Think-tank urges public and private sectors to unite and fight poverty in Scotland

The call for action to tackle inequalities in the marketplace as well as to redistribute income to poor households will be made today by the Scottish Council Foundation (SCF) at the Glasgow launch of Overcoming disadvantage – a Joseph Rowntree Foundation report that features innovative, long-term solutions proposed by five leading think-tanks. The report has been specially commissioned to mark the start of the Foundation’s centenary year.

The SCF warns that low-income households often pay more for their shopping because they cannot afford to buy in bulk or reach shopping centres with the lowest prices. It also notes that the percentage of homes without bank accounts or insurance is higher in Scotland than in other parts of Britain. Households without bank accounts pay more for their gas and electricity because they cannot pay by direct debit or using the Internet. Uninsured households risk being unable to replace damaged or stolen items – and may be forced to turn to high cost moneylenders in an emergency because no other loans are available to them. While these problems are not confined to disadvantaged neighbourhoods, they are often most pronounced within them.

The authors argue that co-ordinated action led by the Scottish Executive to help reduce costs for disadvantaged households would be economically justified, as an attempt to address persistent market failures and to enable poor consumers to enjoy the benefits of competition that the rest of Scotland takes for granted. They recommend that:

• The Scottish Executive should promote cost-cutting partnerships between local shops and major retailers, and offer incentives for new businesses to set up in low-income neighbourhoods.
• Social housing landlords should tackle financial exclusion by negotiating ‘pooled’ packages for insurance and other financial services on more attractive terms than individual households could obtain.
• Greater commitment is needed from the financial services sector to increase the uptake of ‘basic’ bank accounts, combined with the introduction of new products, such as basic life protection insurance.

Jim McCormick, SCF’s Director and co-author of the report, said: “With greater commitment from government and a clearer challenge to private service providers, comprehensive cost-cutting packages could be applied to household bills for energy, food and transport. If a combined reduction of 20 per cent could be achieved on basic household bills in low-income communities, this would have the same impact on disposable income as raising benefits or earnings by a similar amount.”

Other proposals from the SCF for overcoming disadvantage across people’s lives include:

• More investment in the health of pregnant mothers and the well-being of infants, especially in low-income families. Child Benefit payments could be made available during pregnancy through antenatal clinics. The Scottish Executive could encourage stores to promote ‘loyalty cards’ giving mothers a discount on baby products and ‘healthy living’ purchases.
• Setting five-year targets to raise employment rates where they are lowest – including Glasgow, which has a particularly high proportion of residents claiming out of work and incapacity benefits. Improvements in the existing New Deal and Employment Zone programmes could be coupled with extra investment in social enterprise and undertakings from local employers to each hire at least one jobless resident from the city.
• Giving more attention to the potential for converting ‘unofficial’ economic activity by people claiming benefits into legitimate small businesses rather than simply treating it as fraud.
• Cutting the risk of stress and poor health at work, by enabling employees to take ‘sabbatical’ periods of leave, with targeted support to help the low-paid benefit from such options.
• Making advice on money, jobs and volunteering easier to access in low-income neighbourhoods by extending the roles of service providers that local people trust (including health centres and primary schools).

Jim McCormick said: “The common assumption in Scotland that reducing poverty is beyond the powers of local government and the Scottish Executive, and of little interest to the private sector, deserves to be challenged. Both Westminster and Holyrood can combine more effectively to tackle wide inequalities in income and wealth and achieve better outcomes for disadvantaged households and communities.”