 Welcome to the seventh meeting of the Social Justice and Social Security Committee, Apologies has been received from Natalie Don. Our first item of business today is the decision to take items 3 and 4 in private. Are we all agreed? Thank you very much indeed. We now turn to the next item of business, which is an evidence session on the committee's prie budget work in preparation of the Scottish o'r 22-23 budget. I'm pleased to see that we have our panel of witnesses, our first panel of witnesses, online today. The focus of the first panel is to take a broader look at the budget and to further explore child poverty targets. The focus of the second panel is the Scottish Fiscal Commission's forecast social security spend, particularly their forecast for the adult disability payment. I welcome to the meeting our first panel who are joining us remotely, Ailey Dixon, policy and parliamentary manager for engender, Satwat Rayman, director, one parent families Scotland, John Sparks, the chief executive of crisis, and Laurie Morgan Klein, public affairs officer from step change. Thank you very much for joining us this morning. A few housekeeping points to mention before we kick off, please allow our broadcasting colleagues a few seconds to turn on your microphones before you start to speak. Witnesses can indicate with an R in the dialogue box in blue jeans or simply with a show of your hand if you wish to come in on a question, but don't feel you have to answer every single question if you have nothing new to add to what's already been said by others that's okay too. We have around an hour for this session and as I've intimated to colleagues in the committee if you could direct your questions to whichever witness you would prefer answering them or all if that whichever the case may be. I would like to begin by asking Pam Duncan Glancy to ask first questions, please. Thank you, convener, and good morning. Thanks very much for joining us and also for the submissions that you've sent in. They've been very, very helpful. This week, as you'll know, the Joseph Rowntree reported on poverty at the beginning of the week in challenge poverty week, and they highlighted the importance of lifting people in the six target groups in Scotland out of poverty. I wondered if the panel could say something about what would be needed in terms of employment support to do this for lone parents, for women and for disabled people, and also what role you think social security has within that context. So, as it's directed to all panellists, could I start with Ailee Dixon, please, followed by John Satwat and Laurie? Thank you very much, convener, and to the rest of the committee for inviting gender today. Directly on Pam Duncan Glancy's question around labour market support for women, I think it's vital for us to point out that women exist in every single priority group, and we need to take an intersectional approach to the labour market support that we are putting in place to support each group. Close the gap or, obviously, Scotland's gender and labour market experts, and I highly recommend that the committee look at some of their work that they have done, which demonstrates that women, particularly younger women, and therefore most likely to correlate with the age group who have children and black and minority ethnic women who are likely to have larger families or statistically larger families, are likely to work in sectors that have been most affected by pandemic-related restrictions. Whilst furlough has been a useful tool in supporting or at least suppressing some of the higher rates of employment that we might have otherwise expected to see, because of the disruption that those sectors have experienced, furlough is now coming to an end. We are still waiting to see what the future holds in relation to labour market disruption. Women have also experienced labour market disruption because of the distribution of care that has been removed from the state back into the household over the pandemic for care for children and care for older people and for disabled people. We need to take a whole-system look at this problem, and social security will play a vital role in that. Women are more likely to work part-time and therefore likely to use social security to top up their income, both through universal credit but also other payments around supporting families, including the Scottish child payment and best start grants. There is a really important role for social security to play. We need to support some of the sectors that women's employment is working in through budget-related measures. It is really important at this stage to make the point clearly that we will not reach the child poverty targets unless we support women's labour market access and social security access to incomes. We need to bear in mind that children do not care for themselves and we need to pay attention to the fact that mothers still do the vast majority of unpaid care for children and play that kind of take on that mental load as well of support for children. I will leave it there but I might come back on more specific points that we can look to and I'll leave it to others who work more closely with the labour market maybe to come in before I say any more. John Finch-Eli I support everything A&E has just said about disproportionate impact and certainly from a homelessness point of view, while the single biggest reason we see women becoming homeless relates to domestic abuse. It's too easy to assume that that's everything whereas the underlying causes relate to poverty and relate to them in the workplace, in family and so on. I would just highlight a couple of points. One is the knock-on impact on children and why this particular line of questions is so important. Last year there were 11,800 children in families who were assessed as homeless, which of course is devastating at that particular time for those children, but the impact is very long-term. All of the research shows us that the two biggest predictors—not necessarily causes but predictors—of homelessness as an adult are poverty as a child and adverse childhood experiences. Such adverse childhood experiences may include being homeless, so you can see that there's an intergenerational cycle here. That's why it's so important to tackle. The impact of housing costs is what we've seen in Scotland in particular and particularly in the private rented sector. There are very high increases in the housing cost-to-income ratio for working-age households over the past couple of decades in Scotland. Clearly, that's a driver of poverty that needs to be addressed. I would point out a couple of things. One is the evidence that one parent family Scotland gave about increasing the DHP budget and directing local authorities to target additional funds towards people affected by benefit cap and, therefore, mitigating some of the impact of that cap as being one way of closing that ratio between housing costs and an ability. The other piece that I would point to is the Chartered Institute of Housing saying that Scottish Government should consider making use of its social security powers to top up support for housing costs in the PRS, in the private rented sector, as a direct way of addressing that. I'll stop there. There may be some more specific points to come back on, but I'll stop at that point. Thank you very much, everyone, and hello. Given that I'm just thinking about the current situation we're in in terms of what we're trying to do around child poverty, we're actually in the situation for many of the families who are working with the single loss of income with the £20 cut that we saw to UC. We're seeing increasing household costs and concerns about further increases in household costs. Fuel is a big issue, so we're actually in a situation where things could potentially get a lot worse before we begin to look to see how we can support to get better. In the short term, social security plays a critical role in that. The work that we've done with partners who are here giving evidence and others around their need to double the Scottish child payment, etc. We need to support families that we're working with to be able to stabilise income before we can start to look at the employment and the training and the qualification support for the longer term. Some of what John said is that all those things are fundamental, housing, adequate income, etc. What many of the parents we work with have told us is that the impact of Covid-19 and the measures that we had to take to restrict the spread of Covid-19 have created a situation of them where they've been at home alone, homeschooling, trying to look for work, trying to work, etc., and the impact on health and well-being. What many of them have said is that they don't expect us to be able to pick up from where we left off at the start of this. We feel that we need further support. We can do that. When we're looking at employment and training initiatives, we need to be building that in. We need to be looking at it in a holistic way. We've got family support, health and well-being support, etc. All part and parcel of what we see as employment support for the families that we're working with. In terms of the specifics, we were very pleased to see an increase in parent employability support fund and within that, looking at a specific bespoke offer for single-parent families. If we're going to be able to tackle child poverty effectively in the short and medium term, although we need those general, overall employability initiatives, we need to begin to drill down into what are the specifics for each of those priority groups and how do we support them and address some of those specifics. Going back to Ailey's point about intersectionality and intersecting inequalities, many of the families in poverty cut across more than one of those priority groups. We need to look to see how we can come up with a programme that recognises the specifics of the experience. What's also critical around employment is ensuring that the support is integrated and aligned with childcare, with transport links, with all those things that we need to make sure are in place in order to make the transition to work for those who can work and want to work something that's going to be relatively easy as opposed to a series of hurdles that they need to overcome. Critical to that is training and qualifications and how we support families within the priority groups and families living in poverty on a journey towards a good job, not just any job, because the work-first approach that we have at the moment in terms of the punitive benefit system that we have is very much any job, but we want jobs that are going to support single parents to balance their responsibilities as the sole carer, as well as being the sole breadwinner and not want to be at the expense of the other. We would really like to see something like the equivalent of the young parent guarantee for those families in the priority groups and those families living in poverty. There's a pathway being developed that aligns where we know we're going to have growth in good-quality jobs in the future to support those families, those parents living in poverty, to be in a position to be able to take up some of those jobs. We're not just looking at the traditional sectors that women have gone into, but where are some of the growth, as part of the just transition, green jobs, et cetera? How can we make this integral and part and parcel of that journey? I'll stop there. Thank you, Sat Wat. That's very helpful at Laurie. Laurie, I think I've lost you. We can hear you. Your video feed is still going a little bit, but we can hear you. That's good. You spared the sight of my face. Thank you for the opportunity to give evidence today. I think that this is a really crucial question from a problem debt perspective. We know that, often when we're talking about problem debt, we're talking about women. The majority of the people that we advise are women—over 6 per cent of our clients. That's a steady percentage, with many reasons behind that. Drilling down specifically into priority families and households with children, so far in 2021, 39 per cent of our clients come from households with children. We know that there's a particular pressure on lone parents. I'm particularly concerned about the impact, particularly on age groups, because we've seen a big shift in the age of our clients through last year and into this year. That was a long-running trend, moving from an older, late-middle-aged group to a younger group in their mid-twenties to the thirties. That's really apparent in the past year. There's a shifting burden on the younger lone parents at the moment. The wider vulnerability impact can't be understated either. The significant mental health challenges that our clients are facing are increasing. We have more clients that are vulnerable. One of the issues that is the crux of many problems is linked to what was said earlier around housing costs, priority of years, council tax, utility costs, rent—all of those things are pressing really heavily, and they're often the most challenging area that we have to advise people on. It's also really important to say at this point that the majority of people who are coming to us for help are renters and many of those with private landlords. There's a real concern there on how tenants are able to deal with those priority costs, and particularly that pressure is really increasing for our clients with children who are in those vulnerable groups. One way that we can look at that is the tenant support grant that has recently been announced and the tenant hardship loan fund. We need to widen the conversation around that, because it's great that the grant takes on rent arrears. Clients advise that it's not just rent. If someone is behind on rent, they are likely to be behind on utility bills, council tax as well, and we have to see all of that together. I think that if we could look at the grant and see how we could address some of those priority costs as well, because what will be happening is that clients will be utilising what credits are available to them to pay those priority bills, because they recognise the importance of those bills to their safety and to their security and to their families for those clients with children. We need to look carefully at what more we can do there. I think that the longevity of support is really crucial, but furlows have been mentioned as being really good for sustaining employment, and it has been. Obviously, that's coming to an end. I hope that we can talk more about universal credit later on. That is particularly going to have an impact on vulnerable clients of ours who make up the priority groups. The longevity of the support is crucial, and my hope would be that we can maintain the tenant support grant beyond March 2022. We need to look at putting more funding into that, because one of the crucial things—I really want to land around problem debt—is that it is a long-term impact on finances. Clients who have maybe just kept their heads above water over the past 18 months have lost their financial resilience and will be vulnerable to further financial shocks. The ordinary life events that we all sometimes experience will continue to leave households vulnerable for a number of years now. I think that we have got to make sure that we don't just see that as, oh well, the public health consequences of receding, we hope. Therefore, we can begin to look at moving away from supporting households that have been impacted by Covid. However, we will have clients coming to us for help in years to come now who have directly been able to trace their issues with debt right back to what has happened over the past year. There is a particular pressure on loan parents, which we are concerned about, and wider families with children. We know that there is a particular vulnerability there, and that is definitely something that we can see in our statistics. Thank you very much indeed. Laurie Ailey, I think that you were wanting to come back in briefly there. I did. Thank you very much. Just to make a very quick point in relation to some of the things that that was in particular talking about there around childcare and support for labour market access for women, we need to make sure that we are aligning and that there is coherence between things like the gender pay gap action plan and employability support. Programmes such as Living Wage, 60 per cent of workers paid less than the Living Wage are women, which obviously has a huge impact on ability to meet the child poverty delivery targets. I think that there are policy frameworks in place that we just need to make sure are well aligned when we are having some of the discussions about what more is needed. I also fully agree with the point about the immediacy of social security as a labour, not being the only labour but being one that we need to look at with perhaps some urgency as we wait to see some of the chaos in things like the gender pay gap action plan. Thank you very much indeed, Ailey. Good morning, panel. I'll just direct my first question to one parent families. Despite our best efforts, the UK Government is going ahead with the biggest ever overnight cut to social security since the 1930s by cutting the £20 uplift to UC. How big a blow do you think that is to everyone's effort to reduce child poverty? Well, it's a significant blow to a reduced child poverty. One of the things that I just said in my introduction was that it's one of those things that is going to make it harder for us in the short term to look to see what we can do. I just want to let you know that I've got a quote here from a parent, which I think says it better than I do. How will I manage once the additional £20 benefit money stops? I have a child of school self-isolating. I've had a benefit check and I'm getting what I'm entitled to but I don't have enough money to live on. I'm feeling overwhelmed with worry about at all the cost of Christmas looming. I feel a failure as I cannot afford to buy Christmas presents. This is somebody thinking about that now in September. That's the story that we've been hearing through our local services from parents is that there is a big worry and a concern about what is going to be the impact of this and the number of families that are going to be impacted and the disproportionate impact on single-parent families that we see. We also have other things and I do want to just briefly mention that we've been running a campaign to stop the young parent penalty because, if you are a young parent on UC, you get less because it's about age. There's a whole series of disadvantages and disconnects built into the system that we've currently got. In terms of going to make things more difficult, we have a national mission here in Scotland that we've all signed up to end child poverty. I think that it's about looking to see what we've got and how we can use what we've got to support families who are going to be affected by this, but also just not having had enough income to live on over time. That's why I'd said that, in the short term, we need to look to see what we can do with social security here in Scotland. That's why the Scottish child payment is so critical. Some of the other benefits we've got here in Scotland are absolutely critical. What we need to do is ensure that we're supporting families living in poverty to access all that they're entitled to. I know that one of the things that was in the budget papers was around advice and information services. They're going to be critical as we go forward to support families to be able to get what they're entitled to as the starting point and then look to see how we can build on that through supporting the parents that we're working with into good quality work. No, it's going to have a significant impact. John, you wanted to come in at that point as well. Yes, just briefly but to reinforce a comment that Laurie made about longevity. That's two things. First of all, this isn't just about the pandemic. We were already, again, over a couple of decades, seeing significant increases in the number of proportion of renters in Scotland who simply had a shortfall between their housing benefit and their rent. That was already a growing situation. Now, of course, over the last 18 months, we've seen record numbers of people falling into rears as well, and they were teaching on the brink of homelessness. Just to use some research from our colleagues at Shelter Scotland, they have estimated that the cost of somebody being evicted to the public purse is £15,000. I think that that reinforces the financial need to step in as well as the very obvious human need. All I would say is that there will be a theme running across everything that everybody says, that there has been significant support put in place by the Scottish Government, but longevity is the issue. We can't imagine for a second that even the ending of the public health element of the pandemic is the end. The economic emergency for the people that we're talking about, people with the lowest incomes, will last for years, and that support needs to go with that. Many thanks, John. Briefly, Lorry and then Ailey. To add on universal credit, it's a frankly calamitous impact that we're going to see. We know that the average deficit budget for our clients in Scotland goes from minus £33 to minus £119. We know that our clients on universal credit, who had a positive budget before, had surplus left where they could have some room to maneuver, went from 56 per cent of our clients to 31 per cent, and the negative figure for that, while previously 44 per cent of universal credit clients had a negative budget, that jumped to 69 per cent. That might sound a bit dry in the figures, but what that means is a complete cutting-off of options for those households. Ultimately, it will mean that insolvency is going to be their main option for resolving debt. We can't underestimate the huge impact that that is having. I won't say everything that everyone has already said, although I agree that the impact for women of the cut is calamitous to borrow a word. Women are also more likely to rely on public services, which have been affected by a decade of cuts. 86 per cent of the net cuts in the decade of austerity came out of women's budgets, and that was before the pandemic. Women are already facing a squeeze on income that is coupled with rising consumer costs. There are actions in Scotland that we need to prioritise. There has been a commitment to the split of the universal credit payment to reduce the impact of the household payment, which denies women's access to an independent income. Action on that has been slowed, not the fault of the Scottish Government because of the pandemic, but we really need to see action on that progressing quite rapidly, as well as how we can better target things such as Scottish child payment to support primary caregivers and addressing some of the chronically low value of benefits that carers receive. I just wanted to add that to the point about the cut. Many thanks. That's helpful. Briefly, with a supplementary Mary McNair, please. It was actually, I wanted to pose another question, so it was to crisis. I want to direct my question. I note your comments regarding the housing costs and evidence from the Joseph Rowntree. One of our previous meetings shared the same view that single parents face very high housing costs. How much is praising the local housing allowance rates contributed to this? It's certainly a part of it. Just to step back and look at homelessness more broadly, I think that there is clearly strong progress in Scotland on homelessness. If we compare across the UK, the proportion of households in Scotland experiencing the worst forms of homelessness is significantly lower than in either England or Wales, and that's based on policy decisions that have been taken in Scotland. That said, it's certainly by no means complete. We're still looking at, partly because of the pandemic but partly because of trends that were already in place before the pandemic, the record levels of households in temporary accommodation, and we're also looking at a level of about 15 per cent of people who are experiencing homelessness have already experienced homelessness previously in the last five years, so we clearly haven't broken that cycle of poverty for those people. There are three things about addressing homelessness in Scotland that are working and need to be backed and need the longevity of funding. One is the move of local authorities to an approach known simply as rapid rehousing, so transitioning away from a default being a temporary accommodation option to the default being a permanent settled housing option, and that's being backed by the Scottish Government, but needs to continue to be backed because, in some ways, the pandemic has thrown a landslide at you, of course. The second is the area of housing first, which, again, is a success. The housing first programme so far has housed over 500 people with the most complex sets of support needs, and the tenancy sustainment is between 85 and 90 per cent across that programme, but that needs to continue, and, again, the theme of longevity needs to be there. The third area is around prevention. Plart of prevention, of course, is everything that we've been talking about about income, because primarily homelessness is an issue of poverty, is an issue of not being able to afford a place to live, and all of the mechanisms that we've talked about need to be backed, because refreasing the local housing allowance will continue to have a worsening impact, of course, as prices go up. To give one indication of the opposite, when local housing allowance last April or May, I think, was moved back to that 30 per centile of local markets level that it used to be in 2012, our team in Edinburgh did account of properties, homes that would be available to our clients who were experiencing homelessness at LHA levels. The figure went up from an average of about 20 or 30 at any one time prior to that change to more than 400 after that change, so clearly we can see that LHA in the 30 per centile has a significant impact on being able to tackle homelessness. The final thing that I'll tell you on this is that there has been a lot of really good work done on the area of tendency, sustainment and preventing homelessness, but I'm very pleased to see the Scottish Government will be consulting on far-reaching homelessness prevention duties coming in the future, where the proposals will include starting to address and prevent homelessness six months before it happens, rather than when it actually becomes an emergency, making sure that other public services are also involved, where it's clear that people are at a significant risk of homelessness, so prisons, social services, the health sector, making sure that there are effectively risk and act duties on those bodies. That emphasis on preventable need to continue, and there is a financial element to that. We can do all we like on debt advice and so on, but we also need to make sure that debt doesn't happen by supporting the income of those families. Thank you very much indeed, John. Conscious as I am of time, I have a very brief question for Satwat and Ailey sticking to the theme of employability and child poverty targets. How much of an impact is starting with you, Satwat? Do you reckon extending universal free childcare to one and most one-year-olds and two-year-olds will have on both employability and on the child poverty targets? I think that it's going to have a significant impact on employability because it's going to provide a space for the parents that we work with and others than the priority groups to be able to look at qualifications. I think that that's critical here because one of the things that we really need to develop is a sort of skills and qualifications pathway for the families that we work with. It's going to provide opportunities for parents to be able to engage in learning earlier if they choose to because they will be comfortable and confident that their child is somewhere safe and secure and that they don't have to pay for it. The costs of under-free childcare is one of the biggest costs that the families that we work with have, so extending it down is something that we welcome and we've welcomed alongside the already 1140 hours for free and four-year-olds and the commitment to look at out-of-school childcare, wrap around childcare as well, what that there was, because I think that we need to look at childcare in the whole because we need to start from it from the family's perspective and you may have children across those age ranges and so we need to make sure that what we have is a childcare service in Scotland that's able to meet the needs of families coherently to support families to be able to engage in learning and to be able to work, but it will have an impact on employability. Again, it will have an impact I think on costs. I want to go again to something that a parent said. There are two things and I just thought that they were really, really interesting. One of them said, childcare costs are crippling. I earn what I always consider to be a reasonable salary, but it costs more than I earn to send my two children to nursery for only three days a week. That's what it's going to make the significant difference. I'm too scared to leave my job. As I don't want to lose the skills, I have to try and break back into the job market. It will support women with progression in the labour market as well if we have a coherent comprehensive childcare offer and going down to younger children from one plus is a critical part of that. I agree that extending free and affordable childcare will make a huge difference to women's ability to undertake paid work. Engender has called for the scale of childcare provision in Scotland to be rapidly enhanced to 50 hours of fully flexible affordable childcare per child per week. That recognises the fact that the current childcare provision does not necessarily have the flexibility that is needed in order to reflect how women engage with the labour market. The pause to the 1140 hours for understandable reasons has meant that there are questions about the sustainability of many providers that need to be addressed if they are going to beat the targets that the Scottish Government has set out in the programme for government, but the commitment expansion is in the right direction. Even before the pandemic, a quarter of parents had given up work due to the cost of childcare in Scotland to some of the most expensive childcare in the UK, which itself has some of the most expensive childcare in the world. That is absolutely something to support, but we need to be more ambitious and think about how we can really meet all parents' needs through our provision. I thank you for your answers so far. I wonder if I can move us on to reconnect income maximisation, particularly around the change that we are going to be having here in Scotland, with more benefits being run from Scotland and also benefits being run from Westminster. Even before the pandemic, there were lots of figures out there about how much money was not being taken up because people were not applying for it. I suppose that if I can start with John, if that is okay, I will just ask him and maybe the other panel will want to jump in. How do we here in Scotland maximise the benefit take-up from people who you are dealing with? I am surprised at how many people still do not know that they are entitled to benefit or different types of benefit. That is a vital comment, because the ability of Scotland to use its powers also depends on people being able to access that. While I support the need for things like discretionary housing payments for those budgets to be increased, I worry about the discretionary nature of them. It is therefore exact about the issue that you are raising. We are in a position now where the risk of eviction is very high. Some of the six sets are where, for example, in job centres there has been good integration of job centre staff with people dealing with benefits and people dealing with housing and making sure that those things are better joined up and integrated, particularly this time. That is always the case. Supporting someone to ensure that they have housing stability has to be almost a prerequisite to supporting them into employment and making sure that they get the benefits and the social security support that they need along the way. That is what I say. Let us make sure that we are not dealing with housing over here and welfare over here, and we are dealing with employment over here. That integration is important because people will be able to access and it will be more automatic if they will access the support that they need. I would say that the longevity issue is important. Things such as tenant support hardship and grant funding need to be extended, but the key thing for me is that we are helping people with housing stabilisation rather than going straight to employment when that is not the right thing for them and making sure that we join that place of public services. The income maximisation piece is important. As has been stated, there is an issue around uptake. I would say that, ultimately, it comes down to public awareness. There are two parts to that. One is that people simply do not know what payments exist and that they could support them. I know this in our written evidence. There are two case studies, which are a welfare advice team supplied where they had gone through an income maximisation process. It was a difference of several hundred pounds to those households in question, which is a massive impact on a family's ability to cope with problem debt. There is a significant challenge there for the Scottish Government to address how it reaches out, ultimately, because I think too often—and I think that all sectors are guilty of that. I think that sometimes people are expecting people to come to us. First, we need to reach out. Government needs to reach out to let people know what their entitlement is, because I think that there is a big issue around that. The second orger issue to that is, I think, that stigma plays a significant part of this. It certainly does in terms of people accessing debt advice. The welfare payment uptake is linked in with that. That comes down to how we talk about welfare and how we communicate about welfare and how the Government does that. What channels were used by John Mates, a really good point earlier, about having integrated responses, rather than seeing so security over here and debt advice over here and housing support over here? We have got to integrate those things because they are all, certainly from the problem debt perspective, thoroughly intertwined. If we can provide debt advice to a client and help them to maximise their income at the same time—this is one of the prime tenants of debt advice—that is absolutely key. We really need to have a strong focus on income maximisation. Thank you very much indeed, Lorry. Is that work followed briefly as well by Ailey? I will be very brief because a lot of the points have been covered. However, just to say absolutely agree, one of the big issues that comes up from single parents that we work with is stigma and attitudes and how that can put them off at times from seeking help and information and advice. We really need to look to see how we can get the debt, money and welfare rights advice firmly located within communities with trusted organisation intermediaries, where you might go already for something, where you know the individual worker, because it is a very complex system to try to navigate. A lot of those application processes for some of the UK benefits are not simple, and you require support to be able to navigate that. Some parents may start off themselves and think that they cannot do that and put it to one side. Ease of application is critical, so anything that we are developing here in Scotland and Social Security Scotland go out and work with groups to check out application processes. We welcome that sort of thing, so we get something that is simple to fill in, easy to fill in with the right information, advice and support. The point that has been made already around integration is that there has to be coherence, and we need to look to see how we can simplify processes to ensure that the families that we work with are getting what they are entitled to. The only point that I will add is that a lot of the conversations around take-up and maximisation have to do with the access of data and evidence that is still collected largely at household level and the quality of data that we have about who we need to be targeting some of those measures towards, both in the design of payment and in some of the sound posting programmes, but we might come back into the conversation around data later, I suppose. Thank you very much. Mr Balfour has a brief supplementary. I ask no answer, might suffice for this one. I am conscious that we now have Scottish Government providing some benefits and UK providing other benefits. I might mean two different websites, a lot more websites for that. Would it be helpful in your view for the people that you are working with to have one website that has all the benefits that somebody could apply for, and it could be all done in one site rather than having to go through lots of different websites or go to lots of different forms? If all the information was in one place, would that make benefit uptake more likely? Well, whoever wants to go, I don't mind. Thank you. I'll have no particular view on this. Having multiple channels has been quite effective, but I can see arguments for streamlining. Just very briefly, I would say the same as what Ailey has said, but just add to that that what's critical in all these things is having specialist advisors working alongside families when they are going through applying for various benefits. I think that advice and the information and being able to talk through things is critical and is going to be one of the key ways that we can look to see how we can maximise take-up of those benefits is to make sure that it's a supported process, irrespective of whether it's on one or multiple websites. Just very briefly, whether that's the right mechanism or not, I don't know, but it's important to remember that when people are reaching out for advice, for guidance, for support, to access welfare, they may well be going through a very traumatic situation at that time, so anything that makes it easier for them to access the help that they need, and the cliché is that there's no wrong-doer approach that just means that any public service that they are accessing is able, at least to signpost them to the support that they might need for another part of their life while recognising that they will be going through a very traumatic, stressful and difficult time when they're doing that. Thank you very much indeed, John. Miles Briggs, please. Thank you, convener, and good morning to the panel. I wanted to ask a couple of further questions with regards to debt and looking at potential new models. We know from some of the evidence that you've provided as well around council tax debt, for example being one of the first, sometimes which starts to build up, and non-payment of council tax, which becomes problematic for people managing that debt. I just wondered in terms of potential changes that could be brought forward to deal effectively with debts like that, what the panel's view was, maybe start with Laurie, and then specifically maybe on that council tax debt, I'd like to sort of know your whole panel's view. The council tax debt has been for years but has really pressing concern of ours. It's the most common priority a year at an household expenditure a year that people come to us with. It's the third most prevalent debt type that our clients have after credit cards and loans. It's council tax. The reason it causes such concern to us is because of the penalties for non-payment and how local authorities approach those. I mean, I'm always trying to caveat this that I'm not looking to bash local authorities here under incredibly difficult fiscal situation, as we're all aware, but the council tax burden on families who are struggling to pay. Often it feels like that first missed payment is like the first domino toppling, and it ends up in enforcement action, wage harassment, and essentially a kind of level enforcement action that is available to public sector creditors, such as HMSC, DWP, how they are able to collect debt, which no commercial lender would be able to do. Clients can be put in a situation where they're having to repay way above a level that is affordable for them. Crucially, we need to get in after that first domino, and we also need to make sure that there's an integration between advice and collections within local authorities. We worked on a best practice toolkit with the improvement service, which we launched just before the pandemic, which I'm sure we'll both be revisiting, that looked at—obviously, with 32 local authorities, there's 30 different ways in which this is done—that looked at the best ways of communicating with local authority residents who are struggling with council tax and recognising that missed payment on council tax is evidence of wider problems and wider difficulties, rather than focusing specifically on just that one difficulty. We need to get advice integrated. I think that there's also an issue, and not to get into the long grass with that, but if we look at council tax reduction, someone may be in receipt of the full council tax reduction, they're not liable to pay council tax, and the client will go forward with that understanding, but they do not have the full reduction for water and sewage charges that are billed with their council tax, so they are getting the bill in that they think they are exempt from not understanding that this is the water and sewage cost. One way of looking at this is getting to look at where we can get the full reduction for someone who's in getting the full council tax reduction. That certainly leads to confusion. You have a client who will say, although I'm not liable to pay council tax, obviously this is an error, and, in the meantime, they are liable, and this debt is mounting in the background. Of course, local authorities too are having to spend resources. It's a significant amount of money. I mean, sheriff officers, it's not cheap. This is debt enforcement at a cost, and that's why we are urging towards a more preventative approach and addressing where the issues are. Linking back to my earlier points around the tenant's work hardship grant, understanding that renters, particularly, are not just going to be in difficulty with that one bill, so we need to view the whole issue holistically and to try to sort of interdict that process, because it does move very quickly. Obviously, the first bill has missed the full amount for the years, and for someone who's in problem debt, and desperately trying to struggle things. The choice then becomes, well, do I extend high-cost credit further, which I know is unaffordable, or do I miss this bill that is the reveal penalties? People understand—we've done research with clients—the way in which the hierarchy in which bills are, they know that rent, council tax and utilities costs are their first priority. They understand the importance of those, but really what results, when we take this sort of every enforcement action, is a debt spiral that worsens and worsens as someone uses high-cost credit, for instance, to cover one of those essential bills. Next month things are no better, they need to extend more credit upon more credit with spiralling interest costs until someone hits that point of crisis, so we need to prevent people hitting that point of crisis. Thank you, Lauren. Of course, that debt spiral is exacerbated when you consider that sheriff officers' costs are added to the arrears of the tenant rather than being absorbed by the local authority or whoever the case may be. Mr Briggs, do you have a supplementary and then I'll bring in Mr Sparrow? Thank you, convener. It was specifically looking at concerns yesterday about energy costs. We know in one day, gas prices jumped 40 per cent. That impact will probably be next spring, but my question was specifically about preventative models. John, you touched on this in terms of what we can do around homelessness preventative models, but in terms of debt management and preventative models, do any of the panel have any suggestions around that? Specifically, consumer advice is very readily available online, but if people who do not have access to online services or have maybe reading difficulties as well, where should we be looking at taking some of the work around that? I'm happy to maybe start with John, and if anyone else wants to come in. Yeah, so my response is partly relating to Laurie's previous response, for just to reinforce that and join some things together. I think that Laurie's comment about that possibly sometimes being the first of a domino, I think, was really important, and just to join that to the forthcoming consultation on homelessness prevention. If that is the first domino, then that duty on public services is to start action to prevent homelessness six months out. This is likely to be the trigger for that, and of course, it's a local authority debt, and the actions around homelessness prevention will sit with the same local authority. That is indeed joining up across different public services. That is joining up across the same organisations, but it just reinforces the need for really good debt advice at the earliest possible opportunity, both to deal with the issue of spiraling debt, but ultimately to avoid that person, that household becoming homeless, with the law of the human and economic process that goes with that. The energy issue is a huge concern. We know that there is obviously going to be wider inflationary pressures as well as looking at support measures bearing to fade away. We are looking at a really concerning period where people, particularly this winter, as you say, will be the pressurised next spring. Early advice is really important. We need to look at what duties we place on providers. What approach are they taking to clients? Are they communicating with their clients in a preventative way? Are they saying, if you are in difficulty, please talk to us about that. Ultimately, energy increases can be difficult. Can we look more widely at the role of regulators around prices? The price capture is concerning, and huge increases will be passed on to consumers. We need to try and get a bit of a handle on how that market is operating. We have made a big deal about freedom of choice and switching your energy supplier, but if you switch your energy supplier right now, you are going to be paying far more than you would have been. I think that we have really got to make sure that we get advice in there early. I want to avoid people having to make those choices between eating and eating, because that is the reality of the choice that people are making, particularly with £20 less a week on their universal credit. We have got to see the utilities costs being built into wider pressure. There is an actual focus on people and poverty, but we will make a brief point about precarity. The vast majority of our clients are in work, although that can be precarious work, and that is what makes the challenge for them budgeting months and months so difficult. That is why they have fallen into problem debt, because they have had steady commitments that they have been able to manage, but things have been thrown into the difficulty. We have to understand that adding those energy bills on does not just affect people who are in the most extreme poverty but affect people across income brackets. The new group of people who have fallen into difficulty in the pandemic and have not had access to advice before and are not necessarily aware of the pathways, we have got to think quite carefully about how we get access there. Your point on digital literacy and general literacy is also crucial that we need to have multi-format and multi-channel avenues of support for people. That is really crucial. Thank you for building on that in terms of the early intervention and the prevention of what we can do. It comes back to looking at how we develop whole-family support models. The support for families includes the specialist information and advice around income maximisation and also if there is debt and problem debt. We can do that because it is complex. It is not something that many of us would feel confident going in and advising on, but it is part of saying that if we are looking at a whole—there is a budget commitment of a family wellbeing fund and when we are looking at family wellbeing, we need to look at it in the whole in terms of emotional wellbeing but also in terms of financial wellbeing and support with debt needs to be integrated into the other support that we have for families. We are looking to see how we can minimise the stigma around this and talking about this and being able to start that conversation with somebody who you trust, who you have a relationship with is critical to people being able to speak about it at an early stage, as opposed to when, as colleagues have said, so eloquently when it becomes overwhelming. The first question is for crisis in terms of poverty proofing, which we have discussed a lot as a committee. What do you feel that lack of poverty proofing has led to historically? Can you see from legislation so far in this Parliament and from the last Parliament what the impact of having input from people with lived experience is having on preventing homelessness? Thank you. We have seen the impact. In some of those figures that I have talked about, the record high levels of temporary accommodation and the fact that, more crucially than that, that 15 per cent of people who are experiencing homelessness have previously experienced homelessness within the last five years. Clearly, there is a cycle of poverty that has not been broken. I think that there is significant progress in relation to this in Scotland, but it needs to continue. Everything that I have talked about, such as homelessness prevention, needs to continue. The provisions that the Scottish Government is able to put in place using its own social security powers are vital, as the link between poverty and homelessness is very clear. It is not just about housing, but about the ability to afford housing. A lot of that is either in place or coming. The work of local authorities around rapid rehousing has been vital. Reconfiguring everything that they are doing to permanent settled homes, which are the basis for people to move on, move out of poverty, move out of homelessness, rather than managing homelessness through temporary accommodation, the change of emphasis is around preventing and ending. We also need to look at the disproportionate impact on different groups. This is not a homogeneous group. We have talked about the impact on women and the cause of homelessness in relation to women. In relation to men, they are more likely to experience repeat homelessness, so they are more likely to be in that cycle of poverty and homelessness, and they are more likely to sleep rough as well. The nature of support for people is different. For people from Black-Asian and minoritised ethnic groups, there is a disproportionate effect as well. 87 per cent of homelessness is for white individuals when they make up 95 per cent of the population, so there is clearly a disproportionate effect there. Many of the prevention mechanisms on debt and poverty avoidance are universal, but they also need to be focused on those high risk. There has been a real focus on much of the evidence that we have received so far on the importance of lived experience. Is child poverty enough to speak to the parents or do we need to hear from kids who are currently in poverty or folk who are kids who grew up in poverty? We need to hear from the whole family. We need to look to see how we can support children and young people to engage. There are some really good initiatives that people have done to ensure that children and young people are an integral part of designing the solutions, and not just defining the problem. The work that the Child Poverty Action Group has done on the cost of the school day, for example, and things like that, are very specific initiatives involving children and young people. What is important about involving experts by experience and those with lived experiences is that we see it as an end-to-end process. At the beginning, it is not after we have had the chat gone away and done something and come back and said, we are going to do this, but it is an end-to-end process. It is a collaborative design process that we are looking at here. Where testing happens by individuals from the six priority family groups within the child poverty sphere to say what is the impact of this actually going to be, how is this going to land in your life, what matters to you, what is going to make a difference to you. We are actually doing effective co-production, co-design, with the family's feel that the solutions are going to work for them and believe that they can work for them. You can only do that if you look in the whole and work with the whole family from very young children right up to the parents, but I do think that it is making a difference. We are going to begin to look at policies, actions and finances for the lens of how it is going to impact on those in poverty. I am not going to speak about the gender budgeting, etc. I am going to leave that to Ailey, who is much more expert in this than I am, but all that effect will be effective, but it is going to take time to bed in because it is about changing how we currently work to something that is going to be more effective in the long run but potentially more resource-intensive to do so. To echo everything that was said about participation in genuine participation in co-production, in order to do that effectively, particularly when it comes to women, we have to make sure that facilitators have the gender competence that enables them to understand how access to income is different for women, how it impacts men's violence and different standards of health and wellbeing that women experience all interact with one another to affect women's material conditions and the ability that they might have to participate in some of those discussions and some of the dynamics that can manifest within discussions. Having women-only sessions, for example, is something that women often talk about when interacting with lived experience programmes. I also think that there needs to be a bit of a question around how to combine that gender competence or other competence with experience or experts-by-experience perspectives, because one individual's perspective is only their perspective, no matter the extent to which it is inevitably informed by the structural discrimination and oppression. There is a bit of a balance. We need to still have a conversation around how to frame individual experience, particularly when we are talking about things like poverty, which are so gendered. There are so many structural barriers to income and health and wellbeing. We just maybe need to have a bit of a mind to how these all fit together in an effective way to really give us a true and accurate picture. Thank you, Ailey. Final question in this session is from Foisal Childry, please. Thank you, convener. Can I ask what percentage of BME families with children are claiming the new benefit? I. Scottish Child Payments. Any particular? Anyone. Sat fo. I can see you shaking your head. I can see you, Ailey, looking to come in. I'm very happy for that work to come in first. The honest answer is, I don't have figures to hand to tell you, but the quality of the data that we do have is still very, very new for a long time when it comes to Scottish benefits. We didn't ask mandatory questions around protective characteristics. That was changed in 2019. Obviously, Scottish Child Payment has rolled out much more recently than that, so I don't have figures to hand, but there are maybe broader questions that we could return to around the quality of data and how much we can actually gather from the data that is currently being collected and monitored. Any other? I don't know if that one has more accurate figures than I do. I don't have any figures or apologies, but it may be something that the committee will want to ask those who are administering the benefits to see whether they have that disaggregated data. I think that it's critical that we are driven by how it's working currently to look to see where we need to improve either communication about it or support to ensure that the take-up of the Scottish Child Payment is as far-reaching as it can be, and we are getting to as many families as we can. Apologies for not having the stats to hand, but I do think that it's something that the agencies who administer it need to be done on an on-going way to inform the roll-out of the benefit and the publicity and the targeting of support for people to be able to claim the benefit. I thank all our witnesses this morning for taking the time to answer all our questions in such an informed and helpful manner. I am very grateful for your time and for your written submissions, which will form a large part of our consideration over the coming weeks. I thank you very much indeed. I now suspend briefly to allow for a change of our witnesses. I would like to welcome to the meeting our next panel. We have Clare Murdach, Head of Social Security and Public Funding at the Scottish Fiscal Commission, Professor Alistair Smith, commissioner at the Scottish Fiscal Commission, and also joining us remotely Professor David Alff, who is also a commissioner on the Scottish Fiscal Commission. I would like to invite Professor Smith to make a brief opening statement, please, and then we'll take questions from there. Thank you very much, convener. Good morning. Thank you for this invitation to this evidence session. It's our pleasure to be here and we look forward to working with the committee throughout this parliamentary session. We recently published two reports which should help inform the committee's pre-budget scrutiny. In July, we published our forecast evaluation report, which looked back at the forecasts that we made in February 2020 of social security spending in 2020-21. I'll refer to this report briefly at the end of these opening remarks, but first let me summarise our most recent economic and fiscal forecasts which we published in August. We saw then the outlook for the Scottish economy as having improved significantly since our February 2021 forecast. In our August forecast, we have GDP getting back to its pre-pandemic level in the second quarter of 2022, and the unemployment rate peaking at 5.4 per cent in the last quarter of this calendar year. We don't know exactly how the labour market will develop now that the furlough scheme has ended, but we don't expect significant changes in eligibility for devolved social security payments from this. However, one element in our economic forecasts that affect social security spending is inflation, because many social security payments are increased by inflation each year. Significant price rises have been a recent feature of the Scottish and UK economies, and in our August forecast, we said that, like the Bank of England, inflation would peak at 4 per cent by the end of this year. The number of people receiving support also rises over time. Because of that, together with inflation, we are predicting that spending on devolved social security payments will increase from £3.7 billion in 2021-22 to £5.2 billion in 2026-27. The overall outlook for the Scottish budget is still very uncertain, and our forecasts are just one component of that budget. The UK Government's budget on 27 October and the associated updated forecasts from the Office of Budget Responsibility will determine the level of block grant funding to the Scottish Government next year, including the block grant adjustment for social security. I turn to our forecasts in more detail. From next summer, the Scottish Government will gradually be replacing the UK Government's personal independence payment, PIP, with its own adult disability payment, ADP. That is a major step in the devolution of social security, and for the first time we have estimated the additional spending associated with it. Although there are no changes in the overall structure of the payment as we move from PIP to ADP, there are significant changes in the processes for application, review and appeals and in how the payment is promoted. We expect that, by 2026-27, spending on ADP will reach £3 billion, which is about £0.5 billion higher than would have been spent on PIP. We also expect spending on carriage allowance to increase as more people become eligible through the larger numbers of adults receiving disability payments. The Scottish Government receives funding from the UK Government based approximately on what would have been spent on PIP in Scotland. The additional spending on ADP and carriage allowance will need to be met within the Scottish budget by raising taxes or by reducing spending elsewhere. Spending on the Scottish child payment, a payment not funded by the UK Government, is forecast to increase to £165 million in 2023-24 following the roll-out to children under 16. After that point, we expect spending to be broadly flat with up-rating increases offset by a falling child population, but that is on existing policies for Scottish child payment. My last remark about social security spending is a reminder that the Scottish Government also has other commitments to increase social security spending, including, importantly, the doubling of Scottish child payment, and we have yet to include those changes in our forecasts. Finally, our forecast evaluation report shows that spending was £100 million higher in 2021 than we expected when the budget was set. That is a 3 per cent forecast error. About half of that increase is because of increased Scottish Government spending in response to the pandemic. Our forecasts are by their nature uncertain and forecast errors are likely to be larger when we are looking at new payments. Next year's budget will include both the new child disability payment and adult disability payment. Initially, we expect therefore higher forecast errors because we have only limited information to guide our estimates of how the delivery innovations will affect the caseload and average payments. However, in time, those forecast errors should reduce as we get figures for actual expenditure. We are now happy to answer any questions that you have for us and, convener, if it is helpful, I am happy to direct questions to David and to Claire and indeed to myself if I have to. I appreciate that direction, Professor Smith, which will help us with our timely progress through this session. The first set of questions are from Pam Duncan-Glancy, please. Thank you, convener, and good morning. I have to say that the papers that were provided in advance of today were really helpful, including your own submission. I hope that I have had enough grasp of what is a complex paper and area to get a hold of to ask something that is useful. The first question that I have is about forecasting in the fiscal context. How much advanced notice of policy implementation or policy intention do you normally get, or would you expect, in order to be able to forecast for something going forward? I suppose that it is useful to answer that in relation to social security spending. Claire, do you want to address that? Two parts to the question is, how much notice do we have and what level of detail do we need? Effectively, once the Government tells us what their firm policy is, we can include that in our forecasts as long as it is within the five-year horizon. I am assuming that your question might relate to, for example, the Scottish child payment, in which case we would need to know when they plan to double it, how they plan to double it, what the rates will be in each year, and then we would include that in our forecast. In terms of when we get information from the Government, when we have the Scottish budget, for example, we start the process 10 weeks in advance and we go to the Government and we say, can you tell us what your policies are going to be to include in the budget? The Government has an opportunity to tell us what they can tell us firmly at that time. Anything that they will be in the budget, we will include in our forecasts. If there are other policy changes made during the year, the Government can come to us and tell us if they plan to make changes through legislation. If it is not at the right time for us to do it in a budget forecast, we will do a supplementary costing to accompany the legislation to make sure that Parliament has access to an independent forecast of any policy changes that the Government is making. That is really helpful. If you have not yet forecast for the doubling of the Scottish child payment, is it unlikely that the Scottish child payment will be doubled in this budget? We are currently in the middle of the start of our 10 week process in the run-up to the budget. We will be asking the Government what their plans are. We will be able to tell you on 9 December whether the Government is including it or not. At this point in time, we would not necessarily know that it sometimes happens as we get closer to the budget. Just following on from the point that you made earlier about being able to do a supplementary forecast, does that mean that if there was a decision or a policy change between budgets, there would be the information available to Government to be able to adjust their spending appropriately? We will produce a forecast of the spending if it is a change that is being made to legislation. We do not produce a forecast every time the Government says that it wants to introduce a new policy, otherwise we would not stop working at any point. However, if the Government was to say that this is our policy change and we are introducing the legislation to Parliament to implement that change, we would produce a forecast at that point in time. As the Government chooses to use more powers in social security, it will need to carry out similar forecasting exercises before taking decisions on how to do things differently than the UK. What discussions have you had with the Government on forecasting further changes to social security and have any particular areas of potential spend for new benefits being identified? I am not sure that we are really discussing the way that your question implies future forecasts with the Government because it is our job to do the forecast. It is more of a hands-off dialogue. When the Government has formulated its policy towards Scottish child payment, or if some of the other policies that are currently managed by DWP get handed over to the Scottish Government, the processes that the Scottish Government tells us what its policy is going to be, we make the forecast either at the time of the budget or, as Claire said, sometimes outside the budget cycle. However, it is then up to the Government, in discussion with Parliament, not with us, to work out how the increased expenditure is going to be managed within the budget. I would like to pursue the difference that you see coming forward with the Scottish Government moving PIP to add out. The regulations are pretty well similar for both benefits, so there is going to be no differential there. Could you give me a little more on why you think that it will cost more? Secondly, out of that, if take-up is higher—this may be at your limit, but if take-up is higher, will that have to be met by the Scottish Government, or can they go back to the Government and say that another 5,000 people have applied for this benefit? Can you give us the money for it? How do the Government work that one out on was it just natural take-up or was it a deliberate policy decision? That is a very important question or set of questions because our forecast at ADP is going to, at the end of the 5-year period, cost a lot more than PIP is probably the biggest single element in our forecast. I am going to hand the important and tricky questions over to David to have a go at it. Thank you, Alasdair. There were a number of steps that we went through to forecast the implications of the changes in which the way that the Scottish Government plans to deliver ADP. The first thing that we did was to look around to see if there were any equivalent changes in benefits that we could rely on as a way of trying to gauge the extent of its expenditure. For example, we looked at the shift from DLA to PIP to see whether that gave us any comparable lessons. However, in many cases, there was nothing that was exactly comparable to what we were seeing in the proposals. I think that the point to make here is that there were a significant number of different changes that were being proposed by the Scottish Government. In our forecasting effort, we broke that down into nine separate elements that we thought we had to understand in order to come to a forecast. For each of those elements, we first of all, as I said, tried to see if there was anything comparable that we could use as the basis of coming to a number. However, when there wasn't anything like that, we had to make a judgment. Being a judgment is, of course, potentially liable to error. What we did was to share our judgments with both people in Social Security Scotland, with people in the Scottish Government and with other people who were experienced in forecasting. We set out all our judgments and we listened very carefully to the comments and criticisms that they had with those judgments. We then sometimes modified our assessments and judgments in the light of those comments. For example, there is quite an important component of our increase in funding for ADP, which comes because we have forecast that there will be an increase in the average level of payment for moving from PIP to ADP. The basis for that was that when we moved from DLA to PIP, we saw that 43 per cent of people had an increase in payment on an average payment on top by 19 per cent. We worked out by analysing the data that half of that increase was attributable to the fact that when moving from DLA to PIP, there was a change in the rates of payment. If we eliminate that change in payment rates, the remaining half was due simply to the fact that people moved from one benefit to another. Following discussions with the various groups of people through whom we were talking, at the end of the day, we came to a figure for 8 per cent as being the increase in the average level of payment award that would arise because of the transition in the way in which the benefit was being administered. That was the way in which we went about systematically looking at all the various components of the change in policy, thinking through what the potential impact was on the number of people who might claim, the timing of when those people would claim, how long people would remain on benefits for, what the impact of the change in the definition of terminal illness was. We went through each and every one of those elements of the proposed changes, thought our way through the potential implications, looked for evidence, shared our thinking with our colleagues in other institutions, other organisations and then modified our judgments in the light of what we heard from them. That answers your question about how we went about arriving after our judgment. I do not think that we can necessarily help you on the question of how you sort out whether this is attributable to originally to PEP or to ADP. Given that this is part of what we forecast as attributable to the shift to ADP, it will follow on the Scottish budget at the end of the day. I am not sure that there is any scope to go back and say that this was not attributable to what we did as Scottish policy. If I can just follow up with two very quick supplementaries. The first one is, with the transfer being, and I think that what we are trying to do is safe and secure, is that the terminology that is used a lot is that everybody that is on PEP will just transfer a trade across. Are you then forecasting that once people are transferred across, they will look to review that decision, and thus you will see people moving from a different rate to a higher rate? Secondly, is your expectation that there are a number, a substantial number of people out there who are not applying for PEP but will apply for this different benefit? I wonder why that is the case. Is it because they are holding off because they think that they have more chance with the new agency? Is it going to be an advertising awareness course? I wonder how you would come to that conclusion. One part of what we thought was going on here was that, when people were moving across, they might challenge the level of benefit that is being awarded. We thought that there might be a rise in the number of challenges. We also thought that there could be some process by which people who have been turned down for PEP might now start to apply for ADP, but there is also just a sense that if people anticipate that this benefit will be administered in a different way, they will have more support in applying for it, and there will be a wider range of evidence that they can provide in order to support their application. That could encourage people to apply who otherwise would not have applied, so there would have been some increase in take-up. We did forecast that there would be a significant increase in the overall case load for ADP as a result of the switch from PEP to ADP. There were a number of different components that fed through into our thinking and the way in which that would operate. For each of those components, we looked at evidence as to what would provide a number. We provided our judgments, we shared our judgments with other people, and we modified our judgments in the light of comments that we got from other people. I hope that that answers your question. That is a very important issue, monetary and in a policy way. Can I add to David's answer in a different kind of way and quote what the Cabinet Secretary for Finance said in response to our forecast when we published it? She said that we, the Scottish Government, are delivering a social security service based on dignity, fairness and respect rather than taking an austerity-level approach that the UK Government has done, where all that matters is driving down the cost of supporting those who need the most social security and investment in the people of Scotland. We are committed to making sure that everyone can access the financial support that we are entitled to. We obviously make no comment on the policy as a policy. It is stated there by the Cabinet Secretary, but in forecasting what the effects of that policy would be, we took the intention behind the policy seriously. It is clearly the intention of the Scottish Government in designing and devolved social security policies that everyone who is entitled to payments should receive them. It is reasonable to support that if that policy is successful, there will be an increase in take-up rates. That is fed in the way that David has described in detail in our forecast. That is very helpful. I will follow briefly on from Mr Balfour's questions before I bring in Marie McNair. Given that there is such a large additional spend associated from your perspective purely on the smoother, more supported application process before we get to a policy change position, how important from your perspective was it that, given that the additional amount has to come from elsewhere in the Scottish budget for the safe and secure transfer that Mr Balfour talks about, how important in that perspective was it that the Scottish Government took the process this way round, rather than changing the eligibility for ADP but moving it to a case transfer process first from a fiscal position? From a forecasting perspective, all those changes are going to be difficult to forecast and there is a high level of uncertainty attached to our forecast. The more changes you make at any point in time, the more difficult it is to understand what is changing and what the effect will be. By changing the way that the Government has done it, they have changed the way that they deliver it, the way that they administer it. We think that that will increase spending. If the eligibility is to change, that will obviously change the spending in the future. We hope that, when Social Security Scotland is administering the payment, it will be collecting data that we can then use to make sure that, when future costings are done, we can look at how many people are receiving it and how many you can get more information on which categories they have become eligible for, the payment based on, so that, if things are changed, we have more data about the Scottish payments. Good morning, panel. The removal of the £20 universal credit uplift will take many out of UC and therefore eligibility for the Scottish child payment. How has this been factored into your projections? It is indeed the case that the £20 change, which obviously has a big impact across the whole population of people receiving universal credit, takes some people out of eligibility for benefits. However, the effect on devolved social security expenditure is actually relatively small. It is a very significant change, but it does not have a significant impact on our forecasts. We have factored it into our eligibility estimates for the Scottish child payment. I saw that Cabinet Secretary wrote to you last week and said that they estimate 2,000 children, which no longer could be receiving Scottish child payment. That is a number that we would agree with. The next set of questions will come from Miles Briggs. Thank you, convener. Good morning to the panel. Thank you for joining us today. As my colleague Pam Duncan-Glancy said, the briefing that you have provided has been useful when we are trying to get into granular detail of some of the cost projections around new benefits and setting up services. I wanted to ask two specific questions, one with regard to social security Scotland's costs and forecasting that you did originally, which you looked at the Government's potential costs around that, which I believe were set at £307 million, which have now doubled to over £651 million. I just wondered if you had any insight into those costs and where forecasting may have gone wrong by the Government around the initial set-up costs. Secondly, a question with regard to adult disability payments. How do you think that forecasting, which, from the information that you have given the committee, does not seem to be clear the scale of uncertainty around that? What impact do you think that might have on wider social security Scotland and the benefits that it currently administers? I will answer the first question briefly. We only forecast the amount of spending on the payments that are made to people. We do not get involved in forecasting social security Scotland's administration budget. That is for the Scottish Government, so any questions on how that budget is set or what the forecast based on should be directed to the Government rather than ours? As far as risks in the ADP forecast are concerned, thank you for your complimentary comments about the briefing. I am pleased that it made it clear that the ADP forecast, for all the detailed reasons that David talked about a few minutes ago, has got a very high degree of uncertainty in it, because we cannot know exactly, even approximately, how many of the things are going to work out. It is our best guess. However, the comfort in it all is that the biggest changes are going to accumulate over time and it is towards the end of the five-year period that we see the big changes coming. Over that five-year period, we and the Scottish Government will get information about how ADP is working and CDE child disability payment. We will be able to make more reliable forecasts so that, if it turns out, for example, that the estimates that we have made for how it is going to be in 2026-2027 turn out to be accurate, the Government has got a period of years in which to work out how to incorporate those estimates into their budget. It is as well that they do, because it is really important to understand two things about how we think about the social security budget, which is that, as it grows over time—it is not growing over time for reasons of harassment, it is growing over time because once some people become eligible for ADP payments in one year, most of them are going to be in the bill for next year, and the people who join the programme in the next year will then be in the following year. The programme cumulates in a way, and once you have learned the commitments that you have, your Government has got them for the longer run. It does not have the option of cutting back on them when it finds people who are eligible for payment. It does not have the option of cutting back on other areas of the social security budget if the ADP budget ends up bigger than it expected, because in the other areas of social security, the payments are to people who are entitled to them. It is all quite a big budgetary challenge, as we have tried to emphasise in our report, but the Government has got time to think about how, for example, if in the end it does have to make budget adjustments or tax adjustments elsewhere and the budget adjustments would probably have to be for the reasons that I have just indicated, not in the social security budget but in other budgets, it has got time to make those decisions. That is very helpful. I answered my question in regard to when you would expect that uncertainty to be clear, so you think that a five-year projection once the benefit is established was your answer to that. Specifically, looking at some of the drivers around increased cost, you outlined additional successful applications and also higher average payments. Are there any other areas that you think are important to make sure that the Scottish Government is aware of and for the committee to investigate as well to look at the long-term sustainability around payments? David, are there any other areas that you would like to highlight for us? I am conscious of the fact that Professor Alf is looking to come in at an earlier stage as well, so perhaps you could answer both sections there, Professor Alf. Thank you. In answer to that particular question, the three big drivers of increased costs are the increase in the number of awards that we think will be given, which adds £174 million to the budget, the increase in the average awards, which I talked about before, which adds £104 million. We also thought that there would be initial spike in applications once the programme was introduced, which would add about £83 million. Those are the three big drivers of the increase in costs. I want to go back to the point that Alasdair made about the persistence of the increase in costs, that once people get on to ADP, they will stay on ADP potentially for quite a long time, and there will be future up-ratings of inflation, which will make the cost of this grow as well. Part of what is driving the difference between PIP spending and total ADP spending is our forecast also for future levels of the inflationary up-rate that will take place. Those are the main points that I want to make in answer to your question. Just to be clear, Professor Alff, in terms of people remaining on ADP for longer, is that because of the difference between PIP and ADP and the expectation of longer awards? That is certainly part of it, but the nature of ADP itself is not a one-off payment. Once people have become eligible for ADP, they will remain eligible for a period of time, and that has to be fattened into one of the things that can be driving up costs, but also the changes in the review period will have an effect on the length of time that people will remain on the benefit as well. The difference between the cost of PIP and ADP is quite significant. Do you expect that, if social security was to be devolved in entirety, the cost of delivering the benefits would be less? As Claire said, it is not our job to get involved in commenting on the Government's cost and the delivery of the programme. We focus on what the cost is of the programme, the cost is of the payments from the programme, not the Government's costs. Anyone else with any supplementaries at this stage? Pam Duncan-Glancy, please. Thank you, convener, and thanks again for your responses to mine and other questions. Your paper notes the significant challenges around the adult disability payment, and we have heard about a lot of them today in terms of the predictions and the volatility around it. Can you tell us a bit about what you have done to get the information that you have already got and what further information you think could help you with that? I note, Claire, your point on the data collection from Social Security Scotland. It would be really helpful for the committee to get a bit more understanding of the sort of data that you feel you will need in order to be able to predict costs into the future. Claire, I think that questions are directed at you. Thank you. In terms of the data that we use at the moment, we have information on personal independence payment, we know how many people are receiving it, we know which level of award they have, we also know which category they fall into, by which I mean whether they previously received DLA, whether they are in new claim, or whether they are in receipt for special rules if they have a terminal illness case. We look at these different categories of people because they have slightly different characteristics in terms of how much they receive and how long they receive on the payment. When Social Security Scotland is delivering the payment, we would like the same information that we get from DWP, but if it is possible, additional information that we use, for example, there are correlations between people's gender and people's age, so that affects how much people receive and how long they receive the payment for. That type of information and the information that they have in terms of the level of award they are receiving for care or mobility, and in some cases, if we can have information, for example, on which points they scored, if there is a policy change, we can assess how many people are more likely to fall under that category of change than other people. Those are the information that we are after from Social Security Scotland. In terms of the information that we used to forecast adult disability payment, David said that we have spoken to a lot of different people. We asked the Government, we obviously read that position papers, we have had discussions with colleagues in the OBR and DWP who have experience of forecasting the change from DLA to PIP. In terms of additional information that we could get at this point in time, I think that we really need the payment to launch, and then we will see what actually happens in practice. At that point, we can start to understand what it is like for people who are going through the application process as well. We will see what that means for people applying and then we will see what that means for numbers in terms of how many people are receiving it from Social Security Scotland. In terms of policy change, Professor Smith mentioned that the long-term approach to that would be needed given the finances involved. Do you have an idea of the sorts of timescales that would be needed in order to change any, for example, eligibility to adult disability payment? When should the questions start to be asked in order that the forecasting can be suitable and the budgets can be moved as and where needed? Well, I suppose the answer to that is because these budgets respond over time to policy changes, that the earlier thought is given to policy change and the possible long-run effects, the better, because one of the risks is that you make up a change in policy that isn't very expensive in the first two or three years, and even this big shift to ADP doesn't start inciting big costs in the first couple of years. The costs come further down the line. The sooner you start thinking about those implications, the better. That's going to be an issue not just with the policies that the Scottish Government has currently taken over, but when policies like attendance allowance are devolved to Scottish Government control, no doubt the Scottish Government will want to think about how they want those policies implemented. Indeed, they've already said that when, as further social security policies get devolved, they will want to change how they're administered. It will be very important at that point for them to think about what are the long-run implications in the same way that we and they are thinking about the long-run implications of ADP, and you need to think about them all together, because there may be trade-offs between some policies. Frankly, the more you spend on some things, the less you have to spend on other things. With the expensive policies down the line, like attendance allowance, the big policies on the devolution agenda, a lot of them are associated with age and disability, and therefore they have this long-run property that both David and I were talking about. They also have inherent uncertainties about them, because it's hard to predict. Even when we have data, we do a better job of forecasting. Even when we look at established policies, such as PIP, where the UK Government had data on PIP recipients, and, nevertheless, when policies changed, they were surprised by the way the costs changed. There's quite a challenge ahead as further policies get devolved to the Scottish Government. I've got some supplementaries from Marie McNair, Miles Briggs, and then I've got a question myself as well. The process for assessing the as-all disability payment will not use private sector assessments. Have you anticipated any movement in the costs associated with that policy change? David, do you want to answer that question? It was such a fact that we took into account when thinking through the implications of the take-up assumptions that fit into our calculation of the likely costs of ADP, we looked at the fact that people would be able to call on a wider range of support. That was one of the factors that we thought about as being a driver for the increase in the potential take-up of ADP, and hence the increase in the case load. I don't think that we ever went down specifically to that particular issue to which you were pointing. We just recognised that people could call on a wider range of support that was previously available, and that that we thought would have an impact on the case load. We then went and tried to find numbers that would help us to identify what, from the past experience, would be the potential increase in the case load associated with that widening of areas of support. We considered the changes that were being made to the application and assessment process, and we obviously do not consider the cost of that delivery. That is part of the Social Security Scotland versus the European Union Administration cost, which is for the Government to consider. The more compassionate approach that has been taken in Scotland around terminal illness claims a possible factor in some of the cost increase that has been projected. That was something that we looked very hard at. The Scottish Government had done a Delphi analysis asking doctors how they might change their classification in the light of the changed rules, and we drew quite heavily on the findings from that Delphi study in coming to our views as to what the likely impact of that change in terminal illness would be on the ADP costs. Further question from my colleague Mary McNair to follow on from that was about the potential other benefits that the Scottish Government has pointed towards. We received a letter from the minister just yesterday with regard to young carers grant and things like that. I just wondered if you have done any work specifically around those and potential additional successful applicants. In the evidence that you have given to us, you pointed towards 70,000 additional potentially successful applicants with regards to ADP. I wondered if there was any other work that you were doing around potential future benefits and what that would look like as well. In general, as Clare said, we wait until the Government has got a policy that is specified in detail enough, including its timing for us to move to forecast. It does not mean that we do not think about what is in the pipeline, but we do not produce forecasts of it. Clare, do you want to answer in more detail? Probably a specific example, as I saw the cabinet secretary referred to cold weather payments and the devolution of that starting in the next budget year. That is not currently in our headline forecast because they are not devolved and they are not in the Scottish budget. We produce an illustrative forecast of spending on cold weather payments, but if the Scottish Government will be announcing the plans for that at the budget, we will be factoring those into our forecasts and publishing that in December. That is 70,000 figure. How was that delivered or how has that kind of come about then in terms of additional applicants? This is not really the things that David has been talking about in terms of we think there will be more applications made to adult disability payment, we think there will be more successful applications. Because the Scottish Government has published the regulations for adult disability payment, they have a firm commitment to introduce that next year. We now feel that there is enough information available on the policy direction that the Government is taking and the implementation plans for us to factor them in. Final question for me. You are very helpful briefing points to changes that have had to be made in terms of inflation forecasts. There are obvious reasons for that volatility in the economy driven by residual and continuing effects of Brexit, obviously the pandemic as well. Two points. As we look ahead to the Scottish budget, how difficult is it going to be for you to be able to predict inflation rates given where we are with regards to the fuel crisis, the energy cost rising and other costs impacting on households across Scotland? Secondly, where do you expect inflation to be around the time of the Scottish budget and obviously Christmas? One point to make is that in terms of upgrading benefits or social security, what matters is the inflation forecast in September of the year before the benefits are uprated. We forecast that CPI inflation for September 2021 would be 2.7 per cent. We will get the exact figure in a very short period of time, so we will know whether that 2.7 per cent figure was accurate or not, but the change between that and the actual figure for September is likely to be quite small. Just back in August, we forecast inflation would peak at 4 per cent in the final quarter of this year. It is conceivable that, given the way that inflation is actually going, it may carry on into early next year. That would only have an implication for future years if that affected the level of inflation in September 2022, because that would affect the operating that would apply in April 2023. At the moment, we are forecasting that inflation in September 2022 would be 3.3 per cent, so if inflation rose higher or if it stayed persistent for longer, our figure for 3.3 per cent that would apply to the 2023 budget would be out by a more significant amount. However, the degree of error in our forecast for September 2021 is likely to be quite small. Are you looking towards the projected trend towards Christmas? That is hard to say. We are forecasting 4 per cent. That was our last forecast. It could be slightly higher on that, but until we actually get figures from back of England or VR, we will not be making another inflation forecast until we publish our December forecast, so we have not got any official view on that at the moment. I can add two areas of slight comfort. One, as David has just said, we will be producing a revised inflation forecast in December with a forecast that will go alongside the Scottish budget. The other general thing to say is that there is a lot of uncertainty. At this moment, there is a lot of uncertainty, but inflation has been pretty stable for a long period of time. However, the general effects on inflation on the budget are complicated. You would like to say that inflation should not really matter, because everything is inflating, so in real terms, tax revenue, Government expenditure, Social Security expenditure, earnings are all going up. However, things do not go up by the same rate of inflation, and some Social Security benefits have operated in a particular way, others in a different way. Some tax rates, some tax allowances are inflation-adjusted, others are not. The effect of inflation on the forecast is quite complicated, but quite a lot of the inflation effects wash out. It is really in the end the real-terms effects on the economy that are most important. Clearly, it will also have an impact on Government priorities as well, because if inflation has a squeeze on household budgets, as well as the delivery of Social Security benefits, it will also affect what Government considerations will be coming forward surely. Absolutely. That is a good example of the fact that it is the difference between different rates of increases that really bites. If prices in the shops are going up by more than wages or sort of security benefits, then household incomes are taking a painful hit. Did you want to come in there, Claire? I suppose just to add from the Scottish budget perspective, obviously, when inflation will increase the size of the block art adjustments in terms of the funding that is received, because the UK Government will also be spending more on its Social Security payments. But where the Scottish Government has payments that are new and don't have the corresponding funding for the Scottish child payment being one example and the additional cost and adult disability payment being another example, the inflation effect there will push up spending and that will again have to be met elsewhere in the Scottish budget rather than being directly funded by changes in the block art adjustment. That is very helpful indeed and a good conclusion to the session this morning. I really appreciate, on behalf of the committee, your time and the answers that you have given and, like colleagues, the briefing that you provided in advance. Thank you very much indeed and we will no doubt be in touch again very soon to discuss those matters again. Thank you very much to you all.