We have a busy meeting today, so I hope to keep the time this morning, sure that we have enough time to consider all of our agenda items. The first of which is a decision on taking business in private. I'll take in the committee's agreement to take agenda item 6 in private, is that correct? y Comitee's agreement to take agenda item 6 in private, is that agreed? Agreed. That brings us to agenda item 2. The second item of business is an evidence session on the research that the committee published yesterday on the local impact of welfare reform. As a follow-up to research that the committee published in April 2013 on the impact of welfare reform in Scotland, the committee commissioned further research from the Centre for Regional Economic and Social Research at Sheffield-Hallum University to look at the impact at a local authority ward level. I'd like to welcome the author of the research, Professor Steve Fothergill, to provide a presentation of his findings to the committee.  Thank you, chair. I have a presentation. I was intending to speak for perhaps about a quarter of an hour, if that's fine, and then I assume you would want to fire a few questions. Firstly, let me say this is actually a joint effort. It's myself and Christina Beattie at Sheffield-Hallum. Let me also say by way of introduction that, as last time, I've not come here to try to pass judgment on the welfare reforms. I think that's your business. What my job is is to try and tell it as it is and to trace through in a very hard, honest, objective way the impact of the reforms introduced by Westminster, trace through the impact on Scotland as a whole, on local authorities and on individual local areas within those authorities. The background, yes, this is the second time I've been in front of this committee. We did come here with a report, I think, in April of last year, which was the first to try and systematically document the overall impact of the reforms on Scotland, generating figures for the impact of each of the individual elements of the reform package. And, for the first time, we produced estimates for each individual local authority up here. The new report is very, very much a further step on from that original document. It does modestly update the overall Scottish figures. I'll come on to that in a moment. But I suppose the key thing that it does, the real innovation here, is that we've generated new estimates for the first time for each electoral ward across the whole of Scotland. There are 353 individual electoral wards here, and we've got a figure for each one of those. There are also a few comments in the report about the impact on particular types of households and individuals. That's something I know there was quite a lot of interest in last time, so I'm not really addressing any significant way. The reforms that we're looking at, they should be familiar to you by now. There are eight in total that this particular exercise covers. If we had been doing this in England, it would have been a list of 10. Of course, you've put in place measures, haven't you, now, in Scotland to avert the impact of at least two of the reforms that are impacting in England. The housing benefit under occupation rules, which in shorthand terms, I'll call the bedroom tax, I know not everybody likes that term, but I think it's well understood. We've got arrangements now in Scotland that avert the impact on claimants, and right from the off, you've had arrangements that have averted the impact of the reduction in council tax benefit grant from Westminster that is not being passed on to claimants. It's been absorbed, I understand, within the various public sector budgets up here. The credit's not in the package, it wasn't in the package that we looked at last time now, because it's qualitatively different, essentially it's a repackaging of existing measures. The transfer of loan parents for income support to GSA doesn't actually lead to any net reduction in their benefits entitlement, and the RPI to CPI change is really not just a welfare reform, but something more general across the whole of the public sector. I've got to go through this boring bit, it's how we go about measuring the impact of the reforms. I suppose the key point to log is that everything that I'm going to present in terms of hard-edge numbers is ultimately deeply rooted in the Treasury's own estimates of the overall financial savings. We also draw very heavily on the Westminster Government's impact assessments, and indeed also on the benefit claimant numbers and expenditure authority by authority across Britain. The crucial step in moving from the level of local authority statistics right down to the level of electoral wards is that we bring benefit numbers and figures on benefit expenditures right down at the local level, actually at the data zone level into the package, and that allows us to make that transition right the way down from the Treasury's overall estimates through figures for Scotland and its constituent authorities right down to electoral ward level. Having said all of that, you must bear in mind that the figures that we present are ultimately estimates. There is a margin of error on them all, but I wouldn't anticipate them being fundamentally wrong. I think that this is a soundly-based procedure that we've followed. Still on the boring bits, I've got to go through all the health warnings, I'm afraid. You do need to bear in mind that some of the reforms target households and others target individuals, housing benefit reforms clearly target households as a whole. It changes to a capacity benefit entitlement about the entitlements of individuals, and some individuals and some households are hit by more than one element of the package. However, almost exclusively the impact is on working age claimants. There's very little impact at all. It falls on people of above-state pension age. A lot of what we do when we present the figures is to present the figures in terms of the impact per adult of working age. We also look at the impact when the reforms are fully implemented and the timescale on which different elements of the package come to full fruition does vary. In particular, I would draw your attention to the fact that there's still an awful lot in the pipeline happening now or scheduled to happen around disability benefits entitlement to ESA, entitlement to DLA or indeed its replacement PIP. Finally, on the boring bits, I'm afraid, let me say that we hold everything else constant. We're not making any assumptions here about the consequences of the welfare reforms on employment levels here in Scotland or across the United Kingdom as a whole. Let's work down from the Scottish figures eventually down to the ward level statistics. These are a slightly revised version of the figures that we presented in April last year for the impact of the reforms on Scotland as a whole. Now that we know that the bedroom tax impact has been averted on claimants, we're able to take that out of the jigsaw. We also have harder edge numbers on the impact of the overall household benefit cap, and that's a little bit down on what was originally anticipated. Overall, once the reforms have come to full fruition, we're looking at £1.6 billion, £1,600 million a year being taken out of Scotland by the welfare reforms. That financial loss here in Scotland averages £460 per adult of working age per year. That figure is pretty much in line with the GB average, I've got to say. We're not on about Scotland being hit any harder or less hard than Britain as a whole, but when you look at the detailed regional figures as we did in the report last year, Scotland escapes rather more likely than Wales, rather more likely than Northern England or London, but it's hit significantly harder than large parts of southern England. The impact by local authority. Again, this is a revised version of the figures that we presented last year. Big differences between individual authorities up and down the length and breadth of Scotland. We identified Glasgow as being the hardest hit place. On the slightly tweaked figures here, yes, it remains the hardest hit place but through to the other end of the spectrum, Aberdeenshire and Shetland. Among the harder hit places, the older industrial areas of the central belt figure very strongly indeed and that's consistent with a wider pattern across the United Kingdom where it's older industrial areas with large numbers of benefit claimants that really are in the firing line from the welfare reforms. Now, let's get on to the new stuff. The impact by ward across Scotland. This is a list of what we identify as being the 20 hardest hit electoral wards across Scotland as a whole. At the very, very top of that list is Calton in Glasgow where we estimate an overall financial loss of £880 per adult of working age per year once the reforms have come to fruition. You look down that list of the worst hit 20 and you'll see that there are a dozen Glasgow wards. The balance is made up by wards in a number of other older industrial areas, Dundee, Fife, Inverclyde, Weston Barton, Wrenfrewshire, et cetera. At the other end of the spectrum, these are the 10 wards that we think are least affected by the reforms in terms of the financial losses. Very different geography here. Aberdeen and Aberdeenshire account for five of the least affected 10. Right at the very bottom of the list, the least affected part of Scotland, we estimate to be St Andrew's in Fife. One of my colleagues at Sheffield Hallam rather cheekily suggested that you're probably more likely to be hit by a golf ball than by the welfare reforms if you live in St Andrew's. In the report last year, we looked at the relationship between the impact of the reforms and deprivation at the level of local authorities. This does the same exercise at the level of electoral wards. Those dots, and there are 353 of them, is an electoral ward. You don't need to be able to read the scale and the details measures on here. The vertical scale is the hit in each of the wards, measured in terms of the loss per adult of working age per year. The bottom scale measures deprivation from the Scottish indices of deprivation. You can see that there's a very clear relationship there. Broadly speaking, the higher the level of deprivation, the higher the financial hit arising from the welfare reforms. That is a pattern that we identified in the report last year at the level of local authorities. It's not an entirely unsurprising pattern because where are welfare benefit claimants, welfare benefit recipients concentrated, they tend to be concentrated in the poorer areas. That's one of the things that defines areas as being poorer. I'll just show you four maps to illustrate what's there. In the report, there is a map for each of your 32 local authorities and statistics for every single ward. This is the map by ward in Glasgow. I've noted already that Glasgow is hit particularly hard, and therefore you'll see there are large chunks of Glasgow shaded in dark blue, which is where the intensity of the hit is greatest. Edinburgh is a more mixed picture and there's a very interesting block there in the centre of the city where the hit is really quite modest. The academic literature used to talk about economic and social problems as being located in inner urban areas. That is certainly not the case in Edinburgh where the inner urban area will be escaping particularly lightly here, and it's some of the more peripheral bits of the city that are hit hardest. At the other end of the spectrum is Aberdeen, Aberdeen city. You'll notice there's not very much dark blue or even middle blue on that. That's because Aberdeen does not have large numbers of benefit claimants and accordingly is not hit hard by the reforms. Finally, just by way of illustration, there is Fife, a considerable diversity within Fife. I've already flagged up that white area on the right-hand side. That is St Andrews, but there's a considerably dark blue area in the middle of Fife, particularly in the former Caulfield area. The report also makes one or two comments about who is being affected most by the reforms as opposed to which areas are most affected. I will just whip very, very quickly through this slide and the following one. They're just there to illustrate the sorts of groups in the population that are most exposed to each of the individual reforms. What you need to note perhaps when you just scan down this slide and the next one is how often low income or disability or older working age people tends to be flagged up. What you also need to remember is that these reforms are happening simultaneously so that some groups in the population are being hit at the same time by more than one element of the reforms. That is particularly to the incapacity benefit claimants. You need to bear in mind that the reforms to incapacity benefit in terms of the financial losses are the biggest single element of the overall package. Often the people who lose out on the changes to incapacity benefit will be the same people who are losing out from changes to disability living allowance. They may also be losing some housing benefit if they live in the private rented sector or if they've got a grown-up child still living at home then they'll be losing out because of the reforms to non-dependent payments. They'll also be losing out, of course, through the 1% operating rather than operating with inflation. To conclude, the variation in the impact of the reforms is substantial between wards. It's actually greater than the variation between whole authorities. That's exactly what you'd expect to find because the diversity at the level of wards is much greater than the diversity at the level of local authorities. That's the diversity in terms of underlying socio-economic conditions.  It's the deprived wards that have been hit hardest. Unless there is some great revival in employment and labour market engagement as a result of the reforms, it would seem that the gaps in income and living standards between local communities and local neighbourhoods are set to rise. Thank you very much, chair. Thank you very much, Professor. Again, a very helpful report. I think that we will all value and people beyond the Parliament will value the work that you've done identifying where the issues are affecting people. I don't suppose that it was a complete surprise that the link up between deprivation and the hardest hit. I think that what we're actually looking at is the amounts and what the impact of that is. One question just for clarification for myself. Have you done a similar assessment of local ward areas in England? Or is it just an overview in England? Not yet. At the same time as we did the local authority work last year that we presented up here, we did do a local authority-wide analysis in England, so we did have the full comparisons available so that we know how Glasgow, for example, compares with other big cities in England and indeed in Wales. We haven't done the same exercise by ward across the whole of England. We've been piloting the methods up here in Scotland. We are about to apply the same methods in Wales and in the Sheffield area and in Northern Ireland, actually. The number of wards explodes away. Instead of doing with 353, you're doing with several thousand and it becomes an immense task. If I read you right from your initial comments, it would be difficult to do a comparison between, say, Calton and the worst-affected area in England because there are two impacts that will be taken into account in England which won't reflect in here. I should perhaps have mentioned, and it is mentioned in the text of the report, that all the figures for Scotland are a little bit lower than otherwise would be the case. If you haven't put in place the arrangements for the bedroom tax and for council tax benefit, the overall hit to Scotland would have been about £35 a head higher. The hit to clements in Scotland would have been about £35 a head higher than is actually the case. That would put Scotland ahead of the GB average but still I've got to say behind some of the worst-hit regions in Britain. Glasgow, even though we're talking about a hit now of £620 per adult of working age, that's high by British standards. I think the highest across Britain we did identify was in Blackpool of all places where it was 900 across the 910, I think, across the Blackpool borough as a whole. Glasgow's grim on these numbers and Calton is particularly grim but there are one or two worst places. I'll open up to the committee and go to Alex first, followed by Jamie. Thank you very much, convener. I was going to start off a downer road being owned before but I was going to try to come to a slightly different conclusion and question at the end of it. Of course the figures you've produced in terms of overall government policy are in effect only one side or one part of a balance sheet and there are other government policies such as the significant increase in the tax threshold that do increase the amount of money available to those who are basic rate tax payers. First of all, how do you see that resource balancing out? There's clearly a lot going on simultaneously in the world. There's not only the welfare reforms but there's wider tax changes. There's the growth in the economy. There is the difference between the increases in prices and the increases in wages. All we've really been able to do here is look at one element of the jigsaw. I absolutely accept that. There is a lot going on simultaneously as well that's not here. We're not trying to monitor the overall wellbeing of individuals or of areas. We're trying simply to measure the impact on particular places of a particular set of policies. I accept your point. Is it then the case that if, for example, were to break down the impact of other policy changes on a similar basis that it may actually result in these figures being somewhat misleading? Let me qualify that. Insofar as, if we took the full balance of policies, could it actually mean that the differences are more extreme or does it affect the pattern overall? It's very difficult for me to comment on that. I don't think that we haven't got the hard evidence that we haven't done the calculations. There is always a danger that even if we added in more, changes in tax thresholds, people would then turn round to us and say, ah, well, you've not allowed for the fact that prices are rising faster than wages. Where do you stop in this exercise? I'm sorry, what we've stopped at is just looking very specifically at the impact of the reforms. It's very, very hard in the absence of the calculations to give you the definitive answer on some of the wider issues. Thank you, Amy. Thank you, Cymru. Thank you for your report, Professor. I think that a lot of people find it very helpful in understanding what's happening on the grounds of, I don't suppose it is. I wasn't surprised to find three of the words in the area. It was above average and one was below average. I wasn't surprised, but it certainly is very easy to have it quantified, so I'd like to thank you for that. You picked up on the issue. I wanted to explore it a little further. You've made the point that if certain reforms had been put in place here in relation to counter-tax benefit and the bedroom tax, that the scale of loss would have been £35 higher per working-age adult than is otherwise the case that would have actually been above the UK average. You've already said that, but can you quantify the split between the two measures, please? Let's take the impact of the bedroom tax, because I've got to confess that I was really quite unaware until a late stage when we were doing this that you had put in place measures to avert the impact of the bedroom tax. The figures that are up on your screen at the moment, for the overall impact by Ward, we did calculate a set of figures comparable to those that actually included the bedroom tax and then had to go back and take the bedroom tax out of the overall jigsaw. I do know exactly what the bedroom tax does to those particular statistics. In the worst-hit wards, the Caltons, the Springburns, the North East Glasgows, the Drumchappels, the measures that you've put in to avert the bedroom tax take about £30 per adult of working-age per year off those numbers, so Caltons would have been coming in at around about £910 rather than £880, and Springburn at £810, rather than £780, etc. At the other end of the spectrum, if I just went on to those figures, the least-hit places, the measures that have been put in place to avert the impact of the bedroom tax would really make very, very little impact on the places least affected by the welfare reform, so there's virtually no impact, I think, on the statistics for St Andrews down at the very, very bottom of the list. I suppose none of this is surprising because where is social housing concentrated, it tends to be in the poorer communities where there are large numbers claiming housing benefit. The social housing is not concentrated in those particular 10 wards at the bottom of the list, so the effect of the bedroom tax measures has been to ease the impact on the worst-affected wards rather than to spread benefit around evenly across Scotland or, indeed, even to favour the most affluent and prosperous wards. It's the poorest wards that have been benefitted most by that measure. That's very helpful. In terms of the £35 figure on an average basis per working-age adult that you've identified, can you split it between the two measures? How much is for the bedroom tax and how much is in terms of council tax benefit? The impact I recollect has been about £20 is associated with the measures to ease the impact of the bedroom tax in about 15, I believe, associated with the council tax benefit measures. Those are very rough and ready statistics. I'm so sure that if somebody sat down in the Scottish Government with a calculator, they could probably give you a much more precise number than that, but that's very broadly what the impact has been. I appreciate the rough and ready estimation.  Fyllgil, you make the point that I'll just quote your report. You say, Westminster ministers are keen to claim that the welfare reforms will increase in centre of work and will therefore lead to higher employment. As we noted, this is a bold assumption based on a questionable view of how the labour market works, especially in less prosperous areas. You say the evidence in your report suggests that the gaps in income and living standards between communities in Scotland are set to widen. That was the point that you made there. Can you just talk a little bit more about that and why this is your conclusion? Yes, when I'm commenting that I'd be immensely surprised if the welfare reforms lead to much higher labour market engagement, much lower unemployment. I'm really drawing on not so much on the research we've done here, but more on my long experience as a labour market analyst and the researcher on regional economic development. It does seem to me that increasing labour supply by pushing people off benefit, let's say, and out there into the labour market doesn't necessarily raise employment levels. Except perhaps at certain times and in certain places where the labour market is very tight and where firms face a bit of a shortage of labour and they're crying out for any workers. There are times and places where that does apply. I think it applied in large parts of southern England just prior to 2008. But whether it really applies in some of the poorer areas in Scotland, I'm very, very sceptical. I'd be hugely surprised if labour supply in itself, additional labour supply, led to additional numbers overall in employment. No, I don't think that stacks in large parts of Scotland. Thank you. Thank you. Thank you very much indeed for yet another very thought provoking report. Just a couple of questions, really one for clarification. To what extent does the analysis presented today take account of disability benefit cuts? Because obviously the PIP, the PIP benefit is still being rolled out or not as the case may be if you're trying to get it in a pilot area, but it's supposed to be being rolled out. It's not uniform across the country yet. I just wonder to what extent your analysis reflects that position. This is an attempt to estimate the impact of those eight reforms when they have come to full fruition. And now in the case of the shift from disability living allowance to personal independence payments, we've barely started implementing that reform. That reform will not really come to full fruition until probably well into 2018. So the biggest part of that DLA reform hasn't yet happened. A very large chunk of the incapacity benefit reform hasn't happened either. That incapacity benefit, those incapacity benefit reforms actually encapsulate an awful lot. We're not just looking at the reforms that have been introduced by the present coalition government in Westminster. Some of the things happening to incapacity benefit at the moment and in the last couple of years were actually first planned by Labour pre 2010 and only recently have been coming to fruition. But there's an element of the incapacity benefit reforms that really has still to bite in a major way. That's the very last part of the package, which is the limitation of non-means-tested entitlement for claimants in the work-related activity group limiting their non-means-tested entitlement to one year. Because that bites at the back of the pipeline, most of the people who are now moving across onto ESA will find that that hasn't yet bitten. Given that in terms of the overall welfare reform package, that's probably one of the very largest elements of all. There's still an awful lot stored up that's going to come through in the next couple of years or so. Add that together with the DLA reforms and these are often impacting on the same people. Those people still face an enormous hit in the next couple of years. In the worst affected wards of Scotland as well, it's the incapacity disability living allowance reforms that are the really big ones in the jigsaw. So when I'm saying that the place like Calton in Glasgow is hit hardest, I would suspect that a good 40% of that hit has not yet happened. That's very interesting, so I was going to go on to ask in terms of people with a disability. It seems sadly that the net result is that if you suffer from a disability and you live in one of the most deprived wards in Scotland, you are subject in effect to a double whammy. So it's not good news at all, particularly as you rightly say that these benefit cuts are being rolled out and we don't even yet see the full impact of what is coming down the line. It's not that somebody on disability benefits hits any harder in some wards than in others. It's more just that in some parts of Scotland, in some wards, the numbers, the percentage of the working age population out of the labour market on disability benefits is so much higher than in other parts of Scotland. Typically in the Glasgow area, you might have much higher claimant rates of ESA, of IB, of DLA than you do, for example, in the more prosperous economies up in Aberdeenshire. So if you're reforming disability living allowance, if you're reforming in capacity benefit stroke ESA, it's going to impact on the places and on the wards where there are very large numbers of claimants and that's particularly some of those Glasgow wards. Yes, I absolutely accept that. The point that I was rather trying to make was that in terms of other problems that will therefore be prevalent in your community, if you are disabled in a very deprived ward, there will be other issues that impact on your daily life as a result. One other question I had in terms of what we hear from the Westminster Government and indeed Westminster parties that there will be further benefit cuts planned, does this take any account of that at the moment or is that too distant at this point? This is an exercise in looking at what is in the pipeline now and what is going to hit. It doesn't include things that are being talked about that might be introduced beyond May 2015. That's a further exercise, I'm afraid. I hope that we don't need to get you back for that one from my perspective. Thank you, convener, and thank you very much for this. Kevin, and then London. Thank you, convener, and I thank Mr Professor Fothergill for the report that makes very grim reading indeed in some regards. I'm going to ask a few questions and I'm not meaning to be critical in terms of the report itself, but what we have is an exercise based on council words. You mentioned at the beginning that you could go down to data zone level. Is that correct? A lot of the statistics that have fed into this are statistics at the level of data zones. Data zones in Scotland have a population of between 500 and 1,000. I think our judgment is that though we had to throw that information into the pot, if we were to generate statistics right down at that very, very fine grain, they wouldn't be terribly reliable because if you're on about some benefits where there might only be 20 or 30 people in a particular data zone claiming that particular benefit, you can't be sure that those 20 or 30 people are hit in an average way, if you like. I think the statistics are reliable up at the level of electoral wards where we're typically looking at a population of, I think, about 15,000. But at a finer grain, there would be a lot of ropiness in the numbers. There's an additional problem out there which, if you start listing data zones, they don't mean very much to a lot of people, whereas across wards, our unit, which particularly most local politicians can relate to very clearly. Thank you for that. I think that in terms of some of the wards that exist at this moment in Scotland, they don't actually reflect communities and data zones often reflect communities. One of the things, convener, which bothers me is the fact that in a number of wards, and if we look at Aberdeen in particular and I realise that Aberdeen is not the hardest hit, there are areas within Aberdeen which will be immensely hard hit. You have Northfield in dark blue there, which is in the Aberdeen Donside constituency, which the average hit is £560, and Northfield consists of a number of communities which are high in the scale of multiple deprivation or at risk. If you take, for example, Hilt and Stock at Hill, which binds Aberdeen Donside in Aberdeen central, and Tilly Drone seat in Old Aberdeen, which is entirely in Aberdeen central, where the hit for Hilt and Stock at Hill is £440 on average, £350 in Tilly Drone seat in Old Aberdeen. Those are wards where there are socially excluded areas, but there are also areas of quite a lot of wealth. I think that these kind of skew impact on communities. I know that I may be being overly technical on trying to draw down as far as we possibly can, but it is quite clearly the case that communities within Aberdeen, which is one of the least affected places, are still being immensely hit. Within those communities, individuals and families are taking a huge hit because of those reforms. It is always a question of judgement as to how far down you try to drill these statistics. If the average ward in Scotland is 15,000 people, to my mind that is getting fairly close to defining a community. As I say, I am not entirely convinced that the figures would be hugely reliable to find a grain, and that even if we then produced them to find a grain, it would be all open to the argument that, even if we identified data zones where there was not much of a hit from the reforms, there would still be individual households and individual people within those data zones for whom you could say, ah, but that person is going to be hearted, even though they live in an otherwise really prosperous and escaping lightly data zone. We are always vulnerable to that argument, but your argument is fundamentally correct that you will still find some people hit hard, even in the wider areas on the map. It is just that in the context of the ward as a whole, there are relatively few of them. The reason why I am trying to get this drill down is because, obviously, those effects of welfare reform are going to have major impact. You said yourself earlier on the higher the level of deprivation, the higher the financial hit for people. For us as policy makers, I wish we had control over welfare here in Scotland, and hopefully we will do soon. For us, in the policy making decisions that we are taking, I think that we have got to be aware of the hits that are taking place in socially deprived communities. The point that I am trying to get across is that, although some areas seem to be not that hardly hit, there are areas within those areas that are taking a big hit. There is nothing worse that I find than poverty amidst plenty, which we certainly have in Aberdeen. As policy makers looking at other areas, I think that we have got to take account of those data zone numbers before we implement other policies to try and regenerate communities and resolve deprivation. What you need to bear in mind is that, even if you are down in the bottom left-hand corner of that particular graph, you are in a relatively prosperous ward that is hit lightly by the reforms. The impact of any one of the reforms on a particular individual or on a particular household is not necessarily any less than the impact on a comparable household at the other end of the spectrum. All that the relationship with deprivation is saying, really, is that in terms of wards, in this instance, groupings of 10,000 to 15,000 people, the overall impact is much higher where you have higher levels of deprivation. But somebody who is hit by, let's say, the bedroom tax here now, but somebody who is hit by the incapacity of benefit reforms is just as likely to be hit as hard in a non-deprived ward as in a deprived ward. I don't think that I would ever take away from the individual scenarios that are going on, which are having great effect on people and their families right across Scotland. But in terms of policy making, I think that we've got to take into account not only the ward level but the data zone level too. Thank you, convener. I just have one question. It's a very general one. I was interested, Professor Foddigill, in your last key point, in your summary, which was referred to by Jamie Hepburn. That's the one about key effect of the welfare reforms, will be to widen the gaps in income between communities, that being in the absence of a big shift into employment. We started off this session with Alex Johnson, asking it to be noted that other initiatives that were being taken were not taken into account in this study. You very kindly responded to that from wider experience than just what was used for this report. I just wanted to ask you whether, in your view, the wider action that is being taken, the global picture as Alex Johnson referred to about taxation as well as welfare reform, I wondered if you felt there was anything within that which would, in fact, narrow that gap in income between communities. As I tried to say earlier, I'm very sceptical about the whole idea that if you increase labour supply, you therefore automatically increase labour demand. As a general rule, it doesn't seem to apply. As I was also trying to say before, this is inherently just a look at one thing that's going on in the world at the present point in time, but it's a big powerful element of the jigsaw. It's not an attempt to measure the changing wellbeing of communities, it's the impact of a particular set of policies. I was very, very interested to hear a former civil servant speak at a seminar that I attended recently when he was commenting, and he was an ex-treasurer official, and he was commenting on how the welfare reforms had been planned and dreamt up in their present form. What it was clear to me that he was saying was that actually they are driven by financial savings, and that if ministers and others have been going around and saying that these welfare reforms will raise levels of employment and rebuild the economy, that was very much a window dressing that was put on after the event. Primarily, this is about saving money. Some people would like to believe that the reforms will raise the volume of employment to the level of economic activity, but I think deep down, even in the Treasury, they don't believe that. Thank you very much. Professor Fothergill, as I said at the start, is a very, very valuable piece of work. I understand some of the concerns about the fine detail, but equally, in response to what Kevin Stewart said, in my own area you have highlighted the local authorities that are in the area that I represent. Within areas that are very badly hit, there are pockets of wealth that are not reflected in the data, so it swings around about, I suppose, in terms of that. Overall, I think that the information that you provided has been hugely beneficial to the committee. It gives us a lot of work to get on with more analysis and more discussion, but based on firm statistics now, rather than anecdotal evidence or supposition. That's always helpful when it comes to assessing policy and its impact. You said that the welfare reforms were window dressing in terms of what their ambition is. I'm quoting a civil servant there. Who better remain nameless? I think he should. He was a form of civil servant as well. I think he's also been very, very kind, but that's not a matter for you to judge. That's a matter for us to judge, and we can now do it based on very firm evidence, and thank you very much for providing it, and for coming before us this morning to give us more assessment of your analysis, which has been very beneficial to us all. Thank you very much. I'll suspend for five minutes to allow change of witnesses. I'll open the meeting back up again by going to our third item of business day, which is an evidence session from members of the expert group on welfare and constitutional reform on their second report, Rethinking Welfare, Fair, Personal and Simple. I'd like to welcome Martin Evans, the chair of the expert working group. Lynn Williams, a member of the expert working group, and David Watt, a member of the expert working group. I'd also like to welcome Susan Anton, who's an economist and secretariat to the expert working group. Welcome to you all. I'd like to invite Martin Evans to make introductory remarks before we open it up to questions over to you, Martin. Thank you, convener. The group has asked to look at the medium and long-term options for a form of a social security system in an independent Scotland. Our report, Rethinking Welfare, outlines a Scottish benefit system for those of working age. We also provide a route map of how to get there. I am indebted to my fellow group members for their expertise and insight and for the healthy challenge that each brought to our discussions. I know that I and they greatly value the independence of the group and the space that's provided for our deliberations. I would like to emphasise our independence as this was a central condition of all of us joining the group. I valued having members from the academic, business and the third sector, and we're also fortunate to have experts from around the UK and indeed from Europe. In order to support our work, we developed a detailed and targeted process to help build our knowledge and establish a firm evidence-based foundation for our recommendations. We received direct written evidence, convened stakeholder session, commissioned research, held meetings with benefit recipients, wider civil society, academics amongst others. We have drawn extensively on the available demographic and statistical information for Scotland and its performance in relation to other parts of the UK and other nations in Europe. My very sincere thanks to all of those from within the benefit system who shared their stories. Many of these were deeply personal and while some were difficult to hear and others uplifting, all were shared with us openly and honestly and our report is greatly strengthened by this direct experience. We did not formally meet with the civil servants delivering a current welfare system. It was a surprise to me that there were over 10,000 civil servants delivering the system in Scotland. Not just delivering to Scotland but also to significant parts of the United Kingdom as well. They are a great asset now and critical in the future should Scotland vote for independence and nothing in our report should be seen as a criticism of those delivering the policies which we find so unfit for purpose. We learned in evidence from New Zealand how they there value these delivery civil servants much more highly than we do here. Here it is policy civil servants who have the status and influence. The best and most effective change process comes from combining experience both around delivery and policy and that is an important lesson for the future. Our conclusion was that Scotland has a benefit system developed over time that is now too complex and too remote. It can be impersonal and can work against the needs of citizens for support. It is increasingly losing the trust of those involved. An independent Scotland would quickly need to start to rebuild trust and confidence in a system that many feel is broken. This key issue of trust is very wide. It includes the trust of those who receive benefit payments in a system that supports them and, importantly, the trust of society as a whole in the fairness and effectiveness of their system. A lack of trust erodes society's continued support for those in receipt of social security as well as undermining the self-esteem and confidence of those in receipt of support of the benefit system. We divided our work into strategic analysis, strategic choice and an implementation framework. Our strategic analysis was that Scotland has a very strong economic foundation. Across the range of indicators, Scotland is wealthy and productive. Performance relative to the whole of the UK as a whole and its nations and regions is strong. Scotland's assets go further than just its people. There's a clear sense of value of public services, communities and voluntary efforts in Scotland. Just to give one side of the positive side of our analysis, Scotland has a skill population. In recent years, there's been a steady decrease in the percentage of working-age adults with low or no educational qualification. Scotland compares well internationally in terms of educational level achievements and performs best of all the nations in the United Kingdom with the fewest people with low skills and the highest number with high skills. A warning though, as the number of working-age people in Scotland with low skills has fallen significantly, the risk associated with poor qualification has grown significantly. On the negative side, we found current employment rates, for example, amongst older workers to be significantly lower than the best in Europe. Men aged 55 to 65 in Scotland have very low employment rates compared to the best in OECD countries. Equivalent figures for older women are worse. Whilst Scotland is somewhat more equal than the UK as a whole, it's still more equal than OECD countries. It's increasingly recognised that inequality is not just a moral issue. Inequality is a severe drag on economic performance. We firmly believe in the group that paid employment is the best route out of poverty for anyone who can realistically be expected to work. The reality is that far too many people today a job no longer guarantees this. Changes resulting from the hollowing of the labour market, the prevalence of low-paid jobs and the increasing casualisation of employment mitigate against the availability of secure, sufficiently remunerated work for many people. You know very well that approximately 40 per cent of people live in households with at least one member in work and poverty is not evenly spread across the population. Households with disabled people or people from ethnic minorities are more likely to live in poverty. Over half children in poverty are living in households where at least one person is working. We discussed the issue of work at great length. To raise benefits to address poverty was not a credible proposition for us. For example, to ensure a couple with two children had an income leaving aside their housing costs and their childcare costs to meet the Joseph Rowntree Foundation minimum income standard would meet a £10,000 a year rise for that couple. Of all hundreds of sentences and thousands of sentences I read for our report the best in my view came from a Spartacus network report beyond barriers.  They wrote, work for those who can security for those who can't support for all. But it has to be good work. Good work depends on demand from employers for skills and the ability of employers to pay good wages. The business environment encourages investment and productivity. We found that unpaid care contributes significantly to the economy by providing support that would otherwise be provided by the state. However, caring for children or someone with a long-term illness or disability has a significant impact on the ability of households to work an extent to which they need help in the welfare system. Supporting individuals as they move from one phase of their lives to another to employment is a key to a modern social security system for Scotland. Such a system should recognise society's changing with caring and employment responsibilities shared amongst the family and recognise the changing role of women and their contribution to the economy and society. Currently, inequalities in employment, rates of poverty and income inequalities and the cost of caring suggests that what Scotland currently has fails to adequately offer this support. Scotland is in a very positive position regarding affordability of its social security system. The choice facing a future independent Scottish Government is to decide how best to use its financial and human resources to obtain the best results for its people. We examined social security models from around the world and followed descriptions on our report. The best known perhaps is the Nordic model, which is based on the idea of universalism. The liberal model provides safety net levels of mean-sested benefits for encouraging working and the continental model of a contributory system, which is generous to those in work or who have recently become unemployed with little support for others. We concluded that there is no ideal model type for Scotland to follow or indeed import wholesale. We must find our own approach in Scotland. However, we are very keen on policy learning from other jurisdictions, but our conclusion was that wholesale policy transfer from another jurisdiction is vanishingly rare and not appropriate in this circumstance. Our strategic choice was that Scotland would have to rethink welfare. The approach in Scotland would have to be one that suits the needs of the people of Scotland, builds on explicit and agreed values and commands sustained and widespread public support. We looked at purpose and we proposed the purpose for an independent Scottish social security system to provide a safety net through which individuals cannot fall. It must also provide an assurance against life events and then maximise life chances for every individual. In other words, to provide a springboard as well as a safety net. We then looked at principles of a welfare system. These principles represent the tests against which any new policy or changes to existing or inherited policies should be proved. They are grouped under three overarching things. The system should be fair, personal and simple. It was clear to us that these three important policy objectives or principles are held in serious tension. Our conclusion was that it's a real challenge to deliver all three in equal measures. So our report has chosen to emphasise fairness and personalisation in the short term with a focus on simplicity in the longer term. We've outlined our purpose and principles to report who then are the partners to develop these further. We identified and said there were three individuals, firstly, with their families and their communities. They need support from each other and from the state. Secondly, employers. Employers need the individuals that are prepared to work. They need a state to provide an economic background and investment for infrastructure which enables their businesses to grow. Lastly, the state needs employers to create good jobs to minimise work benefits and maximise tax return. Those partners are the critical cogs in the system and must have to assist them a very wide range of civil society organisations to provide the oil to help them to work most effectively together. These civil society organisations include trade unions, business associations, user groups, campaign groups, think tanks and academics. In terms of an implementation framework we recommended that a national convention on social security is established at the beginning of 2015, made up of these partners along with their civil society support to establish a social security partnership for Scotland and use social contract. We drafted an outline contract in our report. An independent Scotland will inherit a patchwork of policies and approaches that have been built up over the last 50 to 70 years. We are confident that it is possible to establish something that better suits the needs of a small independent country. We heard evidence of a widespread will to build a new system that is both fit for purpose and progressive. This endeavour we are in no doubt will take an enormous shared effort. It is clear that there is no easy solution. It will require our political representatives, people from across civil society, the business community and others to enter into a willing partnership with future Scottish Governments so that we can trust and share and we set out a route map for that. We made a series of over 40 recommendations which I won't go through these one by one, but amongst other things we recommended the re-establishment of the link between benefit levels and the cost of living, the introduction of a new social security allowance for Scotland, the abolition of the bedroom tax sanctions and the work capability assessment, the increase of the carers allowance to the same level of the job seekers allowance and raising the national minimum wage to equal the living wage. In the medium term we must plan how to support those in our society who most need the support rather than reacting in ad hoc manner. We were very impressed with the evidence that a serious and sustained focus on pensioner benefits over the last two decades has significantly addressed pensioner poverty. Indeed I was at an event in Cacodd a couple of weeks ago when Gordon Brown was in conversation with Sir Tom Devine. Sir Tom asked Gordon Brown what he was most proud of in his political career. Without hesitation the reply was the reduction pensioner poverty from over 30% to less than 10%. We recommend a similar sustained focus on benefits for people who are sick or disabled and who may be unlikely to find a root to well-being through work. Our last recommendations are for the longer term this search for simplicity. We set out two of the most coherent future propositions a contributory-based system and a universal income-based system. We could at the moment support neither on the basis of cost. The evidence to us that the costs of introducing these systems are high with basic rates of income tax creeping towards 50%. We consider the restoration of trust to be a prerequisite before any such level of taxation would even have a remote possibility of serious consideration for the political party. Finally, our recommendations are not just for an independent Scotland. I would quote from the 5th of June Herald editorial whether independent or not Scotland needs a welfare system that treats benefit claimants and those struggling to make ends meet with dignity. This report has some useful ideas for how that might be better achieved. Thank you, convener. Thank you very much. It is a good overview of the report and I am quite sure that you put a huge amount of effort in to achieve that. Can I start by asking a couple of questions around not so much the remit but the basis on which you are working? Did you impose on yourself or did you have imposed on you any constraints in terms of finance of the overall package that we were looking at, the public spend, if you like, was a figure given to you were you given any indication of the parameters around which you could come up with suggestions? We were given none, although we did work out our own estimates about the cost of social security so we knew what that was going forward. We worked out our own as £18 billion. A few months after we worked out our own the DWP came up with their own figure with £17.9 billion. We were delighted that our figure was in that ballpark but we were given no cost constraint of that by any party. We were asked to look at costs but no cost constraint. In terms of looking at the costs are your suggestions the basis on which you have taken forward your ideas? Will they lead to higher public spending in the short term and the long term? I have a figure around which you can give us an indication of the levels to which there might be any increase. Again, our analysis was there would be no significant increase in public expenditure through our figures. Actually, the DWP figure was short so there was a decline in the cost of administrating benefits for a period of time. Our own analysis was where there would be increase in public expenditure, be offset by savings elsewhere. We tried to set that out in chapter 6 of our report but we were not looking for any significant increase in public expenditure. What we were looking for was a far more effective system of using our existing resources including our policy resources to help people back into work and support those who are on benefit for their efforts to find work. You referenced the efforts of the UK Government under Gordon Brown to address pensioner poverty. Did you look at the impact of the pension situation in a future Scotland in making assessments of how pensioner poverty could be tackled in terms of the increased demographic changes and the cost implications of those demographic changes? We accepted our remit which was to look at benefits for working-age population earlier and we stuck to that remit so we didn't look at pensioner payments at all. We looked at working-age benefits. I'll pass over to the committee now and go to Jamie first. You're followed by Alex. Thank you for coming before us today. Mr Evans, you mentioned the nature of Scotland being a wealthy country with a well-educated population. In your report, you said that Scotland is in a positive position regarding affordability for a social security system. I wonder if you could set out yourself and your colleagues what led you to that conclusion and what does that mean in terms of our ability in Scotland to implement changes that you've set out? The evidence was quite wide-ranging, but looking at overall expenditure on social protection, as a percentage of GDP, it's lower in the UK and lower than a significant number of other OECD countries. In terms of payment of taxes raised in Scotland pay for our system already so we are already paying for it it just happens to be through a UK delivery mechanism. If we were to look at this we would say, yes, we raise the taxes to pay for the system. System of expenditure is not disproportionately high in fact it's lower than the rest of the United Kingdom it's low-ish in comparison to other OECD countries so it's both affordable and sustainable. The issue is no government wants to carry on spending money on benefits if it could avoid and get people off benefits and into the tax regime so again that would be an objective. Of course, as I said, it's entirely affordable. The question to us wasn't, is it affordable? We settled that question was what political choices would an independent Scotland make about how it wanted to support the benefits system and invest in the future? Yeah, I'm sure I suppose the point I'm asking to explore is given it's more affordable does it make it more possible or easier or whatever you want to think to approach it on that basis in terms of reforming the system? More approach than a current system? Yes, indeed. You've obviously posited a number of suggested changes as opposed to the question. Given that you're saying it's more affordable, so it's more affordable here in Scotland does that make it more flexible in terms of implementing change? Well, I think if you have policy control which I think that's the issue that you're interested in allows you to pursue policy objectives consistent with other policy objectives that you wish to have in Scotland so the affordability is one issue then the policy control you have allows you to bring other aspects of the welfare system into play and we've set out a number of issues which we think that can happen but let me ask my colleagues if they have additional issues to say on that. I think there's a number of issues there firstly, as Martin outlined they're what we spend in social protection in Scotland is less and comparison. What you do with that money and in the event of a yes vote with additional resources is obviously a choice that will be made post-yes vote we've obviously looked at the role of a convention and helped to set policy around that. What struck me particularly in all the work we did both in stage 1 and stage 2 but also just in terms of the evidence and I certainly am all this in different sessions where in the current system there are a number of issues about how the system operates in terms of level of bureaucracy we talked about for example the committee you looked at the role of sanctions and the impact of sanctions recently in terms of how does administration operate already and the costs around that then also you have the opportunity to look at for example how devolved and reserve services might fit together more effectively from the perspective of carers and disabilities the number of assessments you have to go through so for me there's a scope within all of this to look at well how do these things operate and operate more efficiently and potentially what could you gain from that? If I'm making you understand and answer to your question the key thing for me obviously was first of all being in business for the very interest in the costs but secondly I think the key point is actually the whole report that is constantly focused on relationship to work and it's about work it's about positive employment for people and positively working to get people into employment and that in turn is beneficial to society and it makes the whole system hopefully ultimately less expensive more affordable and so effective and that's an absolutely key principle I think it does come through the report as well I think that ties in very well to actually meeting the costs we're talking about a short term change to the current system can be readily incorporated within the expansion framework which we set out I know that Dylan Willams mentioning our important science I couldn't help but notice your conclusions in terms of the science system we're quite similar to our own and you also mentioned there in the national convention which you suggest to be established in 2015 and one of the things that it would consider I wonder if the panel could tell us how you think your social security partnership would be an improvement on the current system I think it goes back to the point that I made about trust and I think from the perspective of those who are part of the system and generally there's been a real loss of trust in how the system operates for a whole range of reasons so part of looking at the partnership was what do we need to do to rebuild social security and a commitment to that in Scotland and by bringing together people who are both a part of the system who can shape the system is to rebuild that kind of sense of contract and social cohesion so it was to start from the element of all together and collectively who contributes to shaping the policy in Scotland and a social security system and then how do we develop that from there and the report from that perspective a route map to that here's a draft partnership agreement or partnership approach here's the element of trust in the kind of language in this course we wanted to use was to change the tone of debate about welfare and social security and we use the term social security rather than welfare is to change the whole debate around why we need to invest in this kind of approach so for me the partnership is very much about rebuilding that element of trust and the people who a city or a stake in the system have a real role in shaping that system I think one of the things we were struck by and I'll ask David to have a word here is when we went round speaking to really small business owners and then we also spoke to a labour market economist the critical role that small business plays in their communities and keeping people in employment when times are tough both for those businesses and for the individuals in employment longer you're kept in employment the more likely you are to have a sickness benefit or something like that to come back in the quicker you let go the longer you're out the more likely you are to relinquish a language on benefits one of the keys of this kind of new idea of a social contract to say we're all in this together this is part of the building block you must put in to a trusted social security system and not just to say the benefits will sort it out benefits are critical but all our Murray polling was saying benefits cash is a start point there's a whole range of other issues dignity, trust, reliance which are critical to rebuilding this trust we talk about and I come back this very very positive message we had back from small business if they could be encouraged to keep people back in work it would help the social security system if they're open to that and can be supported with that that helps us all it's so important that they were considered partners in this endeavour and that's why we put them in there with individuals, the state and business and we were very careful to say around them becomes all these civil society organisations it's not to forget the role of trade unions, campaign groups they help that partnership David you were involved in some of those meetings with me absolutely and I think that's a key point I think there's a perhaps sometimes in these discussions if I'm honest both at a national and a local level as well and I spend my life defending businesses because they genuinely aren't setting out to put people into an employment and that's quite the opposite, they're actually looking in a large part across Scotland for employees and well trained employees and I think also a key part of our suggestions is the real close link to skills development and I think that's really important it's not just about money as Martin said absolutely not, it's about skills development it's about a close liaison there so we are training people for the workforce better more competently and that they're more likely to gain employment and importantly as Martin also just said stay in employment because there are quite a number of people who tend to wander in and out and it very much relates to skill level and all honesty yes it does as the professor said to demand and that is patching some parts of Scotland but at the end of the day if you're more skilled you're more likely to be employed we had this concept of distance from the labour market we wasn't physically how far you were from a job but how far you had to travel before you were able to take up a job and what we recognise was we disproportionately invest on those people who are quite close to the labour market, people have gone out of a job quite quickly we are suggesting a reinvestment on those who are quite a long way from being able to get back into a job and that's our social investment part that we were very distruck by the evidence from the Nordic models about how you invested you brought people who are a long way from the labour market you didn't sanction them you supported them in finding the route through the steps they needed to get closer to being employable and finding those jobs now there is the other side about job creation too which your previous evidence was talking something about but I was also talking about the systems whereby you brought people closer to the labour market and we were saying relocate your investment for those who are furthest away because those who are quite close will come back in with much less help from the state so if you're not careful you'll pay for the low-hanging fruit those who are close to the labour market and you'll disinvest on those you really need to get back into work as far as possible You talked about the introduction of a new social security allowance combining benefits together and you also talked about the bedroom tax being enforced which of course there's widespread support for in this part and the Scottish Government of course committed to that as part of this social security allowance housing benefit wouldn't be included can you set out why you've come to that conclusion? Yes, I mean I think we've seen we saw housing benefit as much more of a local benefit much more able to be operated through local authorities much more sensitive to that looking at their own housing market local authorities have to develop their own local housing strategies we thought that was important too we also make these comments about the private rented sector costing a Scotland half a billion pounds a year in rents and we wanted to make quite sure that there was some sort of quid pro quo for that investment that though that might have been paid out private landlords they weren't receiving a will winful benefit from rising property prices in their rents and also the issues of security of tenure now we held back a little bit from the stronger suggestions about security of tenure and the work of Douglas Robertson from Stirling University who was evidence that a call to increase security of tenure is misunderstood by private rented sector tenants who feel they have to stay for that period of time so we wanted more work done to on that issue but that's the reason we wanted housing is a very local matter we think they're more local it's looked at and delivered the better I don't know were you also informed about that place yet but there's been concerns about the idea that housing benefit being wrapped up in that and making it much more difficult and also the issues of direct payments and so on and people potentially being building up our years and the rest of it that features part of the rationale as well all of those things are in part that this idea of fairness and personalisation we wanted to get back to this idea that trying to help people to choose what's best for them and how that benefit paid I've been around long enough to remember that stage of which housing benefit was taken from individual tenants and given to landlords and now the proposal is it comes back to us personalisation let people try to choose within a reasonable series of choices how they can receive their benefit to best suit them and also we listened very closely to the SFHA and others it's clear that we don't have evidence about the future of universal credit but we had a lot of concern about this one size fit all the period over which you receive your benefit monthly the mechanism by which you apply for it through the computers all these things we're saying you need to step back a bit to make it both personal and fair you need more flexibility in the system and I think that's possible speaking informally to those I wouldn't underestimate the complexity that that gives and therefore we parks slightly to one side the simplicity objective which we hold very dear but we say you can't have both simplicity and personalisation at this stage this issue of personalisation is also reflected near the issue of assessment relation to the social security allowance you talk about it the allied identification agreement of an individual's needs and goals should be the starting point for assessment and you're also recommending that work capability assessment is scrapped and say a series of new features should take its place can you talk a bit more about that why you've come to that conclusion this was something that was pretty close to my heart and certainly based on some of the evidence a lot of the evidence we received about the impact of the WCA and I know that as a committee you've looked at that that it is purely it doesn't look at a whole person it doesn't look at the whole person the abilities, the context in which they live and it kind of goes back to my own career as a careers adviser about your starting point is that for someone to achieve their goals you have to better understand what those goals are what their abilities are, what limits something from achieving those goals so although we didn't stress what the system might look like hear the principles around that so what is a person wanting to achieve part of the people cycling out of unemployment is that they're not given a chance to develop their skills and abilities or hear as the job you will take is a work first approach and certainly evidence we've heard from academics particularly where they'll swear is that this doesn't work we know a work first approach doesn't always work so it's about in the longer term how do we get people to where they want to be and so the processes around for people with disabilities is that what are the range of barriers that prevent them from working it's not just about work itself it's about physical barriers, social barriers and so on but also for example the view of someone who has care and responsibility how do they balance that with paid work as well so the element of looking at assessment and support is that it starts on the basis of what goals a person wants to achieve within the context of how the labour market operates I think that policy learning from the Nordic model is quite challenging to some of the pressure groups in Scotland they have to address the issue if you to build trust in a system what are the rules you have to apply to receive benefit, the activation rules the conditionality rules and this is part of that discussion to go through the national convention to say what those should be we were very struck by the evidence from the Nordic countries how high levels of trust in that system relied on the people taking a very clear role each of the parties taking a very clear role and part of that is fair assessment of course critical absolutely critical to that and personalisation having suited the person part of that is also that it's not just the job, can't be the first option there are people as I said a long way from the labour market they need support into a voluntary sector volunteering other forms of activity too but without the harsh current system of sanction and it seems like quite a binary approach to us so we were very struck by this conversation that is a progressive conversation if you to build trust in the system what are the rules that you would seek each of those parties to apply to themselves and to others coming back to this issue of trust people sometimes again reframe that as trust of people in receipt of benefit that is very very important as we say but there's also the equally important trust of wider society in the benefit system only when those two are better aligned can you have the best possible outcome I talk to people almost every day who believe they have been told that Scottish independence will lead to an instantaneous multi-billion pound step change in the redistribution of wealth through taxation and benefits that's not what you're talking about is it our starting point with the Speaker of Scotland had voted for independence so we didn't make a comment about that our proposal is within the envelope not that we were set but that we choose to operate it is possible to rethink a more progressive welfare system and it is within the envelope that we set ourselves which is for the 18 billion pound current system which we say is affordable because the taxes that are raised in Scotland pay for that system so I think that's answer your question I hope so what we're talking about is in effect a proposal, a different proposal certainly, but a proposal for radical welfare reform would that be a fair description of it well I think well our description would be it's a rethinking of welfare because we keep on coming back to this idea the money is important but all those things that surround it the respect, the dignity, the trust are important and they are not peripheral to the issue they are actually central to how you deal with welfare and you actually drive well-being through a welfare policy which recognises those things and our evidence to us was people do not at the moment trust the system rightly or wrongly those in receipt of benefit and wider society have a degree of distrust in it so our line was rethink welfare that was the strap line that we used within the three principles we set personal and simple you wouldn't be the first people to propose a set of principles to radically reform the welfare system we're going through one of these sets of proposals at the moment and it has not been easy timescales in particular have been difficult how do you see your proposals being affected by timescales what timescale do you envisage for it when will it begin to deliver and how long will it take to complete the process a line is this you have to start in almost immediately in the Scottish Government did make a response to our report and then you have to set up in our view 2015 this partnership arrangement to discuss all we're talking about our initial report talked about our transition the Scottish Government said the two-year transition from independence to a new system we keep on coming back to this it's an enormous effort it's a shared effort which can only be successful all the parties we're talking about are in there we didn't set out a timescale for this we just said within five years for the short term so we said within five years all that was suggested for the short term should be able to be agreed how do you envisage the transition between the existing system perhaps not as it is today but as it may be when the transition takes place how long will that take is it something which won't begin until 2018 is it something that will take five years or more to complete the transition through our first report set out a transition timetable which the Scottish Government cut to two years we said it slightly longer their commitment is within two years of independence there will be a new system as I recall their position is that's for the parties to decide the transition an important thing for us was protect the claimant interest through that period that's what we kept on saying concentrate on the claimant interest and maintain the benefit levels to make sure that it's effective the Scottish Government's made a commitment to do it in two years am I I want to say was a fully pick up Martin's point was that there are choices that will be made that are not in our gift to make the rough timelines we set out I think in the report we're around as Martin says five years initially for the short term goals and then roughly five to ten years for others I think looking back at the last session we gave last year we talked about almost like a twin track approach where certainly from my own perspective is that clearly from the evidence we received that some of the damage that has been done just now has to be rectified in some way so within the first couple of years for example increasing carers allowance is the lowest income replacement of all the benefits despite the contribution of carers some of the issues around work capability assessment how it operates so some of these things from my perspective need to be tackled immediately cos there is a lot of damage that's been done and then secondly the other issue is that there's clearly an election in 2016 so that and its self will affect the whole environment around this discussion and obviously circumstances change if financially if Scotland becomes stronger and things are a bit more economically stronger then maybe things can speed up we don't know that there's a lot of things we can't look into the future and see what we've done I think is provide a strong route map in a direction of travel which some people might say is radical some people might not but what we've done is hopefully try to change the whole discourse around this certainly the message I got from first sector colleagues in the very beginning of all this process we've achieved a hell of a lot and I think you know from our perspective that's part of the reason for that so there are factors out with our control that would determine the kind of timescales or issues that you identify I think when you were before the committee the last time we sort of glossed over issues like tax credits for example because we made the assumption that tax credits would be history and universal credit would be in place before any change started is that still the assumption you're making I think it's very difficult for me to make assumptions which aren't in our report what we try to do in our report is set out the short term objectives which you said should be achieved and then medium and the long term it is a matter of the details about how one would do that transition a matter for the parties what we did discuss was tax credits seemed to morphed into a mechanism by which low paid employment was subsidised so we were very concerned with that if we were to tackle in Scotland this issue about the route out of poverty through work you would have to address the issue what is the purpose of tax credit and could there be better applied we didn't then say do this the question you're addressing is just how complicated would that transition be we're saying it is possible the words we use it takes on a normal shared effort we have the human resources to do that 10,000 civil service the policy direction that the Scottish Parliament would provide and the willing partnership we think should be brought to it the financial resources we say are there to do it as you well know looking at the welfare reform you've just been talking about it is a complex business our judgement is this it is possible because we look to other small countries to have a progressive welfare system it is possible to have it in Scotland because it is affordable we think the will is there that was our conclusion from the evidence we took and we didn't just sit in a room we went out and spoke to a whole range of parties we spoke to importantly to the key people in business and the communities about this I think our take was I don't know how the people of Scotland will vote in September we were asked to assume they did vote in a particular way and if they did the assumption was that it would work hard to make it work from all parts of the Scottish civil society and political society if we are making the rough assumption that as we go forward it will be roughly on a revenue neutral basis spending the same money in different ways what are the costs the likely cost of transition specifically does a fast transition have a greater cost than a slow transition is there opportunity for the Scottish Government to work in conjunction with the UK Government for a significant period of time and share the costs and the process of transition or are we looking at something that will simply not cost us anything regardless of what we do it how we do it there has been a lot of debate about transition as we all know especially the report published yesterday the interesting thing about this area is the shared interest of both the UK Government and the Scottish Government in a smooth transition not only for the benefit recipients in Scotland because a significant amount of benefits are delivered in Scotland for people in London and elsewhere so the smooth transition is the interest of both Governments there is no pre-negotiation taking place that's why we couldn't discuss any of the details with the DWP about this but of course informal discussions would be if it's in the interest of both parties to do this if it's in the interest of both parties to have a sensible discussion the smoothness of it would be something for the parties to achieve we think it is entirely possible because we keep on coming back to that the financial constraints as we set them out they are an envelope which can be done the human resources are there as well so we are as far as we can be confident that if we spoke to wasn't saying no it's publicly but if that happened yes because my opening remarks will always in the event of the people of Scotland saying yes to independence what would be your contribution to building an independent social security system well the first resistance I had was a question about would they or would they not vote yes I just had to let that ride and then say come back to the question that is not the issue let's assume they did what would be the contribution I think I was very impressed by a whole range of people may get them into trouble but some of the DWP people I met informally yes they would apply I think they would apply a progressive supportive view to this I can't guarantee that but that's the impression I got from speaking privately Alex Ken to be followed by Kevin Can I just pick up on that just on the last point first of all I should actually say that if it wasn't it's a big premise based on independence putting that to one side if I may as a big if I have to say I quite welcome a lot of the work that's going on here particularly your emphasis on rebuilding trust and focusing on work and so on a lot of things we could all agree on but there are some difficult issues as there are always with welfare and cost gets to the heart of it did you look at transitional cost how much would it cost to introduce the system or the additional costs as far as I thought I'd try to answer that question as far as I'm concerned there's a new I'll try again the short term changes the current system can be readily incorporated paragraph 6.3 in terms of the transition costs of one system to another we thought that is as has been indicated there a matter of how the party is negotiating let's assume willingness we think there will be entirely within the current the cost of administration is half a billion pounds in Scotland actually 0.7 of a billion it's quite high reducing to 0.5 billion pounds we think within that envelope you could manage these transition costs there'll be no additional transition there'll be some significant savings too we believe we can't put the figure over the transitional period there'll be some savings in terms of how better people are helped into work how better the system is operating so I would hope so over the period of transition I think the government is saying a two year transition period just one very simple example it's really fundamentally important is a closer working relationship to the point that I would hope ultimately a merger between Jobcentre Plus and Skills Development Scotland for example would be a massive improvement so that it was a one-stop shop for the individual and that in fact would be a saving so I think there's a real potential for that closer working together would A help the individual and B save in the short and long term and it need initially would not cost anything and so you can move to that system so I think there are opportunities within that framework to make pretty instant savings even in terms of bluntly properties and you know there's a whole sort of you know it's not beyond the word of man to actually make it work pretty effectively pretty quickly given cooperation is important that's right I'm not saying it's not I'm just trying to get to the essence of whether there are costs or not costs but you think there are no additional costs it just for example one of the first things you're going to do is you're going to have a different inflation rate for people in Scotland and those in the rest of the country but the systems will ought to be one system so I love to cope with that is that not additional cost by itself and that has been part of negotiations I think in terms of I mean certainly going back to our first report you know you have to look at how the system would manage that it has been doable I mean with particular changes in Northern Ireland we discussed it at the last session but yeah I think that's a valid point is that you know how does that negotiation pan out and what kind of agreement do you have in place with the DWP to take account of those changes and I think that there's a wider issue here is that when you begin to look at we're talking about the benefits system and we've identified what the cost of those are based on reasonable and quite robust estimates but there's a wider envelope here of different resources that do immediately come into play David has mentioned some about the role of how you look at employability you've got the work programme I mean obviously for example Labour's recommended definition of the work programme so there's 100 million pounds I think is roughly the cost around that you've got a whole other range of policies for example employment law in terms of how people balance things like working care and things so there's a whole lot of wider range of issues here that Valin just looking at cost in that narrow sense for me and it's what you do with that total package and within that obviously we can't see you know we can give it at a steer and we have done around what you can do with that whole package but there are wide decisions to be made that we can't again crystal ballgaze and say but we can provide a direction of travel so I think just to keep persistently focused on cost I think this is the opportunities that potentially will be there just a question I've got to come back to that I want to make clear that you say there's no additional cost we said there's no net additional cost you said there's no additional cost I didn't say well I meant to say there's no net additional cost there'll be on the balance sheet some will go up and some will go down our point is within a £700 million system which is what it costed minister of system in Scotland again remembering that's paid for already by the people of Scotland there will be some additional cost there'll be savings and efficiencies we believe they are as we said in paragraph 6.3 the short term changes can be readily incorporated it's just leading for me to say no additional cost but no net additional cost is what we calculate there to be I'm right in thinking that the system you're describing is marginally more generous in terms of benefit entitlements will there be an additional cost in those terms will the total bill that we'll go up go up we depend on what you compare it to if you compare it to no net increase within a UK system then there will be there will be a difference between if the status and that was only going up by 1% and this benefit system is going up by CPI the rate of inflation in the light for light comparison there'll be that yes I do remember this the UK government's committed to returning to CPI to upgrade benefits from 2015-16 anyway so in those terms if they kept that statement there'll be no in light for like there'll be no differences only if they didn't keep to that commitment Scotland would have benefits rising higher than the rest of the United Kingdom and if they keep that statement the benefits system will be the same and if they keep to that statement the benefits will be the same the benefits won't change the benefits won't change, well not in 2015 no but the commitment to the 1% rise stops with the and we are suggesting that the Scottish Government upgrades it by CPI and then I think accepted that so the additional cross then can you just ask one of the issues again that you get, you want to restore trust again that's very important but one of the things you say you're going to get rid of sanctions but you are going to replace sanctions with positive conditionality so just what does that mean exactly yeah well Lin was very strong on this and we are all struggle with this in that in could we have a system whereby you receive benefits and there was no condition to that receipt of benefit, you could receive benefit and work, you could see benefit and go abroad no, there was clearly some level at which you had to have conditions opposed by society on receipt of that benefit the question was what were those and if you didn't apply to those what happened to you and our analysis was the current system of sanctions was deplorable in terms of how it impacted on individuals and it wasn't achieving the objective that was set for it that didn't mean to say and the weak thing for us to have done would say no conditionality, we spent a long time talking about this this was a critical issue, it is not easy I would come back to challenge those sometimes on the third sector to say well what would you then do if it's nothing you then undermine further the trust the general public has in the system our view was the social contract was critical here, if you contracted in what was your commitment then to receiving this benefit what did you do, we took a lot of evidence on this from the Nordic countries where this is far more ingrained in the system to have this view that you had to give something back, you had to engage our, I hope ours is a reasonable line that we've got here but we put it into the 2015 group this kind of wider society group to work this out because these different points of view have to be argued through because at the end of the day you have to come to some sort of agreement whereby everybody says that's actually not acceptable either for the state to do that to you or for you to do that if you're in receipt of benefit so we were this is a hard hard question and I don't want to duck it at all and in a lot of these discussions with me but I think we came to a place where we set out a draft social contract that's for the people of Scotland through their representation to decide where it is at the moment it is broken in many people's experience, it is far too harsh in many people's view and it's driving people into a place which I don't think a system should drive people to and now I did it with most of the people we spoke to that was a good so many of our discussions it's an incredibly difficult topic and I think we defledded that in the report is that there are a range of views and where sanctions should sanctions play a part in this. Martin measured the Nordic models and we had the expertise of our colleague John Chris from Denmark where conditionality is a strong part of some of these systems however, the emphasis is on that as there's a lot of support in place in terms of active labour market policies as people are supported back into work so the issue of meeting the criteria there isn't really an issue in the sense that it's supported back into work and it's quickly as possible and in many cases the better work or the right kind of work Personally I have my own views around the sanction regime and I think the evidence now in terms of how that is operating is that it's moving people further away from the labour market. The first thing on your mind is how do you feed your family the last thing on your mind is how do I get to the job centre so I think there's issues around that for a range of years to come into play probably the deflected and accused discussion of our group is that what role does conditionality play it must be a positive model of conditionality which looks at support and people to get back into work at the right time that suits them it also then more widely looks at the value we place on things that are now parts of contributions which are not paid work so the value of unpaid care and contribution and also the value of volunteering so for example now in the current system volunteering actually makes your life a heck of a more difficult but it's actually for many people that is a real route back into work and then the other side of that is looking at how you use support people back into work so we've suggested looking at models like Community Job Scotland where it's not a work first approach it's about getting people back into paid work as well so I think to look at sanctions narrowly your right to raise the concerns and there is a wider debate to be had here it's much wider than that just it's that whole area of what does the support system look like and what parts of conditionality play in that I think for me some of the most powerful evidence we had was some of the powerful evidence you've had before you the experience of people on benefits particularly those who in technical terms we call distance from the labour market I had a lot of meetings with church groups and people here there's a strong desire to work someone said to me we're all a little bit broken in this room talking about themselves they say we need more support to get to where we are in a place where we can take advantage of some of these issues the question is to do it in a personal way that's why it's personalisation and a way that's fair both the claimant recipient and fair to the wider society now I don't doubt that this is a vast undertaking to reimagine rethink a welfare system for an independent Scotland the starting point in your question was well we might disagree with that starting point we just took our remit I quite assure you that we just took that as a remit the people of Scotland have voted for this what would be the next step and I think all our experience was those people deserve a great deal more of our empathy and support but in order to get that empathy and support there must be the social contract which is quite explicit and the Nordic model was quite tough on that frankly it had been embedded in their system that if you receive benefits you have this expectation and if you paid a high level of taxation for benefits and there was trust in the system it was a virtuous circle and therefore people were able to be dealt with better on that system that was a policy learning we believe me if I could have just transferred a Nordic model to Scotland and suggested that it would save me months and months of work not possible it hasn't looked at the detail of a culture a geography a society entirely different from our own we have to find a Scottish solution and that does take an enormous amount of effort I think I think two things I suppose from an employer point of view I think the fairness of the system and the robustness of the system is something that employers will look for and I think society in general looks for it doesn't look for something for nothing if you like I think that's important it's a key part of that it really is but I think again a point I made earlier on about the positivity of the system and I think even employers would admit at the moment that the system is not seen as positive about getting people to where they need to be to get a job to be to its position for a post as well I think it's so important so these are probably two industrial words I think that they're really irrelevant to employers particularly its conditionality and positivity about really doing something to help the individual we're talking about and again being individual about them as well I think one point I want to make going back to the issue around cost that's come up frequently is that this is a quote from evidence we receive and I think this reflects a number of pieces of evidence was that and it says this the development of conditionality and sanctions and the deceleration of people who are fit for work and the work programme have greatly added to the complexity the administrative cost of the current system so we have a system which people are being cycled within a system appealing, reappealing, appealing again on how to appeal and the knock-on cost just from the elsewhere to the other example to the third sector so there are issues around that around cost about how that conditionality system would look like secondly I think one of the things we did which was a really strong part of our work was to work with Ipsos Moray which looked at groups that traditionally wouldn't take part in this debate and what was interesting was the issue around how the system operates and conditionality was a very new interview about that and it was around the fact that the issues like how much money you get how you meet those criteria should be more about support so I think there's this issue about some of the attitudes we think exist in the system and also the fact that we have conditionality and sanctions themselves can actually add cost to the system I think I'm starting to push time so a quick question if you want to have one Last question I just want to observe that it's very similar to our own report on sanctions in some ways what you're criticizing is the punitive nature of sanctions that continue to exist under your report but people will continue to lose their benefit if they break the conditions that's the key thing We did that we left that for the convention to look at I think certainly there are strong views that shouldn't be the case and others will say that should be the case I think that's for the convention to work in terms of partnership The language is absolutely critical and if you say sanctions will continue there's a whole range of assumptions and we're trying to find a new set of language to talk about this in a way which is much more positive and a cynic will say what is a sanctions by another name we're saying work activation critical, conditionality critical for trust and what those means is if you start with a point is there nothing that would mean that somebody had the benefit was drawn but if they defrauded the system they'd still get the benefit most people would say no so if you start with that point then you'd require responsibility in terms of receiving the benefit what we're saying that is a discussion that you have to have to base a social contract on that's the point at which Scottish society in 2015 has to settle that as best it can in this convention and it will not be an easy settlement but it will have to have some hard edges otherwise the trust will erode in the system and you get a system which some of the progressive like but actually people won't pay their taxes to support it and that's the hard reality of it in my view I thought I was agreeing with you there but there was no use of language can I just one final question I said that would be your last question we were really up against the quote that was my question he did so I'm going to move on to Kevin thank you the situation in terms of sanctions our report itself said that there was a need for conditionality but for abolition of the sanctions regime as is and Mr Mackintosh signed up to that and is that basically what you guys are saying in terms of your report? yes I mean we read your material with great interest of course we've strongly influenced by it and it seemed to us like we'd had the same time length of time to do this but absolutely it seems an eminently sensible approach to take we then went that step forward to say well how do you then implement that by what route map we do that and we were suggesting that's not for the policy people in the government to do entirely they are players in that but to bring together with other parties to try to agree that that raising broadly thank you you said that Mr Evans that you can export the Nordic model here but there are certain aspects of things that happen in other countries where I think joining up of the social security system the health and social care system in Denmark leading to that much more holistic approach and getting things right for disabled people and their carers that seems to work well there is that integration something that you guys would like to see and do you think that that not only would provide better support for our folks but also have opportunities in terms of cost saving too absolutely we and Lynn again we might want to speak about this but the opportunity to join things up critical because one part doesn't actually work always in tandem with the other part we've got reserved and devolved matters they can work against each other also the integration the investment you make is recouped and gone back into the system within an integrated system and therefore you can justify social investment and preventative spend which you can't always justify if you separate the two systems in a current accounting system we also felt that institutions weren't always well joined up so there's all sorts of opportunities out there for these things to work better together and we make that point quite clearly in summary because we thought it was a critical point and in more detail in the report I think the short answer to that is yes I think that for me from the very beginning and certainly when we attended some of the consultation sessions particularly struck obviously as an unpaid carer with the session of unpaid carers was the disconnects within both let's be fair and within devolved services themselves but also between how devolved services and reserved services clash together so for example what was given was carers having to give at work because there's issues around social care so there's a loss of tax revenue there people are dependent on benefits they don't want to be dependent on benefits so there are opportunities to bring those services together we suggest within the report that there's a chance to review those in a strategic way to look across the board at what resources we would have if there's an independent country what are we doing just now that works relatively well and what doesn't make some critique of some of the commitments that they made already you know how do these systems operate together where are the clashes and the tensions one of the consistent measures we've got again and again was the number of assessments people have to go through blue badge community care benefit assessment work capability assessment maybe for educational support needs I mean for some people their situation won't change for children for example from really complex needs to live as the way it is so the focus on this medical approach are looking at the person around but there's definitely a chance to look at how these things operate more effectively so people can who want to work can work and there are tough questions we have to ask ourselves about how services currently operate and are they achieving the goals they're meant to achieve and certainly if you have some people that we spoke to us know that there are issues there around those tensions so for me the issue is if that's the case then what do you do with childcare, social care do you look how these things operate more effectively how do they connect with each other you know how do you streamline assessment processes and so on as well so there are great opportunities there to be had I think it seems that in many of these places folks have got one point of contact in a one stop shop kind of scenario is that the kind of thing that you would like to see I think that we did talk about that a lot that you know someone was saying for example one example was given when someone such health as a diagnosis of autism for example and they're dealing with a particular professional on the system now it was actually a carer who said why don't you just press one button and it says you're eligible for benefits you know it's that kind of simplicity is that that person you know rather than having to deal with 5 million different professionals I think one example is 24 different professionals in the case of one family is how do you then make that as simple as possible so how do you then reduce that bureaucracy which in itself has got the same money in the system somewhere along the way in terms of the holistic approach and sticking with that I attended an event on Friday I think it was at the Stuart Resource Centre run by the MS Society in Aberdeen and you know I'm always struck by the fact that people just want to carry on work for as long as they possibly can and you know we've got to give them a certain amount of independence in terms of payment to allow them to do that we've talked earlier about the small business role sometimes folks work for small businesses we find it much more difficult to cope with somebody being off sporadically with no set warning so how can we bring all of that together to make sure that we can keep folks in work for as long as they want to be in work in these circumstances and at the same time support the business community to allow them to continue to employ folks Maybe it's one for David I think it very much follows on from the point I've just made that one way it's not joined up in most of those 24 professionals that are talking about will never speak to an employer and that's the thing there is no connection there's only 5 million of us that speak to each other and do things together it's almost regardless of constitutional change we should be working together for the benefit of the individual and I don't think that that happens when most employers are not well engaged and small employers are ups that spot on have very limited resources they don't have an HR person they don't have expertise they don't have the expertise or knowledge which a larger business obviously would take on the stride and be able to spend money in preparation and credibility and facilities accessibility and training and that's tough for small employer but we need to make that more available we need to work more with the third sector specialist in certain areas specialist areas as as you've just mentioned and get more awareness of what's going on so I think there's a big challenge to do that as well with that joined up approach and I think if we were talking to employers at an earlier stage and getting them I think to my it's more sympathetic to the system as well if they saw the system really working to help people into employment very positively and work with them I don't think that that happens and indeed even in the convention the suggestion is that the private sector would obviously be represented to my it's the private sector probably hasn't really much engaged in the system for a long time except as a recipient so his first thing is engagement so to get the respect dignity and trust within the system which seems to be out the window at this moment in time we need to create that joined up approach including not only public sector bodies but private sector bodies to get to the place where we want to be David and I discussed this quite a lot during the group was around the role of employers and the only reason I can balance doing what I do is a care around work is because I've got to understand an employer who's flexible around my needs now they can do that just now so for me it means they don't have to recruit someone new the cost of the business they have losing hopefully what's the value to employee but I think for me it's the opportunities around things like for example if you have employment law you could do a lot more around some of the employment rights that exist already but for me employers are critical they're a part of the welfare system in a lot of different ways and so on as well so they absolutely have to be part of this partnership a portion moving forward If we see private sector employers as the problem we're never going to get to where we want to get to they are part of the solution they're not the entire solution and a reason I can be very positive about that is having spent a lot of time with small employers out in the towns particularly where they know who works for them they know their communities, they're engaged with their communities there is a willingness to help civil capital that they do care and that is not easy to say in some of these discussions but we have to say it really openly because that draws them in allows them not to see the state as just a cash cow to give them money but their reciprocity in this they have something serious to offer to their local communities and in local employment that's why we say bring them in as David was very important to bring them in and bring them in and allow around them their civil society support organisations to help because by themselves they're very ill-equipped to do that by the nature of a small business how can you get time off to come to something a convention, you have to find your civil society support organisations your business associations similarly the trade unions have to come in to support similarly the voluntary sector has to come in and support but we were very clear that the private sector is much part of the solution for a modern welfare system as the state is it's a necessary but not sufficient area of improvement and very struck by the speaking that we did to them about the willingness to be engaged if they're asked I think that's your quick to us thank you very much thank you convener just a couple of points on the issue of for example disability assessment and the current sanctions system and going back to the quote from Mr Evans at the start from the Herald editorial of 5 June to the effect that whether independent or not Scotland needs a welfare system that treats benefit claimants and those struggling to make ends meet with dignity and so on I mean I would make the point that of course in order to take up recommendation in paragraph 27 to abolish the current system of sanctions in order to take up the recommendation in paragraph 31 to scrap the work capability assessment it is only with independence that Scotland will be able to do that that is not on offer from anywhere else or anybody else that is what we need to do and we need independence to do it and indeed in chapter 3 on page 27 chapter 3.4 the sentence starts off what is clear is that independence provides Scotland with the opportunity to design a social security system afresh so I would contend that part of that would be getting rid quite rightly of the WCA as it currently is the current sanctions system but independence is required to do that so I just wanted to make that point as much as the Herald editorial was interesting to me that it certainly lacked a certain factual link to raise substantially in terms of an issue we haven't yet got to is paragraph 30 and the recommendation to the effect that the national minimum wage should begin to rise subject to certain conditions and phased amounts to equal the living wage a clear timetable for full adoption should be set out by the First Government of an independent Scotland and the group goes on to say we recommend the payment of employers' national insurance to reduce to help businesses make this transition I think that's a very important recommendation I know that the Scottish Government's response is that it's looking very closely at that at the moment and I feel that it would be rather odd if we didn't spend a wee bit of time discussing the thinking behind that recommendation our thinking behind that was if we are to encourage people into work it must be good work and it must be reasonably well and the evidence we had was that if the minimum wage had been uprated to inflation it would currently stand at £7 an hour and the living wage at the moment is £7.65 it didn't seem to make us to be a big gap and a big leap to be saying let's be ambitious about that let's move much more to the living wage so that was the reasoning behind what we were doing internally of course we had a number of economists on our group and our advisers too and they were worried quite rightly about the behavioural consequences of that and the affordability of that so we then put in the caveat over a period of time by phases as the conditions arise very struck by the low pay commission's report there's a significant number I think it's 20-25% of current employers could currently afford to pay the minimum wage quite an extraordinary number could have currently afford it and then a move would the move be by regulation to require it or by encouragement and our line was well I actually think we owe it in terms of a growing economy to redistribute some wealth because of all the evidence we had about those who were not just people starting their careers they were in their mid-career in their mid jobs bringing up a family on a minimum wage £6.31 an hour so I think it was the quid pro quo of us emphasising work to say you can't just open up the labour market as it is you had to actually have some sort of government intervention in the labour market and I welcome your emphasis on that because it was an important part of our recommendation one that we talked a lot about about the process as well Thank you and in terms of the express recommendation on the issue of potential reduction in employers national insurance again it would be helpful to get a bit more of the background to that recommendation Certainly the conversation that we had was this is a particularly difficult task for very small businesses to actually ask them to move from the minimum wage to the living wage potentially and you had to open up the possibility what would the state what would government do to assist with that and so we looked at this issue maybe you could have £10,000 a year for insurance bill for all businesses in order to help with that now that £10,000 a year off would meet completely inconsequential to for example Tesco but would make all the difference potentially to a very small business so that's what it would be we looked at the costings of this and we felt the costings were a net gain to the Exchequer in independent Scotland so with all these issues it's about saying that we think we thought the partnership should be an increase of the distribution of the benefits of working to a wider set of society £7.65 an hour didn't seem to us to a non-reasonable figure over a period of time recognising micro and small businesses would find that difficult advised by David and therefore this national insurance proposal was in there costed I don't know if David you want to say anything about it but it's a significant issue for business as well and I certainly think that's why a progressive movement in that direction I don't think that any business is setting out to pay people poorly they pay it what is an affordable wage and ultimately of course the customer and we as the public and the consumer of whatever service or product it is pay for that and I think there is this very clear link to how much the state takes out of people's wages as well and that's where national insurance is an issue as well and I think it will be a challenge to an incoming Scottish Government to look at that whole package and how that's actually done but I think that the recommendation we've made is a sensible support for particularly small employers we're definitely challenged with that One of the conversations we had encouraged people to voluntarily move to the living wage you then give a competitive advantage possibly in terms of price and access to those you only paid the minimum wage so you had to have a discussion about what you wanted to achieve and if the two had been very wide in terms of where they were I think it would have been impossible to require to move by statute to the living wage because they are so close and real-term it struck us as both a symbol about where you wanted to go and a practical issue about what is the real issue in Scotland in terms of employment it's having a competitive industries it's having issues so that productivity is not affected and competitive competition between businesses is not inhibited by this so that was our thinking Fundamental point of course I keep going back about skills and the relationship between skills and unemployment and indeed skills and wage levels so I think if we can upskill our workforce you could say from the bottom up if you like that indeed gives them more capacity to earn more money because they are concentrating on you could argue that we are not focusing enough at the people we are talking about here in upskilling then it's like all the other debates we've had in this session this morning it's the holistic linkage between devolved and reserved powers and of course I would argue that without being able to make that linkage every day in terms of every policy we are rather hamstrung and operate with our hands tied behind our back and I guess in terms of the living wage I mean the point about the minimum wage not keeping up with inflation I think it's very relevant to this debate and also I guess in terms of this issue and indeed many of the issues raised in this I think very comprehensive report is that you have to look at the costs of not doing something of not doing some of this the cost to societies a whole because if the trajectory is to increase in the way that we heard from the earlier session about impacts on deprived communities the cost to societies and getting to groups with this problem I think we'd merit a study in itself but thank you very much I won't detain the committee any longer I want to keep in the theme of joining things up but also talking about employers because I certainly don't think that we ever recognise enough just what benefits small and medium enterprises have in local communities and the cohesion and wellbeing that can be there I noticed in the report for example that there was one of the paragraphs that talked about perhaps maintaining benefits into a length of employment which I presume is about the unemployment trap helping with that and we also know that very often there are incentives for employers to take on young people apprentices and all that kind of thing but if we're really talking about joining things up and I think this applies as well to sole trader self-employed as well as small and medium enterprises anecdotally I find in my constituency there's a real disconnect between the benefits system and employment law for example and how employers can act and I very often come across employers who have said you know I'm having to pay people off see if I could talk to the benefits office and come to some arrangement that they'd get help for a few weeks they'd still have a job in a month's time because it's just a really difficult patch I've heard self-employed people who give up being self-employed because that connection is not there that allows them to live day to day and I wonder if that was something that you looked at the ability to include employers and employment initiatives but include employers in the ability to keep people working and keep people employed once they're already there if it's the employer who hits a hard time Labour market specialist who came to give evidence was absolutely a critical role of employment was to retain people who may be not well at a particular time but it's important with some connection with the labour market working part-time or having some time off to come back and that's not unusual in a whole range of industries but it is unusual in some of the small businesses because as David says they're not well resourced in terms of human resource support they don't understand a complex benefit system either so they can of course do that in my forward I say disconnects between parts of the system which are currently reserved and those which are devolved this gets the heart of some of our discussions we couldn't go to all the details which should happen but everybody we spoke to said yes you can make these better integrated part of the strong view that certainly I have is evidence about older men and older women being absent from the labour force less than half of women over 55 are in employment extraordinary figures compared to 80% in other parts 70% in other parts of Europe that's a massive drag on our economy not having them as active part of the labour force now why is that I don't know, I am not a labour force expert but I know from a whole range of people they have a huge range of skills interpersonal skills and life experience so again we need to find why that is and bring employers into the point and what you were hearing before about where poverty was being concentrated often poverty is concentrated in the older industry areas where older men in particular have come out of de-industrialisation and not found a place in employment again we have to be looking at that too now that's beyond our remit but we were quite clear that the opportunities for employment are not just about being passive in that area the government has a role to play in particularly those two groups, older men and older women and employers have a role to play and if we're not careful we'll confine that it's just the private sector Lynn's sector, it's huge the third sector these days is multi-billion pound organisations in Scotland employing thousands and thousands of people the demands about the living way should apply to those the demands about employer should apply to those and they're highly differentiated so this is not an issue pointed at one part of the employment sector it applies to all including the public sector too about what they do but it comes back to this yes, more connection with the private sector, the better we will unlock that social capital which I think I saw so plainly in all my discussions with them I'm just to add to the point I mean it seems at the moment you almost get rewarded for being distant from the living market if you like, you have to be out of work for so long to get benefit that's exactly the wrong way round and I think that may be some of the reason because the longer you get out there the less likely you are as Martin highlighted that edge group to get back into especially if we're not really focusing the skills I applaud the modern apprenticeships but that's very much aimed at young people it's not aimed at 50 plus-year-old men and women who need to be in support of this and absolutely we shouldn't be rewarding people for being out of work, we should be working with the employers to try and perhaps give them benefit them while they're actually in employment having difficult time for a period of months to make sure they don't leave the job market because there's no doubt there's a significant amount of evidence that getting back into it is harder if you retain it there you're also more likely to enhance your career and get better prospects and also that's an absolute challenge I think you highlighted a very important issue there just a final point Cymru let's go back to the I know that all of you heard some of the evidence earlier from Sheffieldham University just in conclusion from my point of view we know that it's clear the evidence is absolutely there that an independent Scotland could afford its own system for social security and I just would like your opinion as to whether in fact in so doing Scotland could in fact narrow that gap between communities that very wide gap that is widening that we heard about earlier First you're right we do conclude it's affordable we conclude there's a political decision to be made about how you spend that money what your policy objectives are we set out what ours are part of those is we do say inequality is not just a moral issue it's a drag on the economy we bring people in actually you actually spend more so the preventative spend is there so I'm very keen to emphasise that the other thing I would before Lynn comes in just emphasise one thing if we're not careful this conversation about work really upset some people who have a view about work is not the way out of poverty I've tried to make it quite clear why we said that but we recognise some will not find their root out and that's why this view about looking about what we did with pensioners and trying to tie it to those who are long-term sick and disabled is a critical fairness issue you can only do that if you build trust in the system people are only willing to invest more if they think they've had a conversation about that and why we haven't tried other routes too so that's the point I wanted to emphasise at the moment so Lynn I think there are opportunities which independents would present absolutely however what struck me in all of this is maybe to take a more balanced approach is that there are issues with how devolution is operating and there's things that we could do better there's things that we do very well there's things like Mention Committee of Scotland which is a fantastic programme I said you'll operate that but it's a partnership which looks at getting people back into paid work so I think the main point for me is that our remit was around in the event of a year's vote look at employment law, benefits employability, work support and do things in a very different more defective way what struck me in all of this work continually both in phase 1 and phase 2 from the evidence you as a committee have gathered is this is the type of inequalities we have will be there regardless of what happens in September and if we re-choose in action regardless of that result then everybody loses so I think at the end of the day this is people's lives we're talking about and I think what happens in September is important important context is now where we're looking at these kind of issues perhaps more than we have in the past so for me the conclusion in action is not an option so I think that's probably where I'd want to leave that is yes that there's possibilities but let's be honest about where we are as a country it's clear that my membership the group does not mean that either myself or the organisation supported independence or any other form of constitution that's not our job we're a business organisation but I made that absolutely clear but absolutely I think the point Millen made is I think from an employer's point of view a less complex fairer system is going to be better and the one that focus on the individual is going to benefit the society and I hope that whatever happens in September your work and our work will be taken forward by whoever's power in this country and do something positive about it because we're concerned who are currently suffering so we need to do that that's the member of the committee there's just two technical questions that I just want to clarify in terms of the assessment of existing claimants did you take i