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The aspects around whether there will be a saving will be dealt with by the learning that comes out of work within the agency, and the wider Government, that demonstrates that changes need to be made to policies, practices and procedures. The budget process and spending review process are exactly where those types of learning points will materialise in changes to budgets. Those will be demonstrated in the publications that will come out in due course.

One point on which we will be happy to provide further details is the operating costs of the agency compared with, for example, those of the DWP. Those costs, which we continually challenge to ensure that the agency is as effective as possible, are very good in comparison with those of the DWP. There is no issue around the operating costs of the agency.

I ask David Wallace to come in on that.

I do not think that the level of social security payments is unsustainable. As a Government, we have to work out—these matters will come to Parliament to discuss and make decisions on—the choices that we will set out in our budget and in the spending review about the decisions that we have made on investing in social security. Others might wish to suggest that we should disinvest from social security and that we should take money away from people. It is fair and right for us to discuss that but, internally, the Government has discussed the importance that we attach to social security as one way of alleviating poverty and supporting disabled people and carers. Those choices will be laid bare.

I fully recognise that there is an increase in social security expenditure. One way of tackling that is to look to reduce it by making changes to eligibility. The UK Government has attempted to do that. After looking at the increases in social security expenditure, it attempted to make changes to reduce eligibility, but it has now backtracked on some of those. It is right and proper for us to discuss who should be eligible for benefits and whether we think that benefits are going to people from whom we, as a Parliament, would be comfortable taking them away.

I am happy to provide information on how that is not a particularly large issue.

The agency agreements, as you know, Mr Balfour, have been a very important part of the safe and secure transition of benefits. They have been absolutely integral to the way in which the system has developed. With the completion of case transfers we are coming, as the convener said, to the end of many of the agency agreements. That is an important milestone that will allow us to not have to have a system in which we are obliged to do the same as the DWP because, and very understandably, the clear point from the DWP was, “You have an agency agreement, you are doing it the same way as we are.” We have discussed that in the past.

Longer-term policy development beyond the lifespans of agency agreements is not hampered by them. Such policy development continues, however, to face the context of the DWP’s policy decisions and, therefore, the financial implications of those decisions. That is the next challenge on our horizon, if I can put it like that, rather than the agency agreements.

Thank you very much and good morning, convener. As Cabinet Secretary for Social Justice, I must ensure that United Kingdom social security legislation that impacts on Scotland is compatible with the principles embedded within the devolved social security system. I must also be mindful of anything that might disrupt the safe and secure transfer of benefits. I have considered the bill carefully and it is clear that, in practice, it has implications for Scotland only in so far as the Department for Work and Pensions still administrates devolved assistance, under agency agreement, on behalf of the Scottish ministers.

I am, therefore, content that any impacts on devolved assistance from the provisions that are under consideration today will be negligible and can confirm that I intend to recommend consent to the provisions in the following areas. The entry, search and seizure provisions will allow the DWP to apply to a sheriff for a warrant to enter premises, search for and seize items when investigating the most serious cases of fraud. Currently, the DWP requires the police to undertake such action on its behalf. I am content that nothing within the provisions runs contrary to the ethos and principles underpinning the devolved social security system.

Regarding the provisions on data gathering, the UK Government has broadly mirrored the approach pioneered in the devolved social security system, and because of that, and because the provisions contain similar safeguards and exemptions for third sector organisations, I am content to recommend legislative consent.

The provisions on eligibility verification measures allow the DWP to require banks and financial institutions to provide large datasets to help verify a claimant’s entitlement to benefits and identify incorrect payments. Similar provisions were included within the UK’s Data Protection and Digital Information Bill of last year, for which legislative consent was agreed in the Scottish Parliament but which fell away due to the UK general election.

On changes to administrative penalties, there is no equivalent to administrative penalties within the devolved system and I am, therefore, content to recommend consent for the provisions in this area.

Convener, although not included in this memorandum, the Scottish Government did not previously take a position on consent in relation to the overpayment recovery provisions, which you mentioned in your opening remarks. That was to allow time for due consideration to be given to the impact of those provisions on Scottish clients and for on-going discussions with the UK Government. I can, however, confirm to the committee that I have concluded that it would not be appropriate to recommend consent for the overpayment recovery provisions. No such provisions exist within the devolved system and I do not consider them compatible with the ethos of fairness, dignity and respect. I have set out that position in writing to UK ministers, who in response have confirmed that they will seek to amend the bill such that devolved benefits are removed from the scope of those provisions.

The Scottish Government did not see the full provisions of the bill until it was laid on 22 January 2025. That meant that the normal timeframes for lodging the LCM could not be met. Due to the on-going engagement required to understand where the bill and its numerous amendments will impact on Scotland, I expect that there will be a requirement to lodge a supplementary LCM for the bill in due course and I will provide an update on the debt recovery provisions as part of that LCM. Thank you, convener.

We expect that the case transfers that relate to the major agency agreements on benefits will complete on timetable. The agency agreements relating to benefits will end in March 2026 and we have a timetable of ending the case transfers by the end of this calendar year. I think that the case transfer process is one of the great successes of the devolution of social security. It has gone exceptionally smoothly when we look at what can perhaps go wrong when we are undertaking such large changes to benefits. We anticipate that to continue and that would bring to an end the agency agreements for carer benefits, for example, that we have in place currently.

As this bill is exceptionally technical and complicated, it is fair to say that I remain concerned that we may have to come back on other issues. My officials are in detailed discussions with the UK Government on different amendments as they come up. Continuing to do that is proving challenging and it is a further challenge where we have legislation that the DWP and the UK Government may think is only to do with the reserved system but has implications, unintended in many instances, for Scotland. We have been able to clear those up with the DWP in writing, but this is perhaps one of the first significant bills where we are having to tease out how we deal with the fact that while the DWP may think that the legislation is only to do with what happens in the rest of the UK, it has implications for up here.

Certainly. Mr Doris will be aware from his long involvement in these issues that the decision was taken right at the very start not to devolve SDA because it was a closed benefit with an exceptionally small case load, even at that time, and is becoming smaller year on year. At that point, there seemed to be no benefit to the devolution of severe disablement allowance, either to the clients or to the costs that it would take to develop a devolved alternative up here.

We have recently undertaken a consultation on employment injury assistance. I appreciate that people wish to see changes on that but, because those changes are quite significant, we consulted on whether it would be better to extend the agency agreement and allow more extensive consultations to happen. Given that that was the outcome of the consultation, I am still very much minded to move forward on that basis and the work has now begun on looking at employment injury assistance in detail.

I hope that that will demonstrate that the work is on-going, but I think that it is important to carry on with those timescales, given the detailed consideration that is required, particularly on employment injury assistance.