SSC/S5/19/26/A

SOCIAL SECURITY COMMITTEE

AGENDA

26th Meeting, 2019 (Session 5)

Thursday 28 November 2019

The Committee will meet at 10.00 am in the Robert Burns Room (CR1). 1. Decision on taking business in private: The Committee will decide whether to

take item 5 in private. 2. Subordinate legislation: The Committee will take evidence on The Scotland

Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2020 [draft]from—

Shirley-Anne Somerville, Cabinet Secretary for Social Security and OlderPeople, Colin Brown, Senior Principal Legal Officer, and Chris Graham,Unit Head, Low Income Benefits Policy Unit, Scottish Government.

3. Subordinate legislation: Shirley-Anne Somerville (Cabinet Secretary for SocialSecurity and Older People) to move—S5M-19843—That the Social SecurityCommittee recommends that the Scotland Act 1998 (Transfer of Functions tothe Scottish Ministers etc.) Order 2020 [draft] be approved.

4. Assessing the Feasibility of Citizen’s Basic Income Pilots in Scotland: The

Committee will take evidence from—

Wendy Hearty, Basic Income Project Manager, Improvement Service; Gerry McCartney, Consultant Public Health Medicine, NHS HealthScotland; Julie McLachlan, Senior Manager – Economic Policy, North AyrshireCouncil; Andy White, Tackling Poverty Manager, Glasgow City Council.

5. Assessing the Feasibility of Citizen’s Basic Income Pilots in Scotland: TheCommittee will consider the evidence heard earlier in the meeting.

SSC/S5/19/26/A

Anne PeatClerk to the Social Security Committee

Room T3.60The Scottish Parliament

EdinburghTel: 0131 348 5182

Email: SocialSecurityCommittee@parliament.scot

SSC/S5/19/26/A

The papers for this meeting are as follows— Agenda Item 2

Note by the Clerk SSC/S5/19/26/1

Agenda Item 4

SPICe Briefing SSC/S5/19/26/2

Update Paper SSC/S5/19/26/3

Social Security Committee

26th Meeting, 2019 (Session 5), Thursday 28 November 2019

Subordinate Legislation

Overview of instruments

1. The Committee has been designed as lead committee for consideration of thefollowing affirmative instrument:The Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.)Order 2019

2. The Cabinet Secretary for Social Security and Older People will attend themeeting to move the motion to approve.

3. The Instrument and Policy Note are attached at Annexe A.

Purpose

4. The Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.)Order 2019 transfers powers to the Scottish Government enabling it to makearrangements to help young people retain employment. The ScottishGovernment will use the powers to deliver Job Start Payment (previously knownas Job Grant).

5. Once launched, the Job Start Payment will help young people with the costsassociated with the transition into the workplace (such as travel, lunch andclothing costs) after time out of paid work.

Delegated Powers and Law Reform Committee consideration

6. The DPLR Committee considered The Scotland Act 1998 (Transfer of Functions

to the Scottish Ministers etc.) Order 2019 at its meeting on 12 November 2019

and did not raise any issues.

For Decision

7. Is the Committee content to recommend approval of this instrument?

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Draft Order in Council laid before Parliament and the Scottish Parliament under paragraphs 1

and 2 of Schedule 7 to the Scotland Act 1998, for approval by resolution of each House of Parliament and of the Scottish Parliament.

D R A F T S T A T U T O R Y I N S T R U M E N T S

2020 No.

CONSTITUTIONAL LAW

DEVOLUTION, SCOTLAND

EMPLOYMENT AND TRAINING

The Scotland Act 1998 (Transfer of Functions to the Scottish

Ministers etc.) Order 2020

Made - - - - ***

Coming into force in accordance with article 1

At the Court at ***, the *** day of ***

Present,

The Queen’s Most Excellent Majesty in Council

This Order is made by Her Majesty in Council in exercise of the powers conferred upon Her by

sections 63(1)(b), 113(3)(b), (4)(a) and (5)(a) and 124(2) of the Scotland Act 1998(a).

In accordance with paragraphs 1 and 2 of Schedule 7 to that Act(b), a draft of this Order has

been—

(a) laid before and approved by a resolution of each House of Parliament; and

(b) laid before and approved by a resolution of the Scottish Parliament.

Accordingly, Her Majesty, by and with the advice of Her Privy Council, makes the following

Order:

Citation and commencement

1.—(1) This Order may be cited as the Scotland Act 1998 (Transfer of Functions to the Scottish

Ministers etc.) Order 2020.

(a) 1998 c.46. (b) Paragraphs 1 and 2 of Schedule 7 are relevantly modified by paragraph 3(2) of schedule 4 to the Interpretation and

Legislative Reform (Scotland) Act 2010 (asp 10).

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Annexe A

(2) This Order comes into force on the day after the day on which it is made.

Functions exercisable concurrently by the Secretary of State and the Scottish Ministers

2.—(1) The functions of the Secretary of State under section 2 of the Employment and Training

Act 1973(a) are exercisable by the Scottish Ministers concurrently with the Secretary of State

insofar as they—

(a) are exercisable in or as regards Scotland; and

(b) are not exercisable by the Scottish Ministers by virtue of section 53 of the Scotland Act

1998(b).

(2) But the Scottish Ministers may only exercise those functions, by virtue of paragraph (1), to

make an arrangement under which a person in the circumstances described by paragraph (3) or (4)

may be given assistance to retain employment.

(3) The circumstances are—

(a) an offer of employment was made to the person when the person was—

(i) 16 years of age or over; but

(ii) under 25 years of age;

(b) the person was not in employment at any point in the 6 months before the offer was

made; and

(c) the person applied to the Scottish Ministers for assistance under the arrangements made

by virtue of paragraph (1) within the period of one year beginning with the day that the

offer was made.

(4) The circumstances are—

(a) an offer of employment was made to the person when the person was—

(i) 16 years of age or over; but

(ii) under 26 years of age;

(b) the person—

(i) was looked after by a local authority on or after the person’s 16th birthday; and

(ii) is no longer looked after by a local authority; and

(c) the person applied to the Scottish Ministers for assistance under the arrangements made

by virtue of paragraph (1) within the period of one year beginning with the day that the

offer was made.

(5) For the purposes of paragraph (4)(b), a person is looked after by a local authority if—

(a) the person is looked after, within the meaning of section 17(6) of the Children (Scotland)

Act 1995(c), by a local authority in Scotland;

(b) the person is looked after, within the meaning of section 105(4) of the Children Act

1989(d), by a local authority in England or Wales; or

(c) the person is looked after, within the meaning of article 25 of the Children (Northern

Ireland) Order 1995(e), by an authority in Northern Ireland.

(6) For the avoidance of doubt, nothing in this article requires the Scottish Ministers to make an

arrangement to assist every person in the circumstances described by paragraphs (3) and (4).

(a) 1973 c.50; section 2 was substituted by the Employment Act 1988 (c.19), section 25(1); the section has subsequently beenamended by the Employment Act 1989 (c.38), section 29(4) and Schedule 7, Part 1, and by the Trade Union Reform and Employment Rights Act 1993 (c.19), section 47(1).

(b) 1998 c.46; section 53 is amended by the Scotland Act 2016 (c.11), section 32(3). (c) 1995 c.36; section 17(6) is amended by the Children’s Hearings (Scotland) Act 2011 (asp 1), schedule 5, paragraph 2, by

the Adoption and Children (Scotland) Act 2007 (asp 4), schedule 2, paragraph 9(4)(b), and by S.S.I. 2013/211.(d) 1989 c.41; section 105(4) is substituted by S.I. 2016/413.(e) S.I. 1995/755 (N.I. 2); article 25 is amended by the Children (Leaving Care) Act (Northern Ireland) 2002 (c.11), section

2(1).

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Information sharing: HMRC information

3. In section 127 of the Welfare Reform Act 2012(a) (information-sharing between Secretary of

State and HMRC)—

(a) after subsection (2) insert—

“(2A) Information to which subsection (1) applies may be supplied to the Scottish

Ministers for use in connection with any arrangements made by them under section 2 of the

Employment and Training Act 1973 by virtue of article 2(1) of the Scotland Act 1998

(Transfer of Functions to the Scottish Ministers etc.) Order 2020.”;

(b) in subsection (5)(a), after “(2)” insert “or (2A)”.

Information sharing: social security information, etc.

4.—(1) In section 72 of the Welfare Reform and Pensions Act 1999(b) (supply of information

for certain purposes), in subsection (4), after paragraph (b) insert—

“(c) any arrangements made by the Scottish Ministers under section 2 of the

Employment and Training Act 1973 by virtue of article 2(1) of the Scotland Act

1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2020.”.

(2) In regulation 13 of the Social Security (Claims and Information) Regulations 1999(c)

(information), in paragraph (1), after sub-paragraph (b)(v) insert—

“(vi) to the Scottish Ministers in connection with arrangements made under section

2 of the Employment and Training Act 1973 by virtue of article 2(1) of the

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order

2020.”.

General modification of enactments

5. Section 117 of the Scotland Act 1998 (general modification of enactments: Ministers of the

Crown)(d) applies in relation to the exercise of functions by the Scottish Ministers by virtue of

article 2(1) as it applies in relation to the exercise of functions by the Scottish Ministers within

devolved competence.

Clerk of the Privy Council

(a) 2012 c.5; section 127 is amended by the Childcare Payments Act 2014 (c.28), section 27(6)(b); there are other amendmentsthat are not relevant to this Order.

(b) 1999 c.30; there are amendments to section 72 that are not relevant to this Order.(c) S.I. 1999/3108; sub-paragraph (b)(v) is inserted by S.I. 2010/508. There are other amendments to regulation 13 that are not

relevant to this Order. (d) Section 117 is amended by the Scotland Act 2012 (c.11), section 12(2).

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EXPLANATORY NOTE

(This note is not part of the Order)

The Order, made under the Scotland Act 1998 (“the Scotland Act”), provides for certain functions

conferred on the Secretary of State by section 2 of the Employment and Training Act 1973 (“the

1973 Act”) to make arrangements to help young people retain employment, so far as they are

exercisable in or as regards Scotland, to be exercisable concurrently by the Scottish Ministers.

It also provides that these functions are exercisable concurrently to the extent that they are not

otherwise exercisable by Scottish Ministers. The Section H3 Job search and support reservation, in

Schedule 5 to the Scotland Act, reserves the subject matter of the 1973 Act except insofar as

relating to training for employment, and the matters listed in Exceptions 1 and 2 to Section H3.

These excepted functions are exercisable by the Scottish Ministers by virtue of section 53 of the

Scotland Act.

When the functions are exercised by the Scottish Ministers, the requirement for Treasury consent

under section 2(5) of the Employment and Training Act 1973 does not apply (see section 63(2) of

the Scotland Act).

Articles 3 and 4 modify three enactments, in connection with the provisions made by this Order.

This will enable the sharing of Revenue and Customs information and social security information

with the Scottish Ministers in connection with any arrangements they make by virtue of this Order

to help young people retain employment.

Section 117 of the Scotland Act allows statutory references to a Minister of the Crown to be read

as (or as including) references to the Scottish Ministers in connection with the Scottish Ministers’

exercise of a devolved function nominally conferred on a Minister of the Crown. Article 5 applies

section 117 to the Scottish Ministers’ exercise of the functions which they are concurrently

empowered to exercise by virtue of this Order. This means that, in this context, the various

references to the Secretary of State in section 2 of the 1973 Act can be read as including

references to the Scottish Ministers.

A full impact assessment has not been produced for this instrument as no, or no significant, impact

on the private, voluntary or public sector is foreseen.

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POLICY NOTE

THE SCOTLAND ACT 1998 (TRANSFER OF FUNCTIONS TO THE SCOTTISH

MINISTERS ETC.) ORDER 2020

SI 2020/XXX

This Order is made by Her Majesty in Council in exercise of the powers conferred upon Her

by sections 63(1)(b), 113(3)(b), (4)(a) and (5)(a) and 124(2) of the Scotland Act 1998.

The instrument is, by virtue of section 115, and schedule 7 of that Act, subject to affirmative

procedure in both Houses of the UK Parliament and in the Scottish Parliament.

This Order allows certain functions of the Secretary of State to be exercised by the

Scottish Ministers, as well as by the Secretary of State. Its effect will be to allow the

Scottish Government, in certain circumstances, to provide support to young people

entering work after having been unemployed.

The powers conferred by this Order will allow the Scottish Government to provide

support to young people aged 16-24 years old (inclusive), who are entering work after

having been out of paid employment for six months or more.

The Order also provides for additional support to care leavers, who can be eligible for

support until their 26th birthday, a year longer than other young people. Care leavers may

also receive support as long as they have received an offer of employment, without having

to meet the 6 month requirement to be out of work.

Articles 3 and 4 of the Order provide for information sharing to support delivery of any

arrangements made by the Scottish Ministers under the powers it confers.

Policy Objectives

The Scottish Government wants to use these powers to introduce a grant to help smooth the

transition into work for young people on low incomes, reducing the risk of them being

unemployed or economically inactive in later life.

This grant will help with the initial costs associated with entering and remaining in work. It

could be used to pay for lunches, clothing, and help towards travel costs, removing some of

the initial pressure of being able to afford these things. The intent of the policy is not to

replace an unemployment-related benefit and cover all household costs but rather support

young people with some of the additional costs associated with moving into employment.

This policy aligns with wider Scottish Government policies, in particular the Fairer Scotland

Action Plan, the Tackling Child Poverty Delivery Plan, Fair Start Scotland’s employability

support and the Independent Care Review.

Consultation

There has been no consultation specifically on this Order, however, the Scottish Government

has undertaken consultation and engagement activity in relation to its policy as a whole.

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The Scottish Government asked a question about this policy through the Social Security in

Scotland Consultation1 which ran from 29 July to 30 October 2016. The question on what the

Scottish Government should consider in developing the grant received 131 responses, 51

from individuals and 80 from organisations, with almost all supporting its introduction. A

number of responses stressed that the scheme should be simple for both applicants and

administrators.

The Scottish Government consulted2

on the key eligibility criteria and the format of the grant

from 16 January 2019 to 9 April 2019. This consultation explained the broad parameters as

included in this Order and more detailed proposed policy to be delivered through the

administrative arrangements for the scheme.

In addition, seven workshops were held with young people during the consultation period to

seek their views. These workshops included young people from a mixture of socio-economic

backgrounds and experiences, including care leavers, parents, people with disabilities and

people with experience of the criminal justice system.

Consultation responses and feedback from other engagement activity will help to inform

further policy development of the arrangements for the administrative scheme.

Impact Assessments

The Scottish Government’s consultation included draft impact assessments and asked

whether respondents were aware of any impacts which had not been identified. These impact

assessments looked at the likely impact of the expected administrative arrangements, in

addition to the broad parameters for the scheme set out in this Order. Responses to the

consultation questions on impact assessments, along with other engagement activity, will

help to inform the final impact assessments.

Financial Effects

Depending on take-up, the grant could result in expenditure of up to £2 million annually by

the Scottish Government

A partial Business and Regulatory Impact Assessment (BRIA) was included in the

consultation and asked whether respondents were aware of any impacts which had not been

identified. As was the case for the other impact assessments, this looked at the likely impact

of the expected administrative arrangements, in addition to the broad parameters for the

scheme set out in this Order. Responses to the consultation questions, along with other

engagement activity, will help to inform the final BRIA.

Scottish Government

Social Security Directorate

31 October 2019

1https://consult.gov.scot/social-security/social-security-in-scotland/ 2https://consult.gov.scot/social-security/job-grant-eligibility-criteria-consultation/

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1

Social Security Committee

26th Meeting, 2019 (Session 5), Thursday 28 November 2019

Basic Income Pilot Feasibility Study: Interim Report

Introduction The Scottish Government has provided funding to research the feasibility of running a pilot a citizen‘s basic income (CBI) scheme in four local authority areas. The project published its interim report in October: ―Assessing the feasibility of citizen‘s basic income pilots in Scotland: An interim report.‖ A final report and full business case is due in March 2020 after which the Scottish Government will decide whether to proceed with running a pilot.

The Committee will hear from Wendy Hearty, project manager for pilot feasibility study, Improvement Service, Gerry McCartney (Consultant Public Health Medicine, NHS Health Scotland), Julie McLachlan (Senior Manager – Economic Policy, North Ayrshire Council) and Andy White (Tackling Poverty Manager, Glasgow City Council)

The report proposes two levels of CBI for testing and asks for feedback. In particular, the steering group would welcome comment on the proposed models (see table 8 in report) and whether there is a preference for inclusion of certain types of communities in intervention sites e.g. affluent, deprived, urban or rural (section 8.2 of the report on sampling strategy). The report also asks for feedback from the Scottish Government on the cost data and level of detail required in the financial analysis in the final report.

Previous Committee Consideration The Committee held an evidence session on CBI on 9 March 2017 and agreed to keep a watching brief on developments. At that meeting, the Committee heard from:

Professor Donald Hirsch, Director, Centre for Research in Social Policy,Loughborough University

Siobhan Mathers, Advisory Board member, Reform Scotland

Annie Miller, Chair, Citizen‘s Income Trust and Trustee, Citizen‘s BasicIncome Network in Scotland

Howard Reed, Director, Landman Economics

Anthony Painter, Director, Action and Research Centre, RSA

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This was before the Government announced the funding for a feasibility study and discussion focussed on arguments for and against CBI in general terms, proposals from across the political spectrum and the feasibility of implementing CBI in a devolved context.

Principles of CBI There are many different models of a CBI and pilots have tested the concept to varying degrees.1 The Citizens‘ Basic Income Trust refer to six essential criteria: sufficient to cover basic needs, paid regularly, unconditional, paid to individuals, non-withdrawable and universal. While there is extensive research and commentary about CBI there has not been a pilot that has tested a full CBI that matches all these principles.

The proposed model Section 5 of the report outlines three options for testing two levels of CBI. It notes that the model is not yet fixed and the final proposal will depend partly on feedback on the interim report. The group‘s preference is for option 1 which is summarised in the table below. It proposes the removal of some elements of certain benefits and does not propose changes to the tax system. The pilot would be available to all residents in a defined geographical areas and there would be a control group in the wider population.

The interim report makes no proposals for how the pilot or wider CBI could be funded. Costs will depend on decisions about sample sizes and number of sites, but are estimated at c£5m per 1,000 participants for the low level payment and c.£10m per 1,000 participants for the high level payment. Administration, evaluation and control group costs would be additional to this.

Table 1: Proposed weekly payment levels and cost Low level payment High level payment

0-15 yrs, (paid tomain carer)

£84.54 £120.48

16 to 19 £84.54

£213.59 20 to 24 £57.90

25 to pension age £73.10

Pension age £167.25 £195.90

Benefits system Current payments for disability, work capability, childcare and housing continue. Elements of benefits removed2 are:

Personal allowance in income support, incomebased JSA, income related ESA, pension creditguarantee.

Single person standard allowance and childelements in universal credit

family and child elements in child tax credit

Child benefit

1 Sections 3 and 7 of the report expand on this. Another overview of various proposals is available at:

https://cbin.scot/resources/. Arguments for and against basic income cross the political spectrum. For

example, arguments against from a trade union perspective and arguments against from the IEA. 2

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Carer‘s allowance and carer‘s allowance supplement

Tax system No change to tax system. eg. Participants keep personal allowances and CBI counts as income for tax purposes

Coverage All residents in a geographical area. Incomers and leavers also get CBI.

Low level High level Annual cost per 1,000 population

£4.63m £10.4m

Cost for 3 yrs for proposed sample sizes

14,600 people for 3 yrs: £203m

2,500 people for 3 yrs: £76m

10,000 people for 3 yrs: £304m

Sources: tables 2, 3, 14, 15 interim report. Notes: the low level payments are based on current means tested benefit rates. The high level payments are based on the ‗minimum income standard‘.

Only certain parts of benefits are being removed. The intention appears to be to use the CBI to replace the ‗personal allowance‘ element of the main means tested benefits and leave elements for additional costs for disability, childcare and housing in place. The steering group has yet to decide its approach to working tax credit.3

Issues yet to be decided Elements of the model yet to be decided include:

Whether participation will be voluntary or mandatory (see p.87 of report)

Whether and if so how the CBI will be counted as income for reservedbenefits (see p88 of report)

Whether additional pilot options are required for those of pension age(see p.27 of report)

Sample sizes and number of sites

The project has commissioned IPPR Scotland and the University of Strathclyde to model the broader economic impacts of the basic income. This will include consideration of changes to the tax system, which is not possible in the pilot. This is due to report in early 2020 and will inform the final report on feasibility of running a pilot. Other additional work being undertaken includes further consideration of the legal basis for a pilot and discussions with HMRC and DWP (see ‗next steps‘ p.92).

The final report The final report is due in March 2020 and will ―contain a recommendation about whether and under what circumstances a CBI pilot is feasible, how it could be undertaken, what it would be able to consider, and its likely cost.‖

The following suggests themes for discussion:

Theme 1: Collaboration with and lessons from other CBI projects

3 Personal communication, 21 November 2019

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The report summarises the published evidence on CBI and gives an overview of schemes proposed elsewhere (p.16-18, p.55 - 60). While none of the interventions implemented to date ―could be described as full CBI‖ (p.56), findings suggest:

A small labour market impact, with suggestions that second earners andsingle parents spend more time in the home

It can result in children staying longer in education,

Modest to strong health impacts – including impacts on mental health,birth weight, service use and diet

The report states that there is a lack of evidence in a UK context and notes that in addition to potentially filling some research gaps a pilot would encourage the policy debate (p.19).

The Committee may wish to discuss: Extent to which the project has drawn on developments in

researching and implementing basic incomes elsewhere in the UKand internationally. How has this impacted on the proposals?

What will be the unique contribution of the Scottish pilot to theinternational research on basic incomes

To what extent do you expect results from a Scottish pilot to begeneralisable to other contexts

Theme 2: Project organisation and progress The structure and governance of the project is outlined in section 2 of the report. The Scottish Government provided £250,000 over two years. There is a steering group which meets monthly, a councillor group which has met four times, and a stakeholder group which has met three times.

The steering group was formed in November 2017 and received funding in May 2018. It is made up of four local authorities (Glasgow, North Ayrshire, Edinburgh and Fife), NHS Scotland, the Improvement Service and the Scottish Government. Sub-groups have been formed to consider the published research and scope research on economic modelling. The project employs a project manager (based at Improvement Scotland) and policy officer (based at North Ayrshire Council).

There are five workstreams: governance, evaluability assessment, research, engagement with government departments and communications/engagement.

The project has:

Held four evaluation workshops led by NHS Scotland which agreed theintended outcomes and preferred options for a pilot

commissioned and published research on interaction with the benefitssystem: Shaw, J. and Paterson, J. (2019) ‗Exploring the social securityimplications of a citizen‘s basic income pilot.‘

commissioned research on wider economic modelling (to report early2020)

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undertaken a study visit to Finland

undertaken surveys and focus groups in Fife and North Ayrshire on views about a CBI (see p.51 of report for results)

held three ‗stakeholder workshops‘ which ―brought together a wide range of individuals and organisations to get broader feedback on the project plans‖

The Committee may wish to discuss:

The role of the Scottish Government on the steering group Whether the funding and time available has been sufficient to

consider the issues in depth and develop robust proposals How the project has ensured that it takes into consideration

different views about basic income and whether/how the proposals have been improved as a result of that challenge

Theme 3: Discussions with UK Government The ability to run a pilot CBI depends on the co-operation of the UK government. The preferred option requires UK legislation to ‗switch off‘ parts of reserved benefits. The intention is that conditionality would be ‗switched off‘ under this option, which would also require co-operation of the DWP. The approach to how income is to be treated is still to be determined. The report notes:

―suspension of entitlements would require complex changes to underpinning legislation necessitating primary legislation and co-operation of UK and Scottish governments. This will entail substantial political will and time to deliver.‖ (report table 8)

Option 2 would require far less legislative change. This would leave all benefits in place and ensure that the CBI was not counted as income for any benefits. It would leave conditionality in place. Option 3 would not require changes to UK benefits legislation. Like option 2 it would leave all benefits in place, but unlike option 2, CBI would count as income for legacy benefits.4 Table 2: Difference between three CBI options proposed Option 1 Option 2 Option 3

Remove parts of some benefits (see table 1)

No change to the benefit system

Undecided. Options are: include or don‘t include as income, or include the lower amount as income in both the lower and higher payments

Not included as income

Follow current benefit rules for whether included

Source: table 8 of the interim report

One of the key issues is therefore to balance the prospect of getting legislation through against the degree to which it is possible to test a CBI while leaving the current system in place. Another important issue is how best to ensure that

4 It would not count as income for universal credit unless legislation was passed to include it.

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individuals do not see any loss of income (either during the pilot or in the future) as a result of participating. The report states that:

―leaving all benefits in place and ensuring CBI income is disregarded for calculation of means-tested benefits is the surest way to avoid detriment to pilot participants. However, such an approach may be of limited value in learning about the effects of a CBI scheme which would replace parts of the benefits system.‖ (p.38)

The steering group has been ―engaging with DWP since 2018.‖ The former Secretary of State for Work and Pensions, Esther McVey: ―committed DWP officials to engage with the Scottish Government and local authorities on the project.‖ However, ―engagement has not progressed as substantively as the steering group had initially hoped.‖ (report p.38). Introductory meetings took place with the DWP and HMRC in March 2019. They have been asked to comment on the aims for a pilot ―with a view to informing the steering group how local /regional flexibilities or delegation could support a pilot.‖ Another meeting is planned for later 2019. The experience of the Scottish Government in requesting DWP changes to systems for the development of devolved social security suggests that, even with UK government co-operation, getting DWP systems change takes time. For the CBI pilot option 1 the main means tested benefits would need to be calculated differently for claims received from people participating in the pilot. There will need to be specific arrangements to ensure people did not lose out on, for example passported benefits and national insurance credits. This would require change to legislation and also changes to staff practice and IT systems. The system would need to flag certain cases as CBI pilot and treat them differently. The Scottish Government and DWP are already working jointly to progress social security devolution. For example, the DWP provides data to enable Scottish Social Security benefits to be paid and delivering Scottish choices5 required an alteration to DWP‘s universal credit system. The Scottish Government has agency agreements for DWP to deliver devolved benefits on its behalf. The basis of the agency agreements is ‗no change‘. David Wallace, Chief Executive Social Security Scotland told the Committee on 31 October:

―If we tried to make any of the agency agreements bespoke, we would move further away from the ―as is‖ position, which would add time and cost to the process.‖ (Official Report 31 October 2019, col 7)

5 allows universal credit claimants in Scotland to choose the housing costs element to be paid directly to

the landlord and also allows the universal credit award to be paid in two instalments across the month.

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Two other changes that have been under discussion for a number of years are the mitigation of the bedroom tax ‗at source‘6 and extending Scottish choices to provide split payments.7 Shirley-Anne Somerville told the Committee:

―We are determined to deliver split payments, but we are dependent on the DWP changing its IT systems to do that. I cannot ask the agency to make the changes—I cannot ask it to fix an IT program for me. That must be delivered by the DWP, because universal credit remains a reserved benefit. We have worked through our policy proposals and we are working with the DWP on what the system will look like, to determine what changes it would have to make to its IT systems.‖ Official Report 9 May 2019, col 23

The Committee may wish to discuss:

Progress in discussions with the UK Government about the prospect of legislative change and the practicalities of changing IT and procedures

How the project is drawing on HMRC and DWP expertise of the benefit and tax systems to identify the most „achievable‟ design for the pilot

Whether, were legislative change not achievable, the pilot model in option 3 would enable the key research questions to be answered

Whether the degree of legislative change required for option 1 means that the pilot could not start for a number of years

Theme 4: What the proposed pilot will test The short, medium and longer term outcomes sought are summarised in figure 4 on p.62 of the report. The primary outcomes to be evaluated from the pilot are reduction in child poverty, reduction in poverty and reduction in unemployment. The preferred option is outlined in table 1 above. This and the two other options developed are described in more detail in chapter 5 of the report. In summary, the preferred option is to test, over three years, two levels of weekly payment both of which vary by age. The lower payment ranges from £57.90 to £167.25 and the higher payment ranges from £120.48 to £213.59. Benefits and elements of benefits related to disability, caring, childcare and housing remain in place. The tax system does not change. None of the options propose changes to the tax system for the pilot. The interim report doesn‘t address funding, but this could have an impact on the design of any ‗full CBI‘ scheme. Such scheme proposals often rely on changes to the tax system. A scheme which changes the tax system may have a different impact to a pilot that doesn‘t.

6 Altering the housing costs element of universal credit to effectively disapply the bedroom tax. At the

moment the bedroom tax is being mitigated through provision of discretionary housing payments by local

authorities. 7 Split the universal credit payment between two members of a couple.

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The proposal is to run a pilot for three years. It may be that people would make different decisions about, for example reducing working hours or setting up a business, if they were getting a three- year payment compared to a permanent payment. The proposed options would leave the state pension in place. People would therefore get their state pension in addition to their CBI. However, for those getting pension credit instead of the state pension, the removal of the standard allowance would mean that the CBI would replace their existing benefits – either in part or in full. This would leave pensioners in very different financial positions depending on whether they got the state pension or pension credit (or what combination of those two benefits they receive). Other complications arise given the varied types of pension entitlement people can have. The report states that:

―the complexity of CBI interaction with the variations of the state pension entitlements means that steering group may investigate additional pilot options in relation to pensions.‖ (report p.27).

This is one example of how, by leaving many elements of the benefits system in place, the CBI will ‗top up‘ different levels of benefits. This may reduce the extent to which the pilot can test a ‗universal‘ level of basic income. The Committee may wish to discuss:

How close is the proposed model to “full CBI” Whether the behavioural response to a temporary scheme is likely

to be different to the response to a permanent scheme, and how this might affect the value of the results

Given the pilot will not change the tax system and will leave a large part of the benefits system in place, whether it will have a similar impact on poverty as a “full CBI”

How far does the pilot represent a simplification of the current system, given the amount of the benefit and tax system that will remain in place

What are the different options being considered for those over pension age (p.27 of the report) and how will this impact on the ability to answer the research questions

Theme 5: Consent by participants The steering group has not decided whether participation in the pilot will be voluntary or mandatory. The report discusses the issues involved at p.87. It states:

―A view has been expressed that if (existing) welfare benefits were suspended then receipt of a CBI could be effectively compulsory for those without their own financial means. This could imply that the opportunity to give informed consent to participate in the intervention is withheld for all members of the intervention group.‖ […]

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―even in the context of a policy of ‗no detriment‘, there may still be an ethical case to be made for or against compulsory participation in a pilot.‖

The intention is that no-one participating in the project will lose out either in terms of amount of money received during the pilot or the consequences for future payments after the pilot has finished. However this is difficult to guarantee absolutely – particularly with regard to future payments. Receiving a CBI payment could cause someone‘s benefit to stop8 which could lead to:

Losing passported benefits

Losing national insurance credits, which affects entitlement to future benefits

Migrating to universal credit when they re-claimed benefits The report does not mention any arrangements for how any disputes about the payment of CBI will be resolved. For example, there may be disputes about which parent/carer receives a child payment, about when someone meets residence requirements for the pilot, about access to any mitigation or top-up measures intended to ensure no detriment or about official error in administration of payments. The Committee may wish to discuss:

Whether it would be ethical to make participation mandatory if the project cannot absolutely guarantee „no detriment‟

Whether the legal complications of ensuring „no detriment‟ suggest that participation should be voluntary (and whether that in turn implies that the suspension of benefit entitlement would need to be done on an individual rather than geographic basis)

Whether, at the end of the pilot, DWP, HMRC and Social Security Scotland will automatically ensure individuals are not disadvantaged or whether it will be for individuals to seek benefits advice

What arrangements will there be to resolve any disputes participants may wish to raise about entitlement to or administration of the CBI payments

Camilla Kidner SPICe, 19 November 2019

8 This will vary by individual as those with housing costs (if on UC), childcare costs or disabilities will

still receive those elements of means tested benefits. It also depends on how CBI is treated as income.

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CBI Feasibility Study Steering Group - Update for the Social Security Committee 28th November 2019

This paper sets out key findings from the recent Interim Report prepared by the Citizen’s Basic Income Feasibility Study Steering Group. The report “Assessing the Feasibility of Citizen’s Basic Income Pilots in Scotland: An Interim Report” can be found at

https://basicincome.scot/2019/11/04/latest-report-on-basic-income-feasibility-

published/.

What is Citizen’s Basic Income?

1. There are many different models of CBI, varying in the level of payment, eligibility,and the degree to which it replaces and interacts with the existing social security andtax systems. The Citizens Basic Income Trust have defined a CBI as having sixessential criteria: sufficient to cover basic needs; paid regularly; unconditional; paidto individuals; non-withdrawable and non-means tested; and universal.

2. A recent review of CBI-like interventions found a large number of relevantevaluations, although many of these were from contexts that are not directlyapplicable to Scotland today. The review found that there was only a very smallimpact of CBI on the decisions people made about work participation, but there wasevidence that more young people stayed in education for longer. There was someevidence of positive impacts on some health and social outcomes, and widereconomic effects such as reduced health service use and increased businessactivity. However, many uncertainties remain about the likely impacts of CBI in acontemporary Scottish context and how feasible its introduction would be.

CBI Feasibility Work

3. In September 2017, the Scottish Government announced in the Programme forGovernment that it would support local authority areas to explore the feasibility of aCBI scheme. The Scottish Government confirmed on 21 May 2018 it would provide£250,000 over two years to support the undertaking of a feasibility study for a CBIpilot in Scotland.

4. The work is being undertaken in collaboration by four local authorities (City ofEdinburgh, Fife, Glasgow City and North Ayrshire), NHS Health Scotland, theImprovement Service and the Scottish Government. The group are considering therole of a Citizen’s Basic Income in reducing poverty by exploring the feasibility ofconducting local pilots. Specifically, this was to comprise “a feasibility business caseon piloting Citizen’s Basic Income (CBI) in Scotland including full details of theethical, legislative, financial and practical implementation of conducting a pilot as wellas its potential costs, benefits and savings”.

5. Across all agencies involved in this work, there is a strong desire to consider policyoptions that might reduce poverty and thereby improve the lives of the population.With the increasing interest in CBI as one such policy option, particularly in thecontext of a changing economy, the possibility of piloting was raised. However, thesubstantial uncertainties surrounding the impacts and feasibility of CBI generally, andpilots specifically, have led to this feasibility work.

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6. The steering group have been engaging with DWP and HMRC to explore thecomplexities surrounding the interaction of a potential pilot and the benefits system.

7. An early step in this feasibility study has been clarifying what we envisage by a CBI.There are many variations of CBI that have been proposed. We propose a short-listof models that could potentially be piloted. These would be paid regularly toindividuals (to the main parent/guardian for children and adults without capacity),universal for all people resident within intervention sites, and unconditional. Themodel of CBI and implications for other policies (especially tax policy) in a pilotscenario would be very different if CBI were being implemented across Scotland.

8. We have commissioned research from the Child Poverty Action Group on thepotential impacts of different CBI models on the incomes of different groups, whichhighlights the potential for absolute and relative detriment for some populationgroups, particularly if CBI was combined with withdrawal of existing benefits. Thiswork has been used to develop models that reduce this risk, although this cannot bereduced to zero.

9. We propose two levels of payment. The high level is based on the Minimum IncomeStandard

1 (MIS) produced by the Joseph Rowntree Foundation in order to have a

model that is likely to be able to substantially reduce or eradicate poverty. This wouldbe £120.48, £213.59 and £195.90 per week for people aged 0-15 years, 16 years topension age, and pension age respectively. The second, lower, level of payment ismore closely aligned with current benefit entitlements. This would be £84.54, £57.90,£73.10 and £167.25 for those aged 0-19 years, 20-24 years, 25 years to pensionage, and pension age respectively.

10. We do not want to propose models of CBI for piloting that will lead to direct financialdetriment for participants. This is very difficult to guarantee given that the currentsocial security system is designed to identify financial need and vary paymentaccordingly, whilst a CBI is designed to be universal. In order to achieve thisbalance, certain benefits would need to be continued alongside a CBI. These aredisability, work capability, housing and childcare benefits. However, the CBI in ourmodels would replace Income Support (Personal Allowance), Income-basedJobseekers Allowance (Personal Allowance); Income-related Employment andSupport Allowance (Personal allowance); Child Tax Credit (Family Element plusChild Element); Pension Credit Guarantee (Personal Allowance); Child Benefit;Carer’s Allowance (Basic Rate and Scottish Supplement); Universal Credit: Standardallowance for Single person; and Universal Credit: First child / subsequent childpayments.

11. Our models assume that the CBI would be included in the calculation of income fortax purposes but only be taxed if a participant’s total taxable income exceeded thePersonal Income Tax Allowance threshold. We are still clarifying whether CBIpayments would be counted as income for the remaining means-tested benefits inour models. The extent to which these benefits could be suspended in a pilotscenario are discussed further in the feasibility sections below.

1 Information on the Minimum Income Standard can be found at https://www.jrf.org.uk/income-

benefits/minimum-income-standards

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Political Feasibility

12. We have assessed the feasibility of CBI pilots in terms of their: political feasibility(incorporating strategic, psychological, viability and behavioural aspects); financialfeasibility; evaluability; and ethical considerations.

13. In terms of political feasibility, there are mixed views across political parties and civicsociety on the merits of CBI and marked variation in the aspirations and models ofCBI supported by different groups. A number of surveys have been carried out toassess public support, which find a fairly even split between those for and against,with many more in favour of a pilot.

14. Implementing a CBI, even in a pilot scenario, requires the full co-operation of a rangeof institutions including the Scottish Government, the DWP and HMRC. It may bethat primary legislation is required to undertake a CBI pilot given the currentarrangements and treatment of Scottish Government social security benefits.

15. Continued support and intervention by Scottish Government officers and Ministerswith the DWP and HMRC is important if sufficient progress is to be made todetermine the political feasibility of CBI pilots.

Evaluability

16. A key consideration of the feasibility of a CBI pilot is the extent to which it can beevaluated, and thus whether a pilot would provide useful learning on what theimpacts of a wider roll-out would be.

17. The primary short-term outcomes of interest for a pilot are a reduction in poverty,child poverty and unemployment. Secondary short-term outcomes of interest includecommunity level social and economic effects, improved health and wellbeing andimproved experience of the social security system.

18. We have devised a model for piloting a CBI that would allow us to observe a range ofimportant outcomes, but with important limitations. In particular, the wider economicimpacts and changes to taxes could not be evaluated in a pilot scenario but changesin individual outcomes (e.g. work, health and wellbeing outcomes and communitylevel impacts such as volunteering) could be measured. The potential widereconomic impacts are being modelled separately by the Fraser of Allander Institute.

19. We recommend a three-year intervention with an additional one-year preparatoryperiod would be required. A pilot study would need to involve the whole populationwithin a particular geographical location, of a sufficient size to facilitate community-level impacts.

20. There is a trade-off between the size of the community required to detect communityeffects, the desire to have a pilot site in each of the four participating councils, andthe cost of the pilot study. We welcome feedback on whether there is a policypreference for the inclusion of certain types of communities in intervention sites, e.g.affluent, deprived urban or rural areas.

21. Further advice will be sought on the ethical implications for conducting andevaluating a pilot.

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Financial Feasibility

22. Trialling an intervention, such as a Citizen’s Basic Income, is likely to involvesubstantial spending. It is attempting to meet the basic living costs for an entirecommunity for the duration of the pilot study. However, it is important to note that thedirect costs of the payment, and the administration costs of the trial, will be partlyoffset by savings in terms of benefit payments replaced and potentially additional taxrevenue as incomes are boosted, depending on the tax rules agreed.

23. Economic modelling has been commissioned to help establish for financially feasibledifferent models of CBI would be if rolled-out across Scotland.

24. The financial impact of a pilot is different in that tax changes would not be possible,and under pilot conditions the consequences for savings on benefits may not accrueto the Scottish Government.

25. The estimated potential gross direct costs of pilot options are between £76 millionand £304 million over three years at current prices. Additional administrative andresearch costs would need to be added to this. The potential savings from offsettingcurrent benefit spend will be estimated during the next phase of the project.

26. The Scottish Government have been asked to provide feedback on the costs data todate and the level of detail required in the financial analysis in the final report.

Next Steps

27. We are seeking feedback from stakeholders on the work done so far and are nowworking to deliver a final feasibility report with fewer uncertainties and clearerrecommendations on appropriate next steps.

28. Specifically, this will involve completion of the econometric modelling work toestimate the overall impacts on the economy of introducing a CBI; further work toestablish the legal options for CBI piloting; further negotiations with the DWP andHMRC to establish whether and how a CBI pilot could be facilitated; further work todetail an evaluation plan for any pilot that might take place; and further detail on theethical considerations and the degree to which these can be mitigated.

29. The final report will contain a recommendation about whether and under whatcircumstances a CBI pilot is feasible, how it could be undertaken, what it would beable to consider, and its likely cost.

Wendy Hearty - wendy.hearty@improvementservice.org.uk

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