Independent Advisor on Poverty and Inequality: shifting the curve - a report for the First Minister
Report from Naomi Eisenstadt, Independent Advisor on Poverty and Inequality, informed by research evidence and views from stakeholders across Scotland.
The recommendations in my report will not solve the problems of poverty and inequality on their own, particularly if welfare reform continues on the same track as in recent years. But, if implemented well, these ideas should make a contribution to shifting the curve. I've tried to look at ways to increase income to families by improved wages and hours of work, and to reduce their expenditure by looking at housing costs, childcare costs and fuel costs.
I've met with a very wide range of people in the course of this work, most of whom are very positive about the Scottish Government's commitment to an anti-poverty agenda. But it has been frequently stressed that alongside policies that can reduce the numbers of people in poverty, policy should also address the lived experience of people in poverty, especially in their contact with public services. Comments were made not only about the accessibility of public services, but also on the need for them to be delivered with respect for the end user, protecting the dignity of the citizen.
Tackling inequality is particularly hard. Increasingly, pensioners are enjoying the benefits of a strong economy of the past, and carry the least burden of current weaknesses. Progressive taxation, including inheritance tax, while unpopular with some groups, offers clear routes to a fairer and a more just society.
While family income is critical in tackling poverty, public services are also crucial in mitigating the impact of poverty and creating a fairer society. There's ongoing debate about which public services, and which income transfers, should be targeted, and which should be universal. In times of financial constraint, it's particularly important to test whether public money is being spent effectively to meet key policy goals. Universal access can sometimes be no more expensive, avoiding the bureaucratic costs of testing eligibility. However, universal can also mean spreading a limited budget too thinly to help those who need the service the most, and making little difference for those who need it less but choose to use it. Irrespective of the fiscal climate, tax-payers' money should be spent on trying to level the playing field, not, as is sometimes the case, reinforcing ongoing disadvantage.
These are contentious issues, but there may be ways through the log-jam. It would be very useful to have a clear and shared understanding of what a progressive, or as Michael Marmot would have it a 'proportionate', universal system would look like in practical terms. I would be interested in engaging in further debate about this in Scotland, as it seems to me to be key to developing anti-poverty policies.
Area-based open access services represents a third option between universal and targeted services - this is in place in a limited way in the UK but could be expanded; again more debate on this would be useful. It makes sense to put services in areas where people need them the most, and have most difficulty taking up the services. While education is for all, we should be putting family support services into schools in the poorest areas. Smoking reduction services should be available in GP surgeries in the poorest areas, where smoking rates are highest.
The final two recommendations in this report are highly relevant to this debate. One of the arguments for universalism is the stigma often associated with targeted services. I recommend in this report better training for front line staff in treating service users with dignity and respect. The stigma often associated with targeted services is sometimes the result of the way users of targeted services are treated. This was raised in all the meetings I had with people in poverty. Yet I know it is possible for targeted services to be delivered without stigma: services for poor people do not have to be poor services. Indeed one of the key achievements of Sure Start was the creation of an intervention specifically aimed at disadvantaged families living in poor areas that everybody wanted.
The final recommendation, on commencing the socio-economic duty in the Equality Act 2010, would enable a good test on the universal vs targeted debate. This is, of course, a more complex issue than the binary terms in which it is often presented, but I'm absolutely clear that modelling the impact of any change to the delivery of services or benefits, or indeed new services, should be tested against the likely impact on the most disadvantaged.
A fundamental issue for Scotland, which underpins the implementation of a number of the recommendations, is the nature of the economy: are there enough well-paying jobs? The recommendations about improving vocational education and training will not be helpful if the jobs do not exist. The nature of the job, and the industry, determine rates of pay and skill requirements. Encouraging or mandating payment of higher wages needs to be complemented by working with employers to improve employment practice, boost innovation and drive up their demand for skilled workers. This should, in turn, support higher productivity, creating greater capacity to pay higher wages. Increasing hours of work on minimum wage will increase family income in the short term, but does little to ensure in work progression. The evidence tells us that workers who are low paid in one period are much more likely to be low paid later in life, and are less likely to be offered training by their employer. And many organisations and sectors lack clear career pathways or 'ladders'.
The long-term goal must be to move towards a genuinely different economic model, based on inclusive growth. Scotland has already committed to an inclusive approach in its most recent economic strategy, and this is to be welcomed. However, the devil's in the detail, and it's really important to be clear what exactly is meant by 'inclusive growth' and how this approach promotes equality, tackles inequality and alleviates poverty.
Competitiveness and reducing inequality are not fundamentally opposed. In fact, increasingly the evidence shows that inequality is bad for the economy  . If we don't address poverty and inequality now, in the long term we will have a less prosperous economy. As one person told me, it's not just about ensuring that the pie is distributed more evenly amongst all members of society, but ensuring that all members of society are supported to contribute to making the pie bigger. This means that people are supported into work, removing the barriers to participation in the labour market where possible, and the jobs that people have are fairly paid, and offer security and prospects. It also means increasing the importance placed on the wider social responsibilities of organisations. An inclusive economy should see an end to in-work poverty, the development of a more diverse workforce, the creation of new modes of employment, and paths for progression for new, young entrants to the labour market. The recommendations in this paper start to outline some of the steps that are needed to move towards this model.
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