£1/2 billion childcare investment needed in Scotland to drive major reduction in poverty

A £500 million investment in the Scottish childcare system in the next decade should be put at the heart of a major plan to reduce high levels of poverty in the country, according to the independent Joseph Rowntree Foundation (JRF).

As the political parties begin their campaigns for the Holyrood election, JRF is setting out its vision that would help create a prosperous, poverty-free Scotland.

It sets out how the next government could use its current powers to reduce poverty, for example by reducing the attainment gap in schools, and encouraging business to address in-work poverty by expanding access to high quality training in low paid sectors.

It also proposes taxing the Winter Fuel Payment, once income tax powers are devolved, to better target social security and raise revenue for measures to address fuel poverty.

More than 200,000 children, 600,000 adults of working age and 100,000 retired people live in poverty in Scotland.

Working alongside businesses, housing providers, local government, charities and communities, JRF believes more can be done using both existing and new powers due to Scotland in the next parliament.

A Scotland without poverty sets out how the Scottish parties could put poverty reduction at the heart of their own manifestos and blueprint for government. It includes:

  • An overhaul of Scottish childcare, costing almost £500 million over 10 years to focus on improving quality, not just more free hours. It would bring childcare spend as a share of GDP to 0.85 per cent, up from just under 0.5 per cent. This would involve:

    • Creating a single funding system, with full devolution of all childcare funding and replacement of the plethora of schemes that already exist;
    • Extending the current offer of free childcare to parents with two year-olds and making it available through the year;
    • Removing fees for the lowest income families and capping costs at no more than 10 per cent of income for most families. Better off families would pay higher amounts, based on a sliding scale.
  • Measures to control the cost of renting in Scotland, with an increase in affordable house building backed by a Living Rents scheme in areas where cost pressures are greatest. The private rented sector is now the frontline of rising poverty in Scotland. A rolling loans scheme should be available to landlords to improve the security and energy efficiency of privately rented properties.
  • Taxing the Winter Fuel Payment, so it is better targeted towards those on the lowest incomes. This would avoid the problems of means-testing and raise revenue to invest in energy efficiency schemes, which will reduce fuel poverty.
  • Working with business and employers to address in-work poverty, which affects 360,000 adults living in working poor households. As well as expanding coverage of the Living Wage, this would involve setting up an Advancement Service for Scotland and personal training accounts to provide access to training and coaching support. This would help people and businesses ‘upskill’ into better-paid work, and stimulate productivity, which lags behind in the low-paying sectors of retail, health, care and catering.
  • The Glasgow and Clyde Valley City Deal provides a golden opportunity to generate new job opportunities through procurement for local people in poverty. The Scottish Government could also support a Career Ladder programme, where brokers help businesses develop better practices so low-paid workers can progress into higher-paying jobs.

Jim McCormick, associate director for Scotland at JRF, said:

“Poverty is risky, costly and wasteful, but is a problem that can be solved. There is an urgent need to act. We need leadership from the next Scottish government to develop an all-age strategy to reduce poverty and to focus resources on those in the greatest need and on effective approaches.

“Everyone has a role and responsibility in tackling poverty in Scotland, and there is already consensus between political parties on the need address this. Now we need to see this translated into action with a clear set of priorities in the next Parliament. We cannot afford to see a return to business as usual: nearly one in five people in Scotland live in poverty – a level unacceptably high for such a wealthy country.

“We need to be thinking long-term and driving forward a comprehensive plan for a Scotland without poverty. This is a challenge to all parties to set out their plans that will drive down levels of poverty and make sustained progress.”