Programme for Government 2015 to 2016

02 A Stronger and Fairer Scotland

On 18 September 2015 it will be a year since Scotland's independence referendum. The referendum period saw people throughout Scotland take part in discussion and debate about the future of the country. Scotland has shown the world that it is a democratically engaged society, with the ideas and energy to transform our country for the better.

That unprecedented interest in the direction the country should take and the way it is governed has continued. The people of Scotland have shown their support for an approach to government that recognises the importance of fairness and inclusion as key contributors to increased prosperity. The Scottish Government approach also empowers people and communities and values high quality public and voluntary services that respond to the needs of people. These values underpin the Government's whole approach and this Programme for Government.

Standing Against Austerity

The Scottish Government has consistently argued for an alternative to the UK's approach to public expenditure and will continue to do so. This approach has led to an unprecedented austerity programme which has resulted in cuts in funding to the public services that the most vulnerable in our society rely on, and has undermined economic recovery. The Scottish Government recognises that the UK's deficit should be reduced, but that this must be done in a gradual and responsible manner, ensuring that we continue to invest in economic growth.

Following the July UK Budget, the next UK spending review will result in yet further reductions in public expenditure in Scotland, extending the period of austerity. Despite the reductions that have already taken place, our management of the public finances, and innovative approach to infrastructure investment has meant we have been able to mitigate the most harmful impacts of these cuts. However, under the current constitutional framework we will be severely constrained in the extent to which we can mitigate further reductions imposed by the UK Government. We will continue to make the case to the UK Government for an alternative approach to public spending.

Tackling poverty remains our key priority, and this will become increasingly challenging because of announcements by the UK Government on welfare reform. UK reforms to tax credits alone will reduce the incomes of between 200,000 and 250,000 households in Scotland, taking £700 million from the pockets of people on low incomes in Scotland every year. The higher minimum wage for those over 25 will not be sufficient for the majority of households to offset these cuts to benefit income.

The First Minister announced the appointment of Naomi Eisenstadt as Independent Adviser on Poverty and Inequality in June 2015. She is currently a Senior Research Fellow at University of Oxford and Trustee at Save the Children and has been tasked with making recommendations to the Scottish Government on how collectively we should reduce poverty and inequality in Scotland, what works and what does not and she will hold the Government to account on its performance.

Developing Scotland's Constitution

The Scottish Government believes that the best long-term future for Scotland is as an independent country. However, for as long as Scotland remains in the UK, the Scottish Government will stand up for Scotland's interests and support greater self-government, working constructively with the UK Government and the other administrations in these islands.

We have consistently argued for extending the powers and responsibilities of the Scottish Parliament because we believe that the people who live and work in Scotland will do the best job of making decisions for our nation. Wider responsibilities for the Scottish Parliament will allow government policy and public services to be developed and delivered in a coherent and sensible way.

Following the work of the Smith Commission, both Westminster and Holyrood are now considering the Scotland Bill, which sets out the UK Government's proposals for the implementation of the Smith Commission, and the UK Government and Scottish Ministers are also in discussion about the associated fiscal framework. While the Scotland Bill would provide some of the powers needed to tackle the issues that face Scotland, the Scottish Government continues to believe it has significant shortcomings.

Fundamentally, the Bill, as currently drafted, does not deliver in full the recommendations of the Smith Commission. In May the Devolution (Further Powers) Committee of the Scottish Parliament, in a report supported by the Parliament as a whole, concluded that the Bill's provisions on social security do not yet meet the spirit and substance of the Smith Commission's recommendations.

Even if the Smith Commission recommendations are implemented in full, those taxes fully or partly under the control of the Scottish Parliament will increase to around 29% of tax receipts in Scotland and 36% of devolved expenditure. This falls far short of 'Home Rule' as over 70% of tax receipts and 86% of welfare spending in Scotland will remain in the control of Westminster.

The Smith Commission recommendations did not provide the Scottish Parliament with control over key significant taxes - like corporation tax or Employers' National Insurance Contributions - and key elements of the social security system such as tax credits and out-of-work benefits. Narrowing the gap between the Parliament's spending and revenue raising powers would both increase its accountability and enable the Scottish Government to align better all elements of public policy with its objectives.

Short of independence, the Scottish Government's preferred approach is full fiscal autonomy. We believe this would provide the maximum financial and democratic accountability within the United Kingdom, enabling the Scottish Government to increase economic growth while allowing Scotland to continue to contribute to the United Kingdom as a whole.

In July the Scottish Government published proposals for devolution beyond the Smith Commission recommendations that would provide a coherent package of powers to boost competitiveness and tackle inequality. These included business and employment taxation, employment rights including the National Minimum Wage, and the social security system.

We are continuing discussions with the UK Government to secure changes to the Bill both to meet the Smith Commission recommendations in full and to go beyond those recommendations and deliver a Scotland Bill that empowers the Scottish Parliament to meet the challenges Scotland faces. The aim of the Scottish Government is to secure a Bill, and an accompanying fair financial agreement with the UK Government, that it can recommend to the Scottish Parliament.

THE SMITH COMMISSION AND THE SCOTLAND BILL

The Scotland Bill currently being considered by the UK and Scottish Parliaments set out the UK Government's proposals for the implementation of the recommendations of the five-party Smith Commission in November 2014.

The main provisions of the Bill cover:

• The status of, and arrangements for, the Scottish Parliament, including elections.
• Powers for the Scottish Parliament to set rates and thresholds of Income Tax, and devolution of Air Passenger Duty.
• Devolution of certain social security benefits, including disability and carers' benefits.
• Powers for the Scottish Parliament to adjust Universal Credit in Scotland including the housing element.
• Devolution of some employment services.
• Devolution of the Crown Estate in Scotland.
• Revolution of Tribunals in reserved areas - such as the Employment Tribunals - in Scotland.
• Devolution of some power over equal opportunities.
• Devolution of British Transport Police.

The Scottish Government set out its views on the Bill in detail in June 2015. We are currently in discussions with the UK Government on changes to the Bill both to meet the Smith Commission in full and to provide sensible changes beyond those recommendations. The Bill will require the agreement of the Scottish Parliament under the Legislative Consent procedure. The aim of this Government is to secure agreement with the UK Government on a satisfactory Bill, and accompanying financial arrangements (the 'fiscal framework'), in time for the Parliament to consent to the Bill before it dissolves for the Scottish General Election in March 2016.

The Scottish Government will only support a legislative consent motion if there is a satisfactory fiscal framework agreed between the Scottish and United Kingdom Governments.

Using the New Powers

The Scottish Government is committed to using the powers in any eventual Scotland Act to improve the lives of the people we serve. We are also committed to an open and consultative process in developing policies for the new powers in the Bill. We have set out some early policy priorities and we detail how we will implement these newly devolved powers throughout this document. We will:

• Bring forward, in the first year of the new Parliament, a Social Security Bill to give effect to our new social security powers and begin to establish the infrastructure for delivery of devolved welfare powers.
• Address weaknesses, within our limited powers, in Universal Credit and abolish the bedroom tax as soon as we have the powers to do so.
• Enhance opportunities for employment and economic growth by improving support for people to move into employment through reform of the Work Programme and Work Choice and linking employment programmes with training and education. We will introduce a replacement for the Work Programme and Work Choice by April 2017.
• Improve access to priority business and tourist markets by reducing air passenger duty. We will reduce the burden of APD by 50% with the reduction beginning when we introduce a Scottish APD in 2018, with a view to abolishing it completely when resources allow. We are currently consulting with stakeholders on the best way to apply that reduction across new and existing routes.
• Promote equalities by taking early action on gender balance on public boards.
• Abolish fees for employment tribunals.
• Manage the assets of the Crown Estate in Scotland to maximise benefits to the Scottish economy and local communities.

A SCOTTISH SOCIAL SECURITY SYSTEM

The Scotland Bill sets out proposals from the UK Government to transfer certain, limited social security powers to the Scottish Parliament. This would devolve around £2.6 billion (14.6%) of benefit expenditure in Scotland which is currently all controlled by the UK Government. The Scottish Government is in negotiation with the UK Government to secure improvements to the proposals as we believe the powers on offer are limited in their scope and will restrict the ability of the Scottish Parliament to undertake significant reform of the benefits.

Our new powers over social security, despite their limited scope, will provide opportunities to develop different policies for Scotland which are fairer and help tackle inequalities and poverty, in line with the core purpose of the Scottish Government. We will use these powers to develop a system which is:

• Suited to the needs of our people and our country.
• Underpinned by respect for the dignity of individuals.
• Accessible, fair, and commands the full confidence of claimants and the organisations and services which that support them.

We are committed to using the experience of service users and stakeholders in the design of these policies to deliver a Scottish social security system that is recognised for its efficiency on behalf of taxpayers, the services it offers and the fairness of the outcomes it delivers. We will set out our policy statement on new social security powers before the end of 2015 and will introduce a Social Security Bill in the first year of the next Scottish Parliament to deliver this vision.

The Scotland Bill will transfer powers over social security benefits for disabled people with long-term health conditions and their carers. This will cover a series of benefits currently delivered by the UK Government through Disability Living Allowance (DLA), Personal Independence Payments, Attendance Allowance, Carer's Allowance, the Industrial Injuries Schemes, Severe Disability Allowance and the Motability Scheme. We are committed to establishing a social security system that has at its heart a set of principles and values that govern it. This will include ensuring that people are treated with respect and dignity during their time of applying for, being assessed, and receiving disability-related benefits. We will also provide people with relevant information so that they are aware how the system will work for them and how long decisions will take.

Our Social Security Bill, and accompanying legislation, will be wide-ranging, covering the principles which will underpin our approach to social security in Scotland as well as the improvements we intend to make to the system we inherit. There will also be specific provisions to abolish the bedroom tax, introduce flexibilities for those in receipt of Universal Credit in Scotland and the benefits we will introduce under the powers being devolved through the Scotland Bill. We will develop our approach to delivery of the new social security powers in consultation with those with an interest in improving social security delivery in Scotland, including those in receipt of benefits.

The Welfare Funds (Scotland) Act 2015 put the Scottish Welfare Fund on to a statutory basis. Working with local government, the Fund has supported over 130,000 households (49,000 were families with children and 82,000 single people) with at least one award between 2013 and March 2015, with a total expenditure of around £65 million.

The Department for Work and Pension's (DWPs) Work Programme is not designed to help those with the greatest barriers to work into sustained employment. Our vision is to use the opportunities of devolution to help deliver our commitment to reducing inequality and stimulating sustainable economic growth. We want to see everyone achieve their economic potential, and we recognise the importance of employment in achieving this. So, we will move quickly to implement the new powers which allow us to create an alternative to the DWP's contracted employment support programmes in Scotland, and will do so from 1 April 2017, the earliest possible opportunity.

Scottish Government funding has also allowed full mitigation of the bedroom tax in 2014-15 and 2015-16 for around 72,000 households who have had their Housing Benefit reduced. We will use our new powers to abolish the bedroom tax at the earliest opportunity. The Scotland Bill will enable the Scottish Government to make changes to Universal Credit, including the frequency of payments, varying plans for single household payments, and paying social landlords direct for housing costs in Scotland which will better reflect the needs of the recipients of the benefits.

We are working to develop successor arrangements for the regulated Social Fund that provides Sure Start Maternity Grants, Cold Weather Payments and the Winter Fuel Allowance Payment. As part of this we will improve links to other devolved services such as support for mothers during pregnancy.

The new arrangements will also include responsibility for funeral payments. We believe no-one should be prevented a dignified funeral or forced into debt because of the costs of organising a funeral for their loved one. We will review advice on planning a funeral, and review how to make best use of funeral payments to support those on low income who need extra help in arranging a funeral.

SCOTLAND'S PLACE IN THE WORLD

The Scottish Government recognises the importance of working with other nations, institutions and organisations to contribute to the success of the global community. We will continue to use our international activity to promote policy priorities such as gender equality, educational attainment, human rights and democratic participation - exchanging knowledge and building relationships in support of our domestic and international objectives. We also want to maximise the impact of Scotland's
world-standing in areas such as social enterprise. Our aims are:

• To ensure better understanding of international opportunities and a greater appetite and ability to seize them.
• To enhance Scotland's influence the world on the issues that matter most to us.

The Scottish Government will develop a new Diaspora Engagement Strategy which will set out how we can better engage and connect with people of Scottish descent around the world, enhancing the role they can play in supporting our international ambitions. We will also use our position as a world leader in social enterprise development to share expertise internationally. Our expertise will help support organisations that are working with disadvantaged groups including women and disabled people.

We recognise that our commitment to fairness does not end at our borders and as a good global citizen our international engagement will be underpinned by our commitment to addressing global challenges such as climate change, tackling inequality and promoting human rights, sharing our knowledge, skills and technical expertise for global good. We will oversee the successful implementation of the United Nations Sustainable Development Goals in Scotland by 2030, particularly in relation to areas which the Scottish Government is already driving forward; tackling poverty, gender equality, access to education for all, and renewable energy.

Scotland and the European Union

Being part of the EU has delivered enormous social, cultural and economic benefits to Scotland for more than 40 years, and has allowed us to make distinctive contributions to addressing global challenges such as climate change, delivering sustainable growth and energy security. It has also enabled us to make our progressive voice heard in the world. The risk of the UK exiting the European Union poses a significant threat to those benefits and to businesses and jobs right across Scotland.

In the coming year, we will implement our Action Plan for EU Engagement, with the aim of influencing the UK's EU renegotiation and preparing for the EU referendum. The Action Plan sets out the four key areas in which we will focus our activity in the EU:

• Making a strong Scottish case for remaining a member of the EU.
• Active Scottish engagement in EU policy developments and promoting a strong reform agenda.
• A higher degree of Scottish engagement in EU investment, innovation and inclusion programmes.
• Strengthening partnerships with key EU partners (including France, Germany, Ireland, the Nordic countries, and Vanguard regions).

We will continue to ensure Scotland's role in the EU is represented and to work with the UK Government and other devolved administration as appropriate. The Scottish Government will make a clear argument in support of continued membership of the EU in the forthcoming referendum.

SUSTAINABLE DEVELOPMENT GOALS

Scotland must continue to take its share of responsibility for addressing global issues. In September 2015 world leaders at the United Nations will adopt the new Sustainable Development Goals (SDGs), which will replace the United Nations Millennium Development Goals (MDGs) which come to an end this year. The MDGs consist of eight targets to be met by developing countries, the aim of which was to tackle poverty and inequality there. In the run up to 2015 deadline, the UN Secretary-General established a process to establish a post-2015 UN Development Agenda, bringing together more than 60 UN agencies and international organisations to focus and work on sustainable development. The key difference from 2015 onwards is that the SDGs will apply to both developed and developing countries.

The First Minister has confirmed that Scotland will adopt and implement the SDGs and work to achieve them by 2030. Many of the SDGs chime with what Scotland is doing to tackle poverty and inequality, both in Scotland and through our international development work. The outcomes will improve people's lives in numerous ways but particularly in relation to areas which the Scottish Government is already driving forward such as tackling poverty, gender equality, access to education for all, and renewable energy.