Scottish Government People's Panel 2026-27 Event 3: The Cost of Living

3. Key considerations for Government

The cumulative impact of financial pressure is eroding confidence and trust

• Panel members described rising costs as a cumulative experience over several years, gradually eroding their financial resilience, limiting their ability to absorb further increases, and generating feelings of resignation and exhaustion.
• The cumulative nature of cost-of-living pressures appeared to be contributing to a growing sense of pessimism about the future, alongside declining confidence that living standards will improve.
• This sustained pressure may risk further weakening trust in institutions and confidence in policy solutions.
• The findings suggest that panel members thought about the government response in the context of a loss of trust. There was the sense that government was not listening or being responsive, and did not understand what was happening for people as a result of these financial pressures. For government, loss of trust is therefore an important consideration alongside the financial and other hardship consequences.

Households have made adaptations – but there are limits to resilience

• Panel members described how they had adapted in different ways to try to manage rising costs. While these coping strategies demonstrate flexibility, there was also a sense that people and households are reaching the limits of what they can absorb or change.
• There are also wider implications and potential long-term societal impacts to people delaying major life decisions or investments.

There are potential impacts on businesses and the wider economy

• Panel members described reduced household spending as a result of cost-of-living pressures. Spending cuts included discretionary areas such as socialising, eating out, leisure activities, holidays and major purchases. Sustained reductions in consumer spending could reduce demand for goods and services, with negative implications for businesses, investment and economic growth.
• Members also described a reluctance to make major life decisions such as starting businesses. A reduced willingness to take business risks could lead to fewer business start-ups, with potential longer-term consequences for the wider economy.

A critical consideration for policy design is around who qualifies for support

• Cost-of-living pressures were affecting all of the panel members, not just those on low incomes. In particular, some panel members who did not qualify for targeted support, yet were still struggling with the cost of living, felt overlooked. They voiced concerns about being above the threshold for support, and a perception that this was unfair.
• The findings reinforce the importance of recognising that experiences of financial pressure are not determined by income alone. Members highlighted a range of circumstances that shaped vulnerability, including caring responsibilities, disability, household composition and being just above eligibility thresholds for support.
• The findings also suggest that the population experiencing significant cost-of-living pressures extends beyond those traditionally viewed as financially vulnerable, and may be broader than the population recognised by existing support mechanisms. Policy makers should consider whether policy design, support arrangements and public communications adequately recognise this wider group of households.

Tensions around funding and delivery of cost-of-living support

• There was recognition that some households need additional cost-of-living support, but some uncertainty about how such support should be funded. Some panel members were sceptical about funding support via increases in taxation, believing that additional costs would fall disproportionally on certain groups or could create unintended economic consequences.
• Panel members were sceptical about the extent to which businesses such as supermarkets and energy companies would be willing to prioritise consumer interests over profits. This contributed to wider doubts about whether government interventions could be implemented effectively, for instance concerns that price caps on certain foods would lead to rises elsewhere.

Demand for long-term solutions alongside immediate relief

• Panel members argued that government should focus more on tackling the wider underlying drivers and root causes of cost-of-living pressures as well as providing short-term support. For example, they talked about housing improvements, changes to energy pricing, using Scotland’s renewable energy resources, food education, and support for local food production.
• Panel members felt that government interventions were not tackling the underlying causes of high prices for energy, food and housing, and expressed some doubt as to what could be done by national governments faced with global drivers of high prices. The discussions suggested that government response measures may be viewed by some members of the public as more credible when positioned alongside wider action on the root causes of affordability challenges.
• A key implication for government is the need to provide clearer evidence of how it is addressing long-term affordability pressures while also taking action to address the root causes of the rising cost of living and its impacts.