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First, let me be clear that the draft budget sets out our plans to invest £69.7 million to support the scaling up of employability support to parents in 2023-24. That represents a reinstatement of the in-year budget reduction that the Deputy First Minister announced in the emergency budget review.

Although the decision to take £53 million as a saving in 2022-23 was not taken lightly—the Deputy First Minister laid out the incredibly difficult backdrop to having to make that emergency budget review—it was taken in recognition that employability interventions take a bit longer to have an impact and were unlikely to result in immediate increases in income for people. Although the decision has meant that services were unable to begin scaling up support in 2022-23 as we would have liked, the impact of employability was not factored into the modelling of the interim targets, for example, in recognition of the fact that there would be a time lag between someone entering support and their sustaining employment.

It was also noted in the published annex that the impact of employability as set out in the plan was quite optimistic, with outcomes potentially being achieved later and at a slower rate. I guess that a lot of that depends on the labour market and the backdrop of some of the other pressures and challenges in terms of reserved benefits for people moving into work. However, the reinstatement of that resource now means that that employability work can scale up as was anticipated in the plan.

It is fair to say that there has been a huge response to the widening of the Scottish child payment eligibility criteria. Clearly, that is a good thing, but it has meant that the staff at Social Security Scotland have been working extremely hard to ensure that people’s payments are processed as quickly as they possibly can be. I pay tribute to the efforts that they have made.

I do not know whether Kevin Stevens has any further figures that he can give on the processing of Scottish child payment applications or whether we need to come back to the committee on that.

Thank you, convener, for inviting us to the committee meeting today.

We have again faced a very challenging fiscal context in which to set the budget. We are all aware of the impact on our economy of the United Kingdom Government’s mini-budget and the effect of rising prices as a result of Russia’s invasion of Ukraine. I am therefore pleased that we have continued to prioritise our resources towards taking steps to tackle child poverty alongside our other priorities of protecting public services and investing in the transition to net zero.

Within my portfolio, in 2023-24 we are committing £5.2 billion in social security and welfare payments, which will go directly to more than 1 million people in Scotland. That money will, of course, help low-income families through the cost of living crisis, support older people to heat their homes in winter and enable disabled people to live full and independent lives. That includes investing £442 million in the Scottish child payment, which is the UK’s most ambitious child poverty reduction measure and which we increased to £25 per child per week in November 2022, when we extended the payment to all eligible six to 15-year-olds. It is estimated that, in 2023-24, around 387,000 children will be eligible.

That investment underlines our commitment to delivering on our national mission to tackle child poverty, using all the powers and resources available to us to support families as far as possible and to tackle the underlying causes of inequality. It sets out how we will deliver on the priority actions that are set out in “Best Start, Bright Futures—Tackling Child Poverty Delivery Plan 2022-2026”, which was published in March 2022, with a key focus on long-term parental employment support, increased social security and measures to reduce household costs.

Across social security, our total investment is over £770 million above the level of funding that was forecast to be received from the UK Government through the block grant adjustments. That money will go directly to the people of Scotland who need it most.

We uprated the Scottish child payment by 25 per cent in November 2022, when we extended it to six to 15-year-olds, and we will uprate all other Scottish benefits in line with inflation—by 10.1 per cent in April 2023—at a cost of around £430 million. That uprating includes benefits for which that is a statutory requirement as well as those for which uprating is discretionary, in recognition of the difficulties that are being faced by many people due to the increased cost of living.

We are investing over £520 million to deliver devolved social security in Scotland in 2023-24, to ensure a simplified and compassionate system that will treat everyone with dignity, fairness and respect, and to provide people with an improved experience.

In February 2023, subject to the Department for Work and Pensions providing the necessary data, we will launch our new winter heating payment, with a stable, guaranteed annual payment of £50, which will help around 415,000 low-income individuals with their heating expenses each winter.

We are also investing £41 million—including in local authority administration—in the Scottish welfare fund, while delivering an independent review, to provide essential help to the most vulnerable people in our communities.

The budget also recognises the important role that carers play in supporting people with disabilities or long-term conditions. We will invest over £420 million through the carers allowance, the carers allowance supplement and the young carer grant. Alongside that, we will begin to roll out Scottish carer’s assistance by the end of 2023, with full national introduction in the spring of 2024. That will deliver an improved service that is designed with carers to meet their needs and in line with our principles of dignity, fairness and respect.

Within the budget, we are also making available £752 million for affordable housing as part of the wider planned investment of over £3.5 billion over this parliamentary session to deliver more affordable and social homes. We are making available £85.9 million for discretionary housing payments to support tenants who are struggling with their housing costs and over £12 million to support continued progress of actions in our ending homelessness together action plan, which focuses on homelessness prevention, rapid rehousing and housing first.

We are investing over £70 million in our Ukrainian resettlement programme to ensure that those displaced by the illegal war in Ukraine continue to receive a warm Scots welcome and that they are supported to rebuild their lives in our communities for as long as they need to call Scotland their home.

In conclusion, against the backdrop of a challenging economy and an on-going cost crisis, the budget, and my portfolio within it, continue to seek to prioritise action in our three main areas, including tackling child poverty.

I thank the committee for its pre-budget scrutiny and I look forward to taking your questions.

On your first point, yes. There was a scaling up of staff. There was an expectation that the number of applications would increase and, therefore, there was additional gearing up towards that. As I said, we will get those figures to the committee.

On the child poverty targets, I go back to the cumulative impact assessment, which we published in March. As you know, it projected that around 17 per cent of children will live in relative poverty in 2023-24. That is based not least on the impact that will be made by the Scottish child payment, which we have just discussed. We have done absolutely everything that we can, in a very difficult situation, to build into the plan the best chance of hitting those targets.

I highlight the current economic climate, much of which is outwith our control, including the impact of the cost of living on household budgets. That includes the challenges that people currently face—including those in work, who are not even entitled to the Scottish child payment. That is not the ideal backdrop against which to try to reduce levels of child poverty. Despite that, however, we are doing absolutely everything that we can, and we remain firmly committed to delivering on those targets.

As members will know, we will not know for sure whether the targets have been met until official statistics are available in March 2025. However, as I said, the plan is the right one, and that remains the case.

As Pam Duncan-Glancy and other members will be aware, however, the plan cannot take account of economic circumstances in the United Kingdom or decisions that are made by the UK Government. One example is the freezing of the local housing allowance rates—yet again, for a third year running—at 2020 levels. That is another real-terms cut, and I fear that it will exacerbate the situation for people in Scotland who are renting. In addition, it will have a negative impact on homelessness.

Something such as that has an impact on child poverty levels, but we cannot control it. That is just one concrete example—there are many others—of where decisions that are made elsewhere have an absolute negative impact on the plans that we have in place.

As you know, the welfare fund is being reviewed, and we did not set any restrictions on the review in terms of the recommendations and suggestions for change that might come out of it. That includes how the fund is delivered.

You will be aware that some of the issues that sparked the review concern inconsistency. For example, in some local authorities, the fund was underspent, while in others it was overspent. All those issues are being looked at as part of the review, and we should probably wait until the review is concluded. I am happy to come back to the committee once we see the recommendations.

Local government was made the distributor of the welfare fund very much with a view to its knowing local needs and being able to respond to the needs of local people who require crisis support. That would be more difficult for a national agency to do, for example, with regard to discretion in the use of the fund. As I said, however, we probably need to wait for the outcome of the review, which will be published this spring. As I said, I am happy to come back to the committee once we have those recommendations.

No agency could ever say that it was going to get absolutely every decision right first time within a certain timescale. What we can say about Social Security Scotland is that the customer satisfaction rates are very high indeed, which is in marked contrast to other agencies, particularly the Department for Work and Pensions.

The point about reconsideration is important. We are trying to ensure that, where possible, the agency gets the decision right first time, although that is not to say that there will not have to be some reconsiderations. That is about ensuring that all the information is available, which takes time. That information sometimes comes from external agencies, so it is not all in the gift of Social Security Scotland staff.

When we consider the volume of applications that have been received in quite a short space of time and the increase in the number of benefits and supports for which Social Security Scotland is responsible, we see that there has been a huge growth in the organisation. We need to look at the situation in context. Yes, some people would have wanted a decision sooner, and some are not happy and there has to be a reconsideration. Nonetheless, for the overwhelming majority of customers of Social Security Scotland, there has been a very good service and, as I said, customer satisfaction rates are very high indeed.

We should not be complacent, and we should always look at these things and engage with the feedback loop from those with lived experience. Again, Social Security Scotland is very good at checking regularly with those who receive support to ensure that any further improvements that can be made are made.

No, I do not think that that is the focus. Again, however, we can come back to the committee with more detail on the timeframe and the scope of the review.

I could probably spend a good half hour talking about local government finance, and we had a long discussion at the Local Government, Housing and Planning Committee on Tuesday about that. Suffice it to say that, in the context of total Barnett consequentials being only £800 million, the £570 million that has been allocated to local government is tough and challenging for local authorities, but, in that context, perhaps that is not an unreasonable settlement.

The Accounts Commission verified that figure of £570 million. It also pointed to reserves and said that local authorities should keep under constant review priorities for the use of those reserves. Some decisions around the priorities of individual local authorities might have been taken some time ago, and, in the midst of a cost of living crisis, those should always be kept under review.

The other thing that the Accounts Commission pointed to was reform. I mentioned the need for us all to look across the public sector, particularly in relation to years 3 and 4 of this budgetary cycle and at the projected finance that is coming down the line from the UK Government. This is the time to make moves towards reform, because years 3 and 4 will be very challenging.

We are trying to give local authorities maximum flexibility to make decisions on where they spend their money by removing as much ring fencing as possible. It will then be down to each local authority to decide where it spends money and to support revenue-raising opportunities; of course, local authorities have complete freedom around council tax levels. I go back to the exchange that I had with Miles Briggs about the discrete areas of funding that we would want local authorities to continue to spend on in relation to those joint priorities.

Those are not easy things to balance, but we hope and expect that local authorities see the value for money in the third sector investment that they make. The many projects that are delivered are very good value for money, and I think that local government recognises that as much as we do.

We will continue to have those discussions with local government and the third sector, but the context and background to the issue has to be acknowledged.

We try to be as transparent with information and figures as we can be, and we can certainly look at whether there is more that we can do in that space.

Let me first take the issue of the affordable housing supply programme budget. We had a bit of an exchange about that at the Local Government, Housing and Planning Committee on Tuesday, so I hope that Miles Briggs will not mind me going over some of the key points on it again.

Let me be clear that the £3.5 billion for the affordable housing programme remains £3.5 billion. There is no change to that, but the profiling of it was always going to ebb and flow depending on the availability of resources.

The capital resources that are available to us are very much restrained by the UK Government’s decisions. The capital availability remains at the same cash level, but there has been a 3.4 per cent real-terms reduction in our UK Government capital allocation between 2022-23 and 2023-24. Context is important. If you add into that the impact of high inflation, that means that every pound that is available for the affordable housing supply programme in the coming year is worth less than it was last year and much less than it was the year before. Context is important, but the £3.5 billion remains the same.

On the funding that is available for the coming year, there is a £37 million reduction on the previously published capital spending review figure, which is 4.7 per cent. However, we are taking steps to mitigate that because we know the importance of the programme. We are doing that in three ways. First, additional financial transactions are available to the value of £17.6 million. Secondly, we have a £15 million transfer from the net zero budget to help with net zero heating systems in the affordable housing supply programme. Thirdly, we will have additional money from the charitable bonds receipts. Taking all of that together, the gap will be reduced to a very small figure, if anything at all.

Actually, the main problem is inflation. I met Shelter and other colleagues at the homelessness prevention and strategy group meeting yesterday, and they all said the same: that the major problem is inflation and therefore the value of that money. The Scottish Federation of Housing Associations said exactly the same and that the ability to deliver projects on budget is really constrained because of inflation and interest rates.

On homelessness, more than £12 million is included in the budget to support the continued progress of actions in our ending homelessness together action plan. On top of the homelessness funding provided through the local government settlement, we are investing £100 million up to 2026-27 to continue to transform the homelessness system. That is in addition to a budget of £30.5 million, which is an increase to local authorities for homelessness prevention activity in 2023-24. That funding will be distributed using a revised formula that better represents the drivers of need in homelessness and which recognises local authority efforts to reduce the use of temporary accommodation.

Miles Briggs will be aware of the work that is going on with the task and finish group, of which Shelter is a co-chair, in order to give me some recommendations around what needs to change. The prioritisation of funding and, in particular, grants available to the third sector needs to pivot towards two clear priorities: first, temporary accommodation and reducing the number of people in temporary accommodation, and, secondly, the prevention of homelessness. I think that you will see a far sharper focus on those priorities with the funding that is going in.