Further devolution of powers to Scotland: devolved benefits and additional discretionary payments

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 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 in Scotland on the benefits (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 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.”

This note gives general background on the devolution of further powers in the area of welfare, and looks more closely at the Smith Commission’s proposals for devolving responsibility for certain benefits and for additional discretionary payments. It also looks at the Draft Scotland Clauses on these areas in the Command Paper Scotland and the United Kingdom: An enduring settlement, published by the UK Government on 22 January. Some have suggested that the powers in the Draft Clauses are more narrowly defined than they had been led to expected, based on their interpretation of the Smith proposals.

A separate Library briefing covers the further devolution proposals regarding Universal Credit: Further devolution of powers to Scotland: Universal Credit housing element and payment arrangements (SN07095).

In addition, a Library briefing will be published in due course on: Further devolution of powers to Scotland: employment programmes.