Minimum Income Guarantee report: SG response

Background

The independent Expert Group was established in 2021 to take forward the Programme for Government commitment to begin work towards a Minimum Income Guarantee. The Expert Group put in place an Experts by Experience Panel to support and inform their work.

Through the Expert Group's time the membership included academics, trade unions and poverty and equality organisations. The first meeting took place August 2021, with the final meeting held in May 2025 just ahead of the publication of their full report ‘A Minimum Income Guarantee: a Roadmap to dignity for all’^[1] in June 2025.

The Expert Group’s Roadmap outlined 30 recommendations for the Scottish and UK Governments. The near-term recommendations covering the period 2026-2031 focus on ‘building the guarantee’. This would involve a lot of changes to existing systems, especially Universal Credit, to remove harmful and discriminatory policies, and of course, this is reserved to the UK Government.

Other near-term recommendations include improving wages alongside security in hours, conditions and employment rights, as well as expanding opportunities to progress at work. On public services the recommendations suggest changes are needed to ensure that services are affordable and accessible, and that childcare and transport services enable people to access the labour market. They also recommended a pilot Minimum Income Guarantee to gain insight and data.

Their medium-term recommendations, covering the period 2031-2036, suggest actions to ‘create a fairer Scotland’ by establishing frameworks with the UK Government to enable progress and cooperation, such as exploring an interim time-limited Minimum Income Guarantee based on the learning from a pilot; ensuring that skills and employment are futureproof; reducing household costs by expanding services; and increase participation in society.

Their longer term ‘collective ambition’ beyond 2036 focuses on creating a social contract built on dignified work, investment in people’s needs and public services, reduction of costs and a guaranteed safety net.

Our response to the Expert Group’s Roadmap focuses on the recommendations made in the nearer term (2026-2031) as this will be the lifetime of the next parliament. Going beyond that timeframe is too uncertain and relies on any findings from the work done over the next five years to explore a Minimum Income Guarantee in Scotland further. As we are approaching an election in May 2026, this response focuses on what this current Government is already doing to make progress towards the recommendations and outline areas on which the future government may wish to focus.

If the UK Government acted to address the issues identified in the Expert Group’s Report and reformed Universal Credit to make it fit for purpose this would go a long way to providing an adequate level of financial support to families across the UK. It would also free up existing resources that the Scottish Government commits to mitigate policies such as the benefit cap, the bedroom tax and the two child limit. Money that could be invested elsewhere.

Fiscal and constitutional context

We are already utilising the powers that we have over social security and services in Scotland. However, the UK Government retains the powers over Universal Credit and the majority of powers over employment, such as the minimum wage and living hours.

The UK Spending Review^[2] published in June 2025 delivered a disappointing and challenging settlement for Scotland. Across both resource and capital budgets the Scottish Government’s funding fell substantially short of expectations. Without the full fiscal levers of an independent nation, the budgets for the Scottish Government will continue to be almost entirely dictated by decisions taken in Westminster. That means when Westminster decides to tax jobs or cut support for disabled people there is an automatic and substantial cost to Scotland’s budget. The UK Government’s failure to fully fund their employer National Insurance Contributions increase left Scotland with a £400 million shortfall in funding, undermining investment in our priorities.

Despite this uncertainty we are investing around £6.9 billion in Social Security benefits and other payments in 2025/26. This investment is vital as none of us know when we might need to access the social security safety net.

That is £1.2 billion more than the funding we are forecast to receive from the UK Government through the Social Security Block Grant Adjustment – of which £649 million is to mitigate the worst impacts of Westminster austerity, for example the Bedroom Tax and benefits cap, as well as the wholly inadequate level of Universal Credit which we’ve established the Scottish Child Payment to combat. The future value of the Social Security Block Grant Adjustment remains deeply uncertain as the UK Government pursue a reform agenda focussed on reducing benefit spend. This uncertainty is starkly evidenced by the recent in-year impact of the UK Government’s changes to Winter Fuel Payments.

In contrast, we view our benefit expenditure as an essential investment in the people of Scotland which directly results from the conscious policy choices made by Ministers and this Parliament, founded on the unanimously passed 2018 Social Security Scotland Act.

We have no plans to increase tax in Scotland to finance any elements of a Minimum Income Guarantee. As part of Scotland's Tax Strategy, the Scottish Government has committed to exploring the reforms needed to continue to deliver sustainable and growing tax revenues in the future.

We recognise the fiscal challenges facing the public finances, and we have a clear strategy and plan in place to ensure that the public finances are on a sustainable path, including through the actions set out in our Medium-Term Financial Strategy^[3] and Fiscal Sustainability Delivery Plan.^[4] We are taking action to increase Social Security Scotland’s ability to tackle fraud and error; invest in critical digital services and platforms; drive operational delivery improvement and consider wider improvements to the way we manage reviews of client awards.

This investment is possible because we balance our budget every year. We are fully funding social security to ensure the system can deliver a service based on dignity, fairness and respect. It is an investment in the people of Scotland and provides value for money for the public purse.