No clear plan to plug benefits funding gap, watchdog says

The Scottish Government has no plan to fill a £770 million funding gap in its disability benefits, a watchdog has said.

Adult disability payment (ADP), which replaces the personal independence payment (Pip) in Scotland, is forecast to be the largest contributor to the funding gap for social security payments with a UK equivalent.

The Scottish Fiscal Commission has previously forecast the ADP spending gap alone will grow to £770 million in 2029-30.

A new report by Audit Scotland says the Scottish Government’s approach to ADP, for example improving benefit take-up and having lighter touch award reviews, generates additional costs.

The Scottish Government spent £2.6 billion on ADP and Pip payments in 2023-24, £141 million more than the funding available to it.

This is contributing to a larger overall funding gap for devolved social security spending of £2.0 billion by 2029-30.

The report says the Scottish Government has not yet set out a detailed strategy for how it will manage the forecast gap between social security funding and spending within its overall budget.

It says: “The Scottish Government does not have a clear strategy in place to manage risks arising from any UK decisions on benefit spending that could reduce the size of the Scottish budget.”

Scottish Conservative social security spokesman Alexander Stewart MSP said: “This stark report should be a wake-up call to SNP ministers to get a grip of their ballooning benefits bill.

“Audit Scotland have made it clear that the nationalists are burying their heads in the sand when it comes to how they will afford this in the coming years.

“SNP ministers are so wedded to their approach of doing things differently when it comes to the welfare system that they have typically given no thought to the ever-increasing funding gap created by their higher spending on benefits.

“Economic experts have made it clear that if the SNP don’t act on this then hard-pressed Scots will face more tax rises or cuts to public services.

“The SNP must start taking responsibility for their rising welfare bill.

“While it must continue to protect the most vulnerable, it also must deliver fairness and value for taxpayers and claimants alike.”

The report recognises that social security is a key strand of the Scottish Government’s overall aim to reduce poverty and improve equality outcomes.

It says that while it acknowledged eligibility requirements and payments for Pip and ADP are broadly similar, the main difference is that the ADP application and review processes are designed to be less onerous on people.

This is in keeping with Social Security Scotland’s statutory principles of dignity, fairness and respect.

The audit also commended the progress that the Scottish Government and Social Security Scotland have made in implementing and delivering ADP.

Social Justice Secretary Shirley-Anne Somerville said: “I welcome this report and I am pleased it recognises that we have successfully transferred the personal independence payment awards of everyone in Scotland to adult disability payment, a system that is underpinned by dignity, fairness and respect.

“Benefit expenditure is the result of our conscious decision to invest in the people of Scotland.

“Here, when somebody is eligible for support, they meet a humane system.

“Our efforts are possible because we balance our budget every year despite over a decade of austerity and punitive welfare cuts from successive UK governments.

“And our Medium-Term Financial Strategy and Fiscal Sustainability Delivery Plan set out the actions we’re taking to improve the sustainability of the public finances.

“I continue to call on the UK Government to reverse its plan to cut the health element of universal credit, which will cost around 77,000 households in Scotland £3,000 a year by 2029-30.

“Meanwhile, we will not cut adult disability payment and I urge the UK Government to follow our lead to ensure disabled people have the support they need.

“The Scottish Government will unapologetically continue to prioritise measures to reduce poverty and inequality, including through policies like the Scottish Child Payment and our plans to eradicate the two-child limit next year.”