Social Security (Amendment) (Scotland) Bill - fairer Scotland duty assessment impact assessment

Summary of evidence

Both tax credits and the benefit which is replacing them, UC, are paid as a form of financial support to people on low incomes. In particular, working tax credit and UC both provide support to people who are in work on a low income. Both broadly support the same groups of people, although tax credits has no limit on the amount of capital a person may have, while UC does have a limit of £16,000.

DWP statistics for Scotland, up to the end of September 2024 show around 27% of people who had previously received Tax Credits failing to move to UC. Evidence gathered thus far by DWP indicates that this is largely driven by people who are choosing not to apply for UC after their Tax Credit award has ended for personal reasons. When asked why clients had decided not to move, reasons given were that they didn’t think they would need Universal Credit, the award level would be negligible or that they would not be eligible. There were no reports of clients getting in touch to ask why their Tax Credits had stopped. Despite this drop out rate, the number of families receiving Scottish Child Payment over the same period has not shown a corresponding drop and there is no evidence that the ‘Move to UC’ has affected the numbers or eligibility of those applying for Best Start Foods, Best Start Grants or Funeral Support Payment.

Based on the current evidence, despite the drop out rate from the Move to UC, caseloads for devolved benefits in Scotland have remained steady. Caseload figures show that there has been no impact on take up of Scottish Government Benefits during this ‘Move to UC’ and as our actions in amending the existing regulations are administrative and post-date that programme in relation to tax credits, we do not believe there will be any future impact.

The legislation that is now being amended was written in the full knowledge that tax credits would close in the future. Tax Credits closed for new applications in April 2019 and (apart from Best Start Grant which was introduced in December 2018) the legislation that is being amended was introduced between May 2019 and January 2023.

To ensure that all people on low incomes were protected by that legislation, tax credits were included but only as an interim measure while still in existence. It was known that UC would, in the future, be the key metric for low-income households, which remains the case. No alternatives are considered to be necessary to continue to meet the original policy intent.

Social Security Scotland have taken action to ensure that recipients of Scottish Government benefits, who previously relied on tax credits, were aware of the need to move to UC to ensure they continued to receive those Scottish Government benefits. The fact that there has been no impact on take-up or caseloads during the ‘Move to UC’ period suggests that this has been successful.

We are satisfied that no further evidence is necessary, given that these regulations simply reflect the reality that tax credits will cease to exist, and all the people who had previously been entitled to tax credits will have had their awards ended prior to these regulations coming into force.

Officials presented details of the Move to UC to the Benefit Take-up Stakeholder Reference Group in February 2024. This group includes representatives from Citizens Advice Scotland, CPAG, Age Scotland, COSLA, NAWRA, the Poverty Alliance, Maggie’s and others. No significant concerns were raised in relation to the planned closure of Tax Credits or Move to UC programme or the support that Social Security Scotland had put in place to support clients.