Corporate report

Agency agreement between the Secretary of State for Work and Pensions and the Scottish ministers in respect of the delivery of compensation recovery services

Published 15 July 2026

Applies to England and Scotland

Key personnel	Name	Role
Author	[Redacted]	[Redacted]
Owner	Neil Couling	DWP Director General, Fraud, Disability and Health
Owner	Ally MacPhail	Deputy Director, Organisational Strategy & Performance, Social Security Scotland

1. The Agreement

Document	Version/Date
Concordat between The Department for Work and Pensions and Scottish Government	March 2020
Memorandum of Understanding (MoU) and Supplementary Agreements on Devolution between the United Kingdom Government, the Scottish Ministers, the Welsh Ministers, and the Northern Ireland Executive Committee (MoU on Devolution)	October 2013
Memorandum of Understanding between Scottish Ministers (SM) and Secretary of State for Work and Pensions (SSWP) on joint working arrangements covering the implementation of devolved provisions in the Scotland Act 2016 relating to Social Security and Employment Support Services in Scotland (SM/SSWP Single MoU)	January 2023
The Agreement between the Scottish Government and the United Kingdom Government on the Scottish Government’s Fiscal Framework	August 2023
Scottish Devolution: A Framework for Audit and Accountability	March 2019
Scottish Devolution: Financial Arrangements for Formal Agreements	April 2025
DWP and Scottish Government Joint Communications Framework	December 2023

1.1. This Agency Agreement (hereafter referred to as ‘this Agreement’) is entered into between the Secretary of State for Work and Pensions acting through the Department for Work and Pensions of Caxton House, Tothill Street, London, SW1H 9NA (DWP) and the Scottish Ministers of St Andrew’s House, Regent Road, Edinburgh, EH1 3DG.

1.2. References to the Scottish Government (SG), the Scottish Ministers or Social Security Scotland will, as appropriate, be read as also including reference to each of the other entities.

1.3. References to Secretary of State for Work and Pensions shall be read as including reference to the Department for Work and Pensions (DWP), as appropriate, and vice versa.

1.4. DWP and Scottish Ministers each constitute a ‘Party’ and together constitute the ‘Parties’.

2. Purpose

2.1. Pursuant to Section 93 of the Scotland Act 1998, the Secretary of State for Work and Pensions may perform, on behalf of the Scottish Ministers, functions specified under the Scotland Act 1998 (Agency Arrangements) (Specification) Order 2018 – Statutory Instrument (SI) 2018/626. The Scottish Ministers have asked, and the Secretary of State for Work and Pensions agrees to perform those functions, in accordance with this Agreement, insofar as they relate to the delivery of Compensation Recovery services for people resident in Scotland during the relevant recovery period.

3. Duration

3.1. This Agreement is effective from and including 1 April 2026 (‘the Commencement Date’) and, unless terminated earlier in accordance with its terms, will remain effective up to and including 31 March 2027 (‘the Term’).

3.2. This Agreement may be varied, to include affecting a termination of this Agreement, by mutual written Agreement of both Parties at any time during the Term.

3.3. If an extension to this Agreement is required, it must be requested 6 months prior to the Term end date.

4. Derivation

4.1. This Agreement forms an annex to the ‘Memorandum of Understanding between the Scottish Ministers and Secretary of State for Work and Pensions on joint working arrangements covering the implementation of devolved provisions in the Scotland Act 2016 relating to Social Security and Employment Support Services in Scotland’, and will be read in conjunction with the following documents and any subsequent arrangements which are agreed and support this Agreement, insofar as they are not replaced or terminated in the future:

Document	Version/Date
Concordat between The Department for Work and Pensions and Scottish Government	March 2020
Memorandum of Understanding and Supplementary Agreements on Devolution between the United Kingdom Government, the Scottish Ministers, the Welsh Ministers, and the Northern Ireland Executive Committee (MoU on Devolution)	October 2013
Memorandum of Understanding between Scottish Ministers (SM) and Secretary of State for Work and Pensions (SSWP) on joint working arrangements covering the implementation of devolved provisions in the Scotland Act 2016 relating to Social Security and Employment Support Services in Scotland (SM/SSWP Single MoU)	January 2023
The Agreement between the Scottish Government and the United Kingdom Government on the Scottish Government’s Fiscal Framework	August 2023
Scottish Devolution: A Framework for Audit and Accountability	March 2019
Scottish Devolution: Financial Arrangements for Formal Agreements	April 2025
DWP and Scottish Government Joint Communications Framework	December 2023

5. Delivery of compensation recovery

5.1. The Compensation Recovery Unit (CRU), as part of Department for Work and Pensions (DWP), works with insurance companies, solicitors and any DWP customers, to recover amounts of social security benefits paid as a result of an accident, injury or disease, if a compensation payment has been made (the Compensation Recovery Scheme).

5.2. DWP has delivered Compensation Recovery Services on behalf of Scottish Ministers via benefit specific Agency Agreements on a ‘business-as-usual’ basis since the transfer of executive competence. However, Agency Agreements for Personal Independence Payment (PIP), Attendance Allowance (AA), and Disability Living Allowance (DLA) expired on 31 March 2026. As it is anticipated that there will be a small “tail” of compensation claims to conclude given the timeframes allowed for decisions to be made, Scottish Ministers asked the DWP to continue to recover existing historic compensation recovery claims for Scottish recipients of PIP, AA and DLA beyond 31 March 2026, where these benefits were in payment before this date. DWP has agreed, thus a “Compensation Recovery stand-alone AA” is to be entered into between the parties.

5.3. During the term of this Agreement, DWP will, on behalf of and as agreed with the Scottish Ministers, continue to deliver Compensation Recovery services for people resident in Scotland during the relevant recovery period. There will be no difference in the delivery of Compensation Recovery services to people resident in Scotland to the way the scheme is operated in England and Wales.

5.4. For the avoidance of doubt, this means that the Scottish Ministers will not request changes to the DWP business-as-usual procedures and processes.

5.5. The delivery of the Compensation Recovery Scheme includes all associated functions (this list is not exhaustive) such as the registration of all compensation claims received, tracing relevant benefits and making an attribution decision to ensure monies recovered from compensation settlements have been paid for the same reason as the compensation claim. CRU will pursue settlement details and chase recovery of outstanding debt, deal with any review requests and/or appeals in line with the Dispute Resolution Team process, and archive compensation claims to ensure compliance with the General Data Protection Regulation (GDPR). Information that would indicate fraud and/or error has occurred will be investigated.

5.6. Information on the DWP Compensation Recovery process can be found at Compensation Recovery Unit - GOV.UK.

6. Revisions and changes to compensation recovery

6.1. DWP agrees to inform the Scottish Ministers as soon as practically possible of any changes to Compensation Recovery or supporting legislation that may impact on or require changes to the functions carried out on behalf of the Scottish Ministers. Both Parties would need to agree whether a revision to this Agreement is required.

6.2. Both Parties shall act transparently and will work in a practical way in resolving any issues that may arise, in the spirit of co-operation, trust, respect and confidentiality. This Agreement will be reviewed, as required, through the Joint Ministerial Working Group on Welfare.

7. Disputes

7.1. In the first instance DWP and Scottish Ministers will notify each other of any issues, concerns or complaints regarding any matter covered by this Agreement. Contact will be made by the owners of this Agreement.

Scottish Government	DWP
Ally MacPhail, Deputy Director, Organisational Strategy & Performance, Social Security Scotland [Redacted]	Neil Couling, DWP Director General, Fraud, Disability and Health [Redacted]

7.2. The process for dispute resolution is outlined in Section A3 (Dispute Avoidance and Resolution) of the MoU on Devolution, as referenced in Section 4 (Derivation) of this Agreement.

8. Litigation

8.1. The Scottish Ministers will notify DWP and Office of the Advocate General (OAG), by email, within three (3) working days of the receipt of any pre-action correspondence, initial writ, petition or claim in the Sheriff Court or any petition for judicial review in the Court of Session in relation to Compensation Recovery which is being administered by DWP, or any legal challenge in relation to data protection, which is raised by a person resident in Scotland and/or relates to a decision or action of DWP made before the Commencement Date or made during the Term of this Agreement. DWP will conduct any such litigation on the basis of business-as-usual arrangements.

8.2. DWP agrees to inform the Scottish Ministers, as soon as practically possible, on the progress of any judicial review or challenge in relation to data protection, or any decision in such litigation proceedings, which has an impact on the delivery of Compensation Recovery to people resident in Scotland which is being administered by DWP. DWP will conduct any such litigation on the basis of business-as-usual arrangements.

8.3. DWP and the Scottish Ministers agree in relation to any challenges brought in a tribunal by a claimant resident in Scotland, or where the claim relates to decisions or actions of DWP in relation to Compensation Recovery that:

• DWP will conduct any such litigation at the First tier and Upper Tribunal in accordance with their business-as-usual arrangements,

• DWP will liaise, where necessary, with OAG to conduct any litigation conducted in the Upper Tribunal

• Where appropriate OAG will instruct Standing Junior Counsel from the Advocate General’s panel or Senior Counsel authorised by the Advocate General to appear on behalf of DWP and conduct litigation in accordance with DWP policy

8.4. The decisions or actions of DWP mentioned at paragraph 8.3 are ones which are made by DWP before the Commencement Date or during the Term of this Agreement.

8.5. Where a judicial review claim or a challenge brought in the Upper Tribunal relating to a matter covered by paragraphs 8.1, 8.2 or 8.3 above raises a devolution issue as defined in Schedule 6 of the Scotland Act 1998, DWP will, as soon as practically possible, notify the Scottish Ministers and OAG of the devolution issue. DWP and/or OAG will normally retain conduct of the litigation in accordance with the arrangements under paragraphs 8.1, 8.2 and 8.3 above. The Advocate General has a statutory role in relation to devolution issues as does the Lord Advocate. Accordingly, OAG will discuss litigation strategy in such cases with DWP and the Scottish Government Legal Directorate on a case-by-case basis. OAG and DWP may agree that the Scottish Government Legal Directorate leads on the conduct of the litigation in cases where a Scottish court or tribunal has directed that they should do so, or where the Advocate General (in consultation with DWP) and the Scottish Ministers, consider that is appropriate. Nothing in this Agreement affects either the Advocate General’s or the Lord Advocate’s statutory role in relation to devolution issues.

8.6. The Scottish Ministers agree to notify DWP, by email, within three (3) working days of any challenge which is brought in a tribunal by a claimant resident in Scotland which relates to decisions or actions of DWP in relation to Compensation Recovery which were made before the Commencement Date or during the Term of this Agreement.

8.7. The Scottish Ministers agree that, within three (3) working days of initial receipt of any correspondence, initial writ, petition or claim referred to in paragraph 8.1 above, they will issue an acknowledgement to the pursuer or claimant noting that their correspondence, initial writ, petition or claim has been forwarded to DWP and OAG. DWP will respond to any such pre-action correspondence, initial writ, petition or claim in accordance with business-as-usual arrangements.

8.8. DWP and the Scottish Ministers agree that any litigation which has not concluded at the end of the Term of this Agreement will continue to be administered by DWP, conducted in accordance with the above paragraphs, beyond the end of the Term until the conclusion of that litigation.

9. Business continuity

9.1. If the DWP business continuity plans are invoked which affect delivery of Compensation Recovery to people resident in Scotland, DWP will advise the Scottish Government Single Point of Contact (SPoC) of the issue, impact and resulting action as soon as reasonably practicable via the Single Point of Contact below.

Scottish Government SPoC
[Redacted]
[Redacted]

10. Management information

10.1. DWP and the Scottish Ministers have agreed Management Information (MI) will be supplied to Social Security Scotland to enable them to discharge accountabilities on the following principles relating to the delivery of Compensation Recovery:

• DWP will not create new MI reports that detail performance, specifically for Scottish benefit claimants.

• MI will only be supplied showing performance, at a Great Britain level, of delivering the functions discharged on behalf of the Scottish Ministers. DWP will not supply data specific to Scotland, unless it is currently available and easy to access.

• MI required to inform future delivery is outside of the scope of this Agreement.

11. Financial arrangements

11.1. DWP will recharge the Scottish Ministers agreed Delegated Expenditure Limit costs associated with the delivery of Compensation Recovery to Scottish benefit claimants during the relevant recovery period. This is based on an agreed proportionate share of total Compensation Recovery Unit costs for Personal Independence Payment, Disability Living Allowance and Attendance Allowance.

12. Audit

12.1. DWP and the Scottish Ministers will abide by the principles of audit and accountability as set out in the jointly agreed document ‘Scottish Devolution: A Framework for Audit and Accountability’, as referenced in Section 4 (Derivation) of this Agreement.

12.2. DWP and the Scottish Ministers remain subject to their overall existing accountabilities to the UK and Scottish Parliaments, and their associated audit bodies.

12.3. DWP and the Scottish Ministers will abide by the principles in the Agreement between the Scottish Government and the United Kingdom Government on the Scottish Government’s fiscal framework as referenced in Section 4 (Derivation) of this Agreement, Paragraph 29 of which states that ‘All costs incurred by the UK Government where the Scottish Government is expected to meet the costs will be subject to audit’.

12.4. DWP, Social Security Scotland, National Audit Office and Audit Scotland have agreed the Special Purpose Audit Framework is being used as set out in the ‘Financial Arrangements for Formal Agreements’ document, as referenced in Section 4 (Derivation) of this Agreement.

13. Operational engagement

13.1. Both Parties will work in a practical way to promote a positive shared claimant experience. A link between Service Delivery colleagues in Social Security Scotland and DWP will be established to provide an opportunity for ongoing communication and shared understanding between officials on the operational delivery of Compensation Recovery. Both Parties will act in the spirit of co-operation, trust, respect and confidentiality.

14. Communications

14.1. Communications in relation to Compensation Recovery will be as in the agreed document ‘DWP and Scottish Government Joint Communications Framework’ as referenced in Section 4 (Derivation) of this Agreement. DWP, Social Security Scotland and the Scottish Ministers have agreed the following principles:

• Social Security Scotland will notify DWP if they are to issue any communication related to this Agreement, and of any related issues, at the earliest possible opportunity prior to publication/issue.

• DWP will notify Social Security Scotland if they are to issue any communication related to this Agreement, and of any related issues, at the earliest possible opportunity prior to publication/issue.

14.2. DWP will not make any changes to Compensation Recovery communications to distinguish between Scottish benefit claimants and those in England and Wales, other than for the purposes of data subject rights as noted in section 16 (Data Subject Rights) of this Agreement. For the avoidance of doubt DWP will be operating on the basis of business-as-usual arrangements with regard to communications for Compensation Recovery.

15. Freedom of information requests, parliamentary questions, ministerial correspondence and ‘treat official’ correspondence

15.1. Each Party is to follow existing processes and obligations for requests to that Party and having regard to the MoU on Devolution as well as the Concordat between DWP and the Scottish Government both as referenced in Section 4 (Derivation) of this Agreement.

15.2. Each Party will assist and cooperate with each other where appropriate to enable each to meet its obligations.

15.3. This Agreement does not supersede any legal obligations under the Freedom of Information Act 2000 (FoIA) and the Freedom of Information (Scotland) Act 2002 (FoI(S)A).

16. Data subject rights

16.1. For the purposes of this Agreement, the term ‘Data Subject’ will have the same meaning as in section 3 (5) Data Protection Act 2018 (DPA) and as referred to in the definition of Personal Data under Article 4 (1) General Data Protection Regulation (UK GDPR).

16.2. The terms ‘Personal Data’, ‘Controller’, ‘Processing’ and ‘Process’ will have the same meaning as in Article 4 of the UK GDPR.

16.3. All current Data Protection Legislation and guidance will apply, including but not limited to:

(a) the UK GDPR

(b) the DPA 2018

(c) regulations made under the DPA 2018

(d) regulations made under section 2(2) of the European Communities Act 1972 which relate to the EU GDPR or the Law Enforcement Directive

(e) the Privacy and Electronic Communications (EC Directive) Regulations 2003

(f) the guidance and codes of practice issued by the Information Commissioner

16.4. Requests regarding rights of a Data Subject under Chapter 3 of the UK GDPR will be dealt with by DWP as a Controller in accordance with DWP policies.

16.5. When the Scottish Ministers receive a request pertaining to rights of a Data Subject under the UK GDPR, concerning Compensation Recovery, the Scottish Ministers will acknowledge the request and will forward the said request to DWP within three (3) working days of initial receipt. The acknowledgement will inform the Data Subject that their request has been forwarded to DWP. DWP will then respond on behalf of both DWP and the Scottish Government, in accordance with its business-as-usual arrangements.

16.6. All other functions exercisable to comply with the current Data Protection Legislation, in relation to Personal Data being processed by DWP for Compensation Recovery, will be exercised by DWP in accordance with its existing practices.

17. Data controller arrangements

17.1. DWP and the Scottish Ministers will be Joint Controllers within the meaning of Article 26 of the UK GDPR.

17.2. It is agreed between the Parties that DWP will administer Compensation Recovery on the basis of business-as-usual arrangements as set out under Section 5 of this Agreement.

17.3. The processing of all Personal Data subject to this Agreement which is necessary for administering Compensation Recovery by DWP, will be under DWP’s existing data policies. DWP’s Personal Information Charter contains more information about how DWP handles/processes Personal Data.

17.4. For the avoidance of doubt, Scottish Ministers’ responsibilities under Article 26(3) of the UK GDPR, will be fulfilled by referring the matter to DWP, which will respond to the Data Subject in accordance with its existing practices.

17.5. DWP in their capacity as a Joint Data Controller, as per this Agreement, will take all reasonable steps to ensure that all personal data is up to date and accurate. This will be done in accordance with DWP’s business-as-usual arrangements as detailed in Section 5 of this Agreement.

17.6. Each Party will be responsible for ensuring that their organisation and the data processing they are responsible for is fully compliant with all current data protection legislation.

18. Signatories

Print name:  Neil Couling.

Date: 10 March 2026.

A duly authorised officer for and on behalf of the Secretary of State for Work and Pensions.

Signed by: [Redacted].

Print name: Ally MacPhail.

Date: Tuesday 10 March 2026.

A duly authorised officer for and on behalf of Scottish Ministers.

Signed by: [Redacted].