Fiscal framework outturn report: 2019

7. Social Security

7.1 This section contains the latest outturn and forecasts available on expenditure and BGAs for Social Security benefits from 2018-19 onwards, and the net effect on the Scottish Budget.

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.

Carer's Allowance

7.3 Carer's Allowance is currently the only social security benefit in operation that requires a Block Grant Adjustment. It was introduced during 2018-19 and therefore this is the first Fiscal Framework Outturn Report in which data on expenditure and BGAs appears.

7.4 Table 15 shows the SFC's latest expenditure forecast for Carer's Allowance and the Block Grant Adjustment estimates provided at the UK Spring Statement 2019.

Table 15: Forecasts of Carer's Allowance 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†	286	304	325	351	371	393
	BGA	157†	287	304	325	355	385	N/A
	Net effect on Budget	5†	1	0	0	4	14	N/A

Key: † indicates outturn data

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

7.6 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.

7.7 Table 16 shows the net budget position for Carer's Allowance for 2018-19.

Table 16: Carer's Allowance Budget Position For 2018-19 Compared with Forecasts (£ Million)

	Expenditure	BGA	Net effect on Budget
Forecast as of Budget Act 2018	157	157	0
Outturn	152	157	5
Outturn against forecast	-5	0	5

7.8 This translates into a reconciliation of less than £100k to be applied to the 2020-21 Budget. Table 17 shows the details of this reconciliation.

7.9 As Carer's Allowance was introduced in Scotland in mid-year, no interim reconciliation took place. In subsequent years, the BGA for Carer's Allowance will go through the full process of interim and final reconciliations. The 2018-19 figures for both expenditure and the BGA therefore reflect only a part of the expenditure of an 'average' year, and will likely differ significantly from subsequent years.

Table 17: Carer's Allowance 2018-19 bga Final Reconciliation (£ Million)

Forecast BGA - UK Autumn Budget 2018	157
Outturn BGA	157
Reconciliation to 2020-21 Budget	0

7.10 The latest forecast of the net effect on budget for 2019-20 Carer's Allowance is shown in table 18. Unlike the Carer's Allowance BGA for 2018-19, it will lead to both an in-year and final reconciliation, with the latter taking place in 2021-22. These figures are indicative only - as with the fully devolved taxes an updated BGA forecast will be prepared ahead of the UK Autumn Budget, which will form the basis for the in-year BGA reconciliation.

Table 18: Forecast Carer's Allowance Budget Position For 2019-20 (£ Million)

	Expenditure	BGA	Net effect on Budget
Forecast as of Budget Act 2019	283	290	+7
Latest Forecast as of MTFS 2019	286	287	+1
Change	+3	-3	-6

7.11 The Scottish Government has also committed to pay out the Carer's Allowance Supplement which is an extra payment from the Scottish Government to carers in Scotland who are receiving a full or partial Carer's Allowance payment. Data on expenditure on this benefit is available in the annual accounts of Social Security Scotland.

Discretionary Housing Payments and Best Start Grant

7.12 Outturn expenditure for 2018-19 for the Best Start Grant and Discretionary Housing Payments (DHPs) are shown in table 19, together with Scottish Fiscal Commission forecasts of expenditure and Scottish Government spending plans on DHPs.

Table 19: Forecasts and Spending Plans for Best Start Grant and Discretionary Housing Payment Expenditure (£ Million)

		Outturn†		SFC Forecast
		2018-19†	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
Best Start Grant	Expenditure	4†	21	16	16	17	17	18
DHPs – Bedroom Tax Mitigation	Expenditure	53†	53	55	57	58	60	62
DHPs – Other Spend	Expenditure	9*†	11	11	11	11	11	11

* The total outturn quoted for 2018-19 is net of around £1.7 million of 'recovered funding'. Local Authorities spent £9.9 million on payments for reasons other than bedroom tax mitigation but some of this was above their individual allocations, reducing the cost to the Scottish Government to £9.2 million

Key: † indicates outturn data

7.13 Best Start Grants and DHPs are not funded through Block Grant Adjustments. They are instead initially funded by 'Machinery of Government' transfer payments directly from the Department of Work and Pensions until the end of the Spending Review period. After that, funding for these benefits becomes part of the core resource block grant, or 'baselined' into the block grant, and subject to the Barnett formula. This means that there are no BGAs calculated for these benefits and no reconciliation process. Funeral Support Payment, commencing in autumn 2019, will also commence through this process.

7.14 Table 20 shows the funding transfers that the Scottish Government has agreed before funding becomes part of the core resource block grant.

Table 20: Best Start Grant and Discretionary Housing Payment Funding Transfers (£ Million)

		2018-19	2019-20
Best Start Grant	Funding Transfer	1	2
DHPs	Funding Transfer	20	20

Benefits Yet to Commence

7.15 Executive competence for the remaining benefits will commence in April 2020 and, where relevant, Block Grant Adjustments will be agreed at the UK Government's Autumn Budget 2019. A list is given below in table 21.

Table 21: Social Security Benefits Transferring to Scotland

Benefit	Funding Mechanism	Commencement date
Attendance Allowance	BGA	April 2020
Cold Weather Payments	TBC	Winter 2021
Disability Living Allowance	BGA	April 2020
Industrial Injuries Disablement Benefit	BGA	April 2020
Personal Independence Payment	BGA	April 2020
Severe Disablement Allowance	BGA	April 2020
Winter Fuel Payments	TBC	Winter 2021