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On 27 November 2014 the Smith Commission published its report detailing “Heads of Agreement” on further devolution of powers to the Scottish Parliament. Under the Commission’s proposals, State Pensions and Pension Credit would remain reserved.  Universal Credit (UC) would also remain reserved, but the Scottish Parliament would have the power to vary the housing element of UC in Scotland, and powers to vary UC payment arrangements.

The Commission proposed devolving responsibility for certain benefits outside UC:

  • Disability Living Allowance, Attendance Allowance, Personal Independence Payment, Carer’s Allowance, “Industrial Injuries Disablement Allowance” and Severe Disablement Allowance;
  • Benefits which currently comprise the Regulated Social Fund – Winter Fuel Payments, Cold Weather Payments, Funeral Payments and the Sure Start Maternity Grant;
  • Discretionary Housing Payments.

The Scottish Parliament would have “complete autonomy” over these benefits, or over any benefits or services which might replace them. Devolution of these powers would be accompanied by an increase in the block grant equivalent to the existing level of spending on the benefits in Scotland (currently around £2.5 billion a year).

In addition to having the power to create new benefits in the areas of devolved responsibility, the Scottish Parliament would have new powers to make additional discretionary payments at its expense in any area of welfare.  Prior permission from DWP would not be required, although the agreement of DWP would have to be sought if it were to deliver any additional payments on behalf of the Scottish Government.  The Commission stated that any new benefits or discretionary payments to top-up reserved benefits “must provide additional income for a recipient and not result in an automatic offsetting reduction in their entitlement to other benefits or post-tax earnings if in employment.”

The Commission also proposed giving the Scottish Parliament “all powers over support for unemployed people through the employment programmes currently contracted by DWP.”

In its May 2015 report on the draft clauses and associated Command Paper Scotland and the United Kingdom: an enduring settlement, the Scottish Parliament’s Devolution (Further Powers) Committee questioned whether some of the welfare clauses met the “spirit and substance” of the Smith Commission’s recommendations and posed potential challenges to implementing them.  A key concern was that the powers to create new benefits in areas of devolved responsibility and to make discretionary payments in any area of welfare were narrowly defined. 

With the exception of a new power to top-up reserved benefits, there are no substantive differences between the welfare and employment support provisions in the Scotland Bill and the previous draft clauses.

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