Social Security assistance in Scotland: up-rating for inflation - 2025-2026

A report on the impact of inflation on devolved social security assistance as required under section 86A of the Social Security (Scotland) Act 2018.


3. Policy on up-rating of Social Security assistance

3.1 The Scottish Government’s current policy is to use the CPI 12 month rate for September as the measure of inflation to up-rate devolved social security assistance. CPI is a National Statistic and is a headline measure of inflation in the UK. It is also used by the Bank of England for inflation targeting and official forecasts are available for CPI.

3.2 The CPI 12 month rate for September is published in October so allows its use in the Scottish Government budget process that begins shortly afterwards, ensuring sufficient funds are allocated to fund up-rating of social security assistance, and also sufficient time to update Social Security Scotland payments system in time to pay new payment rates in April.

3.3 In October 2024, the Office for Budget Responsibility published their latest Economic and Fiscal Outlook[13], confirming that annual CPI inflation is expected to remain close to the 2% target throughout the forecast period. A temporary rise from 2% is predicted in 2025 driven by higher gas and electric prices. However, at this time, there is significant uncertainty around the forecast for CPI inflation as various factors can driver lower or higher inflation including wage growth or the continuing conflicts in the Middle East and Ukraine.

3.4 In summary, CPI remains the most appropriate inflation measure for up-rating of assistance and the annual rate to September is the most appropriate period. However, the Scottish Government is committed to keep its up-rating policy under review and will consider alternative approaches if there is a material change to inflation measures.

Contact

Email: ssppip@gov.scot

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