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

Regulatory and EU Alignment Impacts

The Bill does not have regulatory or EU alignment impacts as the focus of the Bill is the social security system in Scotland.

Intra-UK Trade

The Bill is not likely to impact on intra-UK trade.

International Trade

The Bill is not likely to impact on international trade and investment.

EU Alignment

The Bill is not likely to impact on the Scottish government’s policy to maintain alignment with the EU since the scope of the Bill is the Scottish system of social security.

Scottish Firms Impact Test

Scottish Government officials have had a number of discussions with third sector groups who represent the interests of those in receipt of SCP and also provide welfare rights advice via the five family payments reference group. The continuing feedback has been that they would like to see changes made to SCP, many of which are not possible within the confines of the current legislative footing. Many of the same organisations also contributed to the public consultation providing similar feedback. Further engagement about childhood assistance will be undertaken as part of the regulation making process which will be subject to further parliamentary scrutiny and impact assessments.

Details on any schemes created under the regulation-making power relating to care experience assistance including eligibility criteria, processes and delivery model are still to be determined. This will be developed through engagement and consultation with care experienced people and those with experience of delivering similar payments and support. Once determined, the detail will be set out in regulations, which will be subject to further parliamentary scrutiny and impact assessments.

There has been engagement with a range of stakeholders throughout the development of the policy proposals around re-determinations and appeals to understand the impact on the third sector and the groups they represent. Scottish businesses, including the third sector, were given the opportunity to respond to the public consultation on these specific proposals.

It is expected that the Bill could cause additional requests for information and support from existing advice and advocacy services, which may benefit these businesses through increased demand. However there may also be a cost to these businesses in ensuring their staff are trained in and familiar with the new regulations. The Scottish Government will continue to engage with advice services to increase understanding of the changes being introduced to operational processes and procedures prior to their implementation and to support them to provide independent and informed advice for people receiving, or enquiring about, social security payments. It is not anticipated that this should require a significant change to their operations.

As part of the engagement event held with representatives from insurers, insurance lawyers and personal injury lawyers on 28 March 2023, Scottish Government officials explained the reasons behind Scotland being out of alignment with the rest of the UK in relation to the recovery of compensation. Following on from this, an initial proposal of what a Scottish compensation recovery scheme would entail was presented.

Discussion was focused around five key questions:

1. What are your views on the proposal that the Scottish Government should have the powers to recover social security assistance from compensation payments?

2. What do you expect in terms of impact on your organisation and/or industry with the proposed recovery of Scottish social security assistance from compensation payments?

3. What would you like us to consider in the potential development of a recovery scheme for Scottish benefits?

4. Using the UK scheme as a model, in your view, what aspects work well?

5. Is there anything that you think could be improved upon?

The feedback received was positive in that all attendees agreed in principle that Scottish Ministers should have the power to recover amounts from compensation payments, similar to the UK Government. When asked about their thoughts on the initial proposal and potential impact on attendees’ organisations and industry, there was a strong preference expressed for having one unit or platform handling the generation of certificates of recoverable assistance for the whole of the UK. This is because a separate system will require more guidance, training, resources and system log ins for claims handlers. This feedback aligns with Scottish Government officials’ initial thoughts in relation to having the DWP recover compensation on behalf of Scottish Ministers as this approach is the most cost effective and limits complexity for all parties involved.

The main concerns raised was in relation to any potential diversions from the UK approach and the impact this would have on settlement times. Consequently, Scottish Government officials have looked to emulate the UK approach, mirroring the same timescales, heads of compensation and relevant period laid out in the UK legislation framework.

Another concern raised was regarding the proposed recovery of SCP as a loss of earnings benefit in relation to accidents, injuries or disease. Attendees discussed the issues with the recovery of the UK reserved benefit Universal Credit (UC) which is made up of various elements. Officials were able to confirm that SCP is not made up of different components and therefore not comparable to UC.

There was some discussion around heads of damage within the Scottish jurisdiction in that ‘cost of care’ does not exist and is not available for compensators to offset amounts owed. This prompted further investigation where officials sought advice from Scottish Government Legal Directorate (SGLD). Although it was acknowledged that there is not a clear head of damages specifically for cost of care, this is an aspect of the general rule that a person who is liable in damages for personal injury is liable to reimburse the injured party for losses and expenses occasioned by the injury such as loss of wages, care costs, additional accommodations costs or additional transport costs. It was agreed that the head of damage ‘services rendered’ is not the same as ‘cost of care’ and the daily living component of ADP and the care component of CDP would not fit under this head of damage. As a result the Bill has been drafted to include the same three heads of compensation as detailed in the Social Security (Recovery of Benefits) Act 1997^[24].

After the Bill was announced in the Programme for Government 2023-24 was published on 5 September 2023, Scottish Government officials contacted the attendees to gather further insight into the impacts, benefits and costs to the insurers, insurance lawyers and personal injury lawyers of the proposal about compensation recovery in the Bill.

Additionally, an article was included in the Scottish Government Business Communications Bulletin in September 2023 seeking views from all businesses on this proposal.

Further engagement is planned with business, and the insurance sector, in particular about the compensation recovery proposal and potential delivery methods during the passage of the Bill.