Q2 What other principles would you like to see underpin any reform of passported benefits in Scotland?

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1 CONSULTATION QUESTIONS Q1 The principles identified by the Social Security Advisory Committee to underpin the reform of passported benefits are: simplification, autoentitlement, information transfer and making work pay. Do you think that these principles are helpful in the Scottish context? Save the Children believes that the principles identified by the Social Security Advisory Committee are helpful in the Scottish context. The principles of simplification, autoentitlement and information transfer are important in setting how the system should operate. We believe that reform of the system is an opportunity to reduce administrative costs for government. Reducing the administration costs would allow resources to be focussed on the entitlements themselves rather than the mechanisms that support it. In addition, reform of the system presents an opportunity to reduce the complexity of the system from the perspective of claimants and maximise take up by those eligible. Making work pay is vital to ensure that the system of passported benefits does not undermine the potential of Universal Credit to reduce child poverty. Given that Universal Credit will be payable to claimants both in and out of work in widely varying circumstances, any attempt to set further income thresholds within Universal Credit is going to reduce work incentives for people just below the threshold, and build further complexity in to the system if it attempts to account for the needs of different family types. It is important to note that current criteria already recognise the value of providing many passported benefits to those in working households. The fact that Universal Credit is paid to those in work as well as those not in work is not in itself a reason for assuming receipt of Universal Credit in itself cannot be a mechanism for passporting to devolved benefits. Save the Children believes that the Scottish Government should ensure that all children in poverty are entitled to receive free school meals, and promote work incentives, by extending free school meal entitlement to school children in families in receipt of Universal Credit. Q2 What other principles would you like to see underpin any reform of passported benefits in Scotland? Passported benefits play an important role in enabling children to realise their right to a decent standard of living and to live with dignity and respect. They assist families in supporting their children to participate fully in society. In addition, passported benefits support government at every level to meet wider anti-poverty, education, health objectives and targets. Therefore, in addition to the principles outlined above, Save the Children believes that any reform must consider the value and role of passported benefits in meeting key Scottish Government social policy objectives. Passported benefits such as free school meals, have a role to play in realising children s rights (particularly article 27 the right to a decent standard of living); tackling poverty and income inequality; and tackling education and health inequalities. In considering how passported benefits fit with the Universal Credit such considerations and outcomes need to be given as much, if not more, weight than the principles that relate to the operation of the system and an arbitrary limit on the amount which such entitlements cost. In addition, any reform of the system should also consider the longer term implications of

2 changes in support to families. In line with the Scottish Government s laudable ambition to take a preventative approach we suggest that this principle also underpins any reform. Q3 Do you feel that it would be desirable to replace benefits in kind (i.e. providing the goods or services directly) with a cash alternative for some passported benefits? Save the Children believes that this issue requires more detailed consideration and feel unable to provide a definitive position at this stage. Below we highlight what we believe are some of the most important factors in the debate on this issue. In principle Save the Children supports cash benefits going directly to families as they are best placed to decide how their money is spent. There is strong evidence that shows that mothers are predominately the money managers in low income households and that they prioritise children s needs. 1 However there are a number of complex issues to consider in replacing benefits in kind with cash alternatives. In addition, we believe that the best interests of children living in poverty should be the guiding principle in considering whether benefits in kind should be replaced with cash alternatives. On the one hand, as highlighted by the Child Poverty Action Group in Scotland in their response this approach has been tried previously and failed to deliver. The shift from family income supplement to family credit in 1988 involved the cashing up of free school meal entitlement (at 2.55 a week). 2 In subsequent years this amount was not uprated, and so now completely fails to meet the cost of meals to families. The switch to uprating UK benefits in line with the CPI rather than RPI measure of inflation will continue to reduce the value of cash support to families in Scotland by up to 8% within the first five years of UC, 3 again creating real risks if key in-kind benefits are cashed up. On the other hand the potential advantage offered by cashing up is that passports become other elements of Universal Credit, tapered at a steady rate and so protecting work incentives and removing cliff edges. However, it will only ever be effective for regular costs. It is not clear how the irregular costs mentioned as within scope of the consultation NHS services and Legal Aid could ever be cashed up into benefit entitlement. The Scottish Campaign on Welfare Reform s (of which Save the Children is a member) response to the Social Security s Advisory Committee on passported benefits in Universal Credit outlined the implications in more detail which are summarised below. For fixed costs the implications relate to how the purpose of the benefit matches the reality of household spending. Evidence shows that payments clearly labelled as made for a particular purpose is more likely to be spent for that purpose. 4 The need to take account of local circumstances and entitlements would create a complex system which would place an administrative burden on government. An alternative to this would be to set a national cash value for each in kind passported benefit at the point of transfer to Universal Credit, but this would cause three serious 1 Women in Scotland s Economy Research Centre (2012) Child Poverty and Mothers Employment Patterns Exploring Trends. 2 See 3 xation_means_for_living_standards.pdf 4 Institute of Fiscal Studies, Cash by any other name? Evidence on labelling from the Winter Fuel Payment

3 problems. Firstly, it would not take account of local variations. Further, it would cause further complexity as existing passported benefits existed alongside Uamounts through the migration period; potentially leading to confusion, duplicated entitlement for some and other families missing out entirely. Lastly, the value of entitlements would need to be protected over time to ensure that it continued to reflect the actual costs incurred. A policy of simply uprating entitlements by the consumer price index (as is planned for other elements of Universal Credit) would risk cash equivalents of passported benefits becoming hopelessly inadequate over time. Furthermore, in kind benefits such as free school meals help to mitigate the impact of poverty created by inadequate levels of cash benefit entitlements that are set to be replicated. A cash amount within a benefit that is inadequate to protect people from poverty risks worsening hardship and material deprivation. In terms of variable and one off costs, for example support with court fees, legal aid and dental treatment, the difficulty is with having a simple and clear system which adequately supports the actual costs incurred by particular households. This can only happen if a separate application process is maintained. The key issues are that people are aware of potential entitlement, and the application process is simple, and that the entitlement criteria recognise that these sorts of costs can be unaffordable for families whose income or capital may take them out of Universal Credit entitlement. Assessing applications and processing cash payments will be an additional administrative cost, when compared to assessing entitlement based solely on Universal Credit receipt and the actual costs incurred by those entitled. Q4 Do you feel that it would be desirable to roll existing cash payments for passported benefits into the Universal Credit payment, to create a single income stream? See answer to Q3. While we acknowledge that if cash payments are rolled into Universal Credit this may reduce administrative costs, their value must be protected over time. In addition, Save the Children believes that the best interests of children should be the guiding principle, and not administrative considerations, in determining whether cash payments should be rolled into Universal Credit. Q5 Do you think that the welfare system (i.e. receipt of Universal Credit or Personal Independence Payment) should form the basis for access to passported benefits? Yes No for some entitlements only (please specify which) Save the Children believes that any Universal Credit entitlement should give access to all passported benefits. Benefit entitlement acts as a useful proxy for low income in these circumstances.

4 Q6 If yes, what existing alternative mechanisms can you suggest to identify recipients and verify claims? n/a Q7 What could be done to make it easier for people to find out what benefits they are entitled to? It would be helpful if qualification to passported benefits was included in DWP benefit decision notices. We believe that claimants should simply be notified of the passported entitlement e.g. not to require an application where this information is available, and to reduce the reporting burden on claimants by establishing links whereby information is transferred directly to the delivery authority in Scotland. This is what passporting should mean. Q8 Do you wish to highlight any of the groups protected under the Equality Act as being particularly at risk in the reform of passported benefits? Save the Children believes that children are particularly at risk in the reform of passported benefits. Children, particularly young children, are at a greater risk of living in poverty. Their poverty is determined by household income while they do not control their own financial circumstances. As highlighted above, the Scottish Government should take the opportunity provided by the need to review the current system to identify how children can be further supported through passported benefits to ensure that their rights are realised and the wider objective to tackle child poverty is achieved. Q9 What robust sources of evidence with regards to impact on protected equality groups should we draw on when considering the impact of future proposals? n/a Q10 Over the longer term, should the Scottish Government aspire to a move to a more coherent system of eligibility criteria for low-income benefits, such as linking income thresholds to one of the measures of poverty? Save the Children supports this longer term aim. At a minimum we believe that all families living in poverty should receive all passported benefits. As previously stated our recommendation is that Universal Credit entitlement should give access to all passported benefits. Our research from earlier this year, Struggling to work highlighted that some

5 families including single parent households working less than 24 hours per week and some couple families with children - will be left living in poverty under Universal Credit. 5 Save the Children recommends one of the following options if the income threshold is linked to one of the measures of poverty: 1. Relative income poverty measure after housing costs - equivalised 60% of median income after housing costs. Using the after housing costs measure would ensure that people living in poverty due to their high housing costs can access passported benefits. 2. Consideration should also be given to using the Joseph Rowntree Foundation s minimum income standard. This is another measure which could be used to ensure that paying for passported services does not leave families without a basic minimum income. 3. Consider extending entitlement to passported benefits to all households living in the 30% poorest households, in line with the Scottish Government s solidarity target. Q11 Should the Scottish Government assess income: At household level At individual level It should vary according to the entitlement being applied for Save the Children believes that household level is the best way to assess income, as is currently used. However we believe that the Scottish Government should consider any exceptions including: Free School Meals where a young person is getting benefit in their own right Education Maintenance Allowance where a young person is estranged or getting benefit in their own right 5 Save the Children (2012) Ending child poverty: Ensuring Universal Credit supports working mums in Scotland.

6 Q12 Should the Scottish Government adopt a savings limit for some or all benefits? All None Some (please specify which) Save the Children believes there should not be a savings limit for free school meals. The introduction of one would mean some pupils currently entitled would not be eligible if they live in a low income household but their family has capital, as there is no capital limit for child tax credit. The UK government has said those currently entitled to child tax credit with capital over 16,000 would be protected and migrated onto Universal Credit. Q13 If you answered None, please suggest how we could identify those who do not qualify for Universal Credit because they have more than 16,000 savings. Comments Q14 Should the Scottish Government adopt the same savings limit as the Department for Work and Pensions i.e. that no one with savings (excluding equity in your home) of more than 16,000 should receive any passported benefit? Yes No Where Universal Credit is used as a passport this will happen anyway. It is important that such a limit does not exclude people on Universal Credit due to transitional protection. It is vital that any capital limits are logical and simple. Q15 Do you have any other comments within scope? Free school meals Free school meals are a vital devolved source of support to low income families and their children, ensuring children have access to at least one healthy meal a day and freeing up cash for other essentials within hard pressed family budgets (up to 20 a week or 760 a year for family with one primary and one secondary pupil). Save the Children welcomes the Scottish Government s commitment to ensure both families living on low incomes in and out of work are entitled to free school meals. We also welcome the Scottish Government s commitment to ensuring that all children currently entitled to free school meals remain so after the transfer to Universal Credit. However, despite this there remains a gap in the number of pupils receiving a free school meal and the number of pupils officially recognised as living in poverty. In 2010/11, 21% of children were officially recognised as living in poverty yet in June 2010 free school meal statistics show only 17% of pupils registered and only 14% of pupils received a free school meal. Around fewer pupils are therefore receiving a free school meal than are recognised as living in poverty. 6 Save the Children recommends that the Scottish Government should aim to ensure that all children in poverty are entitled to receive free school meals, and promote 6 Save the Children & Child Poverty Action Group calculations based on Scottish Government figures. Details available on request.

7 work incentives, by extending free school meal entitlement to school children in families in receipt of Universal Credit. The estimated additional cost of such an approach for free school meals in Scotland is around 50m. 7 This could be achieved gradually through increasing the income threshold used to withdraw passported benefits. This would improve work incentives and support more families struggling on low incomes. Within the current financial context we would support a progressive universalism approach to delivering free school meals. Scope of the consultation Save the Children is disappointed that the scope of the consultation is so narrow, given the focus on the medium to long term. We urge the Scottish Government to take this opportunity to consider a more holistic and wide ranging view of passported benefits and the current entitlements that support low income households with children. It would be useful to look at the full range of devolved passported benefits, including those currently determined by local government e.g. school clothing grants, council tax benefit, access to the Scottish Community Support Fund, Energy Assistance Package. Further, we believe it would be beneficial to include current universal entitlements such as free prescriptions, free eye tests, subsidised bus travel in the debate about the future of passported benefits. It would be timely to consider the entitlements that currently support the wellbeing of the most vulnerable families in Scotland in a holistic way. It is also important to consider how these benefits and entitlements relate to each other and if/ what further action is needed to develop a complementary package of support to meet the needs of Scotland s most vulnerable families. One idea might be to consider introducing seasonal grants. Save the Children has in the past advocated for seasonal grants lump sum payments to low income families with children in June and November. Such an approach would support the Scottish Government s wider aims of reducing child poverty. Please send your response to by Friday 28 September An Easy Read version of the consultation is also available at 7 Child Poverty Action Group and Save the Children calculation.