Expert Working Group on Welfare Report

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4 Delivery and Transition

Chapter Summary

In this Chapter we set out our understanding, based on the evidence available to us, of the role Scotland plays in the delivery of the current UK benefits system.

We conclude that, in the event of a "Yes" vote, the Scottish and United Kingdom Governments have a strong common interest in working together, as envisaged by Article 30 of the Edinburgh Agreement, to support each other in maintaining the delivery of benefit payments during an agreed period of transition.

We believe that this common interest is underpinned by an obligation to ensure continuity of service to benefit claimants across the nations of the United Kingdom. We also believe that formalising the current arrangements into an agreed set of 'shared services' would safeguard delivery, as well as being the most efficient and cost effective arrangement for both Governments in a period of transition.

Finally, given the important role that Scotland currently plays in delivering benefits to claimants in the rest of the UK (as illustrated at paragraph 4.27), we believe it is the interests of both the Scottish and UK Governments to introduce a programme of information sharing and begin discussions about how benefits would continue to be delivered for all claimants in the UK in the event of Scottish independence.

Introduction

4.1 The Department for Work and Pensions (DWP) carries out the majority of the functions necessary to deliver benefit payments to people living in Scotland. HM Revenue and Customs is responsible for the administration of Child Benefit and Tax Credits.

4.2 With effect from 3 October 201134, DWP dissolved its two executive agencies (Jobcentre Plus and The Pension, Disability and Carers Service) and returned their functions back to the Department. The DWP also took over responsibility for child maintenance from 1 August 2012, a system previously administered by the Child Maintenance and Enforcement Commission which was abolished on 31 July 201235.

4.3 In this Chapter we look at how benefits are delivered across Scotland and the role of DWP operations in Scotland. We consider how the Scottish Government would deliver benefits payments in the event of a "Yes" vote for independence, and provide our views on the main transitional issues.

4.4 The information presented in this Chapter is based on the evidence we have been able to gather in the time available to us. Through Requests for Information and follow-up queries, we also invited DWP, HMRC and COSLA to provide more detailed information to support the evidence we gathered. We took due account of this information in our discussions and it is reflected in this Chapter.

The administration of working age benefits in and from Scotland

4.5 The administration of working age benefits - in other words, where claims are assessed and decisions made on how much benefit is awarded - is allocated to DWP centres across the UK on a combination of geographical and benefit category basis. For smaller items of work, there are centres of expertise in certain offices which service the whole of the UK.

4.6 In response to our Request for Information, the DWP confirmed that Scotland does not 'export' any of its work for Jobseekers Allowance, Employment and Support Allowance, Income Support and Incapacity Benefit. In other words, all claims for these benefits made by people living in Scotland are processed in Scotland.

4.7 DWP's response confirmed that just over 40 per cent of all claims processed in Scotland are claims made by people living in England. DWP also indicated that on a permanent basis Scotland processes the following claims for people living outside Scotland:

  • Parts of Yorkshire - Jobseekers Allowance, Employment and Support Allowance, Income Support and Incapacity Benefit.
  • Parts of the North West of England - Jobseekers Allowance, Employment and Support Allowance, Income Support and Incapacity Benefit.
  • London - Jobseekers Allowance, and Employment and Support Allowance.

4.8 Scotland is also home to the largest working-age benefit centre in the UK, Northgate Benefit Centre in Glasgow. We understand that Northgate currently employs in excess of 1,000 full time equivalent (FTE) members of staff and undertakes much of the English processing activity mentioned above. We also understand that Northgate may process a range of other claims for people living outside Scotland. This could be on a temporary basis, however DWP was unable to provide temporary caseload data or indicate what benefits/volumes such temporary processing activity covered.

4.9 In addition, Northgate carries out certain GB-wide functions: the DWP's national team for decision making and appeals under the Mandatory Work Activity Programme is based there36; and since April Northgate has been supporting the Universal Credit Pathfinder37.

4.10 DWP confirmed that the remaining benefit processing centres located in Scotland are based in: Aberdeen; Bathgate; Clydebank; Coatbridge; Inverness; Kirkcaldy; Kilmarnock; Saltcoats; Springburn; and Stornoway.

4.11 There are also 94 Jobcentre Plus (JCP) offices servicing Scotland38,39,. Jobcentre Plus provides resources to enable people of working age find work and helps employers find new staff. In terms specifically of benefit administration, unemployed individuals can be supported in making a new claim for benefits in a JCP office and find out about the progress of an existing claim.

4.12 DWP Contact Centres provide a wide range of services via the telephone, which include helping claimants find work, claim a wide range of benefits and pensions, as well as enabling employers to place vacancies. In response to a follow-up enquiry DWP confirmed that there are three Customer Contact Centres in Scotland: Dundee, Paisley and Springburn.

The administration of non-working age benefits in and from Scotland

4.13 There are nine Regional Pension Centres across Great Britain40 and one National Centre in Newcastle. The National Centre provides two UK-wide services: the Futures Pensions Service, providing state pension statements and information, and the International Pensions Centre which provides advice and information about claiming pensions and benefits to those people living abroad or who have lived abroad41.

4.14 There are two Pensions Centres in Scotland: Motherwell and Dundee. In response to our Request for Information, DWP has confirmed that there 849 FTEs employed in Scotland processing claims for State Pension and Pension Credit. The number of employees working in the Scottish Pension Centres could be greater, however, given that other services are delivered from these sites (such as the Bereavement Service).

4.15 There are 12.8 million people in receipt of State Pension across Great Britain, including 1.1 million overseas state pensioners. In Scotland just over one million people are in receipt of a State Pension42. There are 2.5 million people in receipt of Pension Credit across Great Britain, around 250,000 of whom live in Scotland43.

4.16 In response to our Request for Information and a subsequent follow-up enquiry, DWP provided the most up-to-date caseload data available for Dundee and Motherwell. This is noted below.

  • State Pension: 1,449,110 claimants (Dundee); 1,328,144 claimants (Motherwell).
  • Pension Credit: 318,260 claimants (Dundee); 305,015 claimants (Motherwell).

4.17 DWP confirmed that Dundee and Motherwell administer claims for State Pension and Pension Credit for people living in Scotland44. The caseload data also shows that the majority of these Centres' business relates to customers living in England rather than Scotland. To underline this, DWP confirmed that Dundee has the largest Pension Credit caseload of any of the Regional Pension Centres and the fourth largest State Pension caseload. Motherwell has the fifth largest Pension Credit caseload and, according to the data provided by DWP, will have one of the largest State Pension caseloads after Dundee.

4.18 Expressed as a proportion of the total British caseload, the Scottish Pensions Centres are therefore responsible for administering around 20 per cent of all British State Pensions and around 25 per cent of all British Pension Credit claims.

4.19 The Bereavement Service - operated by teams based in each of the nine Pension Centres - has no geographic link, but is a virtual network with calls being taken by advisers in Dundee and Motherwell from anywhere in the UK. The assessment of claims takes place in Dover.

The administration of disability benefits in and from Scotland

4.20 Currently, claims for Disability Living Allowance (DLA) are dealt with by Disability Benefit Centres (DBC) located throughout Scotland, England and Wales. Our evidence indicates that DBCs deal with identifiable geographical areas: the New Claims Unit in Blackpool deals with DLA claims from Scotland (except Strathclyde) and the Glasgow Disability Centre deals with Strathclyde as well as Essex and Suffolk postal districts. In response to our Request for Information, DWP has stated that there are 163 FTEs involved in processing DLA claims in Scotland.

4.21 Attendance Allowance (a benefit paid to those of state pension age who need help with their personal care because of a disability) is administered for the whole of the UK from offices in Preston and Blackpool.

4.22 Atos Healthcare is responsible on behalf of the DWP in Scotland for conducting Work Capability Assessments (WCA). The WCA was introduced in October 2008 for people claiming a range of disability benefits including Employment and Support Allowance.

4.23 On 30 April 2012, DWP awarded a four year contract to deliver Personal Independence Payment (PIP) assessments in Scotland to Atos Healthcare from 201345. In turn, Atos will deliver PIP face-to-face assessments in Scotland in partnership with SALUS, an NHS-based provider of Occupational Health in Lanarkshire, and Premex Services Ltd, headquartered in Bolton, who will deliver through their network of locally owned physiotherapy practices46.

4.24 SALUS will service Western Scotland and the City of Edinburgh47. Premex will service all other areas of Scotland except for sections of the Highlands and Islands which will be covered by Atos. Based on current volume forecasts, approximately 20,000 face-to-face assessments will be carried out in Scotland by the end of 2013 and around 325,000 assessments in total will be undertaken between 2013 and 201748.

The administration of child maintenance in and from Scotland

4.25 The Child Maintenance Service operates from six principal offices located in Scotland, England and Northern Ireland. The Scottish office in Falkirk processes applications from all of Scotland and the North of East of England49 and employs 903 FTE staff. The latest figures show that the live and assessed caseload in Scotland was 97,140 which is 8.7 per cent of the total UK caseload50.

Summary of DWP benefits delivery between Scotland and England

4.26 The following table shows where Scotland currently delivers benefits to claimants based in Scotland, where Scotland currently delivers benefits to claimants based in England, and where England currently delivers benefits to claimants based in Scotland.

Benefit Type and Delivery Scotland > Scotland Scotland > England England > Scotland
Jobseekers Allowance X
Employment and Support Allowance X
Income Support X
Incapacity Benefit X
State Pension X
Pension Credit X
Attendance Allowance X X
Disability Living Allowance
Carers Allowance X X
Child Maintenance X

The administration of the Work Programme and Work Choice in Scotland

4.27 Introduced by DWP in June 2011, the Work Programme is designed to support a range of long-term unemployed people into work, specifically those aged 18-24 enter the Programme at nine months unemployment, while those 25 and over from 12 months onwards. In Scotland, the programme is being delivered by two Prime Contractors: Ingeus and Working Links, with referrals split across each provider. Provision lasts up to two years, with contracts lasting at least five years51.

4.28 Work Choice is the DWP's main contracted provision for disabled people who want to work. The programme commenced from 25 October 2010 across four areas in Scotland. While Momentum Scotland Ltd covers the region known as Highlands, Islands, Clyde Coast and Grampian, the rest of Scotland is served by Shaw Trust. The current contracts run to October 201452.

The administration of HMRC tax credits and other benefits in and from Scotland

4.29 HMRC administers Child Benefit, Working Tax Credit, Child Tax Credit and Guardian's Allowance. These are managed on a nationwide basis, with calls from Scottish claimants answered at offices within Scotland or elsewhere with the UK, and vice versa. HMRC undertakes this work through its network of Enquiry Centres and Contact Centres, which also deal with all other taxes, duties and benefits administered by HMRC (not just those mentioned above).

4.30 There are four Contact Centres in Scotland (Bathgate; Dundee; East Kilbride; and Glasgow) and 28 Enquiry Centres. In total they currently employ around 2,200 people53 (made up of temporary and permanent members of staff) with around 2,150 of those based in the Contact Centres.

4.31 In responding to our Request for Information, HMRC was unable to break these numbers down any further and indicate how many people work on tax credits and other benefits. HMRC was able to confirm that there is a further pool of around 75 staff involved in debt management work across all taxes and duties, however, and HMRC believes their work on tax credits is minimal.

The role of Local Government in Scotland

4.32 In response to our Request for Information, COSLA estimated that the number of FTE members of staff employed in providing combined Housing Benefit and Council Tax Benefit services was 1,800. This is based on information gathered from Councils in April 2011. Since then, COSLA has indicated that the DWP has been applying year-on-year efficiencies to the administration subsidy they provide towards Housing Benefit and that Councils may therefore have reduced some staffing and costs since 2011.

4.33 This appears to be borne out by information also provided by COSLA, supplied to them through a survey Society of Personnel Directors in Scotland. This survey was started in late 2012 and reported in April this year. It shows that the average size of combined teams across 26 Councils sits at 60 FTEs. Fraud teams varied in size from 0.5 FTEs to 21 FTEs.

4.34 In terms of the Scottish Welfare Fund, COSLA indicated that budgeted FTEs based on DWP metrics indicated an FTE requirement to administer the Fund across Scotland of 203. The SWF began operation on 2 April 2013, and as a result there are no currently available figures - the precise number could be higher or lower.

4.35 This information is helpful in illustrating the important role which local government fulfils in administering benefits across Scotland, a role which could increase as the change to Universal Credit is introduced.

How administration is supported in Scotland

4.36 Administration of the current system of benefits depends on a number of crucial factors including: having the people with the right skills; having physical infrastructure from which to operate (i.e. buildings); having access to IT and other systems on which that administration depends; and having supplier contracts in place which support the current delivery arrangements.

4.37 We have set out above information on where people are based across Scotland and the number of people employed by DWP and HMRC as we understand it. They are supported by a variety of corporate functions which, with the exception of the Work Services Director for Scotland and his team, are all largely based in England. A single Chief Operating Officer is responsible for leading all of DWP's services to the public, while senior managers are responsible for finance, HR, IT and professional services54. In response to our Request for Information, DWP has indicated that there are around 8,500 members of staff which provide the following services to the Department's eleven regions, of which Scotland is one: change; corporate IT; finance and commercial; HR; professional services and strategy.

4.38 In terms of physical assets, DWP's latest published accounts55 note that the Department has a PFI Partnership Agreement under which the former Department of Social Security transferred ownership and management of its entire estate to a private sector partner, in exchange for the provision of fully serviced accommodation. The contract runs from 1 April 1998 to 31 March 2018. At the end of the contract, the Department will retain the right to occupy all the buildings it wishes, with leases based on the current market terms of the day.

4.39 According to these accounts DWP has two contracts with HP Enterprise Services for the provision of a wide range of IT hardware, software and associated maintenance services, a contract with BT Global Services for its fully serviced IT and telephony network, and a contract with Xerox for the supply of multi-function devices. These contracts expire at various points between 2014 and 2017. The DWP has already started the process of tendering for renewed contracts in the areas of IT, telephony and back office functions. These will be awarded on four or five year terms56.

4.40 DWP has introduced the Central Payment System which is a single integrated payment and accounting system. According to DWP, the Central Payment System offers it a variety of advantages, including greater control of benefit expenditure and improved management information. This system has been in place since 18 April 201157.

4.41 According to HMRC's latest published accounts58, HMRC has a number of property contract arrangements with private landlords or other government departments. Along with individual property contracts, HMRC operates two major contracts for property covering a significant proportion of their estate, through its contract with Mapeley STEPS Contractor Ltd, which expires in April 2021, and through the Newcastle Estates Partnership (NEP) (a contract which DWP also utilises). The latter has phased expiry arrangements until October 2029. At the end of any property contract arrangements, HMRC would typically vacate the building or negotiate a new arrangement with the landlord at prevailing market rates.

4.42 HMRC's 'Aspire' IT contract is designed to deliver a significant proportion of HMRC and VOA's IT infrastructure (desktop, business applications management, enhancements and developments) with Capgemini as the prime contractor, Fujitsu covers data centre operations, desktop installation and support. The Aspire contract commenced in July 2004 and is currently due to expire in June 2017. The Customs Handling of Import and Export Freight System (CHIEF) is also under contract. This is a data capture and validation system for international trade movement and the contract runs for a five year period until January 2015.

The Social Security Advisory Committee and Social Security and Child Support Tribunals

4.43 The Social Security Advisory Committee is a UK-wide independent advisory body of the DWP consisting of 14 non-remunerated appointments. Its role is to:

  • give advice on social security issues;
  • scrutinise and report on social security regulations;
  • consider and advise on social security matters and information products;
  • follow up the development of specific measures to determine if the intended objectives are being realised.

4.44 At an operational level, individuals can appeal to the Social Security and Child Support Tribunal if they disagree with a decision about Benefits, Tax Credits or Child Support Payments. The Social Security and Child Support Tribunal is part of HM Courts and Tribunals Service, an executive agency of the UK Government Ministry of Justice. It arranges independent hearings for appeals on decisions made by the Department for Work and Pensions (including Jobcentre Plus, Child Support Agency and Disability and Carers Service), as well as other government departments (HM Revenue and Customs) and local authorities. Appeals are heard at tribunal venues (152 across Great Britain with 25 in Scotland) and are processed at eight operational sites throughout Great Britain (including in Glasgow).

The introduction of Universal Credit and other welfare reforms

4.45 At the time of writing, it is not possible to provide a definitive view on how the UK Government's reforms might affect the delivery landscape across Scotland as we have described it above, or the breadth of services Scotland provides to people living both in and outside Scotland.

4.46 The UK Government has published the timetable for re-assessment of DLA claimants onto PIP59 but has yet to publish plans for the migration pattern of Scottish benefit claimants onto UC. The UK Government plans to have completed the transition onto the new benefits system by the end of 201760. It is not yet clear at this stage how advanced the rollout of UC in Scotland will be by the time of the Referendum.

Implications for the system of delivering benefits in the event of a "Yes" vote in the Referendum

4.47 On 15 October 2012 an Agreement between the United Kingdom Government and the Scottish Government on a referendum on independence for Scotland was signed in Edinburgh. This has become known as the Edinburgh Agreement. Article 30 of the Edinburgh Agreement establishes a principle relevant to the discussions on how delivery of benefits might operate in the event of Scotland becoming independent:

"The two governments are committed to continue to work together constructively in the light of the outcome [of the Referendum], whatever it is, in the best interests of the people of Scotland and of the rest of the United Kingdom."

4.48 From the picture we have assembled of how benefit payments are delivered across the UK, it appears to us that the two Governments have a strong common interest in working together, as called for under Article 30 of the Edinburgh Agreement.

4.49 We believe that what underpins this common interest is an obligation to ensure continuity of service to benefit claimants across the UK. When viewed from this perspective, placing the current 'shared services' arrangements on a more formal footing appears to be not only a reasonable position during a period of transition but a natural conclusion. We also believe that it would be the most efficient and cost effective short term arrangement.

4.50 Our information indicates that Scotland delivers almost all parts of the current UK benefits system to people living in Scotland from locations within Scotland. There are exceptions to this, however, and these relate to areas such as disability benefits, some of which are partly delivered from England, and the services provided by the National Pensions Centre in Newcastle. There may be others that we have not been made aware of.

4.51 In the course of our work, however, we have also discovered that Scotland provides a wide range of services to England. Some of these services are significant, such as working age benefit processing for London and services for pensioners in England, and involve a claimant count measured in millions rather than thousands.

4.52 Immediately separating these services would present serious risks to the continuity of payments to people in both Scotland and England and so a challenge for both an independent Scottish Government and a UK Government representing the interests of the remaining parts of the United Kingdom.

4.53 A rest of UK Government (rUK) would have to establish additional administrative functions outside Scotland to maintain delivery of benefit payments to claimants living in England, Wales and (in some cases) Northern Ireland, ensure staff covered those functions and bear the associated costs involved in doing so. These costs are likely to be high, and could make it challenging for the UK Government to keep to its tough plans to reduce UK Government Departmental spending through the current UK Parliament and the next61.

4.54 To maintain services for benefit claimants in Scotland in the event of independence, the Scottish Government would need to agree continued access to IT and other systems presently owned, operated and maintained by the UK Government and/or third party suppliers. It may also need to add some specialist skills to the DWP's Scottish operations which are currently provided by the UK, such as actuarial, IT and project management. The picture painted is complex.

4.55 Continuing to share services for a transitional period immediately following a "Yes" vote would help ensure that the delivery of the following benefits to a sizeable number of claimants living outside Scotland was maintained:

  • Jobseekers Allowance;
  • Employment and Support Allowance;
  • Income Support and Incapacity Benefit;
  • State Pension and Pension Credit;
  • Universal Credit.

4.56 Continuing to share services for a transitional period immediately following a "Yes" vote would ensure continued access to the current IT and other systems which underpin delivery, and also help ensure that the delivery of the following benefits to claimants living in Scotland was maintained:

  • Disability Benefits;
  • Benefits for Scots living overseas.

4.57 A possible timetable for transition is shown on the next page.

Welfare and Constitutional Reform: Timeline in the event of an independent Scotland

Welfare and Constitutional Reform: Timeline in the event of an independent Scotland

Maintaining delivery of benefits in the period immediately following a "Yes" vote in the Referendum

4.58 We wanted to carry out further work to test our conclusions and to appraise other delivery options as part of our considerations. During our second, third and final meetings, we developed and refined a set of key criteria against which a number of options could be assessed. These criteria are not designed to be exhaustive or authoritative, but we believe they provide a solid foundation for our conclusions. They could also be used in future work to look at developing a Scottish welfare system.

4.59 We considered that the following criteria were especially relevant when considering how benefit payments should be paid following a vote in favour of independence and in a period of transition leading towards a Scottish Government determining its own policies and approaches after the election in 2016.

4.60 In settling on those criteria, we believed that the main objective of the transitional arrangements should be (as indicated above) to provide continuity of service to benefit claimants in Scotland and the rest of the UK:

  • Certainty: the right level of benefits continue to be paid at the right time to the right people. The transitional arrangements should be easy to understand, with disruption and change minimised as far as possible.
  • Effectiveness of helping people into work: the policy objective of helping people prepare for, and then move into, work is common to both Governments and should be maintained by the transitional arrangements.
  • Support: people who are unable to work should be supported to play as full a role in society as possible, and their needs afforded the proper degree of dignity and respect.
  • Delivery: the arrangements should be straightforward to operate, both from the perspective of the Scottish and rUK Governments. It is important that those administering the interim arrangements have the right skills and proper capability to deliver benefit payments in the transitional phase. Above all else, the arrangements should be capable of being implemented, not a theoretical model which might prove difficult to introduce in practice.
  • Flexibility: the arrangements should be capable of accommodating any initial changes which the Scottish Government wishes to introduce before the first elections to an independent Scottish Parliament in May 2016 or thereafter, thus providing Scotland with a greater degree of policy influence over the benefits system which operates in Scotland. The transitional arrangements should form a solid, and sensible, platform from which to develop both medium and longer-term options.
  • Value for Money: any increase in administration costs should be kept to a minimum. The arrangements should guard against error and fraud on both the Scottish and rUK Governments.

4.61 We considered weighting the criteria but concluded that this would not materially affect the outcome.

4.62 In discussion, we covered a wide range of delivery options, drawing on the analysis presented earlier in this Chapter, points made in our Call for Evidence and points raised in the discussions with stakeholders. We judged these options against the criteria above:

  • Integrating services within the Scottish Government: negotiate with DWP and HMRC for the immediate transfer of existing staff, resources and systems from the UK Government to the Government of an independent Scotland. These services could be transferred into the Scottish Government's current Directorate structure or to an arms-length body.
  • Sharing services between Governments: formalise the existing arrangements with the rest of the UK under which Scotland and England already provide services to people living in both countries and to expatriates living abroad.
  • Transferring services to existing Scottish organisations: consider transferring DWP and HMRC functions to existing public bodies (such as Skills Development Scotland) and/or Local Government.
  • Private sector providers: work with the private sector to establish a new delivery infrastructure.

4.63 In arriving at these options we accept that there are other ways of approaching the matter of delivery. For example, introducing a 'commissioning' and 'provider' based model might offer a further possible approach. After due consideration, we decided to focus on those options which we considered, as concepts, to be most straightforward.

4.64 We are aware that Northern Ireland delivers welfare through the Northern Ireland Social Security Agency (NISSA), but we concluded that entering into a set of contractual arrangements with NISSA would be complicated for both NISSA and the Scottish Government. It would be more straightforward to deal simply with the UK Government rather than both the UK Government and NISSA.

4.65 In addition, these options require a whole delivery system to be maintained. While we recognised that the third sector would not be able to take on this responsibility, the sector has a key role in 'upstream' provision and preventative support central to the wider welfare system. The role of the sector in this context is worth further exploration.

4.66 We also recognise the crucial role that the third sector would play, especially in the areas of advocacy and advice, in supporting claimants during and through such a transitional period. It will continue be a first port of call for many as the current reforms bed in and in the event of future changes.

4.67 Our assessment is presented on the following page in the form of a matrix. We would like to point out that our conclusions relate to delivering welfare immediately following a "Yes" Vote, as opposed to the short/medium or medium/longer term. Looking at the criteria and options against a different timeframe may produce different results.

Expert Working Group's Evaluation Matrix - Delivering Welfare Immediately Following a "Yes" Vote

Criteria Options
Integrating services within the Scottish Government Sharing services between Governments Transferring services to existing Scottish organisations Private Sector Providers
Criteria Satisfied? Risk Criteria Satisfied? Risk Criteria Satisfied? Risk Criteria Satisfied? Risk
Certainty Uncertain High Possible Low Possible/Uncertain High Possible/Uncertain High
Effectiveness Possible Low Possible Low Possible Medium Possible High
Support Possible Low Possible Medium Possible/Uncertain Medium Possible/Uncertain High
Delivery Possible/Uncertain Medium Possible Low Possible/Uncertain Medium Possible/Uncertain Medium
Flexibility Possible/Uncertain Medium Possible/Uncertain Medium Possible/Uncertain Medium Possible/Uncertain Medium
Value for Money Possible/Uncertain Medium Possible/Uncertain Medium Possible/Uncertain Medium Possible/Uncertain Medium

4.68 The matrix shows all options are possible. We consider that integrating services immediately within the Scottish Government could be achieved. We concluded, however, that as the scale of the activity required to achieve this is likely to be complex, and doing so immediately could create significant risk for Scotland and the rest of the UK in achieving the overall objective of continuity of service to benefit claimants.

4.69 The private sector's involvement in providing UK Government services is increasing all the time and the Scottish Government could consider the role that the private sector might have in supporting delivery of certain aspects of a Scottish welfare system. That said, we acknowledge that the private delivery of public services does not form part of the current Scottish Government's approach and enjoyed little, if any, support through the Call of Evidence.

4.70 We concluded that sharing services between the Governments was relatively low in terms of risk, given that this is presently the way in which the arrangements are structured at the current time. Independence would require those arrangements to be placed on a more formal footing than at present. We also concluded that this option would offer the best value for money in the short-term as it should not incur significant additional transitional costs arising from transferring staff, establishing new structures or negotiating contracts with third parties.

4.71 In adopting this approach, the Scottish Government would need to ensure that any early priorities for change could be accommodated by the UK Government. A downside of continuing to share services might be that an independent Scottish Government finds itself unable to implement some of its early priorities for change to the benefit system (though as we note in Chapter 5, Northern Ireland has secured additional flexibilities within the current system). However, as a way of ensuring that benefit claimants who currently receive services from the UK nations continue to receive those services in the event of Scottish independence (irrespective of where they live), we concluded that this was the preferable and most pragmatic option.

Areas for negotiation between the Governments during the transition

4.72 While it is not possible to envisage the precise arrangements in the event of a "Yes" vote, we would expect the UK and Scottish Governments to begin independence negotiations quickly. Welfare may be part of these negotiations or it may be subject to a set of separate discussions.

4.73 Whichever is the case, reaching an agreement which meets the letter and the spirit of Article 30 is important and we recognise that there are a number of matters that any negotiations will have to focus on.

4.74 As a starting point we set out below the main provisions which any inter-governmental agreement during the transitional period would need to cover in relation to delivery of the current benefits system. These are:

  • The term of the agreement and arrangements for varying that term. It may be sensible to tie the term to the current programme of welfare reform (i.e. the end of 2017) or an anniversary of the proposed independence day (e.g. March 2018).
  • A description of the services which each Government will provide to citizens north and south of the border (e.g. how benefits will be paid, when they will be paid etc.).
  • The financial arrangements for providing those services. This would include, for the UK Government, the continued use of DWP resources in Scotland by the Scottish Government (buildings, staff etc.) and, for the Scottish Government, the cost of processing benefits on behalf of the UK Government for people living outside Scotland.
  • Arrangements for how the services could be varied and the costs of doing so. Such variations could cover operational issues (the continued payment of housing costs direct to Scottish landlords following the introduction of UC, for example). Our Call for Evidence describes some of the flexibilities that could be introduced.
  • Data sharing and record keeping.
  • Provisions on contracts, leases and all third party arrangements which expire and require renegotiation within the term of the agreement. The position of both Governments with respect to any renegotiation should be detailed, and the permissions of any third party supplier sought as part of agreeing these provisions.
  • Provisions on IT contracts and intellectual property, both those covering the current benefits system and the contracts in place for UC and other reforms to the welfare state.
  • The operation, monitoring and performance of service under the agreement.

Delivery beyond a transitional period

4.75 In the event of independence, it will be for the two Governments to determine the length of any transitional period. This will be dependent on a variety of factors, including the policies adopted by the first Government in an independent Scotland. Whichever model is adopted beyond the transitional period, the Scottish Government will be keen to learn from the experience of other small nations and how they deliver benefits and wider welfare services.

4.76 The Call for Evidence sought views on delivery in the longer term. Like respondents, we felt that this was difficult to suggest at this stage without an understanding of what principles would underpin the establishment of the welfare state in an independent Scotland.

4.77 In summary, there were comments that whatever system is adopted, it needs to be easily understood, accessible, fair and accountable, and to treat claimants with dignity. There were also some suggestions for the improved integration of advice and support services and for benefit and job seeking services to be made accountable at a local level and claimants.

Conclusions

4.78 In this Chapter we have set out our understanding, based on the information available to us, of the role Scotland plays in the delivery of the current benefits system.

4.79 We have concluded that, in the event of a "Yes" vote, the Scottish and UK Governments have a common interest in working together, as envisaged by Article 30 of the Edinburgh Agreement, to support each other maintaining the delivery of benefit payments in the event of a "Yes" Vote during the agreed period of transition. We believe that this option will offer the best possibility for minimising transition costs as it effectively continues the existing arrangements.

4.80 Most importantly, we believe that what underpins this common interest is an obligation to ensure continuity of service to benefit claimants. When viewed from this perspective, formalising the current arrangements into an agreed set of 'shared services' over such a transitional period appears to be not only a reasonable position but a natural conclusion. We also believe that it would be the most efficient and cost effective arrangement for both Governments.

4.81 Given the role that Scotland currently plays in delivering benefits to claimants in the rest of the UK, we believe it is in the interests of both the Scottish and UK Governments to introduce a programme of information sharing and begin discussions about how benefits would continue to be delivered for all claimants in the UK in the event of Scottish independence.

4.82 Through the Call for Evidence, respondents felt it was difficult to suggest longer term delivery options at this stage without an understanding of what principles would underpin the establishment of the welfare state in an independent Scotland. The Call for Evidence did, however, draw a number of important matters to our attention, and it is to these we now turn.