Section C: Five cases
3. The Strategic case
3. In the standard five cases approach the Strategic Case demonstrates that the spending proposal provides business synergy and strategic fit and is predicated upon a robust and evidence based case for change. This includes the rationale of why intervention is required, as well as a clear definition of outcomes and the potential scope for what is to be achieved.
3.1. This strategic case requires the spending authority to demonstrate how the spending proposal fits in relation to national, regional and local policies, strategies and plans and furthers the required outcomes.
3.2. The wider context by which additional social security powers are being devolved to Scotland, in itself forms the Strategic case for change. This section documents the path that has been followed dating back to the run-up to the referendum on Scottish Independence in September 2014 and finishing with the recent consultation on social security following the passing of the Scotland Act 2016.
3.3. At a high level, the Scottish Government Purpose of sustainable economic growth is underpinned by five strategic objectives - to make Scotland wealthier and fairer, smarter, healthier, safer and stronger, and greener. At its best, the broader social security system should contribute to all these objectives, with the benefits to be devolved particularly supportive of the aim of a fairer Scotland that offers improved opportunities and better quality of life for everyone regardless of their circumstances. See http://www.gov.scot/About/Performance/scotPerforms.
3.4. The strategic objectives are supported by 16 National Outcomes. The social security system, aligned with other public services, should make a direct and significant contribution to several of these, most notably:
- We live longer, healthier lives;
- We have tackled the significant inequalities in Scottish society;
- Our people are able to maintain their independence as they get older and are able to access appropriate support when they need it and
- Our public services are high quality, continually improving, efficient and responsive to local people's needs.
3.5. The benefit system currently in place in Scotland is distributed across a number of recipient groups and the majority of these benefits are currently reserved to the UK Government, with the exception of the Council Tax Reduction and Scottish Welfare Fund which were localised and devolved respectively to the Scottish Government from April 2013. See Table 1 below.
Table 1 - Current benefit system
In Work Credit & Return to Work Credit
Employment & Support Allowance
Financial Assistance Scheme
State Pension Transfers
Winter Fuel Payments
Disability Living Allowance
Personal Independence Payment
Severe Disablement Allowance
Specialised Vehicles fund
Statutory Sick Pay
Vaccine Damage Payments
Child Tax Credit
Statutory Maternity Pay
Council Tax Reduction
Discretionary Housing payments
New Deal & Employment Programme Allowances
New Enterprise Allowance
Scottish Welfare Fund
Social Fund (regulated)
Working Tax Credit
Other small benefits such as child trust fund etc.
3.6. A starting point of the process that has led to the current situation and context for social security was the Scottish Governments Expert Working Group ( EWG) on Welfare. The key milestones of this group are shown in Table 2 below  .
Table 2 - Key milestones for Expert Working Group ( EWG) on Welfare
4 June 2014: The Group published their second report
23 September 2013: Expert Working Group issues Call for Evidence
4 August 2013: Expert Working Group to further develop independent welfare system
11 June 2013: Expert Working Group publishes first report
11 June 2013: Scottish Government's response to the Expert Working Group's report
8 February 2013: Initial Call for Evidence responses and analysis
3.7. The two reports of the group in 2013 and 2014 laid the foundations for current thinking around social security reform in Scotland. Whilst written in the context of possible independence, much of the analysis and discussion remains pertinent. Of particular relevance is the following paragraph from the summary of the second report:
It is clear to us that the key issue is trust: the trust of those who receive benefit payments in a system that supports them and the trust of society as a whole in the fairness and effectiveness of the system. A lack of trust erodes society's continued support for those in receipt of social security and also undermines the self-esteem and confidence of those who receive support from the benefits system. A recurring theme of our report is therefore how trust can be established and maintained.
3.8. It is also worth repeating the comments of the EWG chair in respect to the contribution of Ailsa McKay.
I am indebted to my fellow Group Members for their expertise and insight, and for the healthy challenge that each brought to our discussions. I know they have greatly valued the independence of the Group and the space this provided for our deliberations. Tragically, one of our members died before this report could be presented. Professor Ailsa McKay was a lively and enthusiastic contributor to our work and her expertise helped the Group enormously. Her vision and passion were limitless, and she continually encouraged us to see beyond the problems and embrace opportunities and possibilities. Though we greatly missed her input into the written report, we have made every effort to ensure her contribution is fully reflected in what we say. I hope she would be proud of our report.
3.9. Immediately following the independence referendum in September 2014, the Smith Commission was set up to oversee and deliver cross-party agreement on enhanced devolution for the Scottish Parliament - in line with "the Vow" made by the three largest UK parties immediately before the referendum, to create a stronger Scottish Parliament within the UK.
3.10. The Smith Commission included representation from all five main Scottish political parties and was tasked with agreeing a package of powers. Representations were made by each of those parties, as well over 400 civic institutions, organisations and groups and over 18,000 members of the public, providing a broad range of views on which powers should be devolved. Many of those representations, including those of the Scottish Government, favoured the devolution of the social security system in its entirety.
3.11. Their Heads of Agreement, published on 27 November 2014, detailed a number of recommendations in relation to social security. These included the recommendation that the Scottish Parliament be given complete autonomy to determine the structure and value of a range of powers over disability, and devolution of the components of the regulated social fund. In addition, the Scottish Parliament should be given the power to make administrative changes to Universal Credit and to vary the housing cost element. The Commission also made clear recommendations that the Scottish Parliament be given powers to create new benefits in areas of devolved responsibility, and top-up reserved ones. See Table 3.
Table 3 - Summary of Smith social security powers
For carer's, disabled people & those who are ill
Currently part of the Regulated Social Fund
Attendance Allowance ( AA)
Carer's Allowance ( CA)
Disability Living Allowance ( DLA)
Personal Independence Payment ( PIP)
Industrial Injuries Disablement Benefit ( IIDB)
Severe Disablement Allowance ( SDA)
Cold Weather Payment ( CWP)
Funeral Payment ( FP)
Sure Start Maternity Grant ( SSMG)
Winter Fuel Payment ( WFP)
Discretionary Housing Payments ( DHP)
3.12. Following and in parallel with the negotiations between the Scottish Government over the Fiscal Framework  by which the new powers would be implemented a number of strands of work were undertaken. A key clause in terms of social security relates to the additonality of Scottish government powers.
The Governments have agreed that any new benefits or discretionary payments introduced by the Scottish Government must provide additional income for a recipient and not result in an automatic offsetting reduction by the UK government in their entitlement elsewhere in the UK benefits system. Any new benefits or discretionary payments introduced by the Scottish Government will not be deemed to be income for tax purposes, unless topping up a benefit which is deemed taxable such as Carer's Allowance.
3.13. In March 2016, the Scottish Government published a paper  outlining the future for social security in Scotland and outlined a vision for social security.
Our vision: social security is important to all of us and able to support each of us when we need it
This was supported by five principles that were to form the basis of social security in Scotland. See Figure 8 below.
3.14. Additional work was undertaken as discussed in the introduction on the Stage 1 options appraisal that resulted in the decision to form an Agency to deliver social security in Scotland  .
Figure 8 - Principles for social security
Principle 1: Social security is an investment in the people of Scotland
- At the heart of our approach is an understanding that social security is an investment in the whole of Scotland, and an important tool for tackling poverty and inequality. Where some people in our society face additional costs in their daily lives - e.g. because of ill health or disability - then it is right that society as a whole helps to meet those costs.
- Social security should help provide protection and act as a safety net in times of need. It should also aspire to provide a springboard and maximise the life chances of everyone, acting as an early intervention to give people the best possible chance. It should work with other devolved services to ensure the best outcomes, contributing to the 2020 vision for health and social care.
Principle 2: Respect for the dignity of individuals is at the heart of everything we do
- At every step of our engagement with individuals, we will treat people with dignity and respect.
- Treating people with dignity and respect means using language that is carefully considered and does not stigmatise.
- Social security should be regarded by everyone in society as an integral component of a fair and prosperous country.
Principle 3: Our processes and services will be evidence based and designed with the people of Scotland
- The starting point for the design of our policies and processes is that they are based on the best evidence, and that the individuals who are affected by them should have their say and are listened to. By combining the best evidence available with the views of applicants and professionals who provide support in this area, we will be able to design more effective policies and services, and those services will be better equipped to meet the needs of those who need them.
Principle 4: We will strive for continuous improvement in all our policies, processes and systems, putting the user experience first
- In the first instance, our priority will be to ensure a smooth transition from the existing UK benefits to our new Scottish arrangements, so that people have confidence that they will continue to receive the support to which they are entitled.
- Our policies, processes and systems should evolve in response to how Scotland and its people change over time. We will ensure that they remain fit for purpose with a transparent approach to monitoring and review, built around listening to applicants and recipients.
Principle 5: We will demonstrate that our services are efficient and value for money
- Taxpayers are entitled to expect that the investment we all make in social security should be well managed, cost effective and streamlined. We will look to align what we do with other services, where appropriate.
- We know from our consultation that the system can be complex for individuals. We will look to reduce the bureaucracy involved in claiming benefits and ensure that, at all stages, people are provided with the relevant information on how the system will work for them.
- We will continue to work closely with other Scottish public services, learning from good practice and innovation with a view to working smarter to help deliver better objectives at a time of falling budgets.
3.15. Not least amongst this work was the Fairer Scotland conversation which culminated in the launch of the Fairer Scotland action plan in October 2016  .
3.16. The Scotland Act 2016 which was passed on 23 March 2016 gives extra powers to the Scottish Parliament and a Scottish Government, in addition to formal control over certain aspects of social security as detailed above, most notably:
- The ability to amend sections of the Scotland Act 1998 which relate to the operation of the Scottish Parliament and the Scottish Government within the United Kingdom including control of its electoral system (subject to a two-thirds majority within the parliament for any proposed change)
- Legislative control over areas such as road signs, speed limits, onshore oil and gas extraction, rail franchising, consumer advocacy and advice amongst others by devolution of powers in relation to these fields to the Scottish Parliament and the Scottish Ministers.
- Management of the Crown Estate, the British Transport Police and Ofcom in Scotland
- Control over certain removable taxes including Air Passenger Duty and Aggregates Levy
- The ability to set Income Tax rates and bands on non-savings and non-dividend income
- Extended powers over Employment Support and Universal Credit
- The right to receive half of the VAT raised in Scotland.
3.17. Another significant part of the case for change is the current UK Government context. The devolution of the social security powers will not take place in isolation. Major welfare reforms are on-going at a UK level.
3.18. Disability Living Allowance ( DLA) for people aged 16-64 is in the process of being replaced by PIP, which the UK Government is implementing in a staged manner. Both of these benefits will become the responsibility of the Scottish Government. Severe Disablement Allowance ( SDA), which is also being devolved, has been closed to new claims since 2001 and existing claimants below state pension age have been, or are, reassessed for eligibility to Employment and Support Allowance, which remains reserved to the UK Government.
3.19. At the same time, Universal Credit is being rolled out across Great Britain, replacing six existing income-related benefits. Payment is normally made once a month into a recipient's account, with a claim by a couple being paid into a single account chosen by them. The Scotland Act has given the Scottish Government the power to alter the payment frequency of Universal Credit ( UC), enable direct payments to landlords for rented accommodation, and pay into more than one household account. DWP will continue to administer UC and work is underway with DWP to establish how these powers can be used in practice.
3.20. Scottish Ministers' views on welfare reform differ markedly from those of UK Ministers with the Scottish Ministers' position being that many UK welfare reform policies are likely to have a negative impact on people in Scotland.
3.21. From a specific social security perspective the launch of the large scale consultation on social security in Scotland on 29 July 2016 was a defining moment. The Scottish Government issued a public consultation to inform the content of the new Scottish Social Security Bill. The consultation set out a vision and recapped the five key principles for social security in Scotland. The consultation was in three parts, covering:
- a principled approach;
- the devolved benefits;
- operational policy.
3.22. The consultation contained a total of 234 questions. The consultation was designed in a modular way, to allow people to focus on the areas of most interest or relevance to them.
3.23. The responses to the consultation have been published as "A New Future for Social Security in Scotland"  . The views of the people of Scotland, as expressed in this docunment, have had a major, abiding and important infuence on, specifically, the analysis of the socio-economic case component of this OBC and have a wider and deeper influence on the decision documented in this OBC in terms of a preferred option.
Email: Andy Park
Phone: 0300 244 4000 – Central Enquiry Unit
The Scottish Government
St Andrew's House