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We can cast our minds back only a few years to the time when the Scottish child payment came into being. As Mr MacDonald will remember, the payment was based on the give me five campaign by anti-poverty organisations. I was very pleased to work with my then colleague Aileen Campbell on the introduction of the Scottish child payment, which came in not at £5, which is what we had been asked for, but at £10. The payment will increase to £27.15 from April so, if my reckoning is correct, that is an increase of more than 170 per cent since its launch at £10.

We know that it makes a difference—we absolutely see that it makes a difference—but we must also bear in mind that the Scottish Fiscal Commission forecasts that we will invest £471 million in the Scottish child payment in 2025-26. That benefits the families of more than 330,000 children, so it is making an impact on families. As Mr MacDonald will know, part of our work in relation to “Best Start, Bright Futures: Tackling Child Poverty Delivery Plan 2022-2026” is about social security, but it is also about the drivers of poverty. That is why, as well as investing in the Scottish child payment, we need to invest in early learning and childcare, employability and so on. Therefore, this is one part of the work that we are doing. I mentioned the figure of £3 billion in my opening remarks. The Scottish child payment is important, but it is one part of our policies to help those on low incomes, particularly those with children.

I read with concern some of the reports about what has apparently gone to the Office for Budget Responsibility. I accept that Governments make choices; this Government has to make difficult choices. The challenge is to not make those difficult choices on the back of the most vulnerable in our society, which is why I was concerned that some of the first savings that were made were against pensioners, with the taking away of the universal winter fuel payment. Of course, we will reintroduce that payment in Scotland. However, it would clearly be a concern if tough decisions in Government were to be made on the backs of disabled people and those on low incomes.

Any of the changes that the Chancellor of the Exchequer makes will have implications for the Scottish Government’s block grant. If changes are made in social security to those aspects that are devolved, there will clearly be an implication for our block grant in relation to the adjustments in social security. All that matters, because I am very conscious that many members—and many organisations—wish the Government to go further. We have to keep an exceptionally close eye on Rachel Reeves’s decisions, because they will have an impact on the overall Scottish budget, particularly if she makes changes to certain aspects of welfare. That would be extremely concerning but, most importantly, it is extremely concerning for those who rely on those payments.

I am pleased that Mr Balfour will support the regulations, particularly on the basis that, at stage 2 of the Social Security (Amendment) (Scotland) Bill, he moved an amendment that was very similar to what I am proposing, so I would have politely pointed out that there had been a slight U-turn, had he said that he would not vote for the regulations.

However, I take Mr Balfour’s point on the fiscal sustainability of social security. We recognise that a great deal of work needs to be done to ensure that we are fiscally sustainable. Social security is an investment in the people of Scotland, and we need to bear in mind that, when people talk about cutting social security benefits in Scotland, they are talking about taking money away from low-income families, disabled people or carers, so people would need to find the money for those areas.

Social Security Scotland officials are working alongside exchequer colleagues to feed into the fiscal sustainability work, and I am working closely with the Cabinet Secretary for Finance and Local Government on that. The delivery plan will be published alongside the medium-term financial strategy. As part of that work, we must challenge ourselves in relation to how to run the system as efficiently and effectively as possible, so there is work to be done that involves not cutting benefit expenditure but ensuring that our system is fit for purpose.

In 2025-26, 82 per cent of social security benefit expenditure was funded through block grant adjustments. Therefore, I note that, when we look at increases in the level that is spent on social security in Scotland, a substantial proportion of that will be covered, because the Scottish Fiscal Commission’s forecasts are based on things that are happening right across the UK. Not all of the increase in social security expenditure has to be found through the Scottish Government’s budget, without that money coming in.

The caveat is that there are two different areas here. When it comes to areas in which we make additional investment over and above the Scottish block grant adjustment, the easiest way for the Scottish Government to be able to review the costings that we have on social security would be for the Westminster Government to relieve us of the burden of mitigating some of the worst excesses of the UK Government’s system, such as the two-child cap, the benefit cap or the bedroom tax. If Mr Balfour is looking for an easier solution that would enable us to reduce our social security expenditure, that might involve the UK Government ending the need for us to mitigate, or at least reducing the amount of mitigation that we need to do, in order to protect people from the worst excesses of Westminster.

The Government frequently produces and publishes information giving a breakdown of social security payments and the reasons behind them.

The convener rightly points to something that I see when I go out on visits. I am mindful of a visit to the Royal National Institute of Blind People last year, when I spoke with an adult but about the same type of process. That individual’s condition had deteriorated, but he had not raised that with the DWP because he was so fearful, given his experience of applying for benefits in the first place, that what he got might be taken away rather than being increased. However, he did share that change in his circumstances with Social Security Scotland and is now receiving support that he has probably been entitled to for quite some time.

That is not the only conversation I have had that shows that discussions in the community encourage other people to come forward. We will see more people coming forward because of others’ positive personal experiences, which takes us back to the idea of encouraging people to come forward to get what they are entitled to. I am pleased that that is an issue. Yes, it presents budgetary challenges, but we cannot try to cut the social security budget by increasing stigma or barriers. We need a social security system that works for people, and you have given some examples of that, although we must take account of the financial implications.

We did not ask to mitigate the two-child cap in the past. The Scottish child payment was established in phases because of the important work that had to be done with the DWP to allow data-sharing arrangements and to ensure that the framework existed to allow that to happen.

The progress of the Scottish child payment from policy inception to delivery was the quickest of any benefit that has ever been delivered within the UK. I am exceptionally proud of that record, but that was the beginning of a delivery that had to happen in phases to get the payment for children up to the age of 16, because of the work that had to be done with the DWP. There were important aspects to the timing of how the Scottish child payment was delivered. The fact that it had been introduced did not mean that the work stopped—work on the various phases had to continue.

Yesterday’s discussions with stakeholders were exactly about how we use the budget to move forward with the councils that are in greatest need. In relation to greatest need, we talked about the families behind the regulator’s discussions about systemic failure. As Mr Griffin and the rest of the committee well know, when we talk about systemic failure, we are talking about families and children in unsuitable temporary accommodation. I am particularly mindful that, when we talk about figures and the use of the budget, we always need to have in mind how we can alleviate issues for those in greatest need. That is exactly what yesterday’s discussion was about.

What I am saying is that, right across the UK, we are seeing an increase in the number of people who are coming forward for disability payments and that, on top of that, in Scotland, we are also seeing people coming forward because of the ease of the system. There are two different aspects to it.

There may be more people throughout the UK who are applying for disability benefits in general. We will then also see an additional increase on top of that, because of the lack of barriers to entry to our system.

We have not asked for information about the two-child cap, but I return to the fact that the difference is that we now have the Scottish payment, which makes that much easier. The key difference from the conversations that we had about the issue many years ago is that the Scottish child payment is now in existence, which means that the process, which is still complex—certainly, it is much more complex than was suggested in comments that were made yesterday—will be eased.

Do you mean the cost of the agency agreements?

We estimate that it will require an extra £5 million to meet the cost of national insurance contributions within Social Security Scotland. The committee will be aware that there is a staffing level of around 4,500 full-time equivalents, which is a significant workforce. The net impact of that increase will have to be met.

The overall net impact of the increase in employer national insurance contributions for the Scottish budget remains unknown. We are still waiting for clarity from the UK Government on what additional funding it plans to provide. I am sure that the committee can appreciate that such a level of uncertainty about something that has a significant impact, not just on the agency but across the public sector, is of great concern.

It is estimated that the change could add more than £500 million in costs for directly employed public sector staff. However, if we include the staff who deliver public services more widely, such as general practitioners and dentists, it will increase to more than £700 million.

The committee will, I am sure, be aware of the letter that the First Minister and the president of the Convention of Scottish Local Authorities wrote to the Chancellor of the Exchequer on 3 January, which was widely supported by many organisations in the public sector and the voluntary and third sectors, raising concerns about the ENICs decision and seeking clarity on that funding. That clarity is key as we look to finalise budgets. I am sure that the committee would wish the Government to get on with spending our budget from 1 April, but the lack of clarity does not help.