Minimum Income Guarantee: report - a roadmap to dignity for all
The final report by the independent Minimum Income Guarantee Expert Group outlines how a Minimum Income Guarantee could potentially be delivered in Scotland using a roadmap approach, combining long-term vision with near term steps.
What could a Minimum Income Guarantee for Scotland look like?
This section seeks to outline our proposal for a Minimum Income Guarantee in Scotland. More detail on the Roadmap to delivery is provided in the sections that follow.
Expert Group and Experts by Experience Panel principles
In our interim report, we set out a number of foundation principles that would guide us in designing a Minimum Income Guarantee for Scotland.
Expert Group principles
- a guaranteed level of income beneath which no individual living in Scotland would fall;
- a minimum income set to ensure an acceptable standard of living that promotes dignity and a decent quality of life;
- designed to recognise our distinct needs which vary by person and family;
- clearly focused on tackling poverty, inequality and financial insecurity;
- a suite of interventions – including to reform collective services, the world of work and social security;
- accessible to all of us with a clear focus on eliminating inequalities.
The Expert Group believe, to succeed, a Minimum Income Guarantee would need to be:
- co-designed by those with lived experience of financial insecurity and the current benefit system;
- supported by a broad coalition including the public, stakeholders and MSPs;
- co-ordinated, across government and beyond;
- implementable – through first steps taken under existing powers, with further steps and powers outlined as necessary.
In developing our proposals, we have sought to uphold the above principles for a Minimum Income Guarantee and to build the evidence and foundations for future successful delivery. Lived experience, through our Experts by Experience Panel, has been instrumental in driving the work and we have engaged with many stakeholders and the public to refine our recommendations. We believe that momentum is building for this policy and have worked to ensure that our recommendations are implementable, particularly our first steps, and this is detailed through our Roadmap.
In addition, our Experts by Experience Panel produced their final report and outlined a set of principles that they view as central to a Minimum Income Guarantee and we believe these must be central to the work for those taking our recommendations forward.
Experts by Experience Panel Principles
Fairness: The Minimum Income Guarantee should be delivered with fairness and in a non-discriminative and non-punitive manner (without sanctions) to all, reducing inequalities and eradicating poverty.
Compassion: The Minimum Income Guarantee should be delivered with compassion and dignity, providing an assurance of a decent quality of life, and fostering a caring society. The system should be delivered by well-trained and empathetic staff, aimed at reducing unnecessary stress, ensuring people feel confident to access support and understand that the Minimum Income Guarantee is for everyone.
Inclusive and accessible: The Minimum Income Guarantee should be delivered so that it is inclusive and accessible to all. The system should be flexible and account for people’s differing needs through providing both financial and wider support.
Monitoring and evaluation: The Minimum Income Guarantee should be delivered with continuous monitoring, evaluation, and learning. This should be reviewed regularly to ensure it continues to deliver the policy objectives.
A holistic system: The Minimum Income Guarantee should be delivered as part of a holistic system which considers a wide range of needs and the most appropriate support to meet them. This should focus on social security, fair work, and universal services – working with the public, private and third sector in its delivery.
Transparency: The Minimum Income Guarantee should be delivered with transparency. This needs a governance system that demonstrates accountability and ensures cost effective delivery, financial sustainability and is communicated clearly to the public.
Wellbeing: The Minimum Income Guarantee should be delivered to support financial, physical, and mental wellbeing. The system should provide financial security and collaborate with services which empowers people to make genuine choices and participate in society.
Fair work: The Minimum Income Guarantee should be delivered with support for fair paid work and should value unpaid work, as far as is reasonably practical.
Taken together these have worked to guide us as we reach our final conclusions on delivering a Minimum Income Guarantee in Scotland.
At what income floor should the Minimum Income Guarantee be set?
We worked to define the minimum income level that nobody in Scotland should be allowed to fall below. We modelled[71] the costs and poverty impacts in consultation with the Experts by Experience Panel.
Our conclusion is that a dignified quality of life must be the ultimate long-term goal of the Minimum Income Guarantee. The closest proxy we have now is the Minimum Income Standard.[72] We recognise that this is a long-term change. Nearer-term, progress should focus on strengthening the existing safety net and then ensuring all households have an income of at least the relative poverty line medium-term.
The Minimum Income Standard is a widely respected measure, developed by Loughborough University. It is used to aid calculations of things like the real Living Wage. It reflects public consensus on what is needed for a dignified socially acceptable standard of living. It is developed from group discussions, rooted in what people were experiencing at that time and what resources and priorities were considered important for households to be able to thrive. The latest iteration of the research includes budgets and costs priced in April 2024.
We believe the Minimum Income Standard should form the basis for the next steps on what a dignified, socially acceptable standard of living should be in Scotland. This work should be built upon over time as we progress on the Roadmap towards a Minimum Income Guarantee, ensuring this standard of living can be realised for all. When considering the level of the income floor, our Experts by Experience Panel liked that the Minimum Income Standard took a human-centred approach that went beyond survival, and that the Expert Group propose it be reviewed and updated regularly by a Minimum Income Guarantee Commission (see Recommendation 23).
The Minimum Income Standard gives an overview of what a cross section of the public believes a dignified standard of living looks like for different types of households in 2024. The average weekly budget required for households to meet the Minimum Income Standard (after housing costs) are: £293 for a single working age adult, £763 for a couple with two children (one aged 2-4 and one primary school age), £608 for a lone parent with two children (one aged 2-4 and one primary school age) and £375 for a couple of pension age.[73] Food, fuel, personal goods and services and social and cultural participation are the biggest spending items across these households after housing costs and childcare.74
For the purpose of using the Minimum Income Standard to model the Minimum Income Guarantee income level for this report, we chose to exclude both housing and childcare costs from the modelling, in recognition that these vary significantly by household and area, which would require a different approach to a set income floor. Ultimately, we believe these costs should be covered through a separate housing payment and reforms to childcare, but that these should be treated separately to the social security element of the Minimum Income Guarantee that we propose.
The Minimum Income Standard has its limits and does not currently consider the extra costs and barriers to accessing services or entering the workforce faced by some, for example, those who experience more complex, intersecting inequalities. This was acknowledged by our Experts by Experience Panel. When implemented, the Minimum Income Guarantee level must reflect people’s real lives. One example highlighted was that disabled people may have very different needs to achieve a dignified quality of life based on the types of disability and barriers they experience (which can fluctuate over time). As a result, Adult, Child and Pension Age Disability Payments have been disregarded as income in the modelling. These should remain separate from the Minimum Income Guarantee and must continue to provide disabled people with support towards any additional costs faced.
The Minimum Income Guarantee level for this report also excludes essential costs for non-residential social care, which again vary significantly across Scotland and by individual need. Both the Scottish Government and COSLA have a commitment to remove such charges,[75] but this has yet to be delivered and if this is not forthcoming in future, social care charging costs would need to be revisited. Further work is essential to ensure a Minimum Income Guarantee level means dignity for all and takes account of intersecting equalities considerations. Detail on some of these costs and barriers can be found later in this Roadmap.
In addition, and particularly important in a country like Scotland, the Minimum Income Standard, which we use as a proxy in this report, does not currently take account of geographical differences in the costs of reaching the same standard of living, including housing or childcare costs. For example, rural and island communities may face higher transport and energy usage, and higher food prices. In our Roadmap we set out recommendations for how a Minimum Income Guarantee should be set and uprated.
It is important to understand the scale of the problem: how many households are currently below the Minimum Income Standard, and as such at risk of not reaching the dignified quality of life we wish to see for all. Table 1 outlines the number of households with incomes below different percentages (50%, 75% and 100%) of the Minimum Income Standard. It outlines the total gap (referred to as the aggregate income gap) between each of these levels and the income of all households who fall below it. It also sets out the potential poverty impacts and child poverty impacts of closing these gaps by bringing all households up to the respective Minimum Income Standard level.
Note that these estimates are notional in the sense that they bring households up to respective Minimum Income Standard level and no more, without any policy mechanism assumed. In addition, to ensure that all households are reached while also making sure that the impacts are not capturing benefits to which households are already entitled, the analysis assumes full take-up of benefits before households are brought up to the Minimum Income Standard. The figures also do not account for any behavioural effects. As a result of these factors, both the costs and the impacts of moving all households up to the Minimum Income Standard will be understated. In addition, the figures will not be directly comparable with the official poverty statistics.
Moving all households up to 100% of the Minimum Income Standard from their current levels of income, including unclaimed benefit entitlements, would reduce relative child poverty by an estimated 13 percentage points at a cost of £6.9 billion in 2024/25. This would effectively amount to eliminating relative child poverty, albeit starting from a position of full take-up of benefits. Overall, relative poverty would reduce by 12 percentage points with a small minority of households remaining in poverty. Reaching 75% of the Minimum Income Standard would have a similar impact on child poverty but a much lower impact on overall poverty, while 50% of the Minimum Income Standard would have no measurable impact on relative child poverty or overall poverty.
| MIS percentage | 100% | 75% | 50% |
|---|---|---|---|
| Aggregate income gap to Minimum Income Standard percentage per annum (bn) | £6.9bn | £2.5bn | £0.6bn |
| Households affected | 850,000 | 470,000 | 160,000 |
| Relative poverty impact* of closing income gap (percentage point reduction) | 12 pp | 4 pp | 0 pp |
| Relative poverty remaining (%) | 2% | 10% | 14% |
| Relative child poverty impact* of closing income gap (percentage point reduction) | 13 pp | 12 pp | 0 pp |
| Relative child poverty remaining (%) | 0% | 1% | 13% |
Source: Scottish Government analysis using UKMOD.
Notes: rounded to nearest £0.1 billion, 10,000, or 1 percentage point. Childcare and housing costs are excluded from the MIS, and disability benefits and housing costs are excluded from income. Full take-up of benefit entitlements is assumed. Figures not comparable with official poverty statistics.
*Relative poverty impact is the reduction of relative poverty after housing costs (AHC) in percentage points (pp), with disability benefits excluded from income. A household is in relative poverty according to this definition if its disposable income is below 60% of the UK median, with income measured after subtracting housing costs and disability benefits and after adjusting for household composition (‘equivalisation’). For more information on how income is measured when measuring poverty, including treatment of housing costs, see Poverty and Income Inequality in Scotland 2021-24.
The income gap to the Minimum Income Standard is larger for certain groups in the population, whom we know are at a greater risk of falling furthest below the Minimum Income Standard.
| Minimum Income Standard AHC (households with children) | Aggregate income gap to Minimum Income Standard (£bn to gap) | Households (’000) | Mean income gap per annum (£) | Median income gap per annum (£) |
|---|---|---|---|---|
| Disabled people | 1.7 | 140 | 11,600 | 11,200 |
| Lone parents | 1.2 | 110 | 11,400 | 10,300 |
| 3+ children | 0.8 | 50 | 15,900 | 13,700 |
| Ethnic minority* | 0.2 | 20 | 13,300 | 13,700 |
| Young children | 0.2 | 30 | 8,600 | 6,600 |
| Young mothers | 0.3 | 20 | 13,600 | 9,300 |
| Disabled people only | 0.6 | 60 | 10,500 | 8,900 |
| Lone parents only | 0.3 | 40 | 8,000 | 7,600 |
| 3+ children only | 0.2 | 10 | 14,400 | 11,100 |
| Non-priority | 0.4 | 50 | 8,700 | 7,800 |
Source: Scottish Government analysis using UKMOD.
Notes: rounded to nearest £0.1 billion, 10,000, or £100. Categories labelled ‘only’ refer to children who belong to only that priority group and no others. Childcare and housing costs are excluded from the MIS, and disability benefits and housing costs are excluded from income. Full take-up of benefit entitlements is assumed. Mean and median income gaps are calculated only among households below the MIS.
*Ethnic minority: definition used here from the Tackling Child Poverty Delivery Plan priority families which includes everyone who is not White Scottish/British.
Many households belong to more than one of the priority groups. We know that households with a disabled person make up the largest single group who are below the Minimum Income Standard (even without fully accounting for the likely higher costs that disabled people face on average).[76] It is essential that disabled people benefit from the Minimum Income Guarantee and achieve the same dignified standard of living that others reach. The number falling below the Minimum Income Standard reflects both the prevalence of disability among the population as a whole and the barriers many disabled people face to entering employment. The second largest group was lone-parent households. However, households with three or more children tend to be the furthest away from the Minimum Income Standard on average, followed by ethnic minority households more broadly and households with young mothers.
At the intersection of these groups, where people are members of more than one, inequalities are compounded to create further impacts. For example, most lone parents are women; minority ethnic households tend to have a higher average number of children; and disability compounds other inequalities as outlined above. This is shown in the table: on average, the gap to the Minimum Income Standard is lower among lone parents (the majority of whom are women) when they do not belong to any other priority group (£8,000) than it is among lone parents overall (£11,400).
Further detail on the distance certain groups are from the Minimum Income Standard are available in our full modelling paper.[77] We consider it essential that a Minimum Income Guarantee ensures everyone can live a dignified life, and so these challenges must be urgently addressed.
Our vision for the role of work, services, cost of essentials and social security
The aim of a Minimum Income Guarantee is to ensure everyone can live with dignity. This will be achieved by ensuring their household income does not fall below the level set out in the section above. We believe that a Minimum Income Guarantee must be delivered through a combination of fair work; reform to services and the cost of essentials; and investment in social security, ensuring nobody’s income drops below the level required to live with dignity.
Our view, underpinned by a range of analysis, is that attempting to achieve a Minimum Income Guarantee through one of these policy levers alone could lead to unforeseen consequences and negative impacts. As an example, a sole focus on social security investment and an insufficient focus on fair work, could reduce work incentives for certain groups, such as second earners, who are mainly women. Likewise, a lack of focus on services, such as social care services, could reduce employment opportunities for unpaid carers, many of whom are women. Both of these in turn could have longer-term implications for women’s lifetime earning potential, pensions and gender equality more broadly.[78] However, by balancing activity across social security, fair work, services and costs, we can protect and increase living standards, enable participation in society and work, and ensure people have the support they need to take and make the most of the opportunities they wish to. We want people to have genuine choices and so our Roadmap seeks to strike a balance across these areas.
Key design features
In the next section of the report, we will outline our Roadmap towards achieving a Minimum Income Guarantee and we will go into further detail on the overall design throughout. However, we wanted to set out the key design features of a full Minimum Income Guarantee (to be achieved at the end of the Roadmap) upfront.
1.A Minimum Income Guarantee will ensure a dignified quality of life for all.
2.A Minimum Income Guarantee will vary by need based on the reality of people’s lives. Treating everyone the same is not the same thing as treating everyone fairly or securing equitable outcomes. It will protect those facing higher costs or reduced earnings compared to others (for example through introducing premium social security payments for some groups – including disabled people, unpaid carers, rural and island communities). It will be designed and implemented in a way that is responsive to how inequalities intersect and compound for different people and groups of people.
Work:
3.A Minimum Income Guarantee will see the establishment of a social partnership approach to the economy. Many countries who have a stronger record on fair work compared to Scotland or the UK have institutions in place that act to balance the interests of employees, employers and the country. Through this approach, we expect to see paid work going further to provide financial security.
4.A Minimum Income Guarantee will mean reform to work through increases and equivalisation to national minimum wage rate, rights to minimum hours, and a focus on driving fair work into the economy and driving low pay and insecurity out. Everyone who can work should have access to fair work. This includes making sure flexible work is available, that parents and carers are supported by adequate care services and disabled people in work are supported by employers. It should also enable people to contribute equitably to their future through pensions, enabling a dignified life beyond work. Pay and conditions would be set and maintained through agreement with employees, employers and government.
5.A Minimum Income Guarantee will support life-long learning, skills development and training for the jobs of today, while preparing for changes that will come with technological change and the transition to a low carbon economy. Employability services should be there to support people to progress and find sustainable and suitable employment, taking account of the wide-ranging needs of individuals across life stages and circumstances such as ill health, disability and caring responsibilities.
6.A Minimum Income Guarantee will recognise the contribution of unpaid work within the household and across society. This will include financial recognition through the level set for Minimum Income Guarantee payment(s) and stability offered through the guarantee of security for all.
Services and reducing costs:
7.Reducing the cost of essentials and meeting needs through services must be seen as a priority and requires further exploration beyond this work. Ultimately, the ambition would be to see progress towards Universal Basic Services alongside a Minimum Income Guarantee. The success of a Minimum Income Guarantee is reliant on the interaction between services, costs, work and social security so crucially, public investment in services cannot be reduced to pay for a Minimum Income Guarantee.
8.A Minimum Income Guarantee will include regulation of essential costs, to ensure that everyone can afford the things they need to live well and fully participate in society. This means that costs should be set at a level that is reasonable and discounted or subsidised rates provided where needed.
9.A Minimum Income Guarantee will ensure that services and private provision of essentials are efficient, available, accessible, safe, and see high take-up. They must support our goals to reduce the level of income needed to reach a dignified life and enable people to increase their incomes through improved paid work opportunities. They will be designed to meet the needs of individuals and communities across Scotland and action should be taken to promote services where its known take-up is lower.
Social security:
10.A Minimum Income Guarantee will offer a simple and easy-to-understand level of support, which maximises take-up, and removes accessibility barriers. The system should be proactive and, where possible/desirable, automated so that it can achieve the goal of everyone recieving support if they are entitled.
11.The Minimum Income Guarantee payment(s) will be means-tested, responsive to real-life costs, uprated regularly (including in-year where necessary) and set in line with advice from independent experts, including those with lived experience of financial insecurity and the general public.
12.A Minimum Income Guarantee payment will gradually reduce as other income increases, to ensure that paid work is always rewarding. It will also provide security and certainty for those who are unable to be in paid work because of ill health, disability or caring responsibilities.
13.A Minimum Income Guarantee will offer a genuine safety net for all those who need it free from punitive sanctions.
14.Individual payments will be the default for a Minimum Income Guarantee payment, reducing the opportunities for financial and economic abuse that are enabled by the existing UK-wide system.
15.A Minimum Income Guarantee will see a separate payment for housing costs, reflecting their variation. These would be calculated and paid separately to a Minimum Income Guarantee payment.
16.Under a Minimum Income Guarantee no one will lose their existing entitlements compared to now. For example, pensions, non-means-tested payments for disability costs, and Child Benefit to support the additional costs of raising children, would continue, together with additional payments for unpaid carers and other groups, as now. It is important to retain the existing universal parts of the social security system to offer a bedrock of support on which a Minimum Income Guarantee can be built, and to offer a diversity of payments for people and households.
Contact
Email: MIGSecretariat@gov.scot