Scottish social security in six charts

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Scottish social security is growing fast.  By the end of this year, the main agency delivering devolved benefits, Social Security Scotland, will employ over 3,500 staff and be responsible for around £0.7 billion of benefit spending.  By 2027 that figure will be closer to £6.6 billion.  This blog explores that growth in six charts


Chart 1: A ten-year programme

New devolved powers for social security were included in the Scotland Act 2016, mostly relating to disability and carer benefits. It represents devolution of around 15% of spending on social security. The full programme of devolution is currently expected to be completed by the end of 2025-26.

Social Security Scotland was created in 2018 and currently administers 12 benefits (counting Best Start Grant as three benefits). It is due to launch seven more over the next few years.  There is also a complex programme transferring clients from the Department of Work and Pensions (DWP).

Chart 1 sets out the timeline for Scottish benefits. The start dates haven’t been announced yet for the replacements for Attendance Allowance or Industrial Injuries benefits. The chart uses Scottish Fiscal Commission assumptions for these.

 

Chart 2: Social Security Scotland’s share of spending is increasing

Total spending on devolved social security is forecast to grow to around £6.8 billion by 2027-28. £6.6 billion of this will be administered by Social Security Scotland with most of the rest administered by local authorities.

Currently the DWP administers several benefits on behalf of the Scottish Government.  This year (2022-23), £3.3 billion of devolved benefit spending is under these ‘agency agreements.’

The animation shows how Social Security Scotland’s share of devolved social security spending is forecast to grow rapidly over the next couple of years as people move across from devolved DWP benefits.  This assumes that everyone will have moved across by the end of 2025-26. Only Severe Disablement Allowance will stay with DWP because it is closed to new clients. NB The DWP figures in the animation only include spending that is devolved to the Scottish Government.

Animation: Devolved social security spend by agency, 2018-19 to 2027-28

Chart 3: The ‘funding gap’ is getting bigger

The Scottish Government spends more on social security than it gets from the UK Government in funding – around £0.5 billion more this year (2022-23) and forecast to rise to £1.3 billion more in 2027-28.

This additional spending is mostly needed for the Scottish Child Payment and to fund the differences between Social Security Scotland’s Adult Disability Payment and the DWP’s Personal Independence Payment.   Much is uncertain though – as it depends on how different ADP turns out to be in practice compared to PIP.

This is additional investment resulting from the Scottish Government’s choices on social security, but it does need to be funded from the Scottish Budget.  That could put pressure on other policy areas.

Chart 4: Social Security Scotland’s caseloads are increasing

The number of clients that Social Security Scotland deals with is going to increase hugely over the next couple of years.  This includes:

  • Around 400,000 clients getting Low Income Winter Heating Assistance (now renamed Winter Heating Payment) when it replaces Cold Weather Payments in 2023.
  • Around 900,000 clients getting Pension Age Winter Heating when it replaces Winter Fuel Payment in 2024.
  • Around 300,000 clients transferring from Personal Independence Payment to Adult Disability Payment over the next few years.

Because people can get more than one benefit, it’s not possible to add the number of cases together to get the total number of people receiving benefits. 

Chart 5: Administration and development costs have possibly peaked, but it’s all costing more than first expected

Annual spend on administration and development

Chart 5 shows resource budgets so far – both for Social Security Scotland and for the ‘Social Security Programme’ within government which is responsible for developing new and replacement benefits.

At nearly £400 million, the combined resource budget for 2022-23 is the highest across the planned lifetime of the programme of social security devolution.  The Spending Review set out plans for administration and development spending to fall over the next few years, but didn’t detail how this would be split between development costs and day to day running costs. 

Note: To align with the Spending Review, the chart only shows ‘fiscal resource’. This doesn’t include capital or non-cash, which together amounted to £132m in the 2022-23 draft budget. Again, to ease comparison, the chart only shows the original budget for earlier years, rather than final budget or outturn

Total implementation costs

Another way of looking at spending is the total development costs over the lifetime of the project.  In 2017 the total cost of developing Scottish social security was expected to be £308 million over four years (2018-19 to 2021-22).  The most recent estimate is £685 million over eight years (2018-19 to 2025-26).  An update is expected before the end of the year.  It has cost more partly because new benefits have been added and because the programme is taking eight years rather than four.  This has led to staff costs which are more than three times those originally envisaged. For more detail see Audit Scotland’s report from May this year.

These implementation costs don’t include the day-to-day operating costs of Social Security Scotland. (For breakdown See figure 5.3 Business Case February 2020).

Chart 6: The workforce is increasing

Initially, Social Security Scotland thought they might employ 1,900 staff once fully up and running.  Now they plan to employ more than 3,500 staff by the end of 2022.  By June 2022 they had 3,061 FTE staff.

As well as staff in Social Security Scotland, there are the staff in the Scottish Government Programme who are developing policy and systems. Audit Scotland reported that Programme staffing increased from 460 in 2019 to 780 in 2022. Approaching half (47%) of those staff are contractors, “driven mainly by ongoing challenges with recruiting staff with the relevant skills and experience needed.” Audit Scotland commented that:

This growth reflects the programme’s greater appreciation of the range and scale of activity required to implement the benefits but also that in some areas staff have been needed for longer after benefits are launched than was anticipated

Audit Scotland

Camilla Kidner, Senior Researcher, SPICe.