 Good morning and welcome to the 12th meeting of the Welfare Reform Committee for 2014. Can I start in the usual manner, by asking everyone to make sure that mobile phones and other electronic devices are switched off? Our agenda item 1, the first item of business today, is the decision on whether to take item 5, which is consideration of the committee's work programme in private. Do you members agree? Ye, do you? Thanks very much. We go then to our second item of business today and that is to take evidence from the deputy First Minister on the Affirmative Instrument, the Scotland Act 1998, transfer of functions to the Scottish Ministers, etc. Order 2014, which is a draft. The order has been laid under the affirmative procedure, which means that the Parliament must approve the draft before the provisions may come into force. The instrument is also subject to affirmative procedure in both houses of the UK Parliament. Following this evidence session with the Deputy First Minister, the committee will be invited to consider the motion to recommend approval of instrument under agenda item 3. Agenda item 3 will be the formal debate on the instrument, and therefore the officials accompanying the Deputy First Minister will be unable to speak to the committee at that point. I go to the Deputy First Minister and I welcome Nicola Sturgeon to the committee this morning. She is joined by Owen Griffiths, who is the policy officer for the Housing Support and Homelessness Unit, and Jackie Pantoni—I hope I've said that I'm principal legal officer, the legal director of the Scottish Government. I'll give the Deputy First Minister the opportunity to make a brief opening statement. Thanks, convener. Can I start by thanking the committee for its assistance in this matter, both for applying pressure on the DWP over the matter of the cap on discretionary housing payments and also for agreeing to consider the section 63 order so quickly. I certainly hope that we are able to see the order complete at parliamentary stages in the Scottish Parliament swiftly so that we can ensure that we are playing our part in having the order passed timidly. I think that it is also appropriate for me to record my thanks to the Scotland Office and David Mundell in particular for their assistance and co-operation in making sure that we are working to a timetable that is ambitious, but one that is designed to ensure that this transfer of power takes effect and the subsequent order that the Scottish Government requires to lay can take effect in this financial year. Just very briefly about the order, the section 63 order transfers the power found in section 70, section 3, subsection 8 of the Child Support Pensions and Social Security Act 2000. That power, of course, is one to set the cap on the amount local authorities can spend on DHPs in any financial year. The committee is well aware of the history of the order. Scottish ministers have explained previously that we believe that DHPs are the best way of mitigating the bedroom tax because they are the only way of making regular, on-going payments directly to tenants who are affected by the bedroom tax. As the committee is aware, the Scottish Government initially asked the DWP to lift the cap for Scotland. That move would have required a simple negative instrument in Westminster. The UK Government decided to transfer the power to the Scottish Government to allow us to lift the cap. Although it is not the process that we initially recommended, we nevertheless welcome the process that will place the power to lift or vary the cap in the hands of Scottish ministers. It is only this order-making power that has been transferred via the section 63 order that no further powers passed to the Scottish Government in respective DHPs. The Scotland Office has agreed to the timetable, which I know has been shared with the committee. The aim of the timetable is for the order to be made at the November meeting of the Privy Council. At this time, I can tell the committee that everything is on schedule from the perspective of both the Scottish Government and, indeed, of the Scotland Office. With those open remarks, I would be very keen to hear the views of the committee and, of course, answer any questions. OK, do members have questions at the moment? Alex? Before we all agreed on the route that was taken here by lifting the cap on the discretionary housing payments, during the discussion that took place in advance of that decision, there were suggestions made by some people, including myself, that other routes may have produced greater flexibility and that, by choosing to direct all the resources available through the discretionary housing payment, we may actually be making it difficult to get the breadth of cover that the money could achieve. Are there, in your view, any areas where taking this route does limit your capacity to act in other ways? Obviously, with discretionary housing payments, there are eligibility criteria for discretionary housing payments and the eligibility criteria, the policy direction of discretionary housing payments continues to be set by Westminster, so somebody in receipt of discretionary housing payment has to be in receipt of housing benefit. I have to say, you know, my view has always been my view and it continues to be my view that this is the best way of mitigating the bedroom tax, and the reason for that, as I've set out today and I've set out previously, is that it is the only way that the Scottish Government, via local authorities, can get regular and ongoing payments directly into the hands of individuals that effectively compensates them for the amount of housing benefit they're losing as a result of the bedroom tax. There is no other way within the powers that we currently have that we could do that in that way, so I'm perfectly comfortable that this allows us to do what we've set out the intention to do, which is to take away the impact of the bedroom tax. It won't surprise you to hear. I wish we could just abolish the bedroom tax rather than have to mitigate it, but in the absence of that power, this without a shadow of a doubt in my mind is the best way of proceeding. Thank you. Thank you, Deputy First Minister. The paper before us, the support legislation is an affirmative instrument, but the actual measure you're going to use to introduce the power to lift the cap is going to be a negative instrument. Can you ask, just to explain why one is affirmative, one is negative? If Westminster had decided just to lift the cap, it would have been by a negative instrument, so that is the current way of varying the cap. This is affirmative because it is a formal transfer of the power to do that, but I think it's appropriate to stick to the current method had it been done by Westminster to do that. I should say, the Scottish Government at that stage would have two options. We could vary the cap to change it from the level it's at just now to raise it to a higher level, or we can remove the cap altogether. Our intention is to remove the cap altogether. As part of the way that the lifting of the DHP or the monies begin to local authorities has worked in operation, there have been reports in some areas, and I notice in Falkirk Council in particular, that they've suspended DHP mints to some groups unaffected by the bedroom tax. I know that you've said this shouldn't happen. I raise it because I've got an individual constituent as well with exactly the same situation who's been denied a payment. He fears it's because, effectively, those payments have been displaced by the focus on the bedroom tax. Can I ask if there's anything you can do? I know you don't want that to happen. Is there anything you can do to ensure that it doesn't happen? The responsibility for administering discretionary housing payments lies with local authorities. One of the points I made earlier on is that we are only getting the power to vary the cap, not to change any of the policy context of discretionary housing payments. Two issues have arisen in terms of local authorities now can touch on both of them. It's the second one that I think you're particularly touching on. Local authorities were obviously concerned that until the cap is formally lifted, which won't be until later in this financial year, would they be running into legal difficulties if they got to the point before the cap was lifted where they were having to breach that cap. I think we've managed to give assurance to local authorities through the joint letter that's been issued from UK and the Scottish Government, giving comfort around that. I've been very clear that local authorities should plan on the basis of spending up to the limit of money that they have available. I've been equally clear, and I'll put it on the record again today, that the money that the Scottish Government is providing for discretionary housing payments is expressly intended to mitigate the bedroom tax, so that means that anybody affected by the bedroom tax who applies for a discretionary housing payment should get a discretionary housing payment with no other means testing applied to that. The second point you're raising is, with the focus on mitigating the bedroom tax through discretionary housing payments, are there other uses of discretionary housing payments that are being constrained or curtailed? I should say at the outset, and I know money is tight in local authorities. Once we lift the cap, there'll be nothing to prevent local authorities from within their own resources, adding more to discretionary housing payments if they so choose, but even within the amount that's allocated so far, local authorities have, ballpark figure here, £50 million this year, £35 million of that from the Scottish Government, £15 million of that from the UK Government. Our current estimate of the cost of mitigating the bedroom tax is in the region of £40 million, so there is additional resources available through discretionary housing payments for other purposes. Indeed, if you look at the £15 million from the UK Government, that's split into a core amount, an amount for bedroom tax, an amount for bedroom tax in rural areas, an amount for benefit cap, an amount for local housing allowance. Now, we are of the view that the bedroom tax can be mitigated within the £50 million without touching any of these non-bedroom tax purposes, so there are resources there to be dealing with other claims and discretionary housing payments. Of course, it is then down to individual local authorities to assess those claims in the normal way. That's very helpful, and in line with my understanding of what your position is in this, just to return though, if there was evidence that some money was having a displacement effect, that some payments that would normally be expected through discretionary housing payments were not being made, are you monitoring that in any way, or are you actively interviewing in any way? We're monitoring discretionary housing payments in the use of that, and we will continue to do that, and we'll continue to discuss with councils their practical experience of this. I've said very, very openly though that with the best will in the world, the Scottish Government cannot, through discretionary housing payments, or any other means, compensate for the full impact of benefit cuts. These benefit cuts are taking £6 billion out of the Scottish economy, so we're doing as much as we can, we're doing everything we reasonably can, and we'll continue to look with an open mind at that, but nobody should be out there with the illusion that somehow we've got a bottomless pit of money to put back all of the money that the UK Government is taking out of people's pockets. The only way we'll be able to stop the full impact of that is if we've got the power to stop these changes at source. Obviously you've made some money yourself, and the Scottish Government and the Westminster Government have both made money available and local authorities to help with the impact of benefit of the welfare cuts. It's not all been taken up. I was just reading some analysis that possibly the amount of money that was made available in rural areas may have been an overestimation. Can I just ask for your own thoughts about why there hasn't been the full take-up? Is it because there's a very difficult, hard-to-reach group? Is it possibly because there's an over allowance for rural areas, or is there any other explanation why it's not been fully taken up? In terms of initial allocation of money, right now we're in a situation where some local authorities, before the final tranche of money from the Scottish Government for DHPs has been allocated, we have 12 local authorities that are already funded adequately to fully mitigate the bedroom tax, so in allocating the remainder of that, and obviously that has to be done in agreement with COSLA, but what we need to do is get that money to the local authorities who need it. So, yes, part of the reason we wanted the cap lifted wasn't just so that we could, because remember the cap applies to individual local authorities, as well as to the global sum of money. So part of the reason we wanted the cap lifted was not just so that we could increase the global sum of money, but also so that we can flex that money in terms of where it's getting to, so that there's not over allocations in some areas and under allocations in others, and that's what we hope to be able to do with the remaining tranche of money. But secondly, I think there is an issue, again without labouring, well I'm going to labour on this point because it is an important point, the bedroom tax is not abolished, the bedroom tax is still in existence, people still have a legal liability for the housing benefit lost to meet the rent that's not covered by housing benefits. So, when I made the statement about this in Parliament, I was very clear, I think you asked a question about it, that local authorities, housing associations, the government, we have to get the message across that people have to apply for help, and you know as well as I do that that's a message that is easier to get across in some groups than it is in others. So there is an ongoing job of work there that we still have to do in order to make sure that people are aware of the help that is available. I know you talked about discretionary housing payments, I think in other aspects of our welfare mitigation work, the welfare fund for example, you know underspends that we saw last year, I think we're a feature generally speaking of a new fund bearing in, I don't think we're going to have too much difficulty in getting that money out the door. So, but you know these are issues that we've got to keep at, we can't just assume particularly when we're talking about the bedroom tax, that everybody that is entitled to help will apply for it. We need to continue and particularly local authorities, housing associations, landlords have got a particular responsibility there to get that message across. Okay, I thank you for that reply, just on the same point, convener, it's just, it's just the variation, just to let me understand, there's a huge variation that's all I ask that between, let's say North Lanarkshire, this is on the proportion of DHP funding spent, North Lanarkshire has spent over 100, more than 100% and for as Murray, Perthyn, Cynros are less than 30%, that's quite a variation, I was just trying to get your understanding of what's the key reason behind that huge variation, it can't just be hard to reach people I would have thought. No, I mean some of that will be down to the differing impacts of the bedroom tax and an initial situation where the allocation of the funding was not necessarily mirroring where the greatest demand was, which is what we are trying to fix now with the flexibility of not having the cap. Repeat the point that I made earlier on, the cap had a double effect, has because it's still in place, a double effect in the sense that it limits what you can spend in a global sense, but it also limits what can be spent in individual areas, so some local authorities, with their maximum allocation under the cap, still didn't have enough to mitigate all of the bedroom tax where other local authorities perhaps had too much for that, given the lesser demand for it, so getting rid of the cap helps us to sort the allocation as well as ensure that there's enough money overall. Thank you, Mark. The question isn't so much about the policy objective of the instrument which is something that we'll find out in a minute, but I think the whole committee agrees with it. It's more a procedural one, Deputy First Minister, and it's about the role of the Westminster Parliament after, presumably, we agree this instrument today. How does that work exactly? What's the timescale and the procedure to both houses of Westminster Parliament have to consider this, and are we expecting that to be a straightforward process? I would hope that it's a straightforward process, but obviously that part of the process is not entirely within my control. The order is expected to pass through both the House of Commons and the House of Lords in October, so the relevant House of Commons committee scheduled to meet on 14 October, the House of Lords grand committee 23 October, and then the anticipation is that there would be a motion to approve in the House of Lords on 27 October. So, as I said, all of that is on track at the moment, but we continue, as you would expect, to monitor progress and contribute where we can to ensure that that process remains on track. But responsibility for the Westminster side of this process obviously lies with the Scotland Office, but David Mindellan and I are in contact when we need to be to ensure that this process keeps going at pace. Presumably that timescale is still contingent on this Parliament dealing with our side of it in time as well. Indeed. One final quick question about the procedure. I know that there was a bit of frustration, I'm sure you were frustrated as well, that there was a bit of a delay in so far as I had to wait for the Privy Council to bring this effort. Is their role now completely, this doesn't go back to them, does it? Yes, the Privy Council has to approve this and the expectation, assuming everything stays on track, is that what will happen at the November meeting of the Privy Council. There is a fallback where it could happen in December, but the preference is for that to happen at the November meeting of the Privy Council. And again, we're hoping that that's a straightforward process as well. I'm not familiar with the inner workings of the Privy Council, but I'm hoping so. Okay, thank you. The committee is joined by Jackie Baillie this morning, or company Jackie, for our next question. Thank you very much, convener. Whilst the Deputy First Minister and I would probably argue over the fact that there are other ways of doing this, I very much welcome the fact that the order is before us today. Could I ask, because the letter of comfort signed by both Governments was indeed welcome, is she aware that there is continuing reticence on the part of some local authorities to provide full DHP now? Well, there shouldn't be, and if anybody wants to bring evidence of particular reticence in any local authority to me, then I will endeavour to discuss that with local authorities. It's their responsibility, discretionary housing payments are their responsibility to administer. I don't have power of direction of local authorities in these matters, but there is no reason why local authorities should be reticent about mitigating the bedroom tax through discretionary housing payments. Okay, that's very helpful. You mentioned the question of additional money being available because the estimate for the bedroom tax was now at 40 million. There are cases of people who are being threatened with eviction, one of them, one of my constituents, in a local authority area where they failed to fully spend the money last year. They're being threatened with eviction as a result of, if you like, not quite non-payment, but inability to afford the bedroom tax from last year. Given those additional resources that you've referred to that are available, would you consider backdating in circumstances like that? The additional resources, I think to talk about additional resources, is slightly misleading because, to go back to Ken Macintosh's point, there are other calls on discretionary housing payments that, you know, people have recourse to discretionary housing payments for reasons other than the bedroom tax. Speaking on behalf of SNP councils, SNP councils were always very clear that there would be no evictions as a result of people who were trying to pay, but couldn't pay because of the bedroom tax, and I would encourage all local authorities to take that position. It is open to local authorities. You know, there were underspends last year in some local authorities in terms of this money. It is open to local authorities to backdate discretionary housing payments support, but that is a matter for them. I cannot instruct them to do so, so I would encourage you to liaise and engage with the local authority in your area, which I believe you know well on that or any other particular case. Indeed, I have two, Deputy First Minister. I'm interested in what you said about backdating. I take it they can backdate beyond one financial year, and just to note, it isn't just a question of councils. This indeed was a housing association, because of course our Gail and Bute Council did a full stock transfer. I don't know the details of the constituency case you are referring to, obviously. I'm pretty sure you'll pursue that vigorously and rigorously in the best way you can. There is discretion on the part of local authorities to backdate across financial years, but that is a discretion that rests with them, and that's why I would encourage you to discuss that with them. On the basis that you said that let me not call it additional money, but there is money available in the budget because the bedroom tax is estimated to be £40 million rather than the £50 million previously thought. Would you be encouraging local authorities to use their discretion to backdate for people who are subject and threatened with eviction as a consequence of... I think that would depend on the circumstances. The money in this financial year is there to mitigate the bedroom tax in this financial year. There is discretion to local authorities, but local authorities have to be mindful of the other calls on discretionary housing payments. They are perfectly able to exercise that judgment, and I have every confidence that local authorities are able to do so, and if there are particular cases that merit that, then I would encourage local authorities to look at them sympathetically, but the decision rests with them. I suppose what I'm asking you is whether you would favour an approach. I'm not going to sit here and endorse or encourage a blanket approach, because I think it depends on particular circumstances. The money we've made available to local authorities for this financial year is to mitigate the bedroom tax in this financial year. So, you're ruling out on that basis? If it's mitigation in this financial year, you're ruling out? No, I think clarity... No, no, absolutely not. I genuinely just want clarity, because there are people caught in the position where they are threatened with eviction because of bedroom tax arrears for last year. So, I am genuinely seeking clarity on what you're saying. Let me try to do it in simple terms for the benefit of Jackie Baillie. Local authorities have that discretion, and it's entirely up to them whether they choose to exercise that discretion in any individual case to backdate support. Thank you. I just wanted to raise two brief points. One, just going back to Ms Baillie's comments on mitigation. Obviously, this is a policy area over which Westminster has control, and what our Scottish Government is doing is mitigating the harmful impacts of a Westminster policy. That leads me to the second point, which I think you referred to earlier, which is very important, is that this measure today will not abolish the bedroom tax in Scotland, but will rather mitigate the impact of it. Therefore, that begs the question that this Parliament should have the control over such matters, not the Westminster Parliament, and that the only way to guarantee that this Parliament can control such matters is to vote yes on 18 September. We're not abolishing the bedroom tax here. We're mitigating the bedroom tax. I don't want to see people suffer as a result of an iniquitous policy imposed by a Government that we didn't vote for. That's the position that we're in right now. I didn't come into politics to mitigate the policies of Westminster Governments. I came into politics because I wanted to have the ability with others to take decisions that avoid bad policies and hopefully implement good policies that make people's lives better. It is, in my view, beggars' belief, and it's beyond my comprehension why politicians, particularly those of a different persuasion to the current Westminster Government, would be happy with a role of mitigation when they could take those powers into their own hands and trust themselves to use them better. I'll leave those who are in that rather absurd position to explain it because I can't. As we said, some of those politicians didn't bother to turn up to vote and have comments, which could have done something about it, but there we go. That's not really a new thing, but it's very important that the point is made that this is not abolishing the bedroom tax, sadly, because, as we have heard, we don't, at the moment, sadly have the power to do so, but hopefully quite soon. I didn't know if there was a question there or not, but we're going to have a debate on the issue, so maybe we'll get to that point then. In finishing the questions, Deputy First Minister, I was just going back to the point that you're making about the DHP route being the only way available to address this problem. When the housing minister was before, as I asked her a question about discussions that were ongoing with other local authorities, about their preferred option in relation to the dispersal of funds to support people affected by the bedroom tax, we know that Audit Scotland had approved Renfrew councils means of doing that. In my own area, North Lanarkshire Council were pursuing a route which was also being used by some local authorities in England. The housing minister's officials confirmed that discussions were taking place with North Lanarkshire Council about alternative ways of distributing this money. Can you confirm whether those discussions have concluded? Are you going to continue discussing those alternative options? I'm not aware of any appetite to do that. I mean, there's no mystery here. You know, when we didn't have agreement from the UK Government to allow us to, either for them to raise the cap or allow us to do it, we said we would look at other options, but we'd always been very clear that, in our view, this was the best option. The best option because, unlike other options, it has the ability to get regular ongoing payments directly to tenants that avoid them getting into debt, which I think is quite an important part of this. So, yes, we were prepared to consider other options, but this is the best way, and now we've got the power to do it the best way. That's the way we're opting to do it, and I think that's absolutely the right thing to do. So, my question is, have you ruled those other options out? Are discussions still on-going before it's about those other options? We're rooting the money that we have set aside to mitigate the bedroom tax through this route because it's the best option, and I'm not aware of other options that are better than this one, and I don't see why we would have discussions to try to come up with second best options when we are securing the power to do it in the best way possible. In the particular case I'm talking about, I was approached by officials from North Lanarkshire Council to ask that question of the housing minister. They believe that their preferred option, which required the approval of the Scottish Government ministers, was better than DHP. That was their view. Do they have that discretion to use a different method from DHP, or are you saying that this is the only one that they can use? This is where the Scottish Government financial support is going through discussion of housing payments. Councils have a range of discretion to do a range of different things. I can direct or stop them doing that, but in terms of the money— But you can, according to Audit Scotland, approve alternative methods? No, I'm happy to come back to you on this point, but I'm not aware of any request for approval of that, but the Scottish Government's financial support to mitigate the bedroom tax is being rooted through discretionary housing payments. Now, if local authorities want to do other things in addition to that, we'll always be prepared to discuss and enter into dialogue about that. I'm not sitting here just now giving guarantees or saying where those discussions would end up, but this is the best route in our view to mitigate the bedroom tax, which is why we are rooting our financial support for that through this route. Okay. That appears to be the end of questions, so we go to agenda item 3, which is the formal debate on the affirmative instrument, and we have scheduled 90 minutes for this debate, but I'm not encouraging members to use that. Can I remind the committee and others that, during the formal debate, officials cannot speak in that discussion? So I invite the ministers to speak to and move motion S4M 10739 in her name. Formally moved. Okay, thanks, First Minister. Do members have any contributions that they want to make? I think we can then put the question that motion S4M 10739 that the Welfare Reform Committee recommends that the Scotland Act 1998 transfer of function to the Scottish ministers, etc. Order B approved. I think that has completed that part of business this morning. Thanks very much to everyone for their contributions. I'll take a couple of minutes just to allow members to change. I think that we have to change some of the seat arrangements. I'll suspend the meeting for a few minutes. The fourth item on our agenda this morning is the Scottish Government's response to the expert group on welfare and constitutional reform report. As members will recall, the committee took evidence from Martin Evans, Lynne Williams and David Watt of the expert working group at its meeting on 24 June. Today, it provides the committee with an opportunity to take evidence on the Scottish Government's response to the report, so we are still joined by the deputy First Minister for that purpose, but she is now joined by Susan Anton, the economist at the welfare analysis and Edward Dawr, senior policy officer of the welfare division of the Scottish Government. Again, I invite the deputy First Minister to make some introductory comments on the report. Thanks very much, convener. I'll be reasonably brief in my opening remarks. I want to start by placing on record my thanks to the chair, Martin Evans, and all of the members of the expert group on welfare. I know that they were before the committee before the summer recess. I think that the report that they have produced for our consideration is a very solid, robust and comprehensive report and coupled with the first report of the expert group. I think that it would provide a newly independent Scotland with a very solid foundation on which to build a better, more fit-for-purpose welfare system. It's also appropriate for me to point out with sadness that I'm sure will be shared by all the committee that one of the members of the group, Professor Ailsa Mackay, sadly passed away before the group could conclude its work. I know that the input that she was able to make to the group was hugely valuable and I've got no doubt that she would have continued to make a valuable contribution, but I want to put on record my thanks to her for the work that she did here and the enormous contribution that she's had in this area of policy over a long period of time. This report that we're discussing today, as I said, was the second report of the expert group. The group's first report was a technical report looking at the costs of welfare in an independent Scotland and the infrastructure that was already in place to support delivery of the welfare system. The group in that report found that the Scottish Government forecast for a reasonable estimate of the costs involved and indeed the UK Government's own analysis paper mirrored those estimates on delivery. We know that Scotland is already well placed to deliver the functions needed for a welfare system. Indeed, the group found that Scotland delivers almost all parts of the current UK benefit system to people living in Scotland from locations within Scotland and we also deliver significant services to England, which run into the millions. For the second report, I asked the group to look at future options for change, including the principles that should underpin reform, how these principles might be reflected in helping to support people into work and how, as a society, we best support those who can't work and help them to have a decent standard of living and also contribute fully to society. It wasn't an easy remit, but I think the group has come up with a very solid piece of work dealing with key issues such as in-work poverty, while outlining a way forward that would put trust back into the system. The report obviously details some 40 recommendations, but I think what is striking is the finding at the heart of it that we have a system where trust has broken down, both the trust of the wider public in believing that their tax contribution is contributing to a fair system, but also trust in the recipients of the welfare system that they are being treated with dignity and respect, and that their contribution is also being recognised. I am not going to run through all the recommendations because I know that we will get into the detail of some of these in our discussion. There were a number of recommendations in the report that the Government indicated immediately that we would accept. The establishment of a national convention, increasing carers allowance, restoring the link between benefits and the cost of living, abolishing the bedroom tax, replacing the current system of sanctions and abolishing the current work capability assessment that determines the ability to work of the sick and disabled. There were a range of other recommendations that we are looking at very carefully because there is a need to consider them in all of their complexity, but we are looking very favourably at those other recommendations, not least the one that suggests that we should, over time, be increasing the minimum wage to match the living wage—something that I think would be hugely important to help deal with the growing problem that we have in this country of in-work poverty. We are also looking at alternatives to the work programme, how we support those with a disability, enter and stay in work, and the proposal for the introduction of a new social security allowance. Final comment is one of the things that I thought was most powerful about the report, and it is something that I think all of us require to give further thought to. It is this suggestion that we need a radically different way of supporting sick and disabled people, and the analogy was drawn with the very concerted efforts that were brought to bear on lifting pensioners out of poverty. We need a similar holistic approach to dealing with those with long-term disabilities who are not likely to be capable of using work as a route out of poverty. In summary, I was very pleased with this report. I think that it gives us a solid base to work on, and I would be very keen to hear the committee's views and answer questions. Thank you very much, Deputy First Minister. Can I kick off just by praising some of the issues that Martin Evans brought to us when he spoke to the committee. He said that, apart from the remit that you explained in terms of options and principles, he said that he had been given no cost constraints. Can you explain the rationale for that aspect of the remit? The committee was asked to look with a fairly open mind. I think that, as Martin Evans did explain at some length to the committee, they operated within, broadly speaking, the financial envelope of the current cost and the estimated cost over the next few years of delivering the welfare system in Scotland. However, they were not, at the outset of their work, restricted in terms of a cost envelope. They were asked to look creatively and imaginatively. They did look at some fairly radical different options, including the idea of a citizen's income, although they did not recommend that. One of the key themes running through their report is that there are aspects that are fairly well known, as are other members of this committee, as a critic of the cuts that are being imposed by Westminster. I think that there are big aspects of the current direction of travel that we should not carry on with the move to universal credit and personal independence payments. I think that the move to restore some link, the key link between benefits and the cost of living, is really, really important. Increasing carers allowance—these all have cost implications, but the central theme of much of what the report was talking about is how we use current resources better, particularly to help those who are furthest away from the labour market into work. Do you accept that there will be cost implications? Some people have suggested that about £350 million, looking at the recommendations of the committee. Those are figures that have been bandied about. Do you recognise those figures? I do not know where that particular figure comes from, so no, I do not accept that figure. I am happy to respect it in detail. That is part of start-up costs and other implications. I am happy to deal with start-up costs to use your terminology there separately. I am assuming that you are talking at the moment in terms of the cost of delivering a welfare system now. The report is very open about some of the cost implications of some of the proposals that it is making. Increasing carers allowance, so that carers allowance matches jobseekers allowance. I hope that everybody would agree that it is not really acceptable that carers who contribute so much have the lowest level of benefit of any group in society. The cost of doing that is set out in the report at, I think, around £32 million. The cost of restoring the link between benefits and CPI—obviously, the precise cost of that depends on the level of CPI. Of course, the UK Government say that they plan to restore that link from, I think, 2017-18, and that cost is factored into their projections, whether they actually do that or not remains to be seen, I suppose. Much of what this report is talking about—and I think this is what is very welcome about it—is about how you use resources better to get people into work, and then, crucially, how you ensure that, when people are working, they are earning a standard of remuneration that lists them out of poverty. Again, I would hope that this would be a point of agreement around this table, that one of the biggest challenges we face right now is in work poverty. They talk about the potential savings, which are based on estimates of very estimable organisations around what you could save over time to the public purse if you are not having the state subsidising low pay, but instead people paid at the living wage. In terms of set-up costs, if you want me to answer that point, the issues around transition set-up are, as you are aware, dealt with in the White Paper, Chapter 4 and Chapter 10, in particular of the White Paper, issues around welfare. I think that when the committee was before you, their view of that, given the degree of delivery infrastructure that already exists in Scotland, almost the entirety of the welfare system in Scotland is delivered from locations in Scotland and by staff in Scotland. I want to put words in the expert group's mouth, but I think what they were saying is they think that is broadly neutral. Professor Dunleavy's work obviously looked in some of this in greater detail. I think he drew, and I don't know whether this is where the figure you quoted to me at the outset comes from, but he drew the distinction between pure set-up costs and what he termed investment costs. In welfare, for example, a Scottish Government would invest in new systems, IT systems, to support a new welfare system over time. As Professor Dunleavy says, these are investment costs in more efficient ways of delivering systems, and as part of the UK, we pay a share of new computer systems anyway. I am happy to get into any of these particular points in more detail, but that is the general thrust. I will just ask one more question before opening up to the rest of the committee. As you pointed out, the expert group suggested a national convention on welfare to be set up around about 2015. Will financial sustainability be part of the remit of that commission, which you would have to establish? What restrictions might you place on their considerations to ensure that the fiscal constraints that you would be operating under are taken into consideration? Financial sustainability, fiscal sustainability, should be one of the cardinal principles of any responsible Government. I know that when you have a UK Government sitting on a £1.5 trillion debt mountain, it is hard to believe that it has been for UK Governments down the years, but I am a member of a Government that balances the books every year, so that attention to sustainability and fiscal responsibility is vital. We start from the position in Scotland, which is a very strong position in the expert group, and both of their reports draw attention to this. We start from a position where social protection, and the term social protection obviously encompasses welfare pensions, takes up a smaller proportion of our national income or national economy than is the case across the UK. We start from a more sustainable and affordable position. Obviously, everything we do, whether in welfare or anything else, has to be done with the determination to be financially responsible. One of the big challenges, and I would say that it is one of the big opportunities in doing welfare better, is that you design your welfare system in a way. You align it with your systems of employment and your approach to the minimum and living wage in a way that is very much focused about getting folk into work and making sure that work does pay decently for people, so that you are not having people in work dependent on the welfare system. This idea that Scotland can't afford a decent welfare system and shouldn't be aspiring to have a welfare system that is better than the one we've got and actually represents a better use of taxpayers' money is not one that I hold to at all. Did your figures take into account the secret oil field of Shetland? Is that a serious question? Are your figures based on the published figures from the OBR or the ones that you've used in the Parliament, or does it include this secret oil field? I'm not going to go into a question about secret oil fields because I think that would probably be demeaning the purpose of this committee. Our oil projections, as you know, are published. They take account of a range of estimates there in line with industry estimates for production. In terms of the projections around the price of oil, they project a flat cash price per barrel of oil, which actually in real terms is about a 10% reduction, so they are cautious oil projections and our fiscal projections take account of those. I would hope that all of us would see our vast oil wealth as a country as an advantage, a bonus, something that we should be proud of and look to make sure that benefits are more people in future than perhaps it has in the past, not something to be ridiculed. However much you ingest, you may have been intending it. Indeed, First Minister, you have mentioned a couple of times the Scottish Government's acceptance and the recommendation to increase the level of carers allowance the same as job seekers allowance. Just wonder if you could spell out exactly what does that mean for some who be interested in it and indeed how many people would benefit by that? It goes to carers allowance, as I have just said, is the lowest of all of the benefit levels that are paid right now. Our proposal would take carers allowance from £61.35 to £72.40, which would be of significant benefit to carers. I want to be very clear that I do not see this as the be-all-and-end-all of the support that Government owes to carers. Carers do an absolutely invaluable job for society. I know that many carers have other issues around carers allowance in terms of the threshold, the number of hours that they are allowed to work, how carers allowance interacts with other benefits. I think that these are all things that absolutely require to be looked at as part of a bigger review of the benefit system. However, I think that it is an important statement of intent and an important statement of the value that we attach to the contribution that carers make to say that they should not be getting a level of benefit that is below basic job seekers allowance. It must be what you just said. There are some in excess of £500 a year. It is about between £500 and £600 a year. That would be very welcome, I would have thought, for most carers there. I noticed yesterday that you were at Greater Maryhill Food Bank in relation to, again, I am sure, the very welcome announcement of support for that institution and other organisations doing work on the ground. Of course, we, as a committee, have published a report on food banks and staffs that the UK Government's welfare reforms are a huge driver in the increase in utilisation of such organisations and none more so than the sanctions regime. Again, the committee has published a report on sanctions. We say that we accept the need for conditionality, but it should be backed by a greater support. I think that the expert group has said something similar. What is the Scottish Government's perspective in relation to the recommendation and sanctions more generally? I support the thrust of what the expert group has said on sanctions. The expert group is quite clear, although there are obviously differences of opinion around this kind of issue, that some form of conditionality in any benefits system has a role to play. However, the real concern, and it is a concern that I share from the experience of dealing with constituents, as I am sure every member around the table will, is that the current sanctions regime is very, very indiscriminate. It is very heavy-handed. It leads to real inequity and to real hardship on the part of a lot of people, particularly people who have children. As I am sure other members have, I have people at my surgeries in my constituency office who find themselves in sanctions without any real understanding of why they are on a sanction. The implication of that is often that they are without any means of supporting their kids for however long that sanction is lasting. I think that we need to have a system that is much more supportive, that is much more about supporting people through the difficulties they face in getting into work, rather than just slapping on sanctions for often reasons that are difficult to fathom. In terms of food bank demand, I keep hearing, and it was put to me in an interview yesterday, and I should say that the interview was only putting it to me as being somebody else's view, but this view that the DWP puts forward, that the rise in demand for food banks is because we've got more food banks. The folk just decided to go to food banks. That is just insulting beyond measure to people who have to go through what must be real trauma and indignity of going to a food bank. The rise in demand for food banks, 400% increase in demand over the last year, is down to the cuts in benefit provision that Westminster is implementing. That's the hard reality. The experts from Herrie-Watt University made that point as well. It's definitely not supply-led. It's definitely demand-led, sadly. One last question, convener, and it leads to a lot the early work of this committee through the USAE process. We had a lot of witnesses who came through the work capability assessment process, who come to speak to us about their experience invariably, in fact universally, negative. Again, the expert group has posited a change for the work capability assessment that they should be scrapped and replaced with something a little bit more enabling, more of a partnership philosophy. How does the Scottish Government respond to that? Well, again, I agree with the recommendation. Obviously, there's work to be done in terms of the detail of what would replace that. I think it's fair to say, and again this is a view born out of experience, that the work capability assessment has led to some quite horrendous cases of stress and anxiety on the part of people that are put through that. Now, any system like that has to be humane, it has to be personal. I think these assessments should always be carried out by clinicians. I personally don't believe it's the kind of system we should be outsourcing to private companies. I think it is so fundamental, a part of how we support people with disabilities, that it should be a role of government. Therefore, I think there is a real need to put in place something that is much more fit for purpose. As I said, very frankly, there's some careful consideration of exactly what form that takes, but the current system, I think, is deeply, deeply discredited. Go back to the money issues that the convener raised in the opening remarks. The cabinet secretary talks regularly about cuts and puts a broad figure on these cuts, which, again, she mentioned earlier in today's meeting, of £6 billion. Could you give me a rough breakdown of where that £6 billion comes from? Is it an annual figure? Is it a five-year figure? Is it a 10-year figure? The Scottish Government has published an analysis of that, which I'm pretty sure has been drawn to the attention of the committee before, so I'm happy to make that available. I'm looking for a basic indication of what time period that £6 billion relates to, because it has no meaning unless we know. Up until 2015-16, so the four years, I think, up to 2015-16, but, as I say, that is a published document by the Scottish Government, so I'm more than happy to draw to your attention again. It's a figure that extends over four years, is that the case? Over years, up to 2015-16. It's an accumulated figure. When you talk about that accumulated figure, and you talk about it in very general terms, that appears to sound like a commitment to return that money to the benefit system. In an earlier answer, you said that when you asked the committee to look at welfare, you made an assumption that it would be roughly within existing figures. Is there a commitment to return that money to the welfare system in Scotland, or is that just a vague commitment designed to sound attractive to people who are in desperate situations? No, there is a real commitment to undo some of that. Some of that £6 billion, for example, has come from, over the last few years, the link between benefits and tax credits, and the cost of living not being maintained, so the freeze and then 1% cap. We can't go back years and undo the damage that's been done, but we can, going forward, say, as I have said today, that we will guarantee the link between benefits and the cost of living. Similarly, much of the impact on disabled people, for example, is coming from the transition from DLA to personal independence payments, and we are saying very clearly that we will not continue with the rollout of personal independence payments. Now, exactly the cost implications of that, and over what period of time, depend on, because we still don't know the precise timetable for the UK Government's intended rollout of that, but we do not agree with that change. So, there's some very clear and very tangible ways in which we cannot turn the clock back. I wish we could in some respects, but in moving forward from the point that we have control over the benefit system, there are things we will do very differently to stop the impact falling on the most vulnerable in our society. So, reductions in tax credits are actually included in your figure of £6 billion. That figure includes the not rising, not, it's a figure about the money that's been taken out of the economy and the impact on real people. There are substantial changes in the tax system that taken as a whole, but there have been significant reductions in tax credits, but that has been as part of a change, general changes within the tax system, which at the same time saw the basic, the tax threshold increase to the extent that people are between £800 and £1,000 better off as a result of that change. That figure is looking at the net impact of changes on individuals. Now, you know, I'm sorry if it's... You use the phrase net impact, but surely if you want to take the net impact, you have to balance one change in the tax system with another. If you simply take one change and count that as a cut without taking the other change into account, that is expressly not a net impact. What I'm saying, I think there's plenty of evidence from a range of different organisations that the changes you're talking about in terms of raising the tax allowance, for example, do not compensate for the range of other changes for every single person. Now, it stands to reason that when you have tax credits and benefits, not keeping pace with the cost of living, when you've got significant changes to benefits for disabled people that are taking money out, that has an impact, and that impact is what we've tried to quantify in the way that you're talking about. We've moved now from talking about cuts in general to being more concerned about the specifics rather than the headline figure. I'm not sure what... The headline figure is important, because that's the money that's been taken out of people's pockets, but what we are trying to focus on is the impact on individuals, the kind of impact that is resulting in some individuals ending up at the door of a food bank. These are real-life impacts that people are experiencing every day right now that are pitching up, certainly at my constituency, surgeries I can't speak for everybody. These are real live impacts of changes that are happening right now and are planned to continue to happen by the Government and Westminster. Now, you can... It is perfectly valid to argue that, you know, if that's the position you want to argue that this is all for the right reasons and this is all perfectly justified, but you can't deny the impact it's having on particular groups of people. So, taken in its entirety with the proposals of the expert working group on welfare reform, have the effect of reversing the cuts you're talking about? I'm setting out where we would in future do... We can't reverse things that have happened in the past. For example, people losing money because their tax credits or their benefits haven't increased in line with inflation, but in future we can make sure that that link is maintained. Similarly, we can say, as we are saying, we're not going ahead with certain changes. We're not going ahead with the rollout of universal credit. We're not going ahead with the rollout of personal independence payments. So, there are consequences of that. And, you know, that is... These are very firm commitments that we're making. It will be for other parties when we get into this scenario to decide on their own policy and what commitments they want to make. But we are saying, if we want to stop some of the changes that are going to continue to have an impact on people going forward, then we need to do things differently to what is currently planned in a range of areas. So, there's no commitment to reverse. There's simply a commitment to take a different direction in the future? Well, I don't have power. I wish I did have power over... If I had power over welfare right now, we wouldn't be doing some of the things that are having the impact we're talking about. Unfortunately, I don't have that power. Now, I can't, with the best will in the world, turn the clock back to restore a link between benefits and the cost of living a year or two years ago. But I can say quite clearly that, in future, if we have this responsibility, then we'll maintain that link so that those on the lowest incomes don't continue to fall behind the cost of... Their incomes don't continue to fall behind the cost of living, which helps to push more people into relative poverty. I noticed this report talks about CPIs being your measure. I remember when CPI was adopted, you were one of the ones that complained about the move from RPI. Has that changed from RPI to CPI in the longer significant? No. The expert group, and we asked the expert group to look at these things, has recommended that the link should be with CPI. Thank you, convener. Good morning, Deputy First Minister. You said at the beginning of your statement that trust is broken down. I would argue that trust is broken down and being replaced by fear in many places because of the Westminster Government's welfare changes. Mr Hepburn touched upon work capability assessments, and there seems to be a real fear round about them. In a recent visit to the MS Society and Aberdeen, assessments were one of the big issues that kept coming up again and again, not just work capability assessments, but assessments that are going to take place with the changes from DLA to PIP. How do we overcome that fear and how do we ensure that any assessments that are done in the future are done fairly and without the involvement of private enterprise? Well, I'm quite clear in my mind that as we take responsibility for these areas of policy, then I think any system of assessment of people with disabilities has to be done in a way that recognises the clinical specialism that is involved. Clinicians have to be involved and that's something the expert group was very clear about as well. I don't think this is an area that is right for outsourcing to the private sector. I think the expert group was, I think, being very clear about its views around the breakdown of trust and the fact that many people who are in the broader social security system feel very scared and uncertain. That's going to take time to rebuild, but I think that's why the expert group focus on principles on what any welfare system should be trying to achieve is so important because you're starting to work from a system of first principles as opposed to what we've got into in this country, which is the characterisation of everybody who's in the social security system is somehow a scrounger or a skiver, somebody who's ripping off the taxpayer and is capable of working. I mean, let me be very, very clear. The benefit system shouldn't be a free ride for anybody who's capable of work. You know, there is no doubt at all that we want people who can work to work. When they're in work, we want them to be paid a decent wage so that they are less dependent on top-ups from the state. But there are people, particularly people with long-term disabilities, for whom work is not that route out of poverty. And we've got to make sure that these people are dealt with in a system that is personal, that is respectful of their dignity and doesn't create this climate of fear and uncertainty that exists for a lot of disabled people right now. One of the things that came up again and again was that changes to the system itself may actually be much more costly for the state. And I'll give you an example where folk there were saying that if there was massive changes from DLA to PIP, money was lost and folk's independence was taken away from them in terms of travel and other things, that may mean that a relative has to give up work and care for them. How do we ensure that in future in independent Scotland that we get these strategies right to ensure that we allow folk to keep their independence and allow them, their relatives to continue to work if that's possible, allow individuals with disabilities to work with that payment? I think the answer to that has a number of different strands. I think when it goes back to things we're already grappling with in terms of our devolved responsibilities, about the better alignment of different services, whether that's health and social care, employability services, all of that is really important to make sure that we don't have a situation that many carers do just now where the cut off points in carers allowance mean that if they work over a certain amount of time they lose completely, there's a cliff edge there, we need to make sure all these things join up much better. But I increasingly think, and certainly my thinking on this has been developed by this report we're talking about just now, that we need a really fundamental look at how we support people with disabilities, because right now people with disabilities they are in the general welfare system often being treated in a way that is driven by the desire to get people off benefits, and I've already said where people should be in work, they absolutely should be expected to work. But often disabled people right now feel very caught up in this idea that anybody in receipt of state benefits is somehow a scrounger or a skiver, and we've got to get away from that. And I think I'm very, very attracted to what the expert group has said about looking very discreetly at long-term disabled people and how we support them to have independence, to have a decent quality of life in a way that helps lift them out of poverty. Now there's a lot of work to be done around that, I'm not sitting here saying we've got all of the answers to how we do that, but the opportunity to look at that in a very different way is one that we'll open up to us and we should take it. I think it would be fair to say that the evidence that we've taken from folks with long-term conditions and certainly speaking to folk like at the MS society event that I was talking about earlier, you know people want to work for as long as they possibly can and retain their independence and I think this is what's so sad about the situation that we find ourselves in with this Westminster reform, where everybody seems to be tired as a scrounger or a skiver, which I think is absolutely ridiculous. In terms of the bringing together of the current Westminster welfare responsibilities and some of the devolved responsibilities that we've got, do you think that that realignment of services offers real opportunities to provide better services and better welfare for our disabled people? It does and that for me is something that applies across a whole range of different policies. It doesn't sound the most exciting of arguments, but often what you find when you've got some powers held at Westminster, some powers held here as you've got a real dislocation, so you know the split between employability responsibilities and some of the other responsibilities of the Scottish Government in the field you're talking about, you know many of the changes to support for disabled people that are being driven by Westminster, you know Westminster will see them as cutting costs to Westminster, but the implication of that will be a transfer of those costs to areas that Scottish Government is responsible for, whether that's health or local authority, because you know that has to be picked up somewhere in the system. So the ability to bring all of this together, to see this in a holistic way, lends itself to you know much better solutions to how we support people in what is one of the most vulnerable groups that we have to cater for. So an end to the current scenario of Westminster in many cases cost shunting on to other public bodies, which often leads to greater public costs, but beyond that huge costs to people's lives because there's not that holistic approach. I mean I'm not saying that happens automatically, we know from our own experience how difficult that is between health and social care and you know we are working out to integrate those things and so even in areas that are already devolved that there can be if you don't get the right structural setup there can be the tendency to do that, but you know the first step is to have responsibility for all these areas so that you can look at how you align and integrate the different services to provide the best outcome. It doesn't happen by magic and it's not always easy, but we're going to have a better chance of doing it if we have all of these responsibilities in our own hands. Thank you convener and I welcome that opportunity. Can I just begin, if I can, Deputy First Minister, by talking about sanctions which you mentioned earlier, the report was quite strong about abolishing the current system of sanctions, but it talks about replacing it with a system of conditionality. Can I just ask you to explain the difference between sanctions and conditionality? Well you know in terms of basic terminology sanctions is a form of conditionality so you don't get benefit unless you do certain things and benefit can be removed. The problem with the current sanctions regime is the way it's being applied, where it's being applied in my view very indiscriminately, it's being applied in circumstances where people actually need more support, so a single mother ending up being sanctioned because they haven't a childcare and haven't been able to do the things that they're required to do, that makes no sense. So you know the report talks about a more supportive approach here, so if you get into a situation where somebody is over time just willfully not engaging with the system then I think everybody would accept there has to be a degree of conditionality there, but the focus, the first instinct should not be as it is just now or how it appears to be very often just now, which is just take any excuse to slap a sanction on somebody but instead work with that person to understand what the barriers are and try to have a system that helps people overcome these barriers and you know like all aspects of this report is if we take responsibility here and are putting these systems in place then there's a lot of work requires to be done in terms of the detail of that and you know the national convention that has been talked about as an important part of that process, but you know it's not so much that there's a strict line between sanctions and conditionality sanctions as a form of that but it's how it's been applied at the moment and in my view deliberately applied in this way that is so deeply wrong and counterproductive and perhaps that's the bit that's not talked about as much, we talk understandably about the impact on people but the counterproductive nature of the way sanctions are applied in terms of not providing support to help people back into work I think is also of considerable concern. Can I thank you for that? You also mentioned earlier the plans to increase carers allowance, can I just check, do you believe people will be better off as a result of you increasing carers allowance? Yes. I mentioned that I've had some correspondence from somebody who believes that although one part of the carers allowance will increase, another part will decrease, it's your understanding that they will definitely be better off as a result of the change? Yes, but I said earlier on I think there's other issues you have to look at in terms of how carers allowance interacts with other parts of the benefit system. I don't think it's just the amount carers allowance is paid at that is an issue, I think there's issues I said earlier on about thresholds and such like, so I would want us to as part of an overall approach to looking at welfare and rethinking how we do welfare to look at some of these broader issues, but yes I believe that increasing the level of carers allowance will make people on carers allowance better off, and that was the view of the expert committee, the expert group. Can I just ask also, the First Minister, when he was asked last year if he supported the benefits cap, he suggested, he said sorry, quote, if you have the right cap deployed in the right way then that is a reasonable thing to have. Do you agree with that statement? Well what he was saying was there were, you know he was putting a couple of ifs there and saying those ifs weren't satisfied in terms of the benefit cap we're talking about, so he was drawn a distinction between some kind of theoretical discussion around whether there was ever any merit in an approach like that and the specific situation that we have just now. I think what the expert group proposes here is better than the benefit cap approach that the UK government is taking, where there's an onus on government at certain points during every parliamentary term to report to Parliament on the level of social security expenditure and obviously have a responsibility to explain any particular changes in that, and that is an approach that I favour over the one that's currently deployed. I appreciate that the First Minister did put particular caveats in, but with the caveats that we're doing, do you agree with the point that he made? The government, which includes the First Minister, agrees with the expert group, which has laid out an alternative approach, which is a responsibility on government. The benefit cap that the UK remains to be seen how they implement that and what happens when they breach it, whether they'll just allow it to go by the wayside or whether they'll cut people's benefits, which I suppose if it's to be meaningful for them, for their purposes, you would have to assume they will do, which is very worrying, but the government's view is that we favour the approach that's set out in the expert group's report. I'll come back to that second, but it's just to clarify this, because it did cause some confusion at the time, so it's just to clarify. It's a very specific statement. If you have the right cap deployed in the right way, then that is a reasonable thing to have. Clearly, the reason for the First Minister saying that, to my mind, would be to indicate that he's not against some form of benefit cap. On the very specific wording that he used, was he right to use those words? Do you agree with the words that he used? I know what the First Minister was communicating here is that we accept that any government has to be responsible and accountable in terms of spending around the welfare budget, as it does around spending in any other area of government. As you've demonstrated in the couple of times you've read that quote out, he was clearly not agreeing with the approach that the current UK Government is taking around the benefit cap. He was making a hypothetical statement about if you get a number of things right. Now, what the Government's position is, is that we agree that that accountability and that responsibility is more meaningfully exercised and discharged in the way that the expert group is talking about in its report than it is through the approach that the UK Government is taking. I think some people would think he's trying to have it both ways, suggesting that our form of benefit cap is reasonable. I think you're being too cynical there, if I may say. I mean, it's very unlikely, I have to say. Can I just ask as well the final question, really? The working group said that there would be no net additional costs, so there would be some changes. There would be some additional costs, but there would be some savings too, but no net additional costs. Is that your view of the way the new system will work? It won't cost any more than the current system. I mean, that's the view of the expert group. You've had the expert group in front of you, and it's for the expert group to set out its own thinking. It's not for me to do that. There are things that we and the Government, obviously not the expert group, are saying we want to do, much of which draws on the recommendations of the expert group that have a cost implication. So Carers Allowance, which is one of the questions you asked me about, restoring the link with the cost of living. I should say that the UK Government currently says it's going to do that in 2017-18. We'll see whether that transpires, but they are saying that they're going to do that, so presumably their projections include a costing for that. So there are cost implications. We don't want to go ahead with personal independence payments and the loss of income for groups of disabled people that that will entail. But what the expert group is pointing to, and I think pointing to rightly, is if you get other things right in your welfare system, and if you do certain other things that are about tackling in-work poverty, the savings that you make can broadly be equivalent to the cost implications of that. That's the point that they're making in terms of the broadly neutral cost implications. However, there are clearly upfront cost implications of some of the things that we are saying we want to do. Of course, we've said that we would take a different approach to public spending in terms of the growth of public spending in the years following independence, the current UK Government. I think—I may be wrong here, but I think the Labour opposition have said they'll stick to this 1 per cent growth. We've said that while keeping our public finances sustainable with the deficit and the downward trajectory as a share of GDP, we can aim for 3 per cent growth in public spending. We think that's more appropriate and more in terms of the interests of the overall growth of the economy. Just to clarify, do you agree with the expert group findings? Obviously, I've said that things like moving over time to having a minimum wage that equals the living wage is something that we're looking sympathetically at. Obviously, we've got to look at the timing of that. However, yes, I agree if you can do the things. It doesn't happen. What I'm just trying to be very frank about is that these things don't happen just by waving some kind of magic wand or clicking your fingers. You have to get these things right. But if you get these things right, for example, we've not gone into the detail of this yet, but a lot of what the expert group is talking about—about the failings of the current work programme and the need to spend more of your resource on those that are furthest away from the labour market to help them into work. If you do that, if you tackle some of the need for the state to subsidise low pay by raising levels of wages, then yes, I do think the right that a sustainable welfare system doesn't require to be one that is the bill for which it is constantly rising. It's just about using money better and making savings in order to ensure that the money that you are spending on welfare is getting to those who need it most. Thank you very much. Can I join with the Deputy First Minister in welcoming the efforts of the members of the expert group on welfare? Can I pursue firstly care as allowance? I think the press release from the Scottish Government indicated that 102,000 people would benefit. I think that Ken Macintosh has set out that reality is that that would be actually less, because some people in receipt of care won't receive it because it's offset against other benefits. Could the Deputy First Minister therefore confirm that the actual figure of those who would benefit is 57,000? I'm more than happy to look at what Jackie Baillie is putting forward to me in reply to her in writing on the detail of that, but I would remind her that what I've said is that, and I would hope that there would be an agreement here that raising the level of carers allowance is the right thing to do, but there are other aspects of how carers allowance interacts with the benefit system that we require to look at because the intention here is to help people who are eligible for carers allowance. This is one of the many areas where if we get into the scenario of having the responsibility to do this, I'm sure Jackie Baillie will be very keen to work with the Government, or if Jackie Baillie is in the First Government of an independent Scotland, I will be very keen to work with her to make sure we implement these kind of changes in a way that is about benefiting as many people as possible, because the intention is very clearly to do that. I'm as ever keen to work with the Government. I question whether they are quite so keen to work with me, but maybe there is a new dawn. Can I perhaps share the objective to First Minister? I don't think so, but can I say, I think clarity, whatever the constitutional outcome, clarity is important to the people of Scotland. I'm perfectly clear about what we said, but you're asking me to, and I'm having to take away your figures of course. Can I share with you a piece of information? The national statistics distinguish between the number of cases where carers allowance is in payment, that's 57,000 in Scotland, and entitlement-only cases. They talk about a number of 57,000. I just think it's important in terms of clarity for carers sitting at home that we have a clear number. Can I move on, convener, to set up costs? It's been suggested by experts that there would be set up costs for an IT system. I know you made a distinction between investment and otherwise, but you would need a different IT system to administer a changed benefit system in Scotland. The suggestion was that that was 300 to 400 million. Is that a figure that you would agree with? I'm not going to put a figure on that, because as Professor Dunleavy said, we require to have information from and discussion with the UK Government before we can do that, and they are the ones that are refusing to do that. I would certainly recommend Professor Dunleavy's work on that, because he clearly makes the distinction between what he terms pure set-up costs, the things that you don't get back, because they are just associated with setting things up, and an investment cost. He makes the point that, in terms of computer systems—well, firstly, I'm not just talking about welfare here—governments in control of the pace and speed at which it chooses to do that involves putting into place systems that are fit for purpose and can deliver efficiency savings over time. He also makes the point that, of course, as part of the UK, systems are periodically updated and we pay our share of that right now. I wouldn't describe that as a set-up cost, as an investment cost that a Scottish Government would make to make sure that we've got fit for purpose systems to administer our welfare system. Whatever you describe it as, and I'm happy to go with alternative descriptions, does the sum 300 to 400 million fit? No, that's not a figure. I've already said to you, and we've had this discussion across a range of issues on set-up costs. I am perfectly ready and willing to go and talk to the UK Government. I'm happy to clear my diary and do that at a point of their choosing if they want us to be able to bring more clarity. But as Professor Dunleavy said, the barrier to doing that right now is an inability and an unwillingness in the part of the UK Government to enter into these discussions. I think you would agree that the expert groups first report, their interim report, suggested that as a way of avoiding risk that for a transitional period you should share the UK system. Nevertheless, you've said quite clearly that the Scottish Government would wish to make a priority change to social security immediately following separation. If you can't use the existing system because sharing a system where you're going in a different direction becomes difficult, how do you propose to consult, legislate, design, build and test systems within a period of 18 months, two years, however long it would take? We'll do what requires to be done to move from a system of shared administration to a system where we are able to start the process of implementing the kind of welfare system we want. As is evidenced by the experience in Northern Ireland, it is possible within shared systems to make changes. Northern Ireland has opted to make some of these changes already. We may be able to do that through a shared IT system for longer but we won't know that until we can have that proper discussion. We're very clear that we want to be in a position within a very short period of time of being able to start the process of making the significant changes that we all want to see to a Scottish welfare system as quickly as possible. Interesting the example you give because Northern Ireland would remain in the United Kingdom and benefits would be paid in Stirling. There is no such clarity with the position adopted by the Scottish Government. For the record, convener, yes there is. There you go. We could do yes, there is, no there is, no there isn't. I think it's a statement of fact. I will avoid that. Can I ask why the expert group and indeed the Government has previously and currently used GDP as a measure of welfare affordability? That's a standard measure of how you determine the affordability of things within an economy, is the proportion of your economy that that makes up and on that measurement not only is welfare more affordable in Scotland than in the rest of the UK but also than in many other OECD countries. It's interesting then that your own fiscal commission suggested that comparisons of GDP per capita, including North Sea oil, should be viewed with caution as much of the output from North Sea oil we know flows overseas. So an alternative measure that they support, which is your own fiscal commission, that accounts for this is gross national income, and there have been a number of independent economists that have suggested that that would be a better, more realistic measure. I'm not aware that Labour have decided that GDP is suddenly not a relevant measure of the economy's welfare. I'll remember that the next time I hear Ed Miliband talk about the latest GDP figures. Can I just interrupt because I don't think this is funny. This is about whether a system is affordable and judged by independent economists as being affordable. I know you would treat that question seriously. Let me answer it in two different ways. I find the assertion that we seem to hear more and more often from Labour that Scotland can't be independent because we can't afford anything to be deeply insulting to people across this country. We pay for the services that we currently enjoy in Scotland from the taxes and the national insurance contributions that we already make, and I know Jackie Baillie will be aware of the fact that for every single one of the past 30 odd years we've generated more tax per head of population than has been the case elsewhere in the UK. The idea that Scotland is somehow subsidised is that the only reason we can have a welfare system right now or a pension system is because there's a money tree in London sending us up free money. It's just got no basis in fact and I think people find it quite insulting. We pay for our welfare system right now and we will do that in an independent Scotland. The measurement of our country's wealth, the tax revenues from North Sea oil and gas don't flow overseas, they flow to the treasury in London and frankly are as likely to be spent on nuclear weapons and whatever else George Osborne wants to spend them on than on things that are actually for the betterment of people in Scotland. Scotland can afford a welfare system but the real benefit of being independent with powers over welfare is that we get the chance to decide how those resources are spent in a way that actually benefits the people who depend on that system. Jackie Baillie can continue to defend the right of Tory Governments to dismantle our welfare state. She's perfectly entitled to do that but I actually prefer to argue for Scotland taking responsibility to build the kind of system that I think we should be proud to have. It's interesting I find that the Deputy First Minister didn't answer the question because none of what she said was actually indicated as an opinion by myself. What I merely wanted to know is why the measure used of GDP, one that has been criticised by the Government's own economists as well as independent ones, is the one that's used. Jackie Baillie wants to cite independent advisors. The expert group on welfare is a group of independent advisors to the Scottish Government unless she's impugning something else. They are independent and they have said that the welfare system in Scotland is affordable because they've used the GDP calculation that is perfectly valid. I'm not sure—I can't recall if this was a point pursued by the expert group when they were here but I'm perfectly sure that they would be very keen and able to stand aside the judgment that they've made in their report. That's very helpful so your own fiscal commission is therefore wrong. No, Jackie Baillie can tie herself in knots in trying to make this argument that Scotland is somehow too poor to be independent but the facts do not bear it out and that's the reality that she'll keep running into in a pretty headlong fashion. I have to say I didn't make that argument. I was simply asking the Deputy First Minister but I'll move on. Can I ask about transitioning benefits like ESA, DLA or PIP? Would you envisage that there is a requirement for reassessment? I would hope that this is common sense. We have to see the state that the transition to universal credit and PIP is at by the time we become independent. I still don't have a clear sense of what the timescale is going to be and how many people are going to have moved on to a new system but for people who have not made that transition we will not carry on with that transition and therefore there will be no need at that stage for a reassessment of people in DLA. If people have made the transition, would there be a requirement for reassessment? I have to be mindful of what is going to have happened with the process that I'm not in control of. I don't want to put people through. I would rather that the UK Government wasn't going ahead with this botched reform. If there's a yes vote in September, I hope that it will respect that and not continue with the roll-out of PIP in that intervening period so that we may have very, very small numbers in that position and we'll make a judgment then about that situation. We have to see what situation we inherit in terms of the numbers of people who have been transitioned on to a new benefit but it's not in my interest. Given the anxiety that we were talking about earlier on in the part of disabled people, of putting people through assessments that are unnecessary. Can I move on to pensions and I'll make this my last question, convener? I'm very conscious that pensions weren't considered by the expert working group yet. They make up a third, I think. You'll correct me if I'm wrong. A third of all social security expenditure, so clearly they are quite central to future discussions. I know John Swinney set up a working group to look at the affordability of pensions. When will that report and will that work dovetail in with the expert groups? There is no working group looking at the affordability of pensions. The Scottish Government's paper on pensions was published, I think, last September. I'm pretty sure Jackie Baillie's read it. Okay. There's not a working group. Looking at the affordability of pensions, no. Sorry, I must have been misinformed. Thank you, convener, and good morning again, Deputy First Minister. Just on the point, just as a matter of clarity for not all of us sitting around the table today who actually attended the meeting with the expert working group to put questions, take the opportunity to put questions to them, I don't think Mrs Baillie was able to do that. Martin Evans said clearly at page 1565, the taxes that are raised in Scotland pay for our system already. We are already paying for it. I don't think it could be much clearer than that. But we've touched on a lot of issues today and I think that's been extremely helpful. I don't want to waste your time, the committee's time going over issues that have already been raised. What I would like to do is more of a broad brush question. What is clear is that we have discussed the purpose of a social security system and it has been emphasised that, in Teralia, that should include the system as a springboard to get people into work, and that is very important. Also, of course, it's a safety net. Indeed, Martin Evans said at our committee meeting on 24 June that we propose that the purpose for an independent Scottish social security system must be to provide a safety net through which individuals cannot fail. He also went on to say that he and the expert working group had heard evidence of a widespread will to build a new system that is fit for purpose and progressive. In that regard, Deputy First Minister, I would like to quote from a witness that was brave enough to come to our committee to talk about their experience, their family's experience of the benefit system. I did read out this quote when we had the Under Secretary of State for Scotland, David Mundell, here on 26 June. He regardedly seemed to be in denial about what this lady was trying to say. Perhaps I could just for the record read it out again. It was Leslie McMurchey, who made a comment about her husband's experience, who had had a number of mental health and physical problems but was found to be fit for work. In Teralia, she said, I am a history graduate and I thought that when we set up the welfare state it was to be there for people such as my husband, who worked hard and did his best, so that in times of need something would be there for him, but it is not there. She went on to say, there should be something there for those hardworking men and women who have contributed to society. They are being left with nothing. Surely at the heart of our debate today are the positions of people like Leslie McMurchey's husband, because what we have to do surely, and I would ask then the Deputy First Minister to confirm that that is her vision for the social security system of an independent Scotland, that what we want to create is a system that is based on dignity and is part of a system of a civilised country and not leaving people like Mr McMurchey to fall through a safety net. Yes, absolutely. We have to judge the efficacy and the efficiency and the dignity of any system like this on whether it can provide the safety net for the kind of person that you have just spoken about and what concerns me so deeply about what is happening to the social security system in this country right now is that, to put it as charitably as I can, the safety net is developing large gaping holes where lots of people are falling right through it. That is not right from the perspective of the people who are falling through the safety net, but nor is it right for society as a whole, because it benefits nobody. Particularly people with disabilities who are in that position, the burden falls somewhere else. It will fall principally on their family who care for them. It will fall on the health service. It will fall on local authority services. That is why I thought the expert group's characterisation of what a benefit system should be there to do was very powerful. It should be a safety net. It should be there to protect people against life's unexpected twists and turns, but it should also be a springboard. I feel very strongly that the benefit system shouldn't be abused, it shouldn't be exploited, it shouldn't be there to help folk who just can't be bothered getting out of their bed to go to work, but there are a lot of people right now in benefits who want to work, who can't work, who are working but not earning enough, and we need to reorientate the system to help those people much more than the system we've got right now does, as well as ensuring that safety net for those who, through no fault of their own, find themselves in a position where work is not an option for them. Can I ask just another couple of other points on issues that Martin Evan raised when he was here? He said that he hoped that people would be better helped into work by the proposed welfare changes in their report. I understand this morning that the Cabinet Secretary for Finance is announcing proposals for an increase in employment. Can you tell us whether the increased figure that he is indicating this morning includes increases in relation to the childcare proposals that you put forward? I think that there was an indication that that would increase employment, so is the figure that the Cabinet Secretary for Finance is using this morning does it include the projected increase in the number of people who would gain employment through the childcare changes that you envisage? Cabinet Secretary for Finance is setting out today an aspiration which I would hope you would agree with, that we should be aspiring to full employment, and what he's doing is setting out what we need to do as a country in order to overtime work towards that, and yes, childcare and making the provision of childcare much better than it is just now is a key part of what we consider we need to do to get more people into work, as is having the right tax incentives in place to encourage more businesses to locate here and expand here to provide the opportunity. So that's all part of a package of the things you need to do as an economy to become a higher employment, hopefully full employment economy with greater levels of productivity and participation in the labour market. I think that everyone will agree in the aspiration, but having an aspiration is not necessarily the same as having a specific figure, and apparently there is a specific figure being placed this morning on the record. There was a specific figure given in relation to the childcare changes, but we subsequently discovered that no modelling was done under which those figures arrived at, so is the projection, because if we're talking about getting people back into work and we're talking about the numbers that the Cabinet Secretary is, is there modelling on which we can test that against the aspiration that we all agree we should have? We're setting out an aspiration, and I absolutely agree with you. Setting out an aspiration doesn't let you achieve that aspiration, but we're setting out across a range of things, childcare included, how we get towards that. By having control over our spending and our revenue so that we do have the ability to transform childcare and reap the economic benefits of that, to have the tax leavers to incentivise different sectors of our economy and encourage jobs growth, all of these things, they don't happen by magic, but they don't happen at all if you don't have the ability to put in place the policies to make them happen. So, if the committee wants any more detail of any of the aspects in the paper that John Swinney is publishing today, we'll be happy to provide that, but this is about, as a country, setting ourselves the ambition of what we want to achieve, of having confidence in the skills of our people and the wisdom of whatever government it would be to take the right decisions when we've got the hands on the leavers of power and have access to our resources to say, you know what, we can do better than we're doing right now. We've done pretty well on the economic front, notwithstanding all the difficulties with limited powers, we can do a lot better if we have the full economic powers that come with being independent. But would you agree, if you're putting specific figures on what we can expect, then there should have been some modelling that we can look at to see how those things were right to happen? I'm more than happy to provide if there's particular aspects of what has been published today that the committee wants more detail and information of the government's working around that. I'm more than happy to provide that. Will the cabinet secretary agree that if we're going to consider the welfare commission's report and essential to that is getting people back into work, we have to test the capacity of the report to achieve its outcome against the figures that have been given by the cabinet secretary? Absolutely, and why I'm here is to talk about these things and we'll move forward in a way that is about ensuring that we're trying to reach the objectives that we're reaching. The first thing that we have to do is get control of the powers, because all we're talking about today about the opportunities of building a better system in Scotland is academic if we don't first get the powers to do it, because it will still be a Tory Government in Westminster going completely in the opposite direction to the one that probably all of us around this table, with maybe one exception that I don't know wants to go in. On one final question, the figures that we've been working on from the welfare commission report, Martin Evans talked about where they could come from, but one thing he was very specific about was to say that we couldn't look abroad and transplant systems from other countries to here to achieve those outcomes. Do you agree with that? I think the comments he made in that respect and the comments that the report makes are pretty sensible. They do say that we can learn lessons from other places and I think we should all be keen and willing to learn lessons where we can. What they say, and I would say that this is common sense, you can't simply transplant one system from one country and assume that that will work in Scotland with the differences that we have here, but that doesn't mean you don't look to learn lessons and learn from how the best do those things. We have slightly had a schedule where Jackie Baill wanted to ask a supplementary question, so I'll have one short question, Jackie. It will be very short, I promise. I accept that there have been difficulties for the cabinet secretary in costing all of the paper. Have you been able to cost any of it? If so, what are the costs that you've arrived at? The expert group lays out where it considers the cost implications in both directions are. The specific changes that are being recommended here are costy, and the carers allowance is the obvious one of that, but as we move forward we do that in a holistic way that looks at the savings that we can make from lifting people out of poverty who are in work, for example, as well as the cost implications. I thank the cabinet secretary and her officials for coming before us this morning. I certainly found it interesting to discuss it, and I hope that she did too. I thank you very much for your time. I'll suspend the meeting now before we go into our discussion on the work programme.