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Publication - Report

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

Published: 29 Jun 2017
Part of:
Communities and third sector, Equality and rights
ISBN:
9781788510714

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

100 page PDF

1.5MB

100 page PDF

1.5MB

Contents
Welfare Reform (Further Provision) (Scotland) Act 2012: annual report 2017
Annex A - Methodology Summary - Scottish and GB level impacts

100 page PDF

1.5MB

Annex A - Methodology Summary - Scottish and GB level impacts

GB level impacts of post 2015 Conservative government policies is derived from the latest Treasury costings in most cases. The methodology employed to derive Scotland level impacts financial impact relies on published data of relevant benefit/tax credit caseloads. These are sourced primarily from DWP's Stat-Xplore tool [153] , the Office of National Statistics' NOMIS tool [154] and Personalised Tax Credit statistics [155] . The approach taken is to derive an appropriate Scottish share which is then applied to each policy measure. The following provides a an overview of the data used to derive these shares for each policy measure in table 5 (see page 32)

Universal Credit and Tax Credit Changes

Costings for the reduction in the Universal Credit work allowances were updated at the Budget 2016. The Scottish share used (7.96%) to determine the Scottish level by 2020/21 impact is therefore the share of in-work tax credit cases in Scotland, derived from personalised tax credit statistics. It should be noted that this share will be sensitive to DWP plans for managed migration of legacy benefits onto Universal Credit. This share is also used for the UC taper change policy.

Costings for the 2 child limit and removal of the family element were updated at the Budget 2017. The share used for the 2 child limit (6.08%) is the share of families with more than 2 children in receipt of tax credits. The share used for the removal of the family cap (7.72%) is the share of families with children in receipt of tax credits.

Changes to the tax credit income disregard and UC conditionality extension are small measures in terms of financial impact and therefore the share used (8.8%) to calculate the impact of these policies is the Scottish share of total DWP spending on benefits in 2015/16.

Benefit Freeze

The Benefit freeze will affect all working-age recipients of Tax Credits (including Child Tax Credits), Child Benefit, Housing Benefit, Income Support, Employment and Support Allowance, Jobseeker's Allowance and Universal Credit. The approach used is to calculate the total spend in Scotland on these benefits to calculate the overall Scottish share. Table A1 shows the share of GB spend apportioned to Scotland for each benefit/tax credit and in total.

Table A1: Scottish share of spending on frozen benefits

Benefit GB spending 15/16
(millions)
Scottish share of GB spend Scot spending 15/16
(millions)
Explanatory note
Tax Credits 11,194 7.94% 890 Caseload share based on HMRC statistics (Dec-16)
Child Benefit 27,523 7.93% 2,180 Caseload share based on HMRC statistics (Aug-16)
Housing Benefit 24,244 7.1% 1,710 Spending share based on caseload and average award DWP data (Nov-16)
ESA 14,272 12.12% 240 Caseload share based on DWP statistics (Aug-16)
IS 2,539 9.27% 1,730 Caseload share based on DWP statistics (Aug-16)
UC and JSA 2,314 8.55% 240 Caseload share based on DWP statistics (Aug-16) [156]
Total 85,000 8.22% 7,000

The 8.2% share is then applied to the Resolution Foundation estimate of the increased impact of the benefit freeze. The Resolution Foundation produced an initial estimate before Budget 2017 [157] , which was subsequently revised in there analysis of the Budget 2017 when CPI inflation forecasts were revised downward compared to their expectations [158] .

Cap social rents to LHA

The savings from this policy are split across a number of separate policy announcements (see table A2). This includes the initial policy announcement in 2015 (latest update at Budget 2017), the impact of savings form the gradual introduction of the policy for new tenancies announced in Budget 2016, the negative impact of additional exemptions to the policy and the adjusted roll-out and supported housing fund announced at the Autumn Statement 2016.

The Scottish share used (8.7%) housing benefit expenditure on social housing tenants, calculated using average social renting and caseload data from DWP's Stat-Xplore tool.

Table A2: Cap social rents to LHA - Treasury Costings

2017/18 2018/19 2019/20 2020/21
Housing Benefit: limit social sector rates to the equivalent private sector rate 0 440 570 660
Local Housing Allowance: implement for new tenancies from April 2017 0 -130 -75 -35
Social Sector Rent downrating: exemptions 0 -5 -10 -15
Local Housing Allowance: adjusted roll-out and supported housing fund 0 -310 -260 165
Cap social rents to LHA 0 -5 225 775

ESA WRAG Reduction

The latest GB costing for the removal of the work related component of ESA was produced alongside the Budget 2017. The Scottish share used (12.9%) is the Scottish share of ESA WRAG caseload with a duration of less than 3 months (Source: DWP's Stat-Xplore).

Support for Mortgage Interest

Costings for the change of support for mortgage interest from a payment to a loan were last updated at the Budget 2017. The Scottish share used (8.3%) was Scotland's share of GB homeownership as determined by the Labour Force Survey [159]

Pension Credit Freeze

This policy sets the level of the Savings Credit maximum in Pension Credit so that Pension Credit awards for those receiving Savings Credit are frozen where income is unchanged. The latest costing was provided alongside the Budget 2016. The share used (10.8%) is the Scottish caseload share of Pension Credit (savings credit) available from NOMIS.

Benefit Cap

Benefit Cap statistics for February 2017 (available from DWP Stat-Xplore) show the impact of the lower Benefit Cap at a Scotland level and that around 5.5% of all cases were in Scotland. This share is used and is applied to the latest GB costing which was produced alongside an Impact Assessment [160] .

Coalition Measures

Table A3: Coalition government measures identified by OBR and Scottish share used

Measure Identified in OBR report for 2015/16 costings

Share used

Description

CPI indexation (replace RPI and Rossi) for most benefits and tax credits

8.81%

Scottish share of total DWP benefit expenditure (2015/16)

Child benefit frozen for three years from 2011-12

7.86%

Scottish share of HMRC spending on child benefit (2012/13)

Pensions triple-lock

8.46%

Scottish share of DWP expenditure on State Pension (2015/16)

Three-year freeze in WTC basic rate and 30-hour element

7.72%

Scottish share of HMRC spending on Tax Credits (2012/13)

1 % cap on uprating of most working-age benefits from 2013-14

8.81%

Scottish share of total DWP benefit expenditure (2015/16)

1 year uprating freeze on child benefit payments, LHA rates

7.58%

Average of shares used for Child Benefit freeze and cut to LHA rates

Smaller uprating measures

8.81%

Scottish share of total DWP benefit expenditure (2015/16)

Reforms to disability benefits ( PIP)

10.90%

Scottish share of working-age DLA and PIP expenditure (2015/16)

ESA - contribution based limited to 1 year

11.09%

Scottish share of ESA expenditure (2015/16)

High income child benefit charge

7.86%

Scottish share of HMRC spending on child benefit (2012/13)

Tax credit reforms (family element)

7.72%

Scottish share of HMRC spending on Tax Credits (2012/13)

Further tax credit measures (childcare costs, hours threshold etc)

7.72%

Scottish share of HMRC spending on Tax Credits (2012/13)

Cut in LHA to 30th of local private sector rents

7.31%

Scottish share of housing benefit expenditure (2015/16)

Matching the basic state pension increase in 11-12 in the PC min income guarantee

8.46%

Scottish share of DWP expenditure on State Pension (2015/16)

Tax Credit (admin and collection)

7.72%

Scottish share of total DWP benefit expenditure (2015/16)

Smaller measures

8.81%

Scottish share of total DWP benefit expenditure (2015/16)

The OBR's Welfare Trends report provide estimates of the impact of coalition measures (uprating and non-uprating) by 2015/16 and 2020/21. The impact of measures up to 2015/16 are broken down into broad measures (see table A3) as outlined in table 3, however no breakdown was available for the impact in 2020/21. For the impact to 2020/21, where a breakdown is not given by the OBR, then the Scottish share of total DWP benefit expenditure (2015/16) is used for both uprating an non-uprating policy to give an overall total.


Contact

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

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road
Edinburgh
EH1 3DG