PKC Officer Response

It is essential for the provision of further information/detail to be shared and that timely consultation takes place with key stakeholders and partners in relation to many of the key elements associated with MIG in order for more detailed feedback to be provided. Our view is that the Scottish Government (SG) should take steps to provide the correct environment through education, media and public awareness-raising prior to the introduction of any such system. Any MIG and any communications campaign around such a system should provide clear reassurance that those on low and middle incomes will not bear the brunt of the costs and that they will not experience a reduction in living standards as a consequence. The messaging needs to be honest and transparent and the MIG should seek to redistribute wealth from those who can afford it, to those who require assistance. The barriers that some people face and the system flaws that exist can be structural and so it makes sense that these can be deconstructed through policy such as MIG. We cannot say at this stage whether MIG can/will deliver all that is proposed and/or more (we are aware of the limitations e.g. powers, funding, public opinion). We are, however, very much encouraged by the way it seeks to acknowledge poverty as a whole; for too long poverty and its effects have been dissected into palatable chunks to fit with politics or public opinion e.g. “child poverty”, “fuel poverty”, “period poverty”. It may be worth SG considering the impact of the last decade, and most recently the coronavirus emergency, in terms of debts accrued by low income households. Perth & Kinross Council used the Financial Insecurity Funding provided by SG to assist low income households with priority debts e.g. rent, mortgage, Council Tax and fuel. We’d also highlight the potential multiplier effect that a system such as the proposed MIG would have on the economy. It may be argued that those with low incomes are more likely to spend their income on goods and services, rather than save. At the moment, many low income households struggle to meet the cost of priority debts alone, so not only do they have little or no disposable income, they cannot meet the cost of essential living. More disposable income is likely to mean more demand for goods and services and could result in job creation.What do you see as the main benefits, challenges and risks of a Minimum Income Guarantee in Scotland? Benefits: Tackling poverty, inequality and insecurity for all ages. Returning a much-needed safety net that is fit for purpose which caters for the different needs of all groups in our society and how those needs may differ. This is an opportunity to reduce strain on public services, strains which are often a direct result of people not having access to life’s essentials because of a lack of money. Impacts are felt throughout public service at a higher cost than necessary, had those needs not been met as a given, as they should be. Costs should reduce elsewhere in the system allowing people to lead more independent lives so long as the MIG proposed is introduced alongside a range of other measures as proposed. People being able to independently meet their own needs should reduce costs and pressure in the following areas: • Primary & Secondary healthcare • Social Work • Education • Advice Sector A MIG could also achieve better outcomes in the following areas: • Health and wellbeing (e.g. mental health, substance misuse and suicide rates) • Crime • Educational attainment • Housing • Economy • Employment A MIG could ease the transition for those gaining employment; it costs to be engaged in paid employment. SG could consider providing support to small and medium sized businesses to ease any transition period. Improvements may include: • Introducing a Real Living Wage without exception. • Providing national childcare that is free at the point of contact for children from 6 months (when Statutory Maternity Pay/Maternity Allowance ends). Poverty, economic fragility, household fragility and insecurity - none of these are new but the context is new, this could be the optimal time to start to make the changes that were needed in the pre-covid era but are needed more widely now. More people will have experienced difficulties during covid, experienced the lack of safety net and the exposure to threats they hadn’t experienced previously. People may be more likely to be open to the conversations about poverty and willing to tackle the gaps. Challenges: UK society/culture/public opinion can place a disproportionate amount of value on people “working” in the narrowest sense, “working” for many people can mean “being engaged/active in the labour market” and any “unpaid labour” is seen as less valuable but is of equal value e.g. the report highlights this fact with regard to unpaid carers. This is something that needs to be tackled in order to raise awareness of the value of all work. There needs to be a shift in thinking, the post-covid world may be the correct environment for such a shift. Public opinion can often be led by the media and what is proposed may not be achieved if the rhetoric perpetuated by the media during the 2010s were to continue. There is however scope to ensure that there is something for everyone within all three of the proposals Scottish Government will be bringing forward. Whilst universalism can be costly and a targeted approach is undoubtedly required in order to achieve a fairer and more equal society, some consideration should also be given to lowering the cost of living for everyone, areas to be considered could include how SG can influence the cost of life essential utilities, public transport and broadband. Over the last decade the gap between the rich and the poor has widened, mainly due to more financial burden being placed on individual households and most often those households with low and middle incomes. Action is needed to close this gap especially for those who have experienced stagnating wages for so long (Real Living Wage). We acknowledge that the task ahead is not without challenge, not only is there a need to stabilise after the effects of the pandemic but also there is a need to reverse the impacts of a decade of welfare reforms that have had the greatest impact on minority groups such as women, children, disabled people, ethnic minorities and older people.

Why the contribution is important

Risks: The paper seems to emphasise the effect/impact of the global pandemic, consideration should be given to acknowledging that poverty to the extent felt now has always existed for some households and the difference, brought about by the pandemic, is the scale to which poverty has/is being felt. Redundancy, sickness, job loss, job insecurity, insufficient safety net, placing value on being economically active more than unpaid labour have all been a feature of our society for many years and is not something new. Creating a system similar to the MIG being proposed will, without doubt, require additional powers and significant funding, a cautious approach should be taken when considering taxation for low and middle earners as this may further widen the gap between those with and those without. This could be key in terms of public opinion and could unite people rather than divide them as we’ve seen in recent years. The Scottish Government should seek further powers in order to close tax loopholes and to investigate opportunities around corporation tax (UK has the lowest corporation tax of all G7 countries). The funding proposals are limited within existing powers and could be viewed as too narrow in terms of funding options as mentioned previously. The recent announcement of increasing National Insurance contributions may have caused concern from PAYE earners that their take home pay will reduce even further as a result. Wages have not been increasing in line with the cost of living over the past decade and the same burden is being felt by low and middle earners, many of whom are essential workers e.g. retail, nurses, social care, teachers etc. These earners should be assured that the burden will be spread through fair taxation. The position that employers cannot pay a Real Living Wage is no longer a tenable position (some businesses have made unprecedented profit throughout the pandemic). The report also seems to make certain assumptions about homeowners and that they may be in a more financially secure position than those in rented accommodation, we would like to make Scottish Government aware that the same safety net does not exist for those paying a mortgage as those in private rented accommodation. Support for Mortgage Interest (SMI) can only be paid after 9 months to those in receipt of certain benefits, pays a certain rate of interest only and is a loan. The uptake of SMI is very low and there is effectively little or no safety net for this with a mortgage as a result, should they fall on hard times. Ironically, the current system meets the mortgage costs for a landlord (private/social) but not those of a direct homeowner. 3. Are there certain groups of people that you think should be given particular attention when thinking about how a Minimum Income Guarantee in Scotland should work? The Paper already mentions young people, parents, carers, people with disabilities, renters, self-employed, women, mental health, people who are disadvantaged in the labour market, minority groups and people who have no recourse to public funds (NRPF). There is an ideal opportunity here for the Scottish Government to write policy which deconstructs the structural barriers (and indeed, the prejudices and cultural obstacles) that prevent people from not only achieving their potential but prevent them from accessing basic living essentials. One group of people that may not be recognised specifically within the report are those aged 60 and above, the group of women who were disproportionately affected by the increase of the State Pension-age highlighted the issues, generally, for people at that age. Any MIG which seeks to include a “pensioner element” should consider that element being introduced at age 60 for all and there should be no work-focussed conditionality, should UC remain in Scotland beyond 2030, for this group. 1 in 2 people in Scotland will be diagnosed with a long-term health condition in their lifetime and the current eligibility criteria for sickness benefit, it may be argued, is too high a test and therefore work-related conditions are placed upon them which are not proportionate. 4. What steps should we take first to deliver the Minimum Income Guarantee in Scotland? You may wish to think about public services, employment and employers, and social security. With reference to the statement, “None of us are safe until all of us are safe”, for any real, sustainable change to happen, both power and wealth need to be redistributed. Both are major players in making a fair and just society where everyone’s basic needs are met and no-one falls below a minimum standard of living. We welcome reform of Council Tax. More information/detail is required in relation to this proposal and any financial/other implications must be identified; there are numerous issues to be considered in relation to this. Timely consultation and involvement for Councils and Joint Valuation Boards in this process is essential and we would also recommend the early involvement of the Institute of Revenues, Rating and Valuation (IRRV). It is imperative that Councils and Valuation Joint Boards are also involved at a very early stage in relation to any proposals/information around a new Property Value Tax. Early involvement of IRRV would also be recommended. “Collective Service”; more info/expectations/ implications regarding what this means for Local Authorities and other intended partners is required to enable us to contribute to discussion around this. Noted that there will be a future report dealing with this subject. Councils need to be involved in early discussions around delivery models of MIG; must be able to identify any direct/indirect implications and what this will mean. We believe that consideration may be given to making better use of existing powers and would encourage SG to consider the following in advance of the proposed MIG: • Abolish Social Sector Size Criteria and Benefit Cap at source along with Two Child Limit. • Use the “top up” powers to pay a pensioner element to those in receipt of UC aged 60 and over.

by PKCOfficerResponse on September 16, 2021 at 09:52AM

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