Opportunity/Challenge 2: Ensure that the devolved taxation system is delivered in a way which is based on ability to pay and that the devolved social security funding increases the resources available to those who need it
What does the evidence tell us?
- Analysis published alongside the 2022-23 Scottish Budget shows that the Scottish Government's Income Tax policy choices since 2016-17, combined with changes in the UK-wide Personal Allowance, have been highly redistributive and have protected low-income taxpayers. On average, lower earners, women, younger and older people particularly benefit.
- It is estimated that 19% of Scotland's population (1.03 million people each year) were living in relative poverty after housing costs between 2017-20.
- Just under a quarter (24%) of children were in relative poverty after housing costs between 2017-20, equivalent to 240,000 children.
- Poverty rates are particularly high for children in a minority ethnic household (38% in relative poverty between 2017-20), in a lone parent household (38% between 2017-20), in households with a mother under 25 (55% between 2015-18), in households with a child under 1 (34% in 2017-20), in households with three or more children (32% in 2017-20), and in households where there is a disabled adult or child (38% in 2017-20).
- Many disabled people face additional living costs. In 2017-20, as in previous years, the poverty rate was higher for individuals in households with a disabled person, when disability-related benefits are not included in the household income. After housing costs, the poverty rate was 29% (640,000 people each year) for people living with a disabled household member compared to 16% (500,000 people) for those living in households where no-one is disabled.
- Many key benefits are largely claimed by women, who make up 89% of applicants for Scottish Child Payment and 69% of recipients of Carer's Allowance. Younger people and those living in the most deprived areas also disproportionately claim benefits.
- Mothers under 20 are more reliant on state benefits and tax credits than older mothers, making them disproportionally impacted by cuts or changes to eligibility criteria in benefits or support services.
What are we doing to address this?
The level of funding allocated to Social Security shows the strength of the Scottish Government's commitment towards building a new system for the people of Scotland with dignity, fairness, and respect at its heart. By 2026-27, social security assistance and benefit payments are projected to reach £6.5 billion, providing support to over one million people per year. Social Security Scotland will administer benefit payments during this period. This funding will help low-income households, unpaid carers, disabled children and adults or those with a long-term health condition with their living costs including energy bills. This is an investment in the people of Scotland and is key to our national mission to tackle child poverty. We are using devolved social security powers to deliver real and substantial difference to the incomes of people in our communities who need it most.
Our second Benefit Take-up Strategy published in October 2021 sets out how we are working to ensure people can access the financial support they are entitled to, supporting delivery of our national mission to tackle child poverty.
Significant commitments include delivering the "game-changing" Scottish Child Payment (SCP) to support eligible children under six years. We doubled the payment from £10 to £20 per week in April 2022, and we will increase it to £25 per week by end of 2022, when the benefit will also be extended to under 16s. Social Security Scotland takes a range of actions to promote the uptake of SCP including major communications and further marketing activity is planned around SCP in the year ahead.
Other measures include, starting in winter 2022-23, the new Low Income Winter Heating Assistance will provide around 400,000 low-income households, currently eligible for Cold Weather Payments, a stable £50 payment every year towards energy costs. We will also continue funding for unpaid carers through Carer's Allowance and Carer's Allowance Supplement.
We also provide significant investment in Adult Disability Payment which was introduced on 21 March 2022 in three pilot areas and will be rolled out across the summer to further areas and nationally in August 2022. Our new person-centred decision-making process will ensure that everyone is treated with dignity, fairness, and respect. In addition, we are introducing indefinite awards which will avoid unnecessary reviews for severely disabled people with needs that are highly unlikely to change. Scottish disability benefits use a new definition of terminal illness that removes arbitrary time limits around life expectancy, and instead relies upon the clinical judgement of the clinician involved in an individual's care. Entitlement to Child Disability Payment has been extended to age 18 for any young person entitled to the benefit before age 16 if they so choose and rewards will not be reviewed during this time. This means young people have a choice of not needing to apply for Adult Disability Payment at a time of transition.
Social Security Scotland will create a range of Adult Disability Payment stakeholder resources, and content in accessible formats. These will be proactively supplied to relevant stakeholder organisations through the National Stakeholder Engagement Team, for organisations to distribute to people in local communities. The languages we translate materials into were selected through stakeholder consultation; being: British Sign Language, Farsi, Mandarin, Cantonese, Urdu, Gaelic, Polish, Arabic, braille, and easy-read formats. This will enable those, for whom English is not a first language, to be able to access information about their benefit entitlement.
Finally, the Scottish Government also funds support via local authorities and other bodies, such as for Discretionary Housing Payments and for the Scottish Welfare Fund for the provision of Crisis and Community Care Grants.
There are no tax policies set out in the RSR. The Scottish Government will continue to use our powers over taxation and revenue raising in a fair and progressive manner, aiming to protect those on low incomes and raise revenue to fund high-quality public services for all. Tax policy will be set as part of the Scottish Budget process, with the equality impacts assessed in the accompanying Equality and Fairer Scotland Budget Statement.
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