Public Audit Committee 17 December 2025
Yes, I am happy to start. I will explain why there is a qualification, and I will bring Carole Grant in on some of the forward look around this.
Social security powers are not static. Through the Scotland Act 2016 and the fiscal framework, we have seen the application of new powers that have come to the Scottish Parliament. Indeed, over the past few months, the committee has taken evidence on my report on the adult disability payment, which is the largest component of the social security powers that have been devolved to Scotland.
We set out in today’s report on the Scottish Government consolidated accounts—and “consolidated” is perhaps the important word here, convener—that the accounts reflect the transactions of the Scottish Government and those other bodies that are within the accounting boundary, one being the agency that is Social Security Scotland.
The auditor of Social Security Scotland has qualified their regularity opinion because of an estimation of levels of fraud and error within the agency’s accounts. As we set out in paragraphs 6 and 7 of our report, that relates to an estimation of around £40 million of overpayments to claimants in Scotland for benefits that are still administered by the Department for Work and Pensions.
Carole Grant may want to touch on what is coming next for Social Security Scotland’s powers and regulations in relation to detecting fraud and error. These benefits are still administered by the DWP, and the figure is Scotland’s share of the estimated overpayment. The reason why there is a qualification is that fraud and error in every circumstance is deemed to be an irregular amount of public expenditure.
Parliament sets the budget in the Budget (Scotland) Act to spend money as intended. Clearly, if there are amounts of fraud or error, that is contrary to the act and there is a qualification. Carole Grant, through discussion with me and Richard Smith, has to take a view on whether that is material in the context of the Scottish Government’s annual report and accounts and our audit opinions. We have deemed that it is not a material amount that would cause us to amend the opinion on the Scottish Government’s consolidated accounts, but it is still important. Hence, we think that it is still necessary to give it due attention in both the section 22 report and the annual audit report. I will bring Carole in as she may want to say more about either the generality or what comes next.