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Thank you, convener. I very much welcome what is my first time in front of the Finance and Public Administration Committee. I will see whether I still hold that view at the end of the meeting, but it is a pleasure to be able to come and give evidence today.

I will bring in David Wallace to talk through the operational matters around the serious concerted effort within the agency in regard to the benefits that we are responsible for.

First, however, in relation to the item that was in the newspapers, it was particularly disappointing to see the way in which things were portrayed. There is no black hole in the Scottish Government budget and certainly the Scottish Government takes very seriously our responsibilities to ensure that we have firm policies for overpayments, of which fraud is one part.

As a Government, we looked very seriously at whether we should take part in some of the aspects of the UK Government fraud and error legislation because I was concerned about, for example, the ability to take money away from people’s bank accounts without due notice or consideration of their current circumstances. That is a concern for me, because that is not a person-centred approach; it does not take account of the impacts on that individual.

The other aspect is in relation to taking away driving licences. We all have areas in our constituencies—and, I am sure, constituents—where we can imagine that taking away a person’s driving licence would not help them to get a job or to be able to take their children to childcare, for example.

The impact of that on an individual is punitive in a way that does not help them to get into employment, education or training, or to be able to assist with wider family issues. I was greatly concerned about that type of measure. It is a tactic for dealing with overpayments that I did not agree with. What is important is our absolute determination to have strong and robust policies for overpayments, including those related to fraud, but we will not tackle that using the methods that the UK Government was suggesting.

We had a great deal of back and forth with the UK Government about whether we could continue working on historical debt, that is, debt that has been built up. We were unable to do so, which is why I declined further co-operation on that part of the bill. We will move forward to deal with that in a way that fits with the ethos of the social security system, but, as I said in my initial statement, is still very robust.

I am happy to bring in David Wallace if you would like further information about how we deal with issues relating to overpayments, fraud being one of those.

There is an opportunity cost with all budget decisions right across Government. A current example is the mitigation of the two-child cap. The figures that I discussed in my opening statement relate to the current mitigation of the cap but we expect those costs to go up. The First Minister has made it very clear that if the UK Government’s child poverty strategy—which we now think will start at the end of the year after the budget, but that timing is of course up to the UK Government—were to include the scrapping of the two-child cap, we would no longer have to mitigate it and we would use that money on further anti-poverty measures for children. That is one example of the opportunity cost of what we are doing.

I am talking about the additional investment that we are making, which is what we invest above the block grant adjustment.

Perhaps I can respond to the committee in writing with further detail on that, as childcare is not in my portfolio. Overall, however, as we look at childcare, we also need to consider the importance of having an offer that is available to everyone, whether they are in work or not, because it is not just about providing childcare to get people into employment; it is also about supporting young children. That important aspect should not be available only to the children of those who are in work, because it is about early learning as well as being somewhere for people to go.

There are issues with the expansion of childcare down south, which shows the importance of ensuring that staffing levels and supply are adequate. Again, you raise an important point in that, when we are looking at poverty, it is not just about social security. I recently undertook a visit to speak to young mums who are getting support not just on income maximisation but in relation to barriers to employability, such as whether they can access the types of childcare that they require and the fact that that has to work with the support that they get from the wider system.

A great number of people are in in-work poverty, so getting a job is not necessarily a route out of poverty for many—particularly for women, and not just for young women. It is important that we look at providing people with support even if they are in employment, if that work does not lift them out of poverty.

Yes. There will be an increase, and I absolutely recognise that. That is the crux of the matter, convener. There is a projected increase in our additional investment above BGA and a projected rise in overall social security expenditure for reasons that will have an impact not just in Scotland but in the rest of the UK and will therefore be covered by BGA.

We then get down to why those numbers are going up. If there is a demand call for those numbers to go down, people are, in essence, asking for changes to eligibility for benefits. What changes will people wish to make to benefits for carers, those on low incomes and so on? That is the only way that that trajectory will change.

That is why I was very pleased either last week or the week before to attend the opening of the employability hub in Beith—

I am very assured by the work that we have done and will continue to do in the agency to look at different types of overpayments and to ensure that we take the issue very seriously.

However, I come back to a point that was made at portfolio question time, which is that we have to be careful about what happens when a number increases. Sometimes it will increase, because the number of benefits that the agency deals with is increasing. When you massively increase the case load, the number of redeterminations, appeals and cases to do with overpayment will increase, too. What we then need to analyse in order to get the proper context is, of course, the proportion of benefit payments that are overpayments or are seen to be fraud.

Therefore, instead of talking about total numbers, we should, as we continue to increase the number of benefits that the agency deals with, be talking about the proportions for different benefits within the agency. If you wish us to do so, we can go into further detail on that.

Mr Hoy will forgive me as I do not have the SPICe briefing to hand. I will ensure that my officials furnish me with it so that I can see where the argument was going. We need to bear in mind that, in essence, the Scottish child payment is a top-up to current benefits. That legislative foundation was decided on because it was the quickest way that we could get money into people’s pockets at a time when there were real concerns about austerity—there still are—and there was a need to respond to the calls that were being made on the Scottish Government to assist. Eligibility is based on the benefit that the Scottish child payment tops up. It is mainly attached to universal credit and there are a small number of other benefits.

Under a more recent act, we have further powers that would allow us to change the legislative basis for the Scottish child payment. In future, it could be changed so that it is not a top-up to a reserved benefit and so that we could set our own eligibility criteria. We would have to look at that decision to see whether those changes would be worth while or not.

The Scottish child payment is targeted. The impact that it makes on relative and absolute poverty has been set out not just by the Scottish Government but by the Joseph Rowntree Foundation and others. I hope that that gives you an explanation of the reasons for its legislative basis and the way that it has been targeted. The delivery of the Scottish child payment was one of the successes of devolved social security, in that it was the quickest that a benefit has ever been implemented by any part of the UK’s social security system.

It is important that we go from that headline and look at the reasons for that. I will break that down, convener, if I may. The analysis of the 2 per cent in relation to current social security reviews is that a large proportion of that is case transfers that have come over from the DWP. In essence, they are not a typical review—it was done to allow for that case transfer to happen. What we will see in future analysis of reviews from Social Security Scotland is what that looks like when a case is reviewed from a Social Security Scotland decision. That is different from the case transfers. We will see that number increase from 2 per cent, because the case transfers are now complete.

On the 16 per cent from the DWP, just under half—I think that it is around 40 per cent; I can get the figures later—of the decisions that are made on DWP reviews are overturned at a later point in the process, either through its version of a redetermination or an appeal. That takes that 16 per cent down quite markedly, because it has made the wrong decision about that review, so it is not really 16 per cent at the end of the process. Then, of course, we will wish to compare the Social Security Scotland number outwith case transfers with the DWP number at the end of the process, once appeals have been taken into account. That work to look at the quality of the work and the decision making is currently on-going in the directorate and the agency.

I am aware that my answer has already taken some time, but if Mr Hoy wishes to have more information, David Wallace and Ian Davidson can come in on what we are already doing to make sure that the review process is fit for purpose.

I will bring in David Wallace on that and on the difference between an error and fraud.