Welfare Reform (Further Provision) (Scotland) Act 2012: annual report 2017

Report on the impacts of the Welfare Reform Act 2012 on the people of Scotland and other welfare measures passed since 2010.

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7. Scottish Government mitigation

7.1 Total mitigation funding 2017/18

In 2017/18, the Scottish Government will spend around £454 million on measures that either directly mitigate the changes introduced by the Act or are part of wider measures tackling poverty in Scotland.

Table 11: Scottish Government Funding: Mitigation and Tacking Poverty Measures

2015/16 2016/17 2017/18
Council Tax Reduction 343 343 351
Discretionary Housing Payment [79] 35 35 57.9*
Scottish Welfare Fund 38 38 38
Fairer Scotland 8 8 6.9
Total 424 424 453.8

Table 11 shows how these costs are broken down by each measure [80] - Council Tax Reduction scheme ( CTR), Discretionary Housing Payments ( DHP), Scottish Welfare Fund and Fairer Scotland [81] .

The Scottish Government has invested over £1 billion in the Council Tax Reduction scheme since the abolition of Council Tax Benefit in 2013, with funding increasing in 2017/18 as a result of a 25% increase in the child allowance in from 1 April 2017. Between 2013/14 and 2016/17 over £125m of Discretionary Housing Payment ( DHP) to fully mitigate the Bedroom Tax ( see section 7.3) has been provided by the Scottish Government. In 2017/18 DHPs became a fully devolved benefit, with no additional funding paid to local authorities by DWP and therefore the total amount spend on DHPs by the Scottish Government increased from £35 to £57.9 million, with £47 million allocated to mitigate the impacts of the bedroom tax.

7.2 Council Tax Reduction

Before the passage of the Act, Council Tax Benefit ( CTB) was a DWP administered form of social security which provided claimants with help to meet liability for Council Tax up to 100%. The Act abolished CTB from April 2013. Non-ring-fenced funding was made available to local authorities and devolved administrations.

Responsibility for assisting those who would otherwise struggle to meet Council Tax liabilities in Scotland now sits with the Scottish Government and Scottish local authorities via the Council Tax Reduction scheme. The UK government transferred funding equivalent to forecasted CTB expenditure in Scotland, less 10%, to the Scottish budget. The Scottish scheme protects vulnerable groups by reducing their Council Tax liabilities, rather than providing benefit payments to meet them as existed under CTB.

The Scottish Government and Scottish local authorities continued the Council Tax Reduction scheme in 2016-17. The child allowance in the Council Tax Reduction Scheme was increased by 25% from 1 April 2017, benefitting up to 77,000 households by an average of £173 per year and helping nearly 140,000 children. The two-child cap will not be applied to the Council Tax Reduction Scheme.

There were 490,410 CTR recipients in Scotland in December 2016. A total of 81,910 (16.2%) of recipients were lone parents and 189,860 (37.6%) were aged 65 or over in March 2016.

7.3 Discretionary Housing Payments

Discretionary Housing Payments ( DHPs) provide help with housing costs for those on Housing Benefit or the housing element of Universal Credit. From 1 April 2017 these have been devolved to the Scottish Government, and continue to be administered by local authorities.

In the period 2013/14-2016/17, the Scottish Government provided £125m of additional funding for DHPs to mitigate the bedroom tax. From 2017 in addition to funding the full mitigation of the bedroom tax the Scottish Government also provides funding for other DHPs, which are frequently made in mitigation of the impact of other aspects of welfare reform including changes to Local Housing Allowance and the Benefit Cap. In the 2017/18 budget £47m was estimated for the cost of bedroom tax mitigation, a further £10.9m was allocated to LAs for all other DHPs.

Table 12: DHP Funding in Scotland (2013-2017)

2013/14 2014/15 2015/16 2016/17 2017/18
SG £20m spent £35.1m spent £35.8m spent £35m spent £57.8m estimated
DWP £18m £15.2m £13.3m £15.2m NA
Total £38m £50.3m £49.2m £50.2m £57.8m

7.4 Scottish Welfare Fund

The Scottish Welfare Fund ( SWF) is a national grant scheme delivered on behalf of the Scottish Government by all 32 local authorities. The scheme replaced elements of the Discretionary Social Fund, abolished by the Department for Work and Pensions ( see section 8.6).

Delivered on a voluntary basis since April 2013, the scheme was made permanent in April 2016 by the Welfare Funds (Scotland) Act 2015 and subsequent legislation. The Scottish Government provides an annual grant of £38 million to local authorities to deliver the scheme, made up of a £33 million programme budget and a £5 million administration budget.

There are two types of grant available:

  • Crisis grants for those experiencing disaster or emergency, and who have no other financial support available.
  • Community care grants for vulnerable people seeking to establish or maintain a home, including families facing exceptional pressure.

Between April 2013 and December 2016, local authorities awarded £124 million of grants. These grants were made to more than 241,000 vulnerable households across Scotland (80,550 of which were households with children).

7.5 Mitigation of the removal of Housing Benefit from 18-21 year olds

The UK Government laid regulations on 3 March to change entitlement for housing costs within Universal Credit ( UC) for new claimants aged 18-21 years which come into effect on 1 April 2017 The Scottish Government is committed to restoring housing benefit for 18-21 years old and fundamentally disagree with the removal of the housing costs for young people which may result in putting them into a crisis and homeless ness situation.

In the meantime the Scottish Government has agreed with CoSLA that the Scottish Welfare Fund ( SWF) will be extended, on an interim basis, to help 18-21 year olds adversely affected by the UK Government's changes. The intention is to use the provisions for Community Care Grant ( CCGs) which enable the Scottish Government to assist people in establishing or maintaining a settled home where, without a grant, there is a risk that they would be unable to do so.

Scottish Government in consultation with CoSLA, Local Authorities and the Third Sector has produced standalone guidance on assistance with housing costs for 18-21 years old [82] .


Email: Philip Duffy, Philip.Duffy@gov.scot

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road

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