Scotland’s future poverty challenges
As the vote and polls have gotten closer, Westminster has promised to give more powers to Scotland even if it remains in the union. But what powers are needed for Scotland to tackle poverty?
Earlier this year we published three papers looking at child poverty, housing and employment in Scotland. Here we return to the poverty challenges they identified and consider what powers the Scottish government would need to tackle them.
Context: Over the last 10 years Scotland has been relatively successful at reducing child poverty – it has fallen by 10 percentage points over the decade, around double the fall seen in England. But despite this relative improvement to the child poverty rate in Scotland, the fall in poverty among children in workless families has been underwhelming. In such families poverty levels remain high.
Challenge: In the short term there is a need to mitigate the effects of reductions in the value of out-of-work benefits. But in the longer-term, better support is needed for workless families. A certain level of worklessness among families with children is inevitable even in the most robust labour market. Capacity (for those with long-term health conditions) or availability (for lone parents with young children) are just two examples of why a household might lack work. A future Scotland must ensure such households are provided with a route out of poverty.
Powers: Using its existing powers the Scottish Government has already absorbed the cut to Council Tax Benefit, replaced the abolished components of the social fund and provided compensation to some families affected by the bedroom tax. A Scotland with full control over social security could do much more to support families unable to work.
Context: Since 1999, Scotland has had control over its housing policy. It has used this power to remove the ‘priority need’ requirement from homelessness applications, meaning that more people are eligible for assistance and despite this the number of homelessness acceptances has still fallen.
Much of Scotland’s success in child poverty reduction compared to England can be attributed to its lower housing costs. But in Scotland, as in England, the share of affordable housing is shrinking and more low-income households are living in the higher cost private rented sector. This is threatening Scotland's recent progress on poverty.
Challenge: How to offer affordable and decent housing for those on a low income in the private rented sector, which lacks the support and regulation of the social rented sector.
Powers: The Scottish Government already has the power to intervene in the operation of private rented sector and to increase the supply of affordable, decent housing. Its 2013 Strategy for the Private Rented Sector explicitly acknowledged that growing numbers of vulnerable people were living in the sector, but it lacked a specific policy response.
So far the housing debate on independence has focused on scrapping the ‘bedroom tax’ but this only affects those in the social rented sector and is expected regardless of the referendum outcome. But if greater powers also gave the Scottish Government control over housing benefit for those in the private rented sector it is not clear how it would intervene if at all.
Context: The employment rate in Scotland rose over the last ten to 2013 from 67% to 72% (overtaking the UK average in 2008). During the recession, Scotland saw a sharp decline in the employment rate (3.4 percentage) from which it has since mostly recovered. But this has been uneven; younger age groups and those without university degrees have seen larger falls in the employment rate than others. Meanwhile jobs growth has been mainly in higher and lower paying sectors; middle paying sectors, like construction and manufacturing, are still sharply down.
Challenge: Our analysis showed that even with a higher employment rate, in-work poverty in Scotland would remain unless bigger changes are made. Scotland needs higher rates of pay and a tax and benefit system that leaves low paid workers taking home a larger share of any increased earnings.
Services must also adapt to meet the need of the in-work poor who are both short on money and on time. If the growth seen at the bottom of the labour market is in routine and inflexible jobs, then access to services (such as the GP) becomes difficult. But if services are designed to meet the needs of low income working families then they will likely meet the needs of most.
Powers: If Scotland had full powers over the tax and benefit system it could make specific changes that would support the in-work poor. But cutting income tax or increasing the minimum wage will only go so far without better services which the Scottish Government already has the power to deliver.
Whatever the outcome of the referendum the Scottish Government will have more powers than before and will be better able to deal with these poverty challenges. The bigger question is whether the powers available will be used given that improving support for the homeless, services for the in-work poor or engaging with the private rented sector can already be done. After Thursday it will be more a matter of priorities than power.