FACT CHECK: Has Holyrood failed to use its powers to combat inequality?

Holyrood’s powers have not been used to combat inequality but have fostered its expansion… The statistics don’t lie and the continuing growth of poverty and inequality in Scotland is shocking and shameful. Anyone serious about changing that would support a fundamental review of spending priorities - Brian Wilson, former Labour minister, The Scotsman 1 February 2020

DOORSTEP ANSWER

Overall poverty rates in Scotland are lower than at the start of devolution in 1999. They are also lower than in the UK as a whole. This is due principally to social rents being kept down in Scotland. Also, child poverty in Scotland is lower than in the UK. A recent upturn in poverty rates across the UK is due to the benefits freeze imposed by Westminster.

OVERALL POVERTY LOWER IN SCOTLAND THAN FOR THE UK

The most authoritative independent source of data on poverty (in the UK and Scotland) is the Joseph Rowntree Foundation. In October last year, the Foundation published a major study entitled Poverty in Scotland 2019. The main findings were: “Overall, poverty in Scotland was lower in 2015–18 (the most recent period for which we have data) than it was in 1999–2002 at the start of devolution, but since 2009–12, poverty rates have started to shift upwards”.

The Rowntree Foundation report says that overall poverty in Scotland in 2018 (the latest data point) is lower than in 1999-2002, the first term of the devolved Holyrood Parliament. In 2015–18, poverty measured after housing costs was close to 4 percentage points lower than it was in 1999–2002. As Mr Wilson say, “statistics don’t lie”.

However, Rowntree makes another point: overall poverty in Scotland – despite the recent upturn – is still lower than for the UK as a whole. The Rowntree report ascribes the lower Scottish poverty level to lower housing costs in Scotland, particularly in the social rented sector; i.e. to actions taken by public sector authorities north of the Border in the period since devolution was introduced.

Note: Poverty after housing costs in Scotland has not always been lower than in the rest of the UK. The divergence occurred in the early to mid-2000s – after devolution. Starting with the Blair government, Westminster pursued a policy of increasing rents in social accommodation to maximise returns. Holyrood deliberately did not follow this course. By 2017, social rents in Scotland were 14% lower for tenants of registered social landlords and 18% lower for tenants of local authority landlords, compared with England.

So, the lower overall poverty level in Scotland does seem to be a consequence of devolution. This evidence refutes Brian Wilson’s claim that Holyrood has somehow “fostered” the “expansion” of poverty.

WESTMINSTER IS TO BLAME FOR THE RISE IN POVERTY

However, according to Rowntree (and supported by other data) there has been a sharp break in the downward trend in overall poverty, starting circa 2010 with the election of the Tory-Lib Dem coalition government. Since then, overall poverty has started to shift upwards and there have been sharp rises in particular forms of poverty (discussed below). This upward movement cannot be refuted and is certainly a cause for concern. What has caused this upturn?

Rountree’s verdict is damning: “…it appears that UK Government policy has driven much of the history of poverty over the past 20 years”. (Poverty in Scotland 2019, p9) In 2010, the incoming Tory-Lib Dem coalition restricted working-age benefits to an annual 1 per cent rise – well below the rate of inflation. After the outright Tory victory in the 2015 General Election, Chancellor Osborne felt confident enough to impose a total freeze on working-age benefits - including child benefit, tax credits, jobseeker’s allowance, housing benefit and income support. This unprecedented five-year freeze – benefits were last raised in April 2015 – is the true cause of the rise in poverty across the UK.

According to an independent analysis by the House of Commons Library, by 2019-20 affected households will have seen annual incomes fall in real terms between £888 and £1,845, as a result of the freeze. (The variation reflects size of family and how many adults are working.) The Joseph Rountree Foundation estimates that by April 2020, the freeze will have driven 400,000 people into serious poverty and “made life harder” for 27 million people – 11 million of whom are children.

LOWER CHILD POVERTY IN SCOTLAND

According to a March 2019 report by the Resolution Foundation, 23% of Scottish children (around 230,000) lived in households that are below the UK relative poverty line. While this number is far too high, it compares favourably to a UK-wide figure of 30 per cent. (The data is for 2016-17.) The Resolution Foundation attributes this to the fact that “Scotland enjoys relatively high earnings but without the same degree of housing cost pressure as London”.

However, as a result of the UK benefits freeze, child poverty is on the rise across the UK. The Resolution Foundation forecast suggests the Scottish child poverty rate will be 29% in 2023-24 – with the UK figure jumping to 37%. Note: This projection uses lower economic growth forecasts from the UK Office for Budget Responsibility – forecasts which are influenced by Brexit uncertainties. However, it is reasonable to believe the child poverty is certainly on the increase.

The upward trend in child poverty in Scotland and the UK may flatten when the benefit freeze is lifted in April 2020 but any positive impact on real incomes depends on inflation. However, new powers transferred to Holyrood give the Scottish Government some policy latitude.

SCOTTISH GOVERNMENT ACTION ON POVERTY

After the 2014 independence referendum, some new local powers over benefits were transferred to Holyrood, under the Scotland Act 2016. These cover disability and carers, and some payments for low-income households. Holyrood now has the power to top up other UK benefits and create new benefits. However, responsibility for Universal Credit remains a reserved power, though Holyrood has some flexibility over payment options (known as ‘Scottish Choices’).

In 2017, the Scottish Parliament used its new powers to enact the Child Poverty (Scotland) Act. This sets a legal duty to bring relative child poverty (after housing costs) down to 10% by 2030-31, with an interim target of 18% by 2023-24. In addition, the act mandates the Scottish Government reduce absolute poverty levels. Scotland is the only home nation to have legislated such mandatory targets.

Using its new powers, the SNP Government has already started to spend extra funds to supplement existing UK benefits. For instance, £452.40 a year more is going to carers here than in the rest of the UK. Direct Scottish Government financial support to low income families was £527m in financial year 2018-2019.

In 2022, the Scottish Government plans to introduce the Scottish Child Payment for all eligible children under the age of 16. This will be monthly and uprated annually in line with inflation. When the policy is fully rolled out by the end of 2022, 410,000 - over a third of Scottish children - will be eligible for the Payment. The cost will be some £180m per annum. At this spend, relative child poverty will be reduced by three percentage points.

However, the Scottish Government has now announced it is bringing forward the start of the scheme. The Scottish Child Payment will be introduced early to families with children under the age of 6, starting next year. These early payments will support around 170,000 eligible children in around 140,000 households. These moves indicate that Mr Wilson’s implied criticism - that the SNP Government is somehow failing to adjust its spending priorities in the light of Westminster cuts to benefits – is exaggerated if not bogus.

Nevertheless, it is true that if the UK economy takes a serious hit from Brexit, it will be difficult for the Scottish Government to meet its statutory obligation to reduce child poverty to 18% by 2023-24, without increasing the Child Payment and/or boosting growth.

FACT CHECK RATING: FALSE

Brian Wilson ignores improvement in Scotland's relative position on poverty compared with UK as a result of devolution, and he ignores, the introduction of the new Scottish Child Payment.