Implementation of the Scotland Act 2016: ninth annual report

7. Social Security

Part 3 of the Scotland Act 2016 contains 14 Sections relating to social security and employment support.

The Scottish Government is responsible for the implementation of these powers, ensuring the safe and secure transition of the benefits being devolved to Scotland and the design of new benefits as part of a Scottish social security system with dignity, fairness and respect at its heart. To achieve this the Social Security Programme was established and, a new agency, Social Security Scotland was created.

Social Security Scotland operates in accordance with the eight principles set out in the Social Security Charter and Social Security (Scotland) Act 2018. This sets the framework to ensure that social security in Scotland meets the needs of Scottish citizens.

Social Security Scotland is now successfully delivering sixteen benefits, and will provide support worth over £6.7 billion to around 2 million people in 2025-26.

Costs

68. The costs set out in Table 7.1 are either audited outturn or budget. Social Security Scotland includes a range of administration and operational costs to support the delivery of payments and services. The work that the Scottish Government undertakes is funded from the Advice, Policy and Programme budget line within the Scottish Government’s Social Justice Portfolio. The table shows the Resource and Capital costs of the work that the Scottish Government undertakes, including the Implementation Costs of the Social Security Programme. The figure excludes the allocated share of the Scottish Government’s Corporate Running Costs and ring-fenced non-cash Depreciation.

69. A more detailed breakdown can be found in the updated Social Security Programme Business Case (PBC), published in February 2023. The costs detailed in the PBC reflect the necessary changes stemming from the pandemic including an additional year of delivery to support safe and secure benefit delivery and case transfer the awards of over 700,000 clients from DWP to Social Security Scotland, as well as adding the Scottish Child Payment extension into the Programme and providing increased functionality for our most complex benefits.

70. The PBC provides a view on the whole-life costs and benefits of the Scottish Government’s Social Security Programme, over a 30-year timeframe to 2050. It shows the Scottish Government’s investment in creating a new public service for Scotland, co-designed by those with lived experience and built from scratch with dignity, fairness and respect at its heart, which will deliver for the people of Scotland for years to come.

2024-25 Developments

71. Executive competence for Carer’s Allowance transferred to the Scottish Government on 3 September 2018, and for Attendance Allowance, Disability Living Allowance, Personal Independence Payment, Industrial Injuries Scheme, and Severe Disablement Allowance on 1 April 2020. DWP continues to administer these benefits through Agency Agreements on behalf of Scottish Ministers, while Scottish benefits are launched and cases transferred from DWP. For 2024-25, Social Security Scotland has budgeted £16.4 million for Formal Agreements. The Formal Agreement costs that the Scottish Government accepts from the DWP are scrutinised to ensure validity, consistency and compliance with jointly agreed inclusions and exclusions. Formal Agreement costs will reduce over time as Social Security Scotland administers new Scottish benefits replacing the DWP benefits.

72. The Scottish Government funds implementation costs incurred by the UK Government as a result of the devolution of welfare powers. For 2024-25 we budgeted £11.5 million for implementation recharges.

The Social Security (Scotland) Act 2018

73. The over-arching framework for use of the Scottish Government’s Social Security powers is set out in the Social Security (Scotland) Act 2018. The rules relating to individual benefits are set out in regulations made under enabling powers in the 2018 Act. In 2024-25 regulations have been made covering the introduction of Pension Age Disability Payment, Pension Age Winter Heating Payment and Scottish Adult Disability Living Allowance. Amendments have also been made to Funeral Support Payment.

74. The Social Security (Amendment) (Scotland) Act gained Royal Assent on 23 January 2025. Some parts of the Act amend or repeal sections of the 2018 Act, and others seek to create new provisions in that Act. In line with the Scottish social security principles, the policy intention is to create efficiencies, remove barriers and empower people interacting with Social Security Scotland.

Social Security Scotland

75. Social Security Scotland was established to deliver on Scottish Ministers’ obligations under the 2018 Act and the Agency delivers its services in accordance with the eight principles set out in the Act and a Social Security Charter. The Agency is founded on the values of treating people with dignity, fairness and respect.

76. In November 2024, Social Security Scotland published its annual Client Survey, covering the period from April 2023 to March 2024, which showed that people continue to have a very positive experience of Social Security Scotland. 81% of people responding to the survey said their overall experience was ‘very good’ or ‘good’; and 89% of people who had been in touch with a member of staff at Social Security Scotland reported that they had been treated with kindness.

77. Social Security Scotland directly employed 3,909 Full Time Equivalent staff across its various sites as at 30 September 2024^[21]. It delivered over £5 billion of benefit payments in 2023-24; £3.2 billion through Agency Agreements and around £2 billion directly. Further details of this spending is provided in Social Security Scotland’s Annual Report and Accounts for 2023-24^[22], which were published in November 2024, in accordance with statutory timescales.

78. With the pilot launch of Pension Age Disability Payment in October 2024, Social Security Scotland’s service has now expanded to sixteen separate benefit payments, seven of which are entirely new forms of financial support available only in Scotland. Social Security Scotland will continue to build capacity and capability with a focus on efficiency in 2024-25 as it prepares for the launch of the remaining Scottish Government benefits.

Benefits Launched

79. A pilot of Pension Age Disability Payment was launched in October 2024. The payment opened up for new applications in further local authority areas in March 2025 and was made available nationally in April 2025. Pension Age Disability Payment provides help with the cost of additional care needs for people of state pension age. The phased rollout of Carer Support Payment, the replacement for Carer’s Allowance, concluded with the national launch in November 2024. The payment provides an improved service, designed with carers to meet their needs, in line with our principles of fairness, dignity and respect, and extends eligibility to many full-time students who were unable to access Carer’s Allowance.

Case Transfer

80. A joint project between the DWP and the Scottish Government is transferring the disability and carer benefit awards of more than 700,000 people in Scotland to Social Security Scotland and onto new Scottish forms of assistance.

81. We have safely and securely transferred the awards of more than 398,000 people, amounting to over £2.2 billion in payments since October 2021. We have completed transferring the Disability Living Allowance for Children awards of every eligible child and young person in Scotland to Child Disability Payment. Over 47,000 awards were transferred in all. More than 300,000 people have now had their awards of Personal Independence Payment and Disability Living Allowance for adults safely and securely transferred to Adult Disability Payment, over 90% of the Personal Independence Payment awards we expect to transfer. Since transfer from Carer’s Allowance to Carer Support Payment began in February 2024, over 45,000 carers have had their transfer completed. Transfer from Attendance Allowance to Pension Age Disability Payment and remaining Disability Living Allowance cases to Scottish Adult Disability Living Allowance began in February and March 2025 respectively.

82. We remain on track to meet our aim of completing case transfer for all relevant disability and carer benefits in 2025.

83. The Scottish Government uprated all Scottish social security payments by 6.7% in April 2024. This uprating includes payments where there is a statutory requirement, as well as those where uprating is discretionary, in recognition of the continuing challenges faced by many due to the increased cost of living.

84. Further work on benefit delivery is also underway and we continue work with DWP to deliver the remaining devolved benefits.

Future plans

85. In September 2024 the Scottish Government brought forward regulations to introduce Pension Age Winter Heating Payment. The timing of the UK Government announcement to restrict eligibility of Winter Fuel Payment meant that it was not practicable for the Scottish Government to deliver Pension Age Winter Heating Payment in winter 2024-25. It was therefore delivered by the DWP on behalf of Scottish Ministers under an Agency Agreement for winter 2024-25, providing support to pensioners in receipt of a relevant qualifying benefit, such as Pension Credit.

86. Ahead of next winter, the Scottish Government has confirmed that it will bring forward regulations to introduce a universal Pension Age Winter Heating Payment in winter 2025-26 for all pensioner households in Scotland. From winter 2025-26, pensioners in Scotland in receipt of a relevant qualifying benefit, such as Pension Credit, will rec £203.40 or £305.10 depending on their age. Additionally, we will introduce universal payments of £100 to every other pensioner household not in receipt of a relevant benefit, recognising that many pensioners who are not entitled to Pension Credit and other relevant benefits are also in need of support.

87. Disability payments are now available for people of all ages across Scotland through Child Disability Payment, Adult Disability Payment (ADP) and Pension Age Disability Payment. We are committed to undertaking an independent review of ADP commencing this year. A Chair has now been appointed to lead this review. A consultation about the eligibility criteria for the mobility component of ADP was undertaken and its findings published last year, and the ADP Review will consider these in its work.

88. Employment Injury Assistance (EIA), which replaces the UK Government’s Industrial Injuries Scheme, will be one of the most complex disability benefits to deliver. The Scottish Government has convened a Steering Group of external experts to examine the overarching aims for EIA and identify priorities for reform.

89. In December 2024, the Scottish Government announced plans to mitigate the impacts of the two-child limit in 2026. The two-child limit prevents families receiving the Universal Credit child element for more than two children, with some exceptions. Mitigation will be a payment equal to the child element for each eligible third and subsequent child and could be worth over £3,500 per eligible child per year for families impacted by the two-child limit.

90. The mitigation will be administered by Social Security Scotland and work is underway, with cooperation from the UK Government, to develop the systems, data sharing and legislation necessary to deliver the payments.