Poverty must be a priority for this Scottish Budget

The Scottish Draft Budget will be published on the 12 December - it will be a key test of whether the Scottish Government puts tackling poverty at the heart of its spending plans for the year ahead.

The Scottish Government has, quite rightly, made clear that tackling poverty is a key priority. It is one of 11 National Outcomes that underpin the National Performance Framework. Additionally, Scotland now has statutory targets on reducing Child Poverty. It’s at Budget time that we get to see how those priorities translate into commitment.

Solving poverty is not going to happen without some serious investment in people and places that deserve a better future. By tackling poverty we will also help to tackle the attainment gap and health inequalities. Income poverty is at the root of so many issues that Scotland is both grappling with and spending huge sums of public money on.

There will be an increase in cash - close to £1 billion - flowing north of the border for 2019/20 following the announcements in the UK Budget, and Scottish Government tax decisions may add a further boost to spending. There are competing priorities, as always, on how this new money and the rest of Scotland’s budget will be spent, with much of the extra money already earmarked to go straight to Scotland’s NHS.

There are challenging choices to be made on spending. Here we outline some of the guiding principles that JRF would like to see underpin this budget.

Make it an evidence based Budget

The Scottish Government is not short on evidence on where best to spend money to tackle poverty: The Tackling Child Poverty Delivery Plan, published by the Scottish Government earlier this year, had a clear evidence basis, with particular at risk groups identified. Echoing the recommendations of the Budget Process Review Group, we expect to see a clear link between the evidence which underpinned the strategy and the detailed Budget proposals.

JRF’s Poverty in Scotland report, published last month, added to the evidence base and shone a light on how investment in closing the disability employment gap and the gender pay gap could pay huge dividends for eradicating poverty and strengthening Scotland’s labour market.

Provide funding that matches the scale of the challenge

Small scale initiatives are unlikely to have the required impact on poverty. Fair Start Scotland, the flagship employability scheme, has been funded to support at least 38,000 people back into employment, some of whom will be disabled. However, this will fall far short of having the necessary impact to close the disability employment gap given there are currently around 350,000 disabled people not in paid work. Disability, including limiting illness, is a key driver of poverty – over 40% of child poverty occurs in households where there is a disability, with half in non-working households. The Disability Employment Action Plan will come out just before the budget. It is crucial that the programmes it recommends receive funding to match the scale of the challenge.

For the non-disabled population, in-work child poverty is prevalent. Much of this can be traced back to the labour market status of women, who are not able to balance work and care in a financially sustainable way. JRF’s recent report identified 90,000 children in poverty in Scotland where there is no disability, but mothers are either not in work or are in part-time work. In many cases, parents are working the hours that they are expected to by the social security system, but their families remain in poverty.

There needs to be action on multiple fronts, from different government portfolios, to redesign our childcare system and change mindsets in the labour market to protect people from poverty’s grasp. At the moment, genuine options for families to battle against poverty are limited. Low hours and low pay are often not a sufficient guard against poverty. Lack of wrap-around childcare (for pre-school children and for primary aged children) makes full-time work difficult to reconcile. And the lack of flexibility commonly offered to fathers by employers means that the mother is left to fit part-time work (often low paid with limited progression opportunities) around their role as main carer.

Big investment may require re-allocation of resources

Overcoming these challenges is likely to feature in the upcoming Gender Pay Gap strategy, but to become a reality, it will need substantial investment. A genuinely affordable wrap-around childcare offer could potentially cost in the same ball-park as the £1 billion multi-year package that has gone into the 30 hours universal commitment for three- and four- year olds, and eligible two-year olds. A possible solution to the scale of this funding challenge could be to trim some of the universalism of this system in favour of a more supportive and labour market orientated package for low-income families. 

Get on with delivering policies that will make a difference

Poverty is a real, and current reality for a million people in Scotland. Social security can provide an anchor for so many families dealing with the buffeting effects of low pay and insecure employment. The £1000 per annum addition to work allowances announced at the UK Budget will have a small, but positive, impact on poverty in Scotland. But Scotland also now has powers on social security. The devolution of existing benefits needs to be carefully managed, and safe and secure transition is rightfully a priority for the Social Security Agency. The Scottish Government has also committed to an income supplement to target child poverty, but have so far signalled that it could be 2022 – into the next parliament - before it is introduced. The longer people are in poverty, the greater harm it causes. Families in poverty can’t wait till then. Choices on delivery are available, meaning there is an opportunity as well as a pressing need to start paying the income supplement sooner. 

There are challenging choices to be made, but choices nonetheless

The Scottish Government is not fully autonomous in terms of determining their Budget envelope, and UK Government imposed austerity – not least the continuing benefits freeze - continues to cast a dark shadow. However, there is more money available to spend this year and Scotland has many of the tax powers to start to carve its own way, as already demonstrated in last years’ income tax shake-up. The Finance Secretary and First Minister have implied that they will not mirror the rise in the Higher Rate Tax threshold announced in last week’s Budget for the rest of the UK, which shows a continued commitment to progressivity, albeit at a price of some bumpy marginal tax rates for some higher earners.

We are used to hearing strong sentiment from the Scottish Government on the pressing need to tackle poverty in Scotland. This needs to be reflected in this Budget. Ultimately, people’s life chances need to be at the heart of this Budget, and the key test is whether it delivers for families in poverty.