In 2023-24, ministers spent £2.6 billion on the Adult Disability Payment (ADP), which replaces the UK-wide Personal Independence Payment (PIP).
That is £141m more than the funding allocated to it through the UK Government block grant.
And as the Scottish Fiscal Commission previously forecast the ADP spending gap to grow to £770m in 2029-30, Auditor General Stephen Boyle has warned the Scottish Government does not have a plan in place to manage the shortfall.
The gap in funding for ADP contributes to a larger overall funding gap for devolved social security spending of £2 billion by 2029-30.
Michael Marra, finance spokesman for Scottish Labour, accused the Scottish Government of “financial incompetence”.
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The Audit Scotland report warns: “The Scottish Government does not have a clear strategy in place to manage risks arising from any UK decisions on benefit spending that could reduce the size of the Scottish budget.”
The UK Government has also announced plans to consult on eligibility changes to PIP which could have a knock-on impact on Scotland’s welfare block grant.
The Audit Scotland report notes that while eligibility and payments are similar for ADP and PIP, the Scottish benefit is designed to be less onerous for applicants – but that has come at a cost, according to the Auditor General.
Mr Boyle said: “Adult Disability Payment is a lifeline for thousands of people in Scotland. It is also the clearest example of how the Scottish Government’s commitment to making the social security process less onerous has come at a cost.
“Given that the gap between available funding and ADP spending is forecast to grow significantly, the Scottish Government needs to set out how the gap will be managed over the medium term, and how this will impact on the lives of disabled people.
“To ensure money is well spent, ministers need to be much clearer on what parts of the ADP application and review process are making the biggest difference to disabled people, and what the costs are compared to PIP.”
Mr Marra said: “This stark report lays bare the financial incompetence of this SNP government.
“It is right that we build a social security system that works for people, but those aims are meaningless without a plan to pay for it or a way to monitor success.
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“The SNP must set out a real plan to balance the books and must get a clearer grasp on what truly makes a difference to disabled people’s lives.”
Meanwhile, Alexander Stewart, social security spokesman for the Scottish Tories, said the audit must act as a “wake-up call” to SNP ministers.
He urged the Scottish Government to “get a grip” of its “ballooning benefits bill”.
“Audit Scotland has made it clear that the nationalists are burying their heads in the sand when it comes to how they will afford this in the coming years,” Mr Stewart said.
“SNP ministers are so wedded to their approach of doing things differently when it comes to the welfare system, that they have typically given no thought to the ever-increasing funding gap created by their higher spending on benefits.
“Economic experts have made it clear that if the SNP don’t act on this then hard-pressed Scots will face more tax rises or cuts to public services.
“The SNP must start taking responsibility for their rising welfare bill. While it must continue to protect the most vulnerable, it also must deliver fairness and value for taxpayers and claimants alike.”
Social Justice Secretary Shirley-Anne Somerville welcomed the report and said: “Benefit expenditure is the result of our conscious decision to invest in the people of Scotland.
“Here, when somebody is eligible for support, they meet a humane system.
“Our efforts are possible because we balance our budget every year despite over a decade of austerity and punitive welfare cuts from successive UK governments.
“And our Medium-Term Financial Strategy and Fiscal Sustainability Delivery Plan set out the actions we’re taking to improve the sustainability of the public finances.
“I continue to call on the UK Government to reverse its plan to cut the health element of universal credit, which will cost around 77,000 households in Scotland £3,000 a year by 2029-30.
“Meanwhile, we will not cut adult disability payment and I urge the UK Government to follow our lead to ensure disabled people have the support they need.
“The Scottish Government will unapologetically continue to prioritise measures to reduce poverty and inequality, including through policies like the Scottish Child Payment and our plans to eradicate the two-child limit next year.”
