Minimum Income Guarantee: report - a roadmap to dignity for all

Why a Minimum Income Guarantee is needed

The need for a Minimum Income Guarantee has rarely been greater.

The reality we see today has been many years in the making. The austerity of the 2010s, following the 2007-08 financial crash, including reductions to benefits, cuts to public spending and increases in precarious work, has combined to undermine living standards for many. This meant the UK entered the pandemic and the cost of living crisis that followed without the necessary social infrastructure, investment and resilience. Over this time, we saw a redistribution of risk to those least able to bear it. This was noted by the participants in our research on framing a Minimum Income Guarantee when discussing poverty:

‘... it was only people on very deprived backgrounds, very ... How do I say it? Low socio-economic status. But now it’s filtering into families where there’s people working. And it’s really only those top tier of people that are earning a lot of money that seem to be getting by without having to ask for help … I know a lot of people that use food banks now that I would never have thought would.’^[21]

Consequences of financial insecurity are often devastating; insufficient income is linked to suicidal thoughts and suicidal behaviour.^[22] People living in poverty in the UK also find it harder to live healthy lives, access NHS services and live with greater levels of illness and die earlier than the rest of the population.23 Six-in-ten people in the most deprived areas report that the cost of living squeeze is impacting their health, this is adding to the demand for, and increasing delivery costs of the NHS and wider public services.24 In 2016, it was estimated that the cost of poverty on health care in the UK was £29 billion25 (£34 billion in 2024 prices). The situation has worsened with growing numbers of people in deep poverty, increases in the cost of living and greater strain on the NHS. Financial insecurity also impacts on life chances, just over two-in-five living in the most deprived areas achieve one or more Highers (43.5%) upon leaving school compared to almost four-in-five young people living in the least deprived areas (79.3%) in 2018/19.26 The societal costs of doing nothing cannot be ignored. As well as harming children and families, poverty is estimated to harm Scotland’s economy to the cost of at least £2.4 billion per year.27

Weaknesses in the social contract disproportionately impacts certain groups in society, including the priority families identified in the Tackling Child Poverty Delivery Plan^[28] and those who experience intersecting and compounding inequalities. Most primary carers, part-time workers, and second earners are women. This means women are more likely to be employed in the public sector, to use public services, and depend on social security. The compounding impact of austerity and the cost of living crisis on women on lower incomes has therefore been severe. By 2027, the most economically marginalised women in the UK are projected to have endured a 21% reduction in living standards since 2010, with single mothers, Black, Asian, and disabled women most severely impacted.29 Lone-parent families consistently have the least disposable income and face systemic barriers across the labour market, social security and services.30 Since the majority (92%)31 of lone-parent households are headed by women, gender inequality is being further entrenched by existing economic and social security policy. Overall this inequality is deeper for disabled women, Black and minority ethnic women, older women and pregnant women.32 Glasgow Disability Alliance found in a recent survey that 93% of their members are worried about money.33 In addition, within these broad groups, inequalities intersect and compound, increasing the likelihood of poverty and financial insecurity, changing the experience of it, and impacting on the solutions most likely to work to tackle it. As such, policy design and delivery must prioritise these groups and their ability to live a dignified quality of life, taking an effective equalities and intersectional approach.

In the coming decades, Scotland will see change which will bring opportunities for society to adapt and grow. We will need to build greater levels of financial security and economic and social resilience to enable everyone to reach their potential. We cannot afford to let poverty, inequality and financial insecurity limit the opportunities for millions of people each year. Action is required to prevent these impacts. A Minimum Income Guarantee could lead to better physical and mental health outcomes, reducing poverty-related spend on health and social care. We also know that a Minimum Income Guarantee could also help mitigate the impacts for affected workers in the transition to a low carbon economy.^[34]

We can provide financial security and dignity for most by regulating costs, and reforming work and services. However, to fully guarantee financial security for all we would also need to see fundamental reform to the principles that underpin our social security system, redefining a social contract that ensures a dignified life for all. This report sees progress towards this goal as incremental, firstly, strengthening the safety net, then tackling relative poverty and, finally, establishing a new social contract that allows everyone to live with dignity.

Public attitudes and calls for transformative change

Poverty, financial insecurity and inequality have been entrenched in Scotland for too long and people are calling for transformative action. The cost of living crisis, and poverty and inequality continue to be some of the top concerns for people in Scotland – and, crucially, only 24% of the general public believe things are heading in the right direction.^[35] In 2022, around four-in-five people in Scotland (79%) supported the idea of a Minimum Income Guarantee36 and we hope to see this rise now that we have developed our Roadmap.

Our Experts by Experience Panel showed broad support, expressing that a Minimum Income Guarantee has the potential to eliminate poverty longer-term, enhance social mobility, enable people to follow their passions and improve people’s wellbeing.^[37] While members acknowledged the challenges of implementing a Minimum Income Guarantee within the current financial and political context, they recognised that the current system does not go far enough.

We commissioned research to understand the public perception of poverty and support for a Minimum Income Guarantee. This found that people see poverty and financial insecurity as a serious issue and a high priority for action: nine-in-ten respondents said this was a very (52%) or moderately (38%) serious problem, three-quarters (77%) said they were personally concerned about it, and seven-in-ten (71%) said that helping those affected should be a top/high priority for the Scottish Government.^[38]

There is support for a solution to financial insecurity that is well balanced. People want to see better public services, affordable costs, improved access to fair and sustainable work and adequate social security which provides a genuine safety net for all.^[39],40 Life is unpredictable, as demonstrated by the pandemic and cost of living crisis, so it is important that everyone in Scotland can enjoy a dignified quality of life and feel secure.

‘I notice even such a difference in my shopping bills, and I live alone, and my gas and electricity bills. I live alone and I work two jobs. I should really be a bit flush, but I’m still living month to month. So I dread to think what people on a far lower income or just a pension alone are bringing in and how they’re coping.’^[41]

Most respondents support statements that align with the ambition of a Minimum Income Guarantee. They most strongly felt that ‘being able to afford the essentials to live a dignified and decent life is a basic human right’ (91%) and ‘everyone in Scotland should have access to good quality work so they can improve their financial security’ (91%). Many also recognised that anyone could find themselves in a position where they cannot afford the basics (88%) and that living in poverty can limit people’s opportunities and choices (87%).^[42]

People want to see an alternative approach to social security and addressing financial insecurity in Scotland.^[43] There is enthusiasm for a Minimum Income Guarantee and support for a more substantive approach to addressing poverty and financial insecurity.44 Over the next phase of this work following the publication of this report, it will be important to continue raising awareness, understanding and support for a Minimum Income Guarantee.

Unfair work

Everyone who is able to work should have access to suitable, sustainable and fair employment to support themselves and their family. It should provide fulfilment and financial security. This is not currently the case for many, often due to the structural inequalities in the economy and labour market. This is demonstrated by increasingly precarious work and the rise in zero-hours contracts, low pay with wages not keeping up with the cost of living, and limited opportunities to upskill, retrain and progress.^[45] This has a direct impact on whether someone is able to afford a decent standard of living beyond retirement. Insecure and low-paid work can create a cycle of financial insecurity and poverty which can be near-impossible to escape for too many.

Too many people are in low-paid work, with around one-in-ten in persistent low-paid, uncertain work, which does not offer the escape routes from poverty and financial insecurity that we want to see.^[46] Over half of workers earning below the real Living Wage are also in insecure work, demonstrating that these are inherently linked.47 The result is that people in work often have to rely on low-income benefits. In October 2024 43% of Universal Credit recipients aged 25-49 were in paid work.48 Levels of in-work poverty have risen consistently for families with children in Scotland, with 70% of children in poverty living in a household where at least one person is in paid work. Similarly, of working age adults in poverty, 60% are in paid work.49 Improvements are needed, particularly within the sectors which see higher incidences of low wages and job insecurity, such as hospitality, forestry and fishing, social care and childcare, arts, entertainment and recreation.50

Structural discrimination means some people are more likely to experience low pay and insecure work than others, especially those with intersecting and compounding inequalities. Women, lone parents, Black and minority ethnic groups, disabled people, unpaid carers, young people and older people are at a heightened risk of in-work poverty. Within these broad groups we can also begin to understand how inequalities intersect in relation to unfair work. Around one-in-four single-parent families and families with three or more children experience in-work poverty. Black and minority ethnic workers experience three times the rate of in-work poverty of white workers.^[51] With an estimated 270,000 people in paid employment in Scotland providing unpaid care and 65% of working age carers not currently in employment or forced to leave paid work due to their caring responsibilities, it is evident that existing support structures are insufficient.52 A lack of good-quality, part-time and flexible work in higher-paid roles means that people who need flexibility to fit around caring responsibilities, the majority of whom are women, are at greater risk of in-work poverty, with a more severe impact on single-parent households.53

Paid work may not be an option for some people, whether that is due to having an impairment, long-term health condition or caring responsibilities. When it is an option, disabled people and unpaid carers face additional barriers due to insufficient transport, childcare and social care services. At the same time, too often, unpaid work is overlooked and undervalued, despite 627,700 people providing unpaid care in Scotland.^[54] In financial terms this work has been estimated to contribute at least £15.9 billion55 to Scotland’s economy annually. Additionally, informal and formal volunteers are estimated to contribute a further £5.3 billion yearly.56 However, it is the less financially quantifiable aspects of this work, the contribution to wellbeing within communities, social cohesion, and quality of life that is even more valuable and is often overlooked.

The Scottish Government has a long-standing fair work agenda. Equally, we welcome some of the proposals outlined by the UK Government in relation to its plans for a New Deal for Working People through the Employment Rights Bill.^[57],58 However, these will need to be ambitious and practical, reinforced by Scottish Government action, if they are to deliver the levels of fair work we want to see in Scotland.

Rising costs and weakened services

Too many people are going without essentials, being forced into debt and being put at risk of losing their homes.^[59],60 The cost of living crisis is often framed around the idea of ‘heating versus eating’ but many can afford neither.61 While this has impacted everyone, it has hit the lowest income households most, especially those with the highest costs, such as disabled people, carers and rural and island communities. For example, there have been reports of people who are unable to afford to charge or use vital life enhancing or life-saving equipment such as nebulisers, electric mattresses and powered wheelchairs, as energy costs have increased significantly in recent years.62

Some essential services are delivered through the market, with a mix of private and sometimes public provision, such as travel and energy. However, for others, public services are meant to provide support in an affordable and accessible way, to reduce costs and support greater income, such as education, health and care. To do so, many of these services require significant improvement to meet demand and the needs of households.

Accessibility and cost are both significant issues worsening financial security for many households, with particularly negative impacts for people living in areas of multiple deprivation, Black and minority ethnic communities, women and disabled people and those with long term health conditions – with intersections between these groups compounding impacts on the most marginalised. The right support might mean the difference between being able to take-up a job offer or not, for example due to being able to access or afford transport, social care or childcare. Ensuring these needs are met will not only advance the ambitions of a Minimum Income Guarantee, but it will protect and fulfil human rights and meet ambitions around developing a wellbeing economy.

As a result of increasing costs, debt is a growing burden in Scotland. This is disproportionately affecting marginalised women due to lower savings and a higher likelihood of being in debt.^[63] Women also experience greater levels of coercive debt as a form of economic abuse which amplifies financial strain and hardship.64

Recent decisions have demonstrated that investment in services are not being prioritised, from the slowing of plans to expand free school meals to all primary age children to the long delay in removing non-residential social care charging.^[65] The Scottish Government agreed to explore the potential for Universal Basic Services following the recommendation of the Social Renewal Advisory Board,66 who also made the case for a Minimum Income Guarantee. While this report shows progress on the latter, the work on Universal Basic Services has not continued since 2022. We are at risk of taking steps backwards, rather than moving forward to ensuring dignity and financial security for all.

Erosion of the safety net

The current social security system in the United Kingdom fails to deliver a stable and reliable safety net for those who need it most. The current basic monthly rate of Universal Credit, the main income replacement benefit, for a single adult over 25 is only £400.14 (i.e. less than £5,000 per year).^[67] As a proportion of average earnings – at 13% – the UK’s social security system is set at amongst the lowest income replacement rates amongst OECD countries.68 This level of payment leaves people without enough money to cover the basics and forces people to make impossible, harmful decisions over essentials.69

As the value of means-tested benefits for working age adults has dropped to unsustainably low levels, successive UK governments have introduced policies that limit support further by creating greater weaknesses in the safety net (primarily Universal Credit), amounting to destitution-by-design. This has included the five-week wait, two-child limit, the benefit cap, unfair third-party deductions, lower payment levels for under-25s (including young parents), and the bedroom tax. Layered on top of these are design flaws in the existing system such as the single household payment and its potential to worsen gender inequalities and rates of economic abuse. In addition, the threat of an extreme work conditionality and sanctions regime, which evidence shows does not move people into sustained employment. All these policies create a gulf between entitlement and need, eroding the fundamental safety net and the hope of financial security for many.

Following the devolution of some aspects of social security in Scotland, we have seen some improvements. such as the introduction of the Scottish Child Payment, which it is estimated will keep 40,000 children out of relative poverty this year (2025-26).^[70] Equally, the introduction of new payments to support young carers through the Young Carer Grant and a top up of benefits to unpaid carers through Carer’s Allowance Supplement.

Social Security Scotland is now also delivering Child, Adult and Pension Age Disability Payments, Carer Support Payment, the Best Start Grants, Funeral Support Payment and Winter Heating Payment. This gives some scope to do things differently. As an example, the Scottish Government currently invests funds to address the impact of the benefit cap and bedroom tax in Scotland and have announced they plan to do likewise on the two-child limit from 2026. We see these policies as more than mitigation, instead, creating the foundations of a new approach to social security in Scotland.