Cost of living support debate: Ministerial speech - 22 June 2022

Opening speech by Minister for Public Finance, Planning and Community Wealth Tom Arthur in the Scottish Parliament on Wednesday 22 June 2022.

Presiding Officer, in moving this debate the Scottish Government welcomes this debate and the issue raised by the Labour party is an important one. I will turn to the Government’s response to the motion shortly, and our wider response to the cost of living crisis, but before I do that let me first set out the Government’s position on second homes.

We recognise that good quality, affordable housing is essential to support communities to prosper across Scotland. While second homes bring benefits to those who own them and the tourism businesses they support, we know that, in some communities, second homes can impact on the availability of property to meet local needs.  It can also, just as importantly, impact on a community’s sustainability. 

That is why we've already taken action on second homes. Since 2013, councils have been able to vary the discount against council tax for second homes and since 2017, they’ve had the power to remove the discount in all or part of their council area.

In January 2019 we increased Land and Buildings Transaction Tax Additional Dwelling Supplement from 3% to 4% of the total purchase price for any additional home of £40,000 or more. This is intended to protect opportunities for first-time buyers in Scotland, but can act as a disincentive to second home purchases.

We will consider all options as we take forward our commitment to introduce powers for local authorities to manage the numbers of second homes in their areas. This will recognise there are different challenges faced by urban and rural areas and we’ll explore fiscal and non-fiscal options that will support the housing needs of different communities across Scotland.

Turning to the issue raised by the motion today we agree that it is clearly wrong that second home owners benefit from the £400 energy rebate from the UK Government that the UK Government is making available.  Using the council tax system to recover this £400 has merit but is not straightforward, so we will work with COSLA and local government to examine all options to recover this money, including through a council tax levied on second homes.

In fact we will explore going beyond just second homes, and also consider applying a similar measure to long term empty homes as well.  We will explore using the funds raised to support local cost of living responses on a fair and equitable basis across councils and I can confirm I will be writing to COSLA this afternoon on this matter and I want these discussions to begin in earnest.

That brings me on to our wider cost of living support. This Government has shown that we respond quickly and effectively to economic crises, ensuring that appropriate support is in place for those on low incomes. At the height of the pandemic, we moved at pace to introduce our £100 COVID Winter hardship payment for families – becoming the first administration in the UK to introduce such vital support. Through this measure we put over £14 million in the pockets of low income families in December 2020.

We followed that with our £69 million investment in the £130 Low Income Pandemic Payment to support over 530,000 low income households in receipt of Council Tax Reduction or who were exempt from or not liable for council tax, by the end of November 2021.

Presiding Officer, through the budget for 22/23 Scottish Government has allocated almost £3bn to a range of supports that will contribute to mitigating the impact of the increased cost of living on households. This includes work to tackle child poverty, reduce inequalities and support financial wellbeing, alongside social security payments not available anywhere else in the UK and our resource spending review prioritises £22.9 billion for social security assistance.

Responding to the crisis we also took the decision to uprate eight Scottish benefits by 6%, and to invest a further £10 million in our Fuel Insecurity Fund to support households at risk of severely rationing their energy use or self‑disconnecting.

This is significant financial support for those living in Scotland which will provide a protection for those on lowest incomes that the rest of the UK do not have.

While we do all that we can, we must not forget that it’s Westminster that holds most of the powers needed to tackle the cost of living crisis – both in the immediate and longer term – including over energy, the minimum wage, National Insurance and 85% of social security spending.

The Scottish Government has continually urged the UK Government to use all the powers and fiscal headroom at their disposal to address the cost-of-living crisis.

As part of that on 25 May the Cabinet Secretary for Finance wrote to the Chancellor setting out policies that would offer a long-term solution to the cost-of-living crisis.  By ignoring our call for a comprehensive funding package to fully address the unprecedented cost of living crisis, the Chancellor’s piecemeal approach makes it highly likely that more support will be needed when energy bills again rise significantly in the autumn.

In concluding, I would say again that the Government welcomes this issue being raised by the motion.  We will constructively examine all options to recover this money through a council tax levied on second homes and long term empty homes in order to support local cost of living responses on a fair and equitable basis.

We will engage with COSLA and local government on the most effective ways to do that.  Taking that approach fits with this Government’s commitment to tackling the cost of living crisis with all the tools that we currently have at our disposal. 

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