Up-rating devolved Social Security assistance: multi criteria decision analysis - January 2024

Executive Summary

1. This report presents a Multi Criteria Decision Analysis of the Scottish Government’s approach to uprating devolved social security assistance delivered by Social Security Scotland in 2024-25.

2. Section 86A(1) of the Social Security (Scotland) Act 2018 (‘the Act’) requires Ministers to:

(a) calculate the inflation adjusted level of each benefit rate provided under Chapter 2 of Part 2 and section 79 of the 2018 Act;

(b) prepare a report stating what the figure is, how it has been calculated and if and how Ministers are responding.

3. Section 86B of the Act provides a duty to uprate disability and carers benefits, Funeral Support Payment and Scottish Child Payment. Carers Allowance Supplement uprates automatically under section 81 of the Act. For all other benefits, it is at Ministers’ discretion whether uprating takes place in any given year.

4. Where uprating is either legislatively required or Ministers make a decision to, this analysis provides a recommendation for how that uprating should be applied in 2024-25 through three distinct steps:

• Defining the options.
• Defining criteria.
• Scoring of options.

5. Each option is a potential method to uprate devolved social security assistance delivered by Social Security Scotland, and is made up of a metric and a reference period. A metric is the specific measure used to measure inflation (e.g. CPI); a reference period is the time period over which the metric is measured (e.g. September 12 month rate). A variety of metrics and reference periods were considered before narrowing down to a shortlist to eight possible options of three metrics and four reference periods. These are:

A. September CPI

B. January CPI

C. Forecast CPI

D. Forecast and re-base CPI

E. September CPIH

F. January CPIH

G. September Household Costs Index (Decile 2)

H. December Household Costs Index (Decile 2)

6. The next step was to identify the criteria the options would be evaluated against. There are a number of factors that must be considered as part of the Scottish Government’s decision on the approach to uprating. Based on internal consultation and analysis, four final criteria were defined to assess the options: robustness, relevance, delivery and transparency.

7. Each option was scored from 1 (Very Low) to 5 (Very High) on how well it satisfies each criteria. The scores were totalled with equal weighting for each criteria to give a total score and then ranked from highest to lowest.

8. The option that scored highest is using the annual September rate of CPI. Sensitivity analysis was also undertaken to understand whether changes to weighting or other parameters that contribute to the scoring would alter the ranking of options, and in each example, this did not alter the preferred option.

9. In conclusion, this Multi Criteria Decision Analysis recommends the Scottish Government uses the September CPI to uprate devolved social security assistance in 2024-25, where Ministers are either required to uprate certain rates of benefits under section 86B of the 2018 Act or where Ministers have chosen to uprate certain benefits not mandatory to uprate.