Finance and Constitution Committee

Meeting date: Wednesday, September 13, 2017

Official Report 590KB pdf

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Social Security (Scotland) Bill: Financial Memorandum

Our next item is evidence on the financial memorandum to the Social Security (Scotland) Bill from the Scottish Government’s bill team. I welcome to the meeting Chris Boyland, who is the legislation and delivery team leader; Kevin Stevens, who is the senior finance business partner; and David—forgive me if I do not get this right—Signori.

It is Signorini.

Thank you for helping me out.

I also welcome James Wallace, who is the head of finance in the social security division. I thank you all for coming along to give evidence.

All members have received copies of the written submissions that the committee has received, along with a briefing from the Scottish Parliament information centre and a paper by the clerks, so we will move straight to questions.

The written submissions highlight the demand-led nature of the majority of devolved social security benefits. That will bring with it uncertainty and a new budget risk, which the Scottish Government will have to manage. There will also be new risks associated with the block grant adjustment mechanism as each benefit is devolved. How does the Scottish Government intend to manage those budgetary risks and ensure that it can meet the costs of providing the relevant benefits when they are devolved to Scotland? I would be most grateful if you would concentrate on the risks associated with the block grant adjustment process, because I know that Ash Denham wants to ask about the wider range of risks.

There is a risk created as a result of the block grant adjustment. The fiscal framework agreement between the UK and Scottish Governments sets out the arrangements by which the block grant adjustment will operate. The block grant is based on expenditure in Scotland in the year prior to devolution. If we were to devolve a benefit in 2018-19, the allocation would be based on the forecasts of the Department for Work and Pensions from 2017-18. An initial adjustment would be made to the block grant for the Scottish Government as a whole, which would be reconciled in line with the fiscal framework. The technical annex to the fiscal framework says that that reconciliation can be done in-year. If there were variations from the forecast down south and expenditure was on a different trajectory to the forecast, an adjustment could be made through the autumn budget in the rest of the UK. Adjustment could be made in-year, using supplementary estimates.

However, that creates a risk for the Scottish Government with regard to cash management in-year. If the forecasts were to track away from actual expenditure, we might require to pay more in cash in-year than had been transferred through the budget, and there would be convergence later in the year.

We are attempting to manage that risk through our forecasts. A number of analysts in the Scottish Government are working to prepare detailed forecasts of likely expenditure on benefits, which will be used to inform our view on whether the block grant adjustment is appropriate. The Scottish Fiscal Commission will prepare forecasts and the OBR will prepare forecasts, and the block grant adjustment will be based on those. It is a new risk and one that we are very alive to, and we are putting in place arrangements to manage it.

Kevin Stevens might want to add to that.

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We are building procedures and processes in different ways. We are considering three main areas. In the social security directorate, we have a finance hub, which will be staffed by appropriately professionally qualified people to manage the finances there. Central finance will work closely with that hub. We have good working relationships there. We are developing good working relationships with the communities analysis division to ensure that we understand the internal Scottish Government forecasts and that we embed new processes into the Government’s business-as-usual financial management. We have good working relationships with Her Majesty’s Treasury as well. There will also clearly be links to the work that the Scottish Fiscal Commission will do.

It is clearly complex, but we are setting up robust, transparent processes that enable all those areas that I outlined to work together productively.

You have a risk to manage and there will be a reconciliation process at some stage. Will you talk us through that? If there is an increase or decrease for the Scottish Government, that will need to work its way through the system and there will have to be a date at which that is reconciled.

In essence, the reconciliation process is described in the fiscal framework and its technical annex. When the fiscal framework was negotiated, the Scottish Government and the UK Government recognised that there was a risk of variations. I should say that it concerns variations for a particular reason. It relates to expenditure deviating from the forecast, not to the result of policy changes, demographic changes or divergences between the way that expenditure grows in Scotland and the way that it grows in the rest of the UK, which will need to be accounted for differently. It particularly concerns forecast error as a result of the way that the initial block grant adjustment is calculated.

Because the block grant adjustment is calculated in year 1 for the year preceding the devolution of a benefit, we know straight away that there will require to be an indexation adjustment to account for the movement in a year forward. However, we are also aware that the demand-led nature of the expenditure means that we are not working with an expenditure limit. We are working with expenditure based on demand, so it will be based on the factors that affect demand and we will require to ensure that we adjust the block grant accordingly.

Linked to that, the fiscal framework describes a number of new cash management and resource borrowing powers to deal with cash management and forecast error in particular. Those allow the Scottish Government to draw on the resource borrowing powers along with the Scotland reserve to ensure that we can manage its cash flow prior to the in-year adjustment—if we choose one—taking place through the supplementary estimate process down south.

Ash Denham has questions about the demand-led risks.

James, you just mentioned the factors that will affect demand. Risks to the public finances will clearly be created by managing demand-led expenditure on such a scale. Could you outline for us what you see those risks as being?

The main risks are policy and demographic. The financial memorandum goes into that in detail. The way in which population changes in Scotland—the ageing population—could encourage greater growth in some of the devolved benefits over the rest of the UK.

On the policy differentials, the Scottish ministers have a desire to change policy in some areas. Some of those are outlined in the financial memorandum. That will cause divergences over time from the UK Government’s position. Those differences will not be accounted for through the block grant adjustment; it will be for the Scottish Government to make up any shortfall with its own resources through the spending review process and the annual budget process.

For balance, I should add that there is also the possibility of a variance downwards. It is not necessarily the case that expenditure will rise above comparable UK spending; it could also fall below UK spending, depending on policy and demographic differences. That would in effect release money into the Scottish Government budget.

You have mentioned issues such as the ageing population and we can, to a degree, see what that might be in future. You would also know the likely impact of a policy change before it was made. Is there anything in the financial memorandum that you would see as being less predictable?

There are difficulties with prediction. There is always an inherent uncertainty in forecasting. Our analyst colleagues are working through that to understand where the variances will occur and how we can improve our modelling to ensure that we are in the best position to forecast expenditure.

There will be occasions when it is difficult to forecast, particularly in some of the areas around the uptake of benefits. There are what I would describe as incomplete data sets, and when we have incomplete data sets, it obviously affects the validity of the forecasting that we can do. Again, our analyst colleagues are well aware of those limitations and are working on new models to enable them to either gather the data or get around the data limitations.

Kevin Stevens might have something to add on forecasting.

As the social security system in Scotland diverges from that of the UK, assessing the impact of changes to take-up in the Scottish system will be a new area and an inherent source of uncertainty. That is why the analysts are developing their capability to produce models to forecast the effect of those changes, while acknowledging that the evidence base for take-up rates in the existing system is limited, as James Wallace says.

Ivan McKee has a supplementary.

I want to explore a bit more on that line on the demographic profile. Correct me if I am wrong, but my understanding is that the way that the BGA works on the tax side—I assume it is the same here—means that an adjustment is made to take account of overall population.

Yes.

Therefore the issue that you are talking about in demographics is the profile of the population within the overall population. You are talking specifically about the ageing population, or the lack of working age population. Is there a risk to population growth specifically from immigration that could have an impact? Would there be an opportunity if Scotland had a different immigration policy post-Brexit that would allow us to grow the working age population that would give a significant advantage in terms of the way in which the BGA is calculated? Just looking at the way in which the numbers are calculated and how they flow through and not commenting on the policy as such, is that correct?

As far as I am aware, no specific modelling has been done on the scenario that you describe. My understanding would be that you are correct. If the population was to grow, it could increase tax receipts in the wider economic sense, which would put more receipts into the Scottish consolidated fund, which would make more funding available to pay for benefits.

However, population growth should be accounted for in that way through the index per capita model. Kevin Stevens might want to comment on that.

That is a fair comment. I would also highlight that the benefits that are being devolved as set out in the financial memorandum are related to disability and age; they are not primarily related to economic activity. Our focus is very much on understanding the behaviours of the benefits that are being devolved into the Scottish system.

In the scenario that the working-age population as a percentage of the total population grew, meaning that the elderly population as a percentage of the total population reduced, is it correct that there would be not only increased tax take but also a benefit from the BGA specifically on social security?

Yes.

We will move on to questions about set-up costs.

I want to know whether I have understood the numbers correctly. It is highly likely that I have not and the panel can correct me.

As I understand it, the projected set-up costs for the new Scottish social security agency are estimated at £308 million over four years. In the fiscal framework, the UK Government agreed to make a one-off transfer of £200 million, a much smaller amount. The estimated running costs of the agency are about £150 million annually, again exceeding by a considerable margin the £66 million to be transferred annually from the UK Government.

Are those numbers broadly correct?

Yes, they are.

Why are the numbers that the Scottish Government gives so much greater than the amount of money to be transferred from the UK Government?

Others have commented widely on the fiscal framework. In the Scottish Government’s view, it represents a fair financial settlement.

The total was not what the Scottish Government asked for. The transfers were only ever intended to represent a share of implementation and administration costs. They were never expected to be the total amounts. There is not a relationship between the two sets of figures, in the sense that one should cover the other.

Okay.

That was not the way that the fiscal framework was designed. We believe it is a fair financial settlement. The £200 million on implementation and the £66 million on administration, which are for all of the Scotland Act 2016 powers and not just social security, can be topped up by the Scottish Government’s own resources to enable it to implement and run the system for social security in Scotland.

That is very helpful. The margin between the two sets of figures—£308 million versus £200 million and £150 million versus £66 million—is to be met from within the Scottish Government’s own budget.

Yes, it will require to be met in that way.

I have an unrelated question about what is not included within the financial memorandum—unless I have missed it, in which case forgive me.

I could not find anything in the financial memorandum about costs associated with the proposed charter on social security rights. Is that correct?

It is correct to an extent. The agency running costs detailed in the financial memorandum are based on the outline business case for social security in Scotland published by the Scottish Government.

The outline business case analysed the costs from DWP in order to build the current activity-based model. DWP supplied us with detailed activity-based information on cost, from which we built a model to work out in a robust evidence-based way what an agency in Scotland is likely to cost. Within those costs would be the cost of reviewing the charter. We do not believe the cost to be significantly above the material threshold that would require us to update the figures.

That puzzles me, because one of the principal features of the Social Security (Scotland) Bill is that it seeks to put devolved Scottish social security on a human rights footing. One of the most important human rights is the right to have your rights enforced in a court of law. It puzzles me that there has been no thought given to the extent to which there will inevitably be increased litigation costs that will have to be borne by the Scottish budget because of the way that social security is being put on a human rights footing in the bill.

I do not understand why that is not above what you have described as a material threshold.

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Our current view is that the costs will not be significant, but let me expand on how we will take forward our work on costs. As I said, we used the current activity-based model to set out the costs, as recorded in the financial memorandum. The outline business case goes on to discuss the future activity-based model, which our analyst colleagues are developing. At the moment, the best information that is available is historical information. We are conscious that we will do things differently from how DWP does things and that there might be variations in costs as a result. Our colleagues are working on a future activity-based model, which maps out the to-be systems and processes of a new agency for Scotland. That will enable us to wrap cost information around those future systems and processes. The work might flush out variances, the likes of which you described. However, currently our view is that the costs will not be significant.

We have started to talk about the information that the DWP has provided. Patrick Harvie has a specific question about DWP estimates and costs, which arises from the paper that the Scottish Parliament information centre provided to us.

The activity-based model that James Wallace described is the basis for the Scottish Government’s estimates of DWP costs of administering devolved benefits in Scotland. I want to make sure that I understand the matter. Is it about calculating a cost that the Scottish Government will provide to the DWP for its continuing administration?

No, it is not.

So, are we talking about the period after the period of DWP administration?

The DWP provided us with detailed cost information, which we used to build a model for a social security agency for Scotland. We used that historical information on how much administering benefits costs the DWP as the basis. We applied it to the Scottish situation to enable us—

So, this does not at all relate to what DWP will continue to administer in the short term.

I am sorry. Yes, absolutely—if you put it that way. The cost information that the DWP has supplied relates to the DWP’s operations; if the DWP’s operations continue, an element of those costs will relate to any benefits that it continues to administer.

Has the DWP agreed with the estimate?

Do you mean our estimate?

Has it agreed with the estimate that you have made?

I do not believe so.

Is it not important to get agreement on the costs of administration?

Do you mean for the agency in Scotland? I am sorry. We have not used the information to estimate funding flows from the Scottish Government to the DWP. It is the DWP’s cost information; I assume that that activity will continue to cost what it currently costs. It does not relate to funding flows between the Scottish Government and the UK Government.

Why, as a percentage of the overall benefits that are administered, is the estimate of the Scottish agency’s running costs lower than the DWP’s running costs? You said that currently the DWP’s administration costs are 6.3 per cent of the value of the benefits that are administered, and you estimate that they will be 5 per cent for the Scottish agency. Why can you say with confidence that the Scottish agency will have lower administration costs?

The analysis is intended to show that we are within a margin of error. We are forecasting here, so there are margins of error involved. We intended to show that the method by which we estimated the costs of the agency in Scotland is robust and that costs will be comparable with those of the DWP; I do not think that we intended to show that our costs will be lower than those of the DWP.

The future activity-based model relates to that. Those will not be the final costs of the agency in Scotland; they are our current estimates, based on our current design assumptions. As the programme to implement social security in Scotland matures and decisions are taken on how we will administer benefits and the exact set-up of the agency, processes might change and costs will have to be reviewed.

Can you say anything about the nature of the administration that the DWP has been doing and which will be done in Scotland in the future? For example, does any of what we are talking about relate to benefits that are currently administered by way of paper records in warehouses in London, which will need to be separated according to geography and moved up here? Currently they are stored by name, so there is not a separate batch that can easily be moved to Scotland.

I will bring Chris Boyland in on that point.

The industrial injuries disablement benefit is entirely paper-based. I do not know where the warehouse is, but I am confident that the administration is paper-based.

Is the intention to move the paper and digitise it in the process or to administer it differently?

We do not have a decision on that. Before we do anything, we would need to identify the records that relate to Scottish recipients. That sorting job would be the first—and, arguably, the most important—part of that process.

I presume that the DWP would have to do that sorting because the warehouse is the DWP’s, wherever it is.

I am not sure that the DWP would have to physically provide the staff to do that. I cannot be certain on that point.

The answers leave me a little unclear as to how the Scottish Government can be confident of a lower administrative cost, with the scale of the benefit being administered, if even principal decisions—such as how it is going to be done physically—have not been made yet.

The costs are just indicative, at this stage.

We have done a detailed piece of analytical work that took the DWP’s database and built the current activity-based model from the data that it provided. Our analysts looked at details such as caseload and new cases coming into and leaving the system, and built a granular understanding of how the flows might work for the different benefits. We made assumptions about corporate costs, such as running costs, audit costs and internal audit costs, and built up a picture of what we think it would cost the DWP to administer the current system in Scotland. That was done because the DWP does not provide separate statistics on Scottish running costs.

That is the whole problem.

We did that exercise and overlaid assumptions on how the system would run in order to provide a broad indication of figures and give a good benchmark of what it might cost in Scotland.

The important point moving forward will be the future activity-based model. Service design experts on the social security programme are designing new fit-for-purpose processes to support a new organisation. We have analysts in the communities analysis division who are building detailed models to model the future. The links between the service design and the analytical piece will enable us to understand how much it will cost to administer the system in the future. However, we know that our current assumptions are reasonable because they broadly tie in with what we estimate it costs to run the system now.

Okay. Fingers crossed. [Laughter.]

The financial memorandum has £190 million for IT set-up costs. In some previous projects in Scotland and the UK, IT costs have spiralled out of control, so it is important that that figure is robust. Can you give some indication of what the £190 million includes?

It is important, first, that the financial memorandum makes it clear that a number of decisions on detailed design are still to be made. Costs will vary materially as a result of decisions on what we buy, and how and when we buy it. The Scottish Government wishes to provide the committee with as much information as possible on implementation to enable scrutiny of costs, but it is important to mention the caveats within the financial memorandum.

The figure of £190 million is based on a specific set of assumptions about our designing and building our own IT system for a social security agency in Scotland. That may not be the method by which we do it; we may reuse, as appropriate, or buy customisable off-the-shelf packages, which may push costs down.

To come to that figure, our colleagues within the social security programme scoped out exactly what system they would build—or possibly build—and wrapped costs around that. We then took the Treasury’s green book—“The Green Book: Appraisal and Evaluation in Central Government”—and applied the appropriate optimism bias to the cost figures that our colleagues presented. As the process moves forward and decisions are taken about the detail of the system’s design, more information on IT will become available and we will ensure that that is supported by a business case that follows the green book, the five-case model and the best standard methodology. We will apply optimism bias where necessary and the appropriate amounts, as per the green book, to account for the possibility that costs may rise beyond those that were in the initial business case.

Kevin Stephens may want to add to that.

Within the programme, there will be business cases at project level. We will be happy to share those business cases with the committee and we will publish them in due course to provide the evidence base for spending decisions.

The Minister for Social Security wrote to the convener of the Social Security Committee last week with a couple of things, one of which was a relatively brief update on IT implementation for social security. If it would be at all helpful, we could arrange for committee members to receive that as well.

Is the assumption that you will build the system in-house and not outsource it?

The cost in the financial memorandum was arrived at on the assumption that the system will be built in-house, but no decision has been taken within the programme on what we will do in practice. Different parts of the system may be built in different ways.

You do not have a system specification or a business case.

At the moment, we do not. We are not at the stage of spending money on the detailed design of IT systems, but there will be a business case for some of the benefits that are about to be procured. The wave 1 benefits were pushing towards creating a system that would enable us to administer those benefits, and there will be a business case for that.

I do not understand how you are able to arrive at a figure if you do not have a system specification or a business case, because those would provide for the component parts of any system. The detailed costs—even the high-level costs—would derive from those.

You are correct in saying that what we spend on IT will be driven by a detailed system specification and a business case. However, we wanted to give the committee an indication of the likely costs, so we made a number of assumptions for a system that would be built in-house and costed those using a broad design for a potential system. We wrapped costs around the potential components of the system and applied optimism bias and contingency as appropriate in order to come to the £190 million cost.

Your line of questioning is about why the financial memorandum is heavily caveated with regard to the implementation costs. The reason why is that there will continue to be uncertainty as the programme moves along and defines precisely what we are going to build or buy.

Convener, it may be helpful if the panel were able to write to us, providing more detail of how the figure of £190 million was arrived at. An awful lot of assumptions seem to have been made.

Okay. Willie Coffey has questions on the same area.

A substantial figure has been set aside for the IT procurement—it looks to be more than half the total implementation cost for the entire programme. When must the system go live, and where are we now? Are we at the pre-specification stage? That seemed to be what you were saying to Mr Kelly. When does the system need to be live?

Different elements of the system will need to be live at different times. The Cabinet Secretary for Communities, Social Security and Equalities has announced the wave 1 benefits—the carers allowance supplement will be live by summer 2018, and funeral expense assistance and the best start grant will be live by summer 2019. Systems will be required to administer those benefits within those timescales. Timescales have yet to be announced for further benefits, but I imagine that elements of IT will be required to support those, as they are announced.

11:30  

When are we going to start the process of speccing the requirements so that the system is ready in time for the first benefit?

I invite Kevin Stevens to describe our programme’s agile methodology, which might assist with that.

The low-income benefit project is undertaking a discovery exercise to scope out what the requirements might be for that. It is important to say that, fundamentally, we are taking a phased approach to the development of the different parts of the system, in order to de-risk the programme more generally—it is not a big-bang approach. If we look at the phasing of the wave 1 benefits, the individual components that are required will be developed in due course—we are gathering the requirements in a discovery phase. Does that help?

Sort of, but it does not really answer the question about when the process to spec what we need will begin, so that it is ready for summer 2018. This is September.

The work is on-going at the moment in the discovery phase.

But is the speccing of requirements that Mr Kelly referred to under way at the moment? One of the fundamentals of any software development is specifying the requirements, understanding what those are and sticking to those and delivering them.

The first Scottish benefit that will be paid is the carers allowance supplement. That will be paid in the form of two roughly six-monthly payments each year, which between them will account for a year’s worth of the carers allowance supplement. My understanding is that that benefit has been designed in that way so that it can be delivered through the Scottish Government’s existing SEAS—Scottish Executive accounting system—payment system. The system and service design requirements for the first benefit are quite deliberately intended to require less in terms of new build, new systems and so on.

As Kevin Stevens said, the service and system design for wave 1, which is due in 2019, is on-going. The work is going into a discovery phase and it will go from that to the alpha build, the beta build and so on. If the question pertains to the first payments—the carers allowance supplement payments—and the system requirements work for that, that benefit has been designed in order to make it as manageable as possible within the envelope that we can currently deliver with our own systems without needing new build.

The financial memorandum says quite clearly that the number of transactions that the Scottish Government will carry out in a week with the new system is more than we currently carry out in a year. We are anticipating a huge volume of transactions. Are you confident that the system will be able to cope with the volume that will come through it to be processed?

If I am right in understanding what has been said, most of that will not happen until 2019.

Perhaps beyond 2019. As Chris Boyland said, the initial wave 1 benefits are on the smaller side relative to the number of transactions that are being devolved as a whole. Work is on-going to look at a payment platform that will ensure that we have a robust system to make payments to the people of Scotland. It is viewed by the programme team as being an absolutely critical factor in our work. We must ensure that payments go when we say they will; there cannot be failure there. The work has started, we are looking at a number of options for systems, and that work will develop over time to ensure that we have a system in place when we need it. We are using existing systems for the likes of the carers allowance supplement. We plan to pay that through the SEAS payment platform because we know that it is a robust and reliable system, and that will ensure that we are at no risk of not meeting our payment dates.

Before I bring in Neil Bibby on the view of the Convention of Scottish Local Authorities, I think that James Kelly—whose point Willie Coffey followed up on—is right: it would be best if the Government were to write to us to lay out, over the period of the roll-out of the programme, what it knows about the procurement process and the various stages that will be required between now and the point at which the benefit becomes its responsibility. That would be helpful. I recognise that, technically, that is not what the bill is about—it is an enabling bill—but although the information that has been requested goes beyond the support that will be available for the bill, the questions that have been asked are still legitimate.

In its submission, COSLA states:

“on the figure of £21m for local delivery, it is unclear what assumptions have been made and what might be in or out for local delivery, given the levels of uncertainty that still exist. More detailed scoping of local delivery services and costings will be needed to understand what is actually required to deliver the principles outlined in the Bill”.

What has been done, and what will be done, to address councils’ concerns?

We are currently engaged in a programme of engagement activity with all of Scotland’s local authorities. I think that we are at the point at which local delivery colleagues will have visited 16 out of the 32 authorities, and the intention is to continue that engagement until we have discussed matters with all of them. So far, we have made the point that the agency’s local presence will take the form of agency staff, not local government staff. We are talking about adding a new agency resource into local government areas rather than rebadging existing local government staff resource.

We have been talking about local government areas partly because that is a reasonably easy way of describing the locality part of the process. I think that we have made it reasonably clear that we are not necessarily talking about using local government premises, sites or facilities in all instances. The minister has said that we intend to base our local presence in places that people already visit. Those places might be local government premises or NHS Scotland health and social care premises. The decisions on those matters will be taken on an area-by-area basis, depending on what we believe will work for each specific area.

To an extent, it is useful to talk about local authorities, because local authority areas are a good way of breaking up the country and describing what we mean when we talk about a specific area, but we do not intend to use local government facilities in all cases. In each case in which we use local government facilities, there will be recharging—the Scottish Government will meet any costs on the local authority that are incurred as a result of us occupying or using its premises. However, until we have an area-by-area breakdown and a model for each area of what we will be putting where, it might not be possible to interrogate the impact on each local authority in detail.

Murdo, do you have a follow-up?

No.

Patrick Harvie wants to ask about the potential value of savings in other budgets and how that will be accounted for.

The financial memorandum does not address only the immediate impact of the bill; it touches on the longer-term operation of the newly devolved powers. However, it seems to me that, for the most part, it is still cast purely in terms of the additional costs that will come from paying benefits. How and to what extent does the Scottish Government intend to estimate the additional value to the public purse of paying benefits through reducing the demand on other public services, such as the healthcare system? I am talking about attaching a value to certain benefits rather than just financial costs.

One example would be the proposal that we made, and to which the Government seems to be open, for a young carers allowance, which would be specific to young carers. If that is delivered well and it achieves its objectives, it should enable young people who are also carers to get greater value from their education and remove some of the barriers that they currently face to that publicly funded education service achieving what the money is being spent for. How, and to what extent, will the impact of benefits on public finances or the effectiveness of spending public money be assessed in terms of more than just the extra financial cost of paying benefits?

I will start with that and then bring in Kevin Stevens. You raise a good point. When our colleagues prepared the outline business case for the agency in Scotland, we began to look at that issue. The OBC goes into detail on the marginal utility gained as a result of social security expenditure. For every pound that we spend in the lower income deciles, a greater marginal utility is gained by those individuals. The OBC details that and attempts to quantify that benefit in a weighted way to show the benefit of social security expenditure in Scotland.

In more detail and more specifically, related to that are the points that you raise about how we quantify the impacts on the other areas of the public sector. There is an element in the fiscal framework where we describe how we will do that. The fiscal framework covers the interaction between the UK public sector and the Scottish public sector. It accounts for spillovers where we make a policy decision that has an impact on the rest of the UK and how marginal savings that might be gained might be transferred between the Governments.

The outline business case used a multi-criteria analysis framework to weigh up the relative merits of the different options for the design of the agency. Factors such as dignity and respect, and implementability and risk were used in the scoring process. I imagine that when on-going decisions are made on the programme, that kind of framework will be used. When we then transition into measuring what we call the measurable improvements that the programme is delivering, we will have a measurable improvements strategy that will ensure that the money that is spent on the programme is aligned with the measurable improvements that are being delivered, so that we can assess the value for money of the programme.

As Patrick Harvie said, it is important to bring in the wider societal impacts so that we are not just setting up a payments platform to pay money to people but are setting up an agency that will treat people with dignity and respect. Finding wider measures to demonstrate the measurable improvements and the benefits that the agency is delivering will be important.

That is an on-going area of thinking.

Yes. There is a role on the programme for someone whose job it is to bring this kind of thing together. It feeds into the business cases and the socioeconomic case of the programme business case. By including financial and non-financial measures, we can establish the wider value for money of a particular project or initiative.

I think that I have caught everybody who wanted to contribute and ask questions. I thank the Government bill team for coming today. We will reflect on the evidence that you have provided to us and we will write in due course to let the lead committee know the outcome of our discussion. I am grateful to you for coming.

11:44 Meeting continued in private until 11:51.