23 March 2022. The forecast shows increasing divergence between Social Security benefits expenditure and BGAs which is largely driven by Scottish Government policy decisions to provide a more compassionate and generous benefits system.

Note 1: This table details only the forecast expenditure for the Social Security benefits with a corresponding BGA and does not include: (i) forecasts for smaller benefits, funding for which is baselined into the core Block Grant, nor (ii) newly introduced Scottish benefits, which are funded from within the Scottish Government's Budget, namely: Best Start Foods, Best Start Grant, Carer’s Allowance Supplement, Child Winter Heating Assistance, Funeral Support Payment, Scottish Child Payment, Discretionary Housing Payments, Employability Services, Self-Isolation Support Grant, Scottish Welfare Fund.

Note 2: There are minor differences in the methodology used to calculate the SFC’s spending forecasts and the BGA forecasts, which are based on expenditure outturn and OBR forecasts, so comparisons should be interpreted with caution.

Note 3: Carer's Allowance Expenditure Forecast does not include Carer's Allowance Supplement (CAS) expenditure, whereas the Scottish Fiscal Commission includes CAS as part of their Scottish Carer's Assistance indicative forecast.

Note 4: Adult Disability Payment and Winter Heating Payment are the replacement benefits for Personal Independence Payment and Cold Weather Payment respectively.

Note 5: SFC Forecasts for Disability Living Allowance Expenditure from 2021-22 to 2027-28 includes forecast expenditure for the Scottish replacement benefit, Child Disability Payment.

Note 6: BGAs for Industrial Injuries Disablement Scheme includes Industrial Death Benefit.

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

56. There are no reconciliations required for Scottish Social Security benefits expenditure, as the Scottish Government manages any variance between forecast and actual expenditure in-year.

57. However, as with the fully devolved taxes, the BGAs for benefits do undergo reconciliations and are reconciled in two stages. An in-year reconciliation is made within the financial year at the UK autumn fiscal event 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 (i.e two years after the Budget was set).

58. Table 15 shows the provisional net Budget position for Social Security benefits expenditure for 2021-22.

Note 1: There are minor differences in the methodology used to calculate the SFC’s spending forecasts and the BGA forecasts, which are based on expenditure outturn and OBR forecasts, so comparisons should be interpreted with caution.

Note 2: Adult Disability Payment is the replacement benefit for Personal Independence Payment

Note 3: Outturn and SFC Forecasts for Disability Living Allowance includes expenditure for Disability Living Allowance (Child). This will continue until case transfer to the Scottish replacement benefit, Child Disability Payment, is complete.

Note 4: BGAs for Industrial Injuries Disablement Scheme includes Industrial Death Benefit

Figures may not sum due to rounding.

59. Table 15 shows that the difference between the BGAs used to underpin the Scottish Budget 2021-22 and the provisional outturn BGAs for total Social Security benefits expenditure is positive £47.0 million. As shown in Table 16 below, £3.0 million was added to the Scottish Budget as an in-year reconciliation in 2021-22 and a further provisional final reconciliation of positive £43.9 million is required, which will be applied to the Scottish Budget 2023-24. The net effect of the in-year reconciliation and the final reconciliation equates to the £47 million referenced above.

* BGAs set at Scottish Budget 2021 rather than UK Budget due to later than anticipated UK Budget

Note 1: Adult Disability Payment is the replacement benefits for Personal Independence Payment.

Note 2: Outturn and SFC Forecasts for Disability Living Allowance includes expenditure for Disability Living Allowance (Child). This will continue until case transfer to the Scottish replacement benefit, Child Disability Payment, is complete.

Note 3: BGAs for Industrial Injuries Disablement Scheme includes Industrial Death Benefit.

Figures may not sum due to rounding.

60. The latest forecasts of the net effect on the Scottish Budget 2022-23 for Social Security benefits are shown in Table 17 below. These figures are indicative only. There have been no updated OBR forecasts since the UK Spring Statement in March 2022 nor SFC forecasts since May 2022 and therefore the latest forecast net effect on the Scottish Budget is indicative.

Note 1: There are minor differences in the methodology used to calculate the SFC’s spending forecasts and the BGA forecasts, which are based on expenditure outturn and OBR forecasts, so comparisons should be interpreted with caution.

Note 2: Adult Disability Payment and Winter Heating Payment are the replacement benefits for Personal Independence Payment and Cold Weather Payment respectively

Note 3: Outturn and SFC Forecasts for Disability Living Allowance includes expenditure for Disability Living Allowance (Child). This will continue until case transfer to the Scottish replacement benefit, Child Disability Payment, is complete.

Note 4: BGAs for Industrial Injuries Disablement Scheme includes Industrial Death Benefit

Figures may not sum due to rounding.

61. The change in the forecasts for the BGA reflects the difference between the BGA used in the Budget Act 2022 and the forecast of the BGA provided at the UK Spring Statement in March 2022. The actual in-year reconciliation will be based on updated BGA forecasts provided alongside the next set of OBR forecasts later this year.

Benefits Yet to Commence

62. Responsibility for Cold Weather Payment will formally transfer to the Scottish Government in winter 2022, with a new Scottish benefit – Winter Heating Payment – launching in Scotland to replace it. The Fiscal Framework Outturn Report will first detail the Cold Weather Payment outturn in 2023.

63. Responsibility for Winter Fuel Payment has yet to be transferred to the Scottish Government and therefore these payments are not funded from within the Scottish Budget. The Department for Work and Pensions will continue to make these payments to people in Scotland for winter 2022-23. An update will be provided in due course.