 Felly, gyda'r ffóllwch i gael i'r F Univers waste committee yma, i fflawn i ddebologo eichening i gael i gael i gael i gael i fflawn i ddebologo eichening i gael i gael i'r fflawn i ddebologo eichening i gael i gael i ddebologo eichening i gael i gael i gael i'r ffaith ffalec o'r amser intu chi'n gweithredu am ei wyddio. Rwy'n rwy'n peu o ffalaen amser winni gallewch oedd yn ei gael i'r ffaith i gael i ddebologo eichening i gael i gael i'r 1 is to agree item 3 in private and all future agenda items of its kind in private. For the first time, we've got an adviser with us today and obviously we'll have an opportunity after the meeting to discuss the evidence that we have, so I'm suggesting that that discussion is taken in private and in future we do similar. So we can have a bit of a summary of that. Is anyone content with that? Thank you very much. In that case, we're now reaching agenda item 2, which is evidence from some experts in the welfare field on the draft clauses, and I'll just quickly introduce the panel. We have John Dickey, who's director of the child poverty action group in Scotland. Richard Gass, who's a member of the policy and standards committee of the rights advice Scotland. Professor Paul Spicker from Robert Gordon University. David Ogilvie, the head of policy and public affairs at the Chartered Institute of Housing, and Jim McCormack, who's a member of the Social Security Advisory Committee, who Duncan and I met with recently. It's a very interesting discussion that we had too. I'll just summarise the session this morning. Obviously we've got five witnesses in an area that can be quite complex and detailed, so I need to ask both my colleagues and our witnesses to be as succinct as we can. Otherwise, I'm going to have difficulty getting through all the evidence sessions that we need to do. We're going to try and finish at the latest about 11 o'clock, and if we can keep it as tight as we can, then that will help. I know it's not always easy given the subject matter, but we need to do what we can. I think that the best thing that I can do is kick off the session, gentlemen, with a very general question. We've now all had the chance, obviously, to see the detail of the UK Government's draft clauses on the welfare and command paper. I'd just like to get an overview from you on how they're drafted and the practical challenges ahead in terms of implementation of the new powers. I don't know how to start off succinctly, given that I know that's a big question in many ways, but who would like to kick off? John, you're looking interested in that ending, aren't you? It's not interested. I mean, just to kick off saying that our concern is how those security powers can be used to prevent child poverty and the wider inequalities that underpin that poverty. Wherever those powers lie, how those powers can be used, obviously concerned in terms of any devolution package, how that package is delivered, can have a huge impact in terms of the efficiency and effectiveness of getting financial support to individuals and families, as well as how those powers might be used. I don't think that there's any question from our mind that the clauses interpret the Smith recommendations pretty narrowly, and some of the opportunities that we thought had come flow from the Smith recommendations, for example, around the possibility of creating new benefits in Scotland, the possibility of topping up benefits to the clauses, don't give effect to those recommendations in a way that we, and I think was widely understood from the Smith recommendations. I think that another key thing is the bulk of social security powers still lie at UK level, which is important for us in terms of how do we influence policy around social security. Having said that, very real opportunities in the powers proposed for devolution and in the clauses, even as they're drafted, to improve the delivery of universal credit, to improve levels of housing support, potentially, given the devolution of the housing element to universal credit, potential around support with maternity costs, potential around improving adequacy and access to disability and carers benefits. So real opportunities there, but I think what we're keen to draw out today is really important, how these clauses are given effect and how that's done in such a way to minimise the impact of creating new administrative interfaces that claimants might fall between, to ensure that we have a system that allows for delivery of minimum standards of social security payments in Scotland, that there's adequate accountability around that and adequate oversight opportunities for claimants to appeal. That we ensure that there's no loss of passporting arrangements, so where replacement benefits are created under devolution, that we ensure that claimants in Scotland are able to continue to be passported and access the reserved benefits that they would currently be passported to. I think the final key issue for us really is to ensure that we, through this process, protect the role of cash benefits in meeting particularly the extra costs of disability and protect them as a social security entitlement. So there's real opportunities in here, but there are some real risks in terms of making sure that we get the process right and get the package right in such a way that it means that we improve the potential of our social security system to tackle poverty and don't create any unnecessary and new holes that claimants can fall through. Okay, John, you've given us quite a good overview there because that's quite a breadth you've covered. Has anyone liked to have added any supplementary into that in terms of the issues that were raised or are those the issues that I think were all there or other things we need to consider? Richard? A major concern going forward is going to be the level of money that comes over and is that going to be sufficient because it's fine having new powers to deliver an expanse of benefits. However, if the finances don't match that, then what might be an opportunity today over time can become perhaps a problem for either Scottish Government or for the delivery agents? Just a thought about accountability issues. Smith observed that we have weak intergovernmental working. That's a problem. That's not an ideal context for welfare devolution, actually. The draft clause responds in some way towards that, but I just observed that we've got in the draft clause an explicit reference to concurrent powers around universal credit, which puts us into formally a very different place in terms of how governments and therefore parliaments will need to work together. We're used to thinking in terms of reserved evolved splits, but there are shared areas in here now. We need to think now, I think, start thinking ahead about appropriate oversight scrutiny, transparency arrangements. So, whatever comes out of those revised clauses, we have much better machinery for independent oversight and parliamentary oversight. In terms of the housing profession, which is what this choice is for housing in Scotland is here to represent, there are much so that other people already said that there are several opportunities here. We're not quite where we wanted to be in terms of what we submitted to the Smith Commission. I think we're a slight distance short of having a system where we were able to top up appropriately for the Scottish context. There is a lot of interpretation involved in this process. In terms of how we are looking at the draft clauses, the recent debate over whether there was or wasn't a veto is something we really need to get some clarity on. Also, the additional funding that we would wish to bring in to support the most vulnerable in Scotland would manifest itself is an absolutely axiomaiic matter. We're at a very interesting point, as we all know, in terms of politics both north and south of the border. We don't have that clarity until the other side of the general election, and we'll have to deal with things at that point. I think what I've tried to highlight in our most recent response, in the written evidence here, is our take. I don't think that we've got much further forward in terms of getting the clarity that we need. There has been a process, it's been a very rapid process, and anybody who's been involved with that should take some credit for that process, but I think that we have not yet got clarity of very specific things around how we would afford to, for example, eliminate the bedroom tax, what are the opportunity costs that we're going to have to face here in Scotland, and what would the implications be at a UK level? And because the Chartered Institute of Housing is a UK organisation, we have responsibility to make sure that we attend to this issue of no detriment. I'm sure we'll get that's a very key point here, and how we interpret the issue of no detriment will be absolutely axiomatic. I'm going to come, once we get this general opening section over, I was going to come directly into the no detriment areas, one of the areas that we need to cover. Paul? Well, there's a great deal that my colleagues have raised, which I think is important, and there is a shortfall in the powers that have been suggested within the draft clauses relative to what was undertaken in Smith that there's a great deal of complexity. We begin from a position where all social security powers remain reserved unless there are specific exceptions. The way in which Smith has been translated into these clauses has seen, in general terms, erosion at most points of the conditions under which transfers are possible, and a limitation on certain powers, including some powers which the Scottish Parliament already has. But I think beyond that, there is a fundamental mistake in the process that has been undertaken by the Scotland office and by the drafters of these clauses. They've taken the view, I think, that their task was to alter the basis of the administrative responsibility for delivering certain existing benefits. So they have drafted a clause relating to disability, which seems to them, although it's complex, to transfer responsibility for disability living allowance and attendance allowance. There are complexities within that. It doesn't quite do that, but that's the way that it's been seen. Now, that wasn't the task that they were supposed to be doing. These clauses, this draft legislation, does not create a single benefit. That is not what this legislation is supposed to be about. It's supposed to be about the transfer of powers so that the Scottish Parliament can make decisions in the areas of benefit. Certain powers were promised. The White Paper says that they're there, but they're not. There is no power to create new benefits in these areas because the criteria on which the benefits can be distributed are being specified in the legislation. There is no power to top up reserved benefits, which again was in the powers. All that there is, and it's being passed off as if it was that, is a discretionary power to deliver short-term benefits in cases of immediate need, a power which the Scottish Parliament already has as a result of an order relating to the discretionary social fund. So we've actually seen a considerable shortfall, but the shortfall reflects, I think, a problem in the approach taken by the clauses. Whatever we do, it's going to be difficult to implement this material in practice. There are going to be political problems, financial obstacles, but what I'm seeing here are legal obstacles, which may mean that a lot of initiatives fail at the first hurdle. I'll lay out quite a map for us to try to guide ourselves through for the next couple of hours. I said that we'd start off with no detriment areas as we begin to get into the meat, and that's what we should do now. I think it was Stuart McMillan who identified himself as wanting to begin to explore that area. Thank you, convener. Good morning, panel. I read the submissions with great interest and certainly what I've heard this morning. It obviously backs up what I've read, but I'm still a bit unclear on the whole issue of the no detriment. I fully... The Smith report is very clear in terms of what it's supposed to mean. Draft clauses are a bit less so, and certainly what I've heard this morning may highlight that as well. In terms of the no detriment, how workable are the clauses that have been produced? How workable to ensure that there is no detriment to either Scotland or elsewhere in the UK, but also Mr Dickey and your submission, you highlight the point of no detriment to Clements? Do you think that no detriment means as well, because there are different definitions of what no detriment is in that exercise? That would be helpful to us. I think that, in the Smith commission, the term no detriment was to mean that neither the Scottish Parliament nor Westminster would be worse off by the transfer of particular benefit. However, no detriment should be taken a step further to include no detriment to the individual, which will create a challenge for the Scottish Parliament and the Scottish Government in that any change would need to be better than what was there before to ensure that there was no detriment. At present, although the powers are being considered and transferred, the Government is firing ahead with the migration or reassessment of folk on disability living allowance to perl independence payments. That was a proposal from Westminster Government as a cost saving exercise, so what is happening while we are considering the matter is that benefits are being revised with an ultimate aim to reduce the social security budget on that particular area. The question would then be at what stage do we measure the amount of money to transfer over? Is it at this point in time or is it at the point when the new benefit or the power would transfer? I suspect that it will be the latter that will be when the benefit transfers, by which point the budget could be significantly less than it is at present. There are two no detriment principles in Smith. The first is about the generic transfer of powers, where I think that it is relatively uncontroversial. The second part, however, is that in relation to each and every policy decision that is made, there will be a cost or price attached, and the illustrations given in the command paper include costs, for example, to universal credit of any alteration in the tax rates. They include the effect on vehicle excise duty of passporting benefits. They include certain things related to employment programmes. I think that we are talking here about a great level of detail where virtually any policy decision will be subject to a cost review. The area that immediately struck me in that capacity was universal credit. We do not know exactly what it would cost to alter universal credit, but we do know something about the costs of universal credit now. According to the Cabinet Office, the estimated costs of administering and introducing an IT system for universal credit currently stand 2021 at the staggering figure of £12.845 million—sorry, £1 billion—an absolutely staggering figure, which indicates that a lot of the expense of universal credit is still to come. I was at a conference on Tuesday and was able to take advantage of the presence of James Wolff, who is the director of universal credit, to ask what he thought the cost implications might be of different potential changes to universal credit. His answer was that some of them are already built into the system and therefore it should be possible to do it at relatively small costs. He gave the example of moving, for example, to buy monthly payment, where the flexibility is already there and therefore it would not require a major computer iteration. However, he suggested that if what the Scottish Government wished to do was to go for a more substantial or complex variation—for example, front-loading payments in some directions or moving towards an irregular frequency for other reasons—that those could prove to be extremely costly. I am just going to pick up on how no detriment is treated in relation to employment programmes. There is an important issue that is underlying here around incentives. Our future Scottish work programme or work choices variation on what we have at the moment is to invest in a different way, for example investing more in training, more in childcare and more of a social investment cycle. It takes longer to get your payback, but the payback is bigger. It is very important that we understand the relationship between the policy choices made in Scotland and the actual outcomes rather than the apparent short-term outcomes. There are some clauses in 2.416 and 17 that talk about the need for a shared understanding of the evidence. That sounds like a technical point, but I suspect that it is going to be extremely important in working through what we mean by no detriment. Where is the incentive for Scotland to invest more or differently in order to get a better payback? We are only in the foothills of even understanding what shared understanding means about the relationship between policy choices and outcomes. I suspect that, quite quickly, we need to have some work through examples of what those might mean in future. Employment programmes and universal credit are two of the examples that jump out immediately from the draft clauses. Can I ask a supplementary on that issue, gentlemen? Obviously, shared understanding would be a fantastic place to reach, and that will not be an easy task, but there will still be disagreements inevitably. So, if there are disagreements, how will they be resolved? Who will arbitrate, and who will decide on the cost or whether detriment exists? Have you got any views about how that might be best done? I guess that will not be part of the clauses, because that sort of material could not be, but memorandres of understanding agreements will need to be built up that allow that sort of architecture to arrive. Last week, as I understand it, was the first meeting of the joint ministerial working group on welfare. There is clearly a bilateral Scotland UK Government angle to this. There will also be what Smith calls a quadrilateral element, which is the four nations of the UK and a wider future funding settlement. I think that there will inevitably need to be kind of last resort ways of resolving tension and conflict. There will be need for appeals ultimately, but the best way in the interim will be to work through what that could mean in practice in half a dozen key areas where powers are either being wholly devolved or that there is an administrative power coming, so that there is a concurrent power shared. We need both Governments and Parliaments to work through those examples early, so that we have a clear sense of where we might be going if different choices are made. Ultimately, it comes down to where the costs and benefits of different choices lie. Even if the evidence is contested in the future, we will need to have robust procedures in place and do some of that in advance. Does that then take us back to your original and very important point of the intergovernmental working and models that are out there? As a broad general principle and no detriment, it would not be acting woefully to cause a problem here or there, if that makes sense. There are models, but none of this is insurmountable. There are models and federal setups and others, and I do not know what has presented this evidence on all from the Canadians, where they describe a whole series of mechanisms that they have in place—intergovernmental councils of ministers and so on—where they see through all of the important disputes or discussions. There is no insurmountable, is there? You have an expert adviser, I suspect, who will be the best place of all to comment on this, but you are absolutely right. We are moving towards what outsiders might call a quasi federal system. It is very asymmetric. We need to take the next step in maturing this settlement, which needs not just more formal mechanisms but needs much better day-to-day relationships between Governments and Parliaments. There will be evidence being published soon by different bodies on how that works, for example in relation to employment programmes in Canada and in Germany and other federal systems. I am sure that there will be evidence in other areas as well. I would question whether we are talking in any sense here about a federal system, that a federation is usually understood as reserving powers to the lower body. What we are seeing is asymmetric in a different direction, where there is substantial power reserved to the UK Government and in particular to the Treasury. In the case of Northern Ireland, there is currently a dispute about the failure of the Assembly to pass a certain legislation that the Treasury and the DWP think they ought to pass. At present, they are being effectively charged for their failure to make deemed savings. The deemed savings include, for example, £105 million from personal independence payment, where I think it is questionable whether there are indeed any such savings to be made, but that has not stopped the deductions and the monthly charges being made relating to those presumed savings. If what we have is a situation where finance comes from the UK Government and the UK Government determines what the prospective budget will be, then there will be completely in their position to control how much is done and indeed what is done. Remember that Northern Ireland has, in legislative terms, full legislative authority over all its benefits. Is that an argument against the block grant in Barna? In other systems, they do not call it Barna, but they call it social transfer. Is that a challenge against that sort of system? How do you overcome that when you have the block grant in Barna and social transfer between the centre and regions of countries? How do you address that problem? I think we would like to know as a committee that we can make some suggestions in our reports. I have to put my hands up and confess that I have not a clue how to do it. That is quite beyond my expertise, if I am looking in the direction of your adviser. I hope perhaps that she can help me, but I genuinely do not know how to get around that particular problem. I will go to the substitute for supplementary, because I think that I will have one in Tavish. Mr McCormick, when you mentioned a few moments ago in terms of policy areas, where there has already been an element of devolution, I would suggest with respect that an example of welfare is not the same as energy policies. It is a lot more complicated—certainly we have already heard this morning—than energy policies. I accept that two Governments could certainly look at what is already in operation, but they could not automatically transfer over the working arrangements into somewhere like the welfare policy. Another point that I would like to highlight is that in terms of the cost. Professor Spicker, you mentioned the cost of the IT system—the £12.84 billion system. The introduction of any IT system is never easy, never cheap and, invariably, there tends to be overruns. With what has been suggested this morning and what is in the draft clauses, how confident would any of you in the panel feel in terms of a new IT system being rolled out and introduced? How confident would you feel that there would be no detriment to Scotland and also to the population of Scotland as a consequence of the system? No confidence whatsoever. The point that has been made is that Government IT projects come in over budget and behind timescales, so I would not have any confidence that a new IT system would ensure that there was no detriment. I guess the key question would be there, because both Governments are capable of having IT systems at run-over cost. The key question there is how transparent the system is for procurement and then agreement about how that cost can be appropriately divided between the UK Government and the Scottish Government. That comes back to the stuff that Jim is talking about in terms of shared understanding of what is going on in any system for disagreement, I am assuming. I am seeing nods, so I am taking that as a yes, and I will go to Tavish. I just wanted to go back to Mr Cormack's point on the joint arrangements that need to be between Governments, and most of them will be formalised after the election for obvious reasons. Smith is very robust on this, and it is fair to say that John Swinney and Michael Moore knew this inside out, so that is why Smith is so robust on this. You also mentioned, in your earlier evidence, that there is already to be a joint ministerial meeting on social security. You mentioned the quad and so on and so forth. All those things are already happening, which I think is entirely positive and a good thing. There is no parliamentary scrutiny of that whatsoever, either by this place or, I know for a fact, either by Westminster rather. Do you think that there should be? I think that your right, Smith, was very clear about looking at some arrangements that have been put in place for a Scottish rate of income tax and HMRC. It is very clear in the fiscal chapter about the need for both parliamentary and independent scrutiny, and there is no reason at all why that should not transfer over to all the clauses, including the social security clauses. It is understandable to pick up David's point on why we are not going to see much in the way of further detailed pre-election, but what is more concerning is that the clauses do not say more on the kind of arrangements or the kind of process that we need to put in place to get towards much more robust scrutiny pre-legislative during legislation and once we get into regulations being made in future. At the moment, the Social Security Advisory Committee has a remit for DWP and DSD in Northern Ireland around regulations, secondary regulations in welfare and pensions, advice giving to ministers both asked for and proactively given and the part to do an independent work programme to look at areas of concern. Our hope would be that both Governments emerging from the joint ministerial group and welfare will actively wish to look at how that kind of arrangement through SACR or others can be put in place to ensure that Scottish parliamentary scrutiny is improved and the capacity outside Parliament is also improved. Do you think that the committee could do a reasonable piece of work on looking at that parliamentary scrutiny part of the equation, which should, after all, naturally come to a parliamentary committee to consider? Absolutely, and I think that the role of the Presiding Officer generically in improving scrutiny is mentioned both in Smith and in the closets. It is not obvious what the timescale for that kind of work would be. I would suggest that there is a bit more urgency required around getting that inter-parliament focus coming into sharper focus sooner rather than later. I think that you have made an absolutely important point there. The general strategy, though, relates to benefits. Some benefits interact and are interdependent, and it becomes extremely difficult to make any alteration in those benefits without having consequential effects on other parts of the system. We see this very clearly in relation to housing benefit. It will be the case in relation to universal credit. It will potentially be the case even to presently existing benefits such as council tax reduction. However, not all benefits are like that, and if we look at most of the benefits that are foreseen within the clauses, many of those are non-contributory, standalone benefits, which do not need to interact with others. Here, there is scope for action. Providing benefits are not means tested. You can give small or relatively small amounts of money without affecting other entitlements elsewhere, and all you need to negotiate effectively is the principle that these things are treated on a standalone basis. Now, there are some benefits that you can do that with, and there are some that you cannot, so it will not work for the discussions about housing costs that are currently being had. I think that that is regrettable, because I think that we could have moved to a position where we did separate out elements of housing costs, but that is not on the current agenda. However, the more we can do of that, the less reliant we are on really difficult, complex negotiations with unpredictable and uncertain outcomes for claimants. One area, of course, where there is a fair bit of interaction is the DLA and PIP, and how that interacts with other benefits. I would have thought that that would be potentially, if Scotland is doing something different compared to the rest of the UK, that the arrangements that Tavish was talking about in intergalamental arrangements need to be pretty strong. I think that that is right. The DLA acts as a passport to, for example, ESA for students. You could change the replacement benefit. In Scotland, it could mean potentially more people entitled to those benefits, which would have an impact on the potential passporting to the still-reserved benefit ESA. There are interactions that would have cost consequences for reserved benefit expenditure, depending on what passporting arrangements are, and we would be wanting to protect those passporting arrangements so that people do not lose out when they become entitled to the Scottish benefit, so that they continue to have that as a mechanism for accessing those benefits that are still reserved, but which provide important support for them. Preamble, in this section, we have come up against the problem about the definition of disability and disabled person, as well as that of carer. Perhaps the answer is that the intergalamental discussions that we discussed earlier might be the appropriate mechanism for doing so, but is that a problem for the Scottish Parliament's legislative autonomy in the definitions within the draft clauses that are currently drafted? I would say definitely. If we take the definition of carer, it is described to exclude full-time students or those in employment. We could not, for example, decide that we would have a carer's allowance in Scotland that could be paid to full-time employment. With carer's allowance, there is an additional element to means-tested benefit. There is a carer's premium in all the means-tested benefits and in universal credit. If we were to introduce a more generous carer's allowance in terms of eligibility criteria, we could potentially increase the number of Scottish residents who would be entitled to extra universal credit, which is not really what the devolved powers are intending. On the other hand, if we didn't change the eligibility criteria but increased the rate at which the carer's allowance was paid, then carer's allowance is treated as income for those other benefits, so increasing entitlement could have a clawback from the deserved benefits. What would be the most effective way to avoid the risk of confusion over the terms and to avoid the situation where people are penalised in this way? We would need to have a relaxation on the unnecessary restriction on the definition of carer, and then there would need to be something introduced. Smith made the point that anything that the Scottish Parliament chose to introduce should be a gain to the individual. In order for that to happen, there would need to be some recognition from Westminster Government that the additional elements that were put in place were to be disregarded in terms of means testing. You are quite right to draw attention to the difficulty of the particular clauses relating to disability. The clauses have two definitions of a disabled person in different places. Clause 16 is, I think, the one that presents the most worry, because it is a homemade definition which will have unpredictable effects that we cannot deal with. I think that we need to be aware that, in talking with many of the problems that Richard is referring to, there will always be those issues when it comes to designing specific benefits, but this clause is not there to design a specific benefit. It is there to define the powers of the Scottish Parliament, and then from there there will be scope to design a benefit or not. I am rather concerned that the extremely strange definition that has been used of disability does not include certain groups that would have been, I think, fairly automatically included in others such as people with terminal cancer, such as people with multiple sclerosis, such as people with fluctuating conditions and so on and so forth. That is very easy to deal with in legislative terms if they simply use the same phrase that there is in clause 22 in clause 16, that would be taken care of. There is not, I think, a major problem about the drafting, but what is it that they have done with this particular clause? Why has it been done that way? It seems to be that they have wished that current criteria for DLA and attendance allowance to be carried forward, rather than to create the opportunity for the Scottish Parliament to define benefits within that area of responsibility, which was the declared intention. John Swinney, I will let you come back, Rob, so that you can complete that section. To agree with what Paul Smith says in terms of the definitions of disability, constraining the possibilities, even more than that, the clause that is currently framed restricts, even if it does not allow for the payment of a PIP-DLA replacement in Scotland to those who are terminally ill if there is no current impairment to their capability. It took a separate section of the UK Welfare Reform Act to allow for payment of PIP-DLA to terminally ill claimants. As the clauses are currently framed, that capability is not here in Scotland to enable that, so there is a gap, a very clear problem that needs to be resolved. It is possible that we will be on the boundary of the precise clauses, but as a principle, it should concern us that we have rigid definitions of under-16 working age, retirement age, when so much of that is quite fluid. One of the big problems in all welfare systems is the jagged edges that are experienced by claimants when they transition from one age category, for example, to another. It may be the case in future that a Scottish Government and Parliament would wish to smooth out some of those jagged edges, smooth out the transitions, for example, when children go into adult services and benefits. The definitions that we have here are more restrictive than we have seen in the past. It should be concerned that that might clash with a potential future direction of travel, which should be about smoothing and improving the experience for claimants, especially as they move from one category to another. We are just to ask a substantive question about clause 16. People in receipt of DLA PIP are often automatically entitled to a range of other benefits and tax credits, some of which will remain reserved. Will the interaction between devolved and reserved entitlements make it difficult in practice to design policy differently in Scotland, for example, to remove those jagged edges that Jim McCormack has just talked about? Jim, do you want to kick that off? Give an example from the employment field. Maybe other colleagues could talk about disability. As proposed, it strikes me that a revised work programme will support to help people at risk of long-term unemployment and disabled people into working to stay in work. As proposed, it might give us a situation in which future providers in Scotland, which might be third sector public service providers, would be accountable to hear for their financial performance and their programme performance, but they still have to apply a conditionality system and a sanction regime to those programmes. That creates not just problems for claimants but it creates strange incentives for providers and gaming and false reporting. That is a particular jagged edge. If we know one thing about the current social security system and the welfare reforms that we have seen, it is that a tougher sanction system has caused a great deal of difficulty for some of the most vulnerable people in our society. That jagged edge around conditionality is one that should be a particular cause for concern, so I suspect that. To bring a focus to the end of the discussion, I will come to Alex Johnson and wider universal credit issues. From my understanding of Smith, people who put extra payments were made but expected to get a net gain. That is from what I have been hearing from the majority of the panel this morning. That is their understanding as well. It does not seem to me that those are in the clauses at the moment in that particular aspect. Do you think that it needs to be in statutory footing because we need to come to some point at some stage of making some recommendations? Do you feel that that should be in statute that people expect a net gain? I do not know how difficult it would be to draw a statute like that. I think that the difficulty with that is that if you can only increase benefits and you cannot alter them, then you cannot create money to do things differently in other respects. There will be cases where, for example, the Scottish Parliament might want to review in the future the balance of funding between on-one-side personal care, self-directed support and, on the other, the payment of cash benefits and may reasonably decide that it wants that balance to be different, but you would have bound yourself and prevented yourself from doing it. I have a very brief one. Clearly some of this is complex to do in statute. The issue that was raised a moment ago around definitions of carer and definitions of disabled persons are presumably ones that could be very easily amended in terms of the current clauses unless there are unforeseen consequential effects that I cannot see immediately. I do not know if that is correct. That point I was going to make is that there are some specific amendments that need to be made if we are not actually going to restrict and reduce the support available to claimants in Scotland, whether that is around the—another example that we have not talked about was the way discretionary payments have been defined in the clauses or described in the clauses, where we already have powers in relation to the Scottish Welfare Fund that enables the Scottish Welfare Fund to make payments. The way that the clause is defined in those clauses actually limits further on the basis in which those payments could be made and limits them so that where people who have been sanctioned or have lost benefit through other issues around conduct, which could include somebody who met a health problem not filling in a form or failing to respond, their ability to access support through the Scottish Welfare Fund would be actually more limited as a result of the way that the clause is defined here, so that needs to be revisited. There are areas that, never mind providing additional support, need to be revisited to ensure that the existing levels of support that are available can be maintained. Emre, I also want to pick up on that. We all support that, Richard. On the definition of carer, it is regular in substantial care but not in full-time employment or in education. At present, the Government describes that as 35 hours a week. There has been nothing to prevent Scotland from describing 17 hours a week or allowing carers allowance to be paid to more than one person. However, the consequence of that is that carers allowance or entitlement to carers allowance is a passport to an increased element of our reserved benefit, which brings us back to the beginning of the process here, the detriment area. We have touched on the issue of universal credit a few times during the discussion already, and I wanted to talk about in the subject just a wee bit more. The first question that I was going to ask is a fairly simple one. We have had the initial role of universal credit within the pilot in Scotland in Inverness. We are now progressing with that. Is there any evidence so far to indicate the degree of flexibility that may exist in delivery arrangements within universal credit? Our experience of universal credit is that the numbers of claimants have been so small that there is nothing to learn at this stage. Inverness has not reported back to Reuters Advice Scotland any particular problems, which would suggest to us that there are not major problems. We know that there has not been very many referrals to the local authority for support to initiate the claim, but the initial roll-out was for young single claimants without children, without housing costs, so it was the easy ones. Traditionally, that is a client group that does not tend to come forward to advice services, so there are still early days for that. I think I have just said that it really is for our purpose. It is too early. The numbers are too small. The only major things we are really focusing on is the fact that it looks like the IT system that they are operating in these pilots is actually not scalable at this juncture. That is the latest information I had anyway. If that is conjoined to the point that Paul made earlier about the significant costs of setting up an IT system, whatever we get, we have to bear in mind that there is going to be a significant number of years here between now and when powers over this area are effectively finally devolved to this Parliament. I would anticipate, unless there is a significant change in direction at the UK Government level on this issue, that we will have a form of universal credit, but it will be interesting to observe how quickly the roll-out can actually proceed if, indeed, what is coming forward to us in terms of anecdotal information about the IT system proves to be the case. We are not anticipating, even from the first two tranches of roll-out numbers, that significant presumptions could be made about how the roll-out is going to go. This week, I will go inside with the next roll-out of universal credit, which will be in 10 local authorities in Scotland by middle of June. DWP published its first analysis publicly about the impacts of being in four job centres in the north-west of England—not inverness, but the job centres that have been longest running for some claims on universal credit showed small, modest and positive impacts. For example, claimants spending an extra day per month in paid employment, a net increase of £10 a month in take-home income, and small early signs of small net impact. What is interesting about flexibility is that there is provision for alternative payment arrangements. Claimants can, at any point, if they know that they can do that, apply for a different payment arrangement, for example in frequency or payment direct for the housing cost of the landlord. In some circumstances, as I can have very much a minority pursuit as a last resort arrangement, what we know is that if you take the lowest paid people in society, those earning below £10,000, up to half of them are paid more frequently than monthly, weekly or fortnightly, and 20 per cent of workers overall are paid more frequently than monthly. Alternative payment arrangements with flexibilities, as suspects, should be seen as a permanent feature of universal credit and something that will allow households to budget in a way that best suits them. The principle of choice is really important alongside flexibility for payment arrangements with universal credit. It is important in terms of what has been devolved to Scotland in clause 21 in terms of devolved policy responsibility for how payments might be made. The infrastructure, the universal credit system is, in theory, designed to allow that anyway, so there should not be huge issues in terms of applying a different policy approach to direct payments—payments that care more frequent as a result of that. The other thing is that there is no legislative barrier to UK and Scottish UK Government agreeing to provide that flexibility on a more wide-ranging basis even now, so that is an important point to note as well. As we heard from the conversation that Paul Spicker had earlier in the week, small variations may not have much of a cost, but substantial variations, significant policy variations over time, could have a very substantial cost in terms of delivery. That is supposed to be the infrastructure that should be designed to allow that to happen anyway, so it is not clear to us why scaling that up would have huge additional costs or barriers to allowing that to happen. Looking specifically at the housing element of universal credit, many people who currently get housing benefit are passported on to that benefit by virtue of entitlement to one of the other benefits that is being rolled up into universal credit. Do you see that relationship as being a problem as we go forward? There are some relationships that we outlined in our written evidence around tapers that we would be concerned about, so if you are going to be isolating the housing cost element of universal credit and dealing with that differently, we would come at that from the point of view that we absolutely want to see and assure that the improved tapers that are on offer on universal credit do not end up being withered away or made less advantageous to people on universal credit. That is part of the relationships that we will need to look at between the Scottish Devalve policy and universal credit implementation. That is an absolute key point that we are going to have to look at. On the housing issue at this stage, I will come back to you if you want. I was interested to explore that on the basis of what we have just heard in relation to the housing element of universal credit going forward. Given the obvious challenge of how that is going to work, I would be interested in the views of panel members on how they envisage, assuming a successful implementation of an arrangement where the housing element in Scotland is devolved but not elsewhere in the UK, and how that then works as part of, if you like, a larger benefit provision that is the same across the UK. The question is to devolve the housing element but more allow the Scottish Parliament to have control over topping up or allowing a slightly higher amount, so having more generous figures for non-depth reductions might allow an eligible rent that is above the 30 per cent, perhaps reflecting the bedroom tax. However, that would still be part of universal credit, for which, as I read it, the extra cost incurred there would then be passed back to the Scottish Parliament to meet. I guess that I am looking at clauses. Clause 19 seems to address the issue of discretionary housing payments in relation to, for example, the bedroom tax specifically. Clause 20 and 21 addresses universal credit and talks about the housing element more widely and implies at least the possibility of a different policy approach. I am not sure if that is right. We would have on this issue, and we have already put into written evidence, which is that it is great to have the ability to top up or to tailor your policy from the Scottish Parliamentary perspective to deal with issues such as the bedroom tax, but we have to still recognise the effect of the word operating within a limited budget, so that opportunity costs involved in executing that policy decision would be of significant concern, not just to the CIS but to the entire housing sector. The number of times that I have come before various different committees here have been asked, so what else would you cut then? I assure you that HEC would not wish to see any further squeeze put on, for example, housing development subsidy, because we need to increase housing supply. That is possibly even a false dichotomy, but it is just one of those issues that we want to test the water with here. Do you want to reflect on that? I just wanted to build on David's point and really make a link to a different part of the clauses and the Smith commission, which I think is important. In fact, Scotland Act 2012, if we think 10, 20 years ahead, one objective in Scotland might be to do a better job than we have done in the past at controlling housing costs, and that is about expanding supply of affordable housing in all tenures, not just social housing. In the interests of controlling the subsidy, we have to do ex ante through housing benefits. If, for example, additional borrowing powers and bond issuing powers come to Scotland, if we prioritise the expansion of affordable housing supply, that gives us a different trajectory on long-term housing costs that have to be picked up through welfare provision, and could potentially put Scotland in a more affordable and sustainable place, which, compared to the UK as a whole, we are in, but to maintain that in future, making the links to other parts of the welfare, sorry, the Smith agreement and the clauses, especially around capital expenditure, is quite an important linkage to make, I think. Mark, there I catch that right at the beginning when you came in that you were quite interested in the area that some of this is beginning to get into in terms of top-up expenditures, better support for individuals. Obviously, from a number of the contributions that we have seen, there is a suggestion that we could improve things by either topping up or giving, or helping in certain areas. They have all got costs. It is how we deal with that, it is going to be the interesting issue. I appreciate that we are looking at the welfare clauses at present. Obviously, there are interactions and there is a question around coherence. From your perspective, looking at the suite of powers that are proposed through the draft clauses, do you feel that there is the sufficient financial flexibility that would allow for the Scottish Government to take a different approach and to fund that different approach in some of those areas that are going to become the Scottish Government's responsibility around welfare? Will you be interested in your views on that? I would answer that in two ways there is insufficient flexibility. The first is that, because of the general reservation of all benefits, that limits the capacity of the Scottish Government towards Scottish Parliament to think about different ways of subsidising the activity of individuals. It will only be possible within the terms of these clauses to offer benefits within the narrowly constrained framework that the clauses specifically allow for. There is a clear difficulty there. It would not be possible to do, for example, one of the things that the Smith commission had envisaged, which was allowing a deliberate supplement to a reserved benefit. This will not be possible within these arrangements. That is one of the large restrictions about flexibility. The other thing to say about this is that, while those powers do not exist and, in particular, while there is no power to create new and alternative benefits functioning by different criteria, the Scottish Government is again effectively included. We have here the rather strange position where the reservations under the Scotland Act lead to rather more restriction than is available to English local authorities through the power to promote welfare. Perhaps I can expand the question slightly. Let's assume a best-case scenario that some of the issues that you have identified here, the very real issues that you have identified here, we are able to, through amendment, get this back to a more purified version, if you will, of what Smith appeared to be suggesting. Let's assume that that happens. Even within that context, is there the sufficient financial muscle being afforded to Scotland through the other powers that are coming—for example, tax-raising or income-generating or wealth-creating—that would allow a different approach to be taken? Say, for example, the ability to create new benefits was provided as a result of amendment. Those benefits would need to be funded. Is there sufficient flexibility for the Scottish Government to be able to take the kind of decisions that would raise the kind of income that would allow it to make decisions in those areas? Or do we risk having the potential that we have powers that come to Scotland that are there but cannot effectively be used? I think it's a reasonable concern to raise and one that we, at the start of this process, flagged up, that we need to be very careful about seeing welfare or social security in isolation and thinking there's control over those in itself will allow us to tackle some of the poverty and inequality issues that we have without having wider fiscal and economic powers. I think the reality is that this package is fairly—as we said, the bulk of the security powers will still remain at Westminster, as will wider fiscal and economic powers. I wouldn't want to move away that there are very real opportunities within what is being, however restricted they are, there are opportunities within the clauses, even as they are framed, to do things differently in Scotland. That will pose real challenges for public support and political will to use those powers to make the investments but being able to take a different approach to maternity expenses, potentially improve the level of support available through replacement to maternity grant, being able to restore payments of maternity support to second and subsequent children. Those are real ways that we could put money into the pockets of families here in Scotland that we're not able to do just now. I would hope that the Parliament would look at ways of finding the resources in order to take that approach to be able to make further progress on tackling child poverty. There are other areas where perhaps even not just in terms of—we're keen to address the inadequacy of current benefit levels, but there are also different approaches that can be taken to the assessment of how people are assessed for benefits, particularly thinking about the disability benefits. Part of this is about the inadequacy of those benefits, but part of it is about the process at the moment for claiming those benefits. It's so complicated at the moment, too often feels very demeaning, too often actually damages people's health and adds a barrier to them, so looking at minimising where we require medical evidence, where there's clear medical evidence in place anyway about somebody's disability or ill health, that's enough to ensure that they're entitled to benefit, eliminating assessment where there's chronic or degenerative conditions, so we're not requiring people to go through assessment processes where there's absolutely clear long-standing degenerative chronic conditions that should just automatically entitle them to whatever replaces PIP in a devolved context, and ensuring that we have adequately qualified peers of the people making those assessments, undertaking those assessments and making those decisions have a real understanding of disabled people's conditions and are looking at it from their perspective. Those are things that can be done that could really improve the quality of support available to people, not necessarily with huge additional costs, so I would hope that whilst we, I think, actually rightly, this is a restrictive package, the clauses interpret something that's a fairly limited package in the first place, there are real opportunities within this to do things differently and improve the levels of support for individuals and families in Scotland. It's possible, but it seems to me that more ought to be possible, and I'd like just briefly to examine your initial premise, which is that the clauses could be amended. What is it that we would wish to see? It seems to me that it ought to be possible for a Scottish Government or Parliament within its areas of devolved responsibility to be able to say that it wishes to change the balance, for example, between housing subsidies and housing benefits, or that it should be possible to change the balance between the amounts it gives in relation to personal care and the benefits which are available for people on personal care. As it currently stands, I cannot see any way of doing this within the constraints of the clauses as they exist. In negotiating new terms, it seems to me that those are fairly basic to the local integration of services. One final question from me, if I may, and that's around the welfare cap. Obviously, there's been a cap applied in terms of welfare spending. How do you see that interacting with the devolution of welfare powers and, in particular, the role that the Treasury might take if there were, for example, decisions taken around additional expenditure that may affect the total benefit spend that is taking place? The clauses don't touch the benefit cap. Smith's report mentioned that a benefit cap should be some variation to ensure that any extra money paid would end up in the pocket of the person and not come off. Unless I've missed something in the clauses, that doesn't seem to be there. There is the potential, for example, that if one of the issues that has been highlighted to this committee previously is the potential for a decision taken in Scotland to impact on, for example, universal credit or other benefit entitlements, there is the potential therefore that there could be an interaction with the welfare cap, which might lead the Treasury to take what could be described by Professor Heald in terms of tax areas as retaliatory instruments or a veto, essentially, around some of those decisions. The welfare cap is far more symbolic than substantive. There are very, very few people who have been affected nationally in the UK. There are fewer people who have been affected by it within Scotland. If it was a question only of financial implications, they would not be difficult to bear simply because so few people are actually touched by this. I have met one person in Scotland affected by the benefit cap, but there are not many of them around. That is because it is based on a false premise, which is that benefits are extraordinarily generous. I am afraid that the common experience of claimants is that benefits are anything but generous. I appreciate that, Mark. Paul, you do us a favour here, I think, at this stage. Explain the difference between the benefit cap and the welfare cap, because there is a difference. I was about to go there and say that I was referring more. I think that there is a cap that has been applied in terms of overall welfare spend, as opposed to individual benefit entitlement. That is where I was going with that, rather than perhaps the individual element, which, for obvious reasons, has received publicity in the sense that it suits a certain agenda to suggest that there are people out there who are receiving thousands and thousands of pounds of benefit. The more pressing issue for us, I feel, is the welfare cap, which is designed to limit overall welfare expenditure. My recommendations were that that should be flexibility there that would take account of any additional spend in Scotland, so that the benefit cap would not act to the detriment of additional expenditure to support individuals in Scotland. Others may remember more clearly. That is not covered in the clauses, but is that linked back into the whole issue around no detriment? I have got my search and find function on the PDF version, so I can tell you. Clause 2.411 says that, in relation to welfare cap, the UK Government intends to remove welfare programmes that devolved the Scottish Parliament from the UK welfare cap so that the Secretary of State for Work and Pensions would not be accountable to Westminster for controlling the Scottish Government spending on those devolved programmes. That seems clear enough, but that is in the fiscal settlement section, rather than the welfare section. When it comes to the benefits cap, it talks about accepting the principle of setting and disregarding, but it also talks about looking at it at a case-by-case basis. Potentially, there is a slipperiness in the language as we move from the AME welfare cap—to think what you are talking about, Mark—as we go down into the welfare section and look at the benefits cap at the household level. It is a slightly different response. As well as the clause that you have just mentioned, there is still the potential for an interaction between the benefits that would become the responsibility of the Scottish Government and the benefits that would remain a reserved competence. There could be cross-border impact, which I am not entirely sure that clause definitely deals with. Although the Secretary of State would not be responsible for decisions that were taken here, if those decisions had a knock-on effect on universal credit, that would have an impact on an area that the Secretary of State would have responsibility for. There may need to be some bottoming out of exactly what that clause is talking about. All roads lead back to no detriment, I suspect, and that is couched so broadly that it is feasible that the kind of interaction with universal credit that we are talking about here would be precisely in that category and might be seen as a trigger for some kind of transfer payment. Alison Hynch has got a supplementary here. I am going to come to stir it around the discretionary payment area. Following on from my colleague Mark McDonald's questions about possible amendments to the draft clauses, am I right in thinking that the major concerns are around the way in which the original recommendations have been written into the draft clauses rather than the original recommendations themselves? It seems that more is possible within the spirit of the draft of the recommendations than is now possible within the writing of the draft clauses. Perhaps Professor Spickr might like to comment on that. Oh, well, yes, I would agree with that wholeheartedly in terms of—basically, there has been a process of translation, which is obviously necessary, but there has been a process of attrition as well, where certain powers seem to have been clawed back. In those cases, it is uncertain as to how far these are deliberate results of drafting or how far they are the results of awkward drafting. I would point, for example, to the reservation in clause 17.3 of loans. Currently, the Scottish Government has the power to make loans—the Scottish Parliament has the power to make loans, sorry—that it shows not to do so in relation to the Scottish Welfare Fund. They do nevertheless exist in relation to social work payments. The clause is rather awkwardly worded, and I am not quite sure whether it does say what it seems to say, but it seems to imply that, as loans will be an exception to the exception that loans will be reserved and that, therefore, Scotland will lose a power it currently has. Now, it is always difficult to tell with these things. These things have to go through a legal process, they have to be arbitrated, they have to go through courts, but on the face of it, it looks as if this is a power that is being lost for no visible reason. That is an example of how the translation, I think, can trip us up and take us off in the wrong direction. There are several examples of this sort as we run through each of the clauses. I think, for example—though I do not know—that winter fuel payment will not be possible under the clauses. The White Paper says that it will be possible, but it has removed the form of words that legitimated winter fuel payment. Is this deliberate? I cannot tell you. Is that the effect? Again, I cannot say with any confidence, but I do think that there is this problem running all the way through the clauses that we have in front of us. Would you have any specific advice to us as a committee on how to mitigate that narrowing impact that the written translation is having? I think that the ideal would be, in many ways, to get schedule 5 section F, the heading section, reworded altogether. Currently, it begins by saying that benefits are all reserved. If, instead, we have a list of benefits that were reserved, then that would remove many of the doubts. That would be additional, then, to certain exceptions which it is necessary to have. I think that, while there is a starting legal presumption that Scotland is not able to do these things, then there will be initial legal barriers. Remember, too, that these are only about powers. These are not about benefits. There will still be the decisions to be taken in Parliament subsequently as to whether or not relevant benefits should then be brought in in the terms that are being proposed. I am not seeing anybody else on that. Just to be clear, we talked earlier about areas where it was possible to make relatively straightforward amendments to clauses. What is being described there would be a fundamental rewriting of the entire section on welfare. Is that correct by Paul Speaker? I am sorry, could you reset the question? What you have just described in response to Alison Johnstone was not a straightforward amendment to a particular clause. No. It was a complete rewriting of the entire section. It is not necessarily a complete rewriting. It is a rewriting of the particular opening to schedule 5 F of the 1998 act, but on which everything else would be altered by such a rewriting. There are specific clauses and restrictions that we could deal with. I am not making the case one with the other one, but we need some of the restrictions around, for example, pit for terminale, discretionary payments under what is currently the Scottish welfare fund. It could be amended fairly straightforwardly so that we do not get a switch from restricting payments. The new clause 18 would now require there to be an exceptional event or circumstance before a grant could be paid at the moment. It requires there to be a risk to wellbeing, but that is a further restriction to require an exceptional event or circumstance. That could be changed and removed quite straightforwardly so that at least we do not restrict further the powers that are possible in the Scottish welfare fund. There are things that can be done quite... It is perhaps important to recognise that there are examples of some changes being made in the opposite direction. In the case of universal credit, Smith had proposed that there should be the power to alter the frequency of payments. What the draft clause suggests is a power to alter the timing of payments. Those are not equivalent. Timing is rather broader than frequency, and it could, for example, affect when the first payment was made, at least in principle. Very briefly, to follow up on Paul's point, the Social Security Advisor Committee has recently submitted to the Minister for Work and Pensions our concerns and the results of our consultation on proposed waiting days in universal credit, in which we have the effect of a five to six-week delay before the first payment is made. If what Paul has spotted gives an opportunity in Scotland, which, to say, is not closed down at the redrafting stage, to look at the timing of the first payment—in other words, to potentially alter waiting days—that would be of significant material impact at the start of universal credit claim. It is just a point that Paul has very helpfully and importantly flagged up with. I will re-write all the clauses, but I better hold on to that one then. Perhaps I have raised it. I want to take us back to what John Smith referred to us a couple of times—clause 18, in the discretionary payments area, in particular. The Smith commission recommendation stated that new powers to make discretionary payments in any area of welfare was, in essence, the recommendation in Smith. Does the extension of the provision to make discretionary payments that I set out in clause 18 actually provide additional powers in this area or not? Paul, you seem to suggest not the very opening answer. I think that clause 18 lays out powers that were included in a previous section 32 order relative to the social fund. It does so in substantially the same wording, with slight loss of power in relative terms. I think that there is confusion in the white paper about what it means for a payment to be discretionary. A payment to be discretionary is essentially if there is an administrative or governmental decision and it is not therefore subject to entitlements or rules that would limit it from being made in the way that it is being made. I think that they have taken discretion to refer only to individual discretion for short-term payments. That is a very special sort of benefit. Those with long memories may remember the supplementary benefits commission, which delivered very extensive welfare provision on a discretionary—that is, a non-entitled basis. When Smith said that Scotland should have discretionary powers, I was assuming that it meant powers of those sort. John Finch-Saunders I think that that is how those powers were understood when reading the Smith recommendations and the clauses clearly do not give effect to that broader power to be able to top up, for example, top up reserves benefits in Scotland. John Finch-Saunders I wanted to ask a follow-on of the definition of what is discretionary, because I read your paper, Mr Spicker. Clearly, what I would have assumed as discretionary is that, as you have described the effect of the decision that could be taken, which was out with entitlement, you could have said that ministers could decide whether it could be paid or not paid, as opposed to what seems to be, specifically, about short-term payments in very specific circumstances. John Finch-Saunders mentioned it earlier, unless the need results from an exceptional event or circumstances seems to be the very specific reasons that that payment should be made. John Finch-Saunders Let's give a small example of why the Government would introduce a discretionary payment as a top-up to a reserve benefit. Think about the Christmas bonus. That is the sort of thing where you might say that you do not want to make it an entitlement necessarily, you do not want to keep it going, but maybe it is something that the Government may at certain circumstances wish to do. John Finch-Saunders Is there a legal definition of discretionary payments that only includes payment to meet a short-term need to avoid the risk to the wellbeing of an individual, as the UK command people suggest? Is that an accepted definition? John Finch-Saunders Not within the literature that I am aware of, the key definition of discretion, I think, tends in most of the literature to follow Casey Davis's work on discretionary justice, to argue that discretion refers to gaps or lacuna that there are in systems of legal rules where, effectively, supplementary rules are then made. It is that rather than the particular point, but clearly the Scottish welfare fund is a discretionary benefit of a particular type. It is one example of discretion, but discretion can run much wider than that. John Finch-Saunders Can I come to the paper by John Finch-Saunders and ask you about—you obviously have concerns about the clause I read out earlier, unless the need results from exceptional event or circumstances. Could you explain further what you mean by what your concerns are in this area? The key issue is that under the current powers and the Scottish welfare fund operates it is possible for people to access crisis grants, for example, even if they have been sanctioned and they have lost reserved UK benefits as a result of a sanction, as long as there is a risk to the wellbeing. It is not an automatic bar to be able to access that support. That is really important, because in some cases people have been sanctioned and left with no money, and the Scottish welfare fund has been a source of crucial financial support to them. What is happening here is that the clause restricts that further by saying that there needs to be some kind of additional exceptional event or circumstance that could clearly act as a bar to the scope in which Scottish welfare fund payments could be made if somebody has been sanctioned in relation to UK benefits. Even further than that, not just in relation to having your benefits sanctioned, but it refers to losing benefits as a result of the conduct of the claimant. That could be losing benefit because you failed to return a form or you filled in the form wrong. Clearly people with mental health problems learn difficulties and literacy issues. If somebody has happened, you lose your benefits, you have not. That could be described as conduct for them not to have access to Scottish welfare fund under the new powers in relation to discretionary payments would be a serious blow in those situations. Does that clarify what the restriction there is? I would be inclined to say that almost any experienced welfare rights officer could drive a carton horses through the phrases that John has been talking about. That is part of the problem. That should not be subject to legal arguments in particular contexts where it is uncertain for claimants and where it relies on backup and support. We have seen what has happened with exceptional circumstances in the past. I can remember when we used to have to claim that it was an exceptional circumstance if you needed more than one bath a week. That was within the rules. However, having said that, there is an experience where Government starts off with inappropriate definitions and gradually those definitions are put under the hammer until they no longer have the same shape. We should not be starting there. It is important to make sure that we are not doing anything that adds further restriction to the powers to provide discretionary payments under the Scottish welfare fund. I think that this is part of my confusion that Clos18, and maybe I am trying to be objective here, seems to take us a step back slightly from where we currently are rather than a step forward, which is my understanding of what Smith was trying to refer to in this area. I saw people reacting to that, but that will not be on the record because there is a reaction to it in terms of that more restrictive nature than Clos you are talking about. I asked somebody just to put on the record that I saw nodding heads there to what Stuart said, so I know. Yes, that is our understanding. Can I get a wee bit of clarity? Most of us around the table here, we are dealing with a language in an area that we do not normally deal with in our caseload, so we are behind the curfee. I am at this stage unaware of what the eligibility is, although I know that people have come to me and my colleagues that they cannot get a crisis grant because they have not met that eligibility criteria. I am just walking in and getting it. What is the substantive difference between the language that has been referred to by Stuart and the current eligibility criteria to get a crisis loan? At the moment, people need to demonstrate that there is a risk to their well-being if they do not, if they are not able to access that. So, it is a simple example. There is a risk to their well-being, which I think is fairly broadly, you know, people cannot buy any food that they are unable to pay their electricity. To then add that there also has to have been some exceptional event or circumstance over and above there being a risk to their well-being for not. That exceptional event could be a sanctuary? That is actually about restricting entitlement where eligibility, where a sanction has been imposed. So, it is an exceptional event and the issue of... It is where a sanction has been imposed. John, I am just saying that you do not have any money because of a sanction. None of us here want to make it any tougher for people to get help in that crisis situation, but I want to know, in terms of the discussion that we will have after this, about whether this is a substantive issue or whether it is not. I think that we would argue that it is a substantive issue. I do not want to overplay it in the scale of some of the other issues that we are discussing, but the language restricts... That could be a problem or it might be a problem, but I just do not get it at this point. Absolutely. The difference between being able to demonstrate a risk to their well-being and the additional risk to being able to require that exceptional event. And the risk to their well-being. There is a problem always in introducing new vocabulary and welfare rights, because what the effect of any new vocabulary does is to create uncertainty about entitlement and to give us a period in which this has to be negotiated and argued. There is, in fact, a number of precedents about exceptionality. I can remember taking cases about when torn trousers were considered exceptional and when they were considered to be normal wear and tear. We really do not want to be going down this road, because for claimants... What I am trying to get at, John, is this an area where the committee needs to seek more clarity or comes to a judgment as we were momentarily a goal coming to a judgment? This is a bad thing, when we do not know and the clarity is not there. For our future discussion... To help to move this on a little bit, I think what we are getting to the point is clearly there is a perspective emerging here that the framework that has been offered here, that has been arrived at through this negotiation process, seems to be, as others have already said, a step back. What we wish to see is a welfare system that supports a better working housing system from our own perspective. I would have grave concerns about the impact of people in crisis, for example in rural areas. That is where my mind is going to, who are unable to get access to crisis payment and are left destitute situation. That is not a situation which supports a well-functioning housing system in any way. Given that the Scottish Parliament already has powers in terms of housing policy, you need to therefore have the powers to support the housing system through the benefit system. That sounds to me like, although I do not want to admit that I have spotted yet, it does sound to me that we need some further substantive clarification on that. That is what I was trying to go to, because it seems to me that it looks like, on the face of it, that we have introduced or are in danger of introducing additional barriers. For clarification, convener, I see all the panel nodding. I think that we are in agreement and that is what is happening here. That does concern me, because I thought that the Smith commission's recommendations were pretty clear on that, but the clauses now seem to have made it less clear. I just wanted one final question. It comes back to the original point and the quote that I used from the Smith commission recommendation about new powers to make discretionary payments in any area of welfare. Does clause 18 meet the recommendation of the Smith commission in this area to permit discretionary payments in any area of welfare? No, I think that that is a universal agreement on that one. In which case, I will go to Lewis. Following up on the discretionary housing payments and again, there are specifics within the clauses in specific restrictions in terms of eligibility. I am particularly interested from the housing provider perspective or the housing profession perspective, what those restrictions, for example, will prevent the use of housing benefit to meet service charges, for example, that sort of thing, which clearly, given people's care needs, is quite a significant restriction. Are those on-duly restrictive? Do they reflect the intent of the Smith commission and how will they work in practice? With specific regards to eligibility criteria, I have to admit to you that I have not got to the point where I have a set line on that. There is more work to be done in a house to scope that. I am unable to answer that question, but what I would do is come back to this committee with written submission subsequently, if that is okay. That would be very helpful. I thank you, David. I do not have other... John Dickie. It is worth adding that the new clause does not give power to enable local authorities to give discretionary housing payments to individuals who are not in receipt of housing benefit. The way that the under-occupancy charge of bedroom tax is applied at the moment, some claimants, particularly those who are in work, receiving a relatively small amount of housing benefit, lose all that housing benefit, which then essentially means that they are not entitled to a discretionary housing payment. In effect, as the clauses are currently phrased, we can fully mitigate the impact of the bedroom tax through discretionary housing payments, because there will be some people who are not entitled to discretionary housing payment as a result of having lost all their housing benefit as a result of the bedroom tax being applied. Is something for the committee to be aware of in terms of what is in effect enabled through these clauses? The way that you have described it suggests that we are talking about small sums for a small number of people, but presumably, again, a relatively straightforward thing to adjust in terms of the clauses as they graph. I would have thought so, because a small amount for a small number of people but an important amount in terms of taking that... For those individuals, absolutely. Linda, I think that the area of employment support was the last area I think that we would have left to explore, so that you were interested in that. Yes, there were a few things that I was interested in in that. Employment support in general, to quote from the Smith agreement, all powers over support for unemployed people provided through contracted employment programmes. The work programme, as we call it, but it seems that in the draft clauses we have something very different. It talks about persons who are at risk of long-term unemployment and disabled persons. It talks about the assistance being for at least a year, and I just, first of all, your view broadly on the difference between what was proposed in the Smith agreement and what the draft clauses have come up with. Come on, Jim. Get that search facility going. I think that what's interesting is that Smith talked about what we currently call the work programme, what choices. Those are not the only, but those are the main programmes for the clients that we are talking about. And then when you think about the possibility, what we talked earlier, I think maybe before you arrived, Linda, about the jagged edge around conditionality. That's one aspect that I think does need to be revisited. The point about 12 months, I think that anyone would understand the intent behind the requirement or the expectation that support would be available for at least 12 months. But there are cases where people with the right kind of support, for example, pre-employment training or childcare or transport support, can thrive in work without the support being there for a full 12 months. Although it sounds an odd thing to say, I would want to see flexibility in that area to allow where sufficient progress has been made and is agreed by the individual and the provider, that support can be refocused on those who may need rather longer than 12 months. We know that one problem with work programme in particular is the very poor performance for people with fluctuating conditions, some older people, some people in rural areas, where some of those people need longer support and that means more expensive support. In the context of being able to make different choices within fixed budgets, alternative choices can quickly become expensive and the flexibility to be able to move resources around those programmes strikes me as a pretty important principle. That would tie in as well with the thought from Smith that there would be powers given over programmes that are unemployed generally. Now it seems to be in the draft clauses that it is only for the longer-term programmes over a year, etc. Does anyone have the information to say how much this is restricting the original intention of Smith and what effect that could have? Like shorter-term employment programmes, for example, the interaction between that and the rest of the system seems to me that it is going to be terribly piecemeal as to trying to have a cohesion and an overall picture of how we are dealing with services for the unemployed generally. I do not have a clear picture of this and I am as puzzled by the clause as you are, but when I note that it includes skills training as well then it seems to me that lots of skills training might be short term and the idea that there should be any restriction on skills training I find deeply puzzling. I do not understand why this restriction was thought appropriate, but once again I have to emphasise that this is not a provision that is legislating for employment support, it is a provision that is giving the Scottish Parliament the power to make decisions. Why restrict those decisions in this way? I cannot begin to fathom. That moves on very well, Paul, to the question that I was going to ask about your paper in particular. Your clause 26 talks about the UK Government retaining the ability to make mandatory referrals to the Scottish Government programmes and then you speculate rather about the implication of that for the Scottish Government. I will read what I said, which is that it seems to imply that the Scottish Government will have the duty to provide programmes in these terms and to meet the expense. If those are mandatory referrals and the UK Government retains the ability to make mandatory referrals to the programme, I do not think that the Scottish Parliament is being given the option to decline, but that is not within the clauses, that is within the text of the white paper. Again, how it would operate, I think take us back to this business of intergovernment working, I am puzzled as to where they think the authority lies. That has to be explored. Something further on that from the Child Poverty Action. John, you said in your submission that you were concerned about the interplay between employment programmes and conditionality and sanctions. Yes, it was just to make the point that with working age benefits, the current reserve, the current conditionality and sanctions regime, which in many cases is undermining people's attempts to move into work and towards the labour market, that will still be applying. At the same point as Jimmie, the jagged edge between what we might want to try and do differently in Scotland with the devolved employment programmes coming up against the requirement that that will still be working within a reserved benefits regime, which too often is imposing arbitrary conditions or conditions that are not actually helpful in terms of supporting people to move into work and impose damaging sanctions on them when they fail to do that. I think that there will be very real opportunities within, even as it is currently proposed, to do things differently to ensure that employment support in Scotland is more suited to the local labour market, more appropriate to what is available in terms of childcare support and other support to enable parents, for example, to move back into work that would hopefully help to reduce the number of inappropriate or arbitrary tasks that people are having to undertake in order to meet the benefit requirements, but there will be a limit to that because the actual benefit regime will be as it is now unless we manage to get the changes to that that we would like to see. Even before Jimmie comes back in, I am also concerned about the service providers of the work programme to use the term, so you could have the work programmes perhaps unless we were mandatorily told otherwise. The work programme is being run by the Scottish Government, so the service provider is being paid, if you like, by the Scottish Government, responsible to them, but then you have the sanctions regime coming from DWP, so there is an interaction issue, a responsibility issue here for the service provider. How would that work? There are conflicting incentives, which I suggested earlier, which will result in gaming, false reporting and so on, if we are not careful. Broadly, what we have here has been said by Paul and John is that the UK Government is retaining the power to mandate unemployed people at a certain point in their GSA claim to then take part in Scottish Government programmes. There is quite a lot of space beyond that mandatory referral to design what kind of activity the clauses talk about various techniques and tools that can be used. Although there are clear restrictions here, which could cause detriment to claimants, participants and providers, there is a space here in Scotland to reframe conditionality. Conditionality is not and should never be simply about penalties and sanctions. It should also be about the incentives that you can draw down by taking part, by meeting that condition to participate. The incentives might be about better training, better childcare, transport support and so on. If Scotland is investing in those kinds of ways to improve outcomes ultimately, the incentives for doing so should be very clear, in other words, the savings for doing so should be very clear. That boundary is still there to be negotiated, but it is important that, even within the terms of the clauses, DWP currently pilots all sorts of flexibilities across the UK, not very often in Scotland. There is no reason why there could not be a negotiation around more flexibility for Scotland in that space, even within the important restrictions imposed by those clauses. When you are talking about incentivising, I am certainly not an expert in that, but I understand that providers of the work programme get paid by results. Again, the interaction between the paying by results, which I presume is about getting people into work by the person who is paying you, and the obligation to report to DWP again about the conditionality and sanctions regime. On the result side, I think that we will have the Scottish Government and Parliament being responsible for designing and commissioning of those programmes, and then performing and financial reporting. That gives some leverage to reshape the terms in which people take part, to reshape the terms in which providers run activity in that space. One could draw the boundary in different ways that are split between reserved and devolved powers. The clauses suggest a certain way of doing it, a purely personal view and not an organisational view. What matters is coherence for the claimant and the provider. Ideally, we might have seen responsibility for job centre plus functions as they apply to mandated claimants and as part of that accountability framework. That would be a modest shift, because the bulk of expenditure in that area is not going for long-term unemployed claimants—it goes elsewhere. That may not be possible in the future, but ideally coherence and smoothness for the participant and the right set of incentives for the provider should be at the heart of that form of devolution. That brings us right back to where I started. If we are now saying that it is not all services for unemployed but very restricted to those at long-term and over the year, it takes away from that flexibility and cohesion and ability to deal with the whole issue, both in terms of the overall structure of the nation and for the individual. I hesitate to say this, given that you are one of the architects of the Smith report. Does it mean that you agree with everything? Fair enough. My reading of Smith Paragraph 57 is that the intention was about taking over responsibility in Scotland for those mandated programmes. Scottish organisations and local authorities have already run various employment support and employability back-to-work schemes that affect people before they get to that point of mandating. That is a next step forward for Scotland. There are risks in jagged edges, some of which, hopefully, could be smoothed out, but there are opportunities for integration, nonetheless, which we have not seen previously. Can I just finish with one thing here? I have just signed off the Smith report. Yes, it was a negotiation. Can I say that your representatives in the Labour group also signed it off, so please go back to them and ask them to join with me in getting this made better and back to the spirit of the Smith agreement? Follow-up on something about the discussion relating to the work programme. I think that it is important not to see the clause through the prism of the work programme. The employment programmes have changed like the sands of the desert. We cannot expect that two years from now, five years from now, ten years from now, that there will be the same structure, the same management rules, the same processes as there are now. However, what there is supposed to be is an enduring power for Scotland to make its own decisions in those areas, whatever the decisions may subsequently be. That means that we should not get too bogged down with the actual structure, and what troubles me about the clause is that the clause is trying to do that. In terms of the complexity of this and the challenge of moving forward, there has been a lot of talk resulting from Smith. The work programme could be devolved to a lower level of government. How does that play into this discussion? Is that not come back to what Paul said? It is about giving Scotland the powers, and we need to then decide how we use them. However, if it suddenly wants to reflect on Duncan's point. Of course, this is entirely about the powers of the Scottish Parliament. It is not about the powers of the UK Parliament, and it can claim at any point that it has concomitant powers, concurrent powers, that this is about shared competence, and there is nothing to stop them from running parallel systems. We have seen that, for example, with the local support services framework, that the DWP is actively attempting to do that in certain areas that do overlap substantially with the competences of the Scottish Parliament. That needs to be also part of the intergovernmental agreement. The question is, is Scotland to have any areas of exclusive competence? That takes up to a completely different discussion, but it is probably a good place to end with that big question mark hanging there. We have covered quite a breadth of information today. We have got quite deep in some areas, so I am very grateful to witnesses for coming along today and giving us of their expertise that will help us when we come to the end of our conclusions in the next month. Thank you very much for attending today. That is the end of this particular session. The next meeting will happen on 26 February, when the committee will take evidence from a range of experts regarding boron powers. I am now moving that into private session, so those who are not members of the committee or associated with it, can we now please wicket the committee room?