Social Security (Amendment) (Scotland) Bill: business and regulatory impact assessment

Consultation

Within Government

Within government and social security agencies consultation has taken place with:

Scottish Government:

• Social Security Policy Division
• Scottish Government Legal Directorate
• Social Security Programme
• Care Experience and Whole Family Wellbeing Division
• Mental Health and Incapacity Law Division
• Communities Analysis Division
• A Good Childhood - Children and Young People Unit, Directorate for Children and Families
• A Good Childhood – Caregivers, Directorate for Children and Families
• Keeping The Promise Team, Directorate for Children and Families
• Children and Families Analysis Team, Education Analytical Services, Learning Directorate
• Redress, Relations and Response Division, Children and Families Directorate

Social Security Scotland:

• Social Security Scotland Operational Policy
• Social Security Scotland Fraud and Error Resolution
• Social Security Scotland Analysis and Insights

UK Government:

• Department for Work and Pensions (DWP)
• HM Revenue and Customs (HMRC)

This engagement has allowed for consideration of the practicalities of the proposals and has provided an assurance that the provisions included at introduction can be implemented in future.

Public Consultation

Most of the provisions in the Bill were consulted on as part of a public consultation titled Scotland’s Social Security system: Enhanced Administration and Compensation Recovery^[21], which ran for a total of 12 weeks from 4 August to 27 October 2022.

The Scottish Government ran a series of events whilst the consultation was open aimed at driving engagement and increasing the number of responses received. This included two online events for stakeholder organisations interested in responding.

The consultation received a total of 34 responses, most of which were submitted on behalf of organisations. An independent analysis of the responses carried out on behalf of the Scottish Government^[22] found that there was widespread support for most of the proposals included in the consultation. Concerns raised about the proposals in the consultation were considered during policy development and influenced the provisions included in the Bill.

A question was posed in the consultation paper to gather views on the potential impacts of the proposals on businesses and organisations. Three respondents provided an answer to this question.

The main perceived impact of the Bill on businesses and third sector organisations was the potential additional strain the proposals could place on the capacity of third sector organisations that deliver welfare rights advice, financial inclusion advice and mental health support. Two respondents suggested that additional resources could be required in organisations that support those with lived experience of the social security system, particularly in the face of other ongoing challenges such as the cost-of-living crisis.

There was however the opposing view that, through making improvements to the social security system, the Scottish Government could reduce pressure on third sector organisations and free up resource to focus on supporting people in other ways.

A recognised limitation of the public consultation was that very few responses were received from stakeholders in the legal and insurance sectors with an interest in the policy about compensation recovery. The Scottish Government sought to engage with potentially impacted stakeholders, who may have experience of the UK compensation recovery scheme, to gain insight and further scope out the design of the new scheme.

A targeted engagement event with stakeholders from the insurance and personal injury industry was held in March 2023. The purpose of this virtual event was to communicate the proposal and provide reassurance that the Scottish Government’s preferred approach to the recovery of social security assistance is one which offers consistency across both UK and Scottish Governments.

There has not yet been a formal consultation on the policy or provisions regarding care experience assistance. The Scottish Government will shortly launch a full public consultation seeking views on the proposed assistance, which will include reference to the powers taken in the Bill in regard to care experience assistance. In addition, further consultation on the detailed rules for the assistance itself will be undertaken before the regulation-making power being taken in the Bill is exercised.

A public consultation was not conducted on the provisions about information for audit of the social security system. The Scottish Government is clear that this provision is high priority, fundamental to the functioning of the Scottish social security system and aligns with the practice of other government departments. Stakeholder engagement will inform the processes used to capture information for audit to ensure that they are clear, user-friendly and accessible. The secondary legislation which will specify the detail of the process will also be subject to the full suite of necessary impact assessments in the course of its development.

Business

The majority of the provisions in the Bill are not anticipated to have an impact on services provided by private business.

It was deemed appropriate to consult directly with businesses about the policy on compensation recovery due to the potential impacts on industry. Compensation recovery is a longstanding feature of the UK social security system with the current UK scheme administered by the Compensation Recovery Unit (CRU) as part of the Department for Work and Pensions (DWP).

The Scottish Government recognises that consultation with business and considering the potential impacts of not only any new compensation recovery scheme developed, but also the interactions between any new scheme and the existing UK scheme, is key to the success of this policy.

To better understand the potential impacts on businesses of the proposal about compensation recovery, Scottish Government officials contacted representatives of the Association of British Insurers (ABI), the Association of Personal Injury Lawyers (APIL), the Forum of Insurance Lawyers (FOIL), the Law Society of Scotland, the Forum of Scottish Claims Managers, the British Insurance Brokers’ Association (BIBA), the International Underwriters Association, the Faculty of Advocates, Motor Accident Solicitors Society (MASS) and the Lloyd’s Market Association.

An initial engagement event was held virtually in March 2023 and attended by representatives from a variety of businesses who could potentially be impacted by a new scheme for compensation recovery. Table 1 below sets out their roles, organisations and membership of industry bodies:

Further information about the engagement with businesses can be found in the section titled Scottish Firms Impact Test.