Social Security assistance - effects of inflation: report 2020-2021

2. Background

2.1 In 2019, the Scottish Government prepared an analytical report that provided a detailed review of relevant inflation measures to inform the options available to Scottish Ministers for uprating devolved social security assistance. The analytical report explored in depth the methodological features of inflation measures and drew on a range of evidence including recommendations from the UK Statistics Authority and the Office for National Statistics, an independent review led by the director of the Institute of Fiscal Studies^[7] and the House of Lords Economic Affairs Committee's report 'Measuring Inflation'.^[8]

2.2 The analytical report subsequently informed a policy paper that set out the Scottish Government's approach to uprating social security assistance. Both papers^[9] were provided to the Social Security Committee and the Scottish Commission on Social Security on 2 September 2019.

2.3 The policy paper recommended that the September Consumer Price Index (CPI) rate be used for uprating devolved social security assistance in the short-term, with the assistance payment rounded to the nearest multiple of five pence. The September 2020 CPI rate published on 21 October 2020 was 0.5%.

2.4 Overall, the Scottish Commission on Social Security was supportive of the Scottish Government's uprating policy of using September CPI rate to uprate social security assistance at least in the short-term. The Scottish Commission on Social Security set out recommendations^[10] for the Scottish Government approach to benefit uprating in terms of the significance of Social Security principles and human rights, the shorter-term and the longer-term approach to uprating. The Scottish Government responded^[11] to these recommendations and will keep the recommendations under consideration to inform the development of future reports as more forms of assistance are introduced and reported on.

2.5 The Social Security Committee noted the Scottish Government's position on uprating of devolved assistance and had no further views to report beyond the discussion at the Committee on 10 October 2019.^[12]

2.6 The following sections provide a detailed discussion of how the inflation-adjusted levels of assistance were calculated, what the inflation-adjusted levels of assistance would be and what the Scottish Ministers intend to do.