The cost of implementing new Holyrood powers – including a new benefits system – has not been properly estimated by the Scottish Government, Scotland’s public spending watchdog has warned.
A report by the Auditor General Caroline Gardner has also warned it will be “challenging” for ministers to recruit enough staff to get the Scottish social security system up and running on time.
Ms Gardner found that the cost of setting up new social security and financial powers would exceed the £200 million contribution made by the UK government and extra cash would have to be found from the Scottish budget.
The Scottish Government estimates that the new Scottish social security agency will employ at least 1,500 people when it is fully operational.
The report noted that 110 staff had been transferred to the social security programme from within the Scottish Government creating workforce pressures in other departments.
It added: “It will be challenging to recruit the necessary staff numbers and skills to develop the new powers.”
The Scottish Government aims to have a new social security agency in place by the end of this parliamentary term with the first first wave of devolved benefits expected to be issued in the summer of 2019.
The Auditor General said the specialist nature of roles dealing with new powers meant suitable staff were often in short supply and the Scottish Government faced external competition.
The report revealed that during the year the Scottish Government had offered “pay supplements” to attract people to specialist roles in digital technology and procurement.
On the costs of setting up the new powers transferred to Edinburgh under the 2012 and 2016 Scotland Acts, the report – Managing the Implementation of the Scotland Acts – urged greater transparency and better estimates.
It said: “Under the fiscal framework, the UK government will contribute £200 m to the costs of implementing the new powers. The Scottish Government will have drawn down all of this by 31 March 2018 and will have spent about £62m at this point. The Scottish Government has not estimated the total overall cost of implementation. The excess will need to be funded from the wider Scottish budget. Greater transparency and a better understanding of the overall implementation costs is required to help financial planning and decision-making.”
Ms Gardner said the government had to develop its “capacity and capability” to deliver the new powers, while delivering on its existing responsibilities and preparing for Brexit.
Her report said the social security programme was now at a “critical point” while acknowledging that “good” early progress had been made.
But it said a “significant amount of work” was required this year if deadlines are to be met. This would require working effectively with the UK government’s Department of Work and Pensions and the development of IT systems.
It added: “Plans need to be fully developed to reflect interdependencies, assurance activities, contingency arrangements and key decision points.”
It also described meeting the objective of recruiting and deploying key people on time as “challenging”.
Tory MSP Adam Tomkins said: “The Nationalists are about to learn not only how difficult it is to achieve a fair welfare system that’s affordable and sustainable, but how complex it is to get it up and running.
“It’s incredible that the SNP government hasn’t at least attempted to work out how much this is going to cost.”
A Scottish Government spokesperson said: “Our workforce planning is geared to ensuring we have the people we need to deliver on our responsibilities now and in the future and uses a number of established mechanisms to recruit specialist skills into key areas.
“The Scottish Government fully recognises the need for transparency in reporting of implementation costs arising from the new Scotland Act powers.”