Taking action on cost emergency

The First Minister has chaired the Scottish Government Resilience Committee (August 11) to discuss urgent steps to mitigate the growing cost emergency which is affecting people and businesses.

Ministers assessed the current situation and likely scenarios in the months ahead and agreed a number of immediate actions. The Scottish Government will:

• Continue to maximise the direct financial assistance available to those most in need, principally through ongoing work to extend eligibility for and increase the value of the Scottish Child Payment
• Undertake an emergency budget review to assess any and all opportunities to redirect additional resources to those most in need, reduce the burdens on business and stimulate the Scottish economy
• Consider urgently all options within devolved powers for regulatory action to limit increases in costs for people, businesses and other organisations
• Bring together energy companies, banks and food retailers to examine what further help can be provided by these businesses to limit cost increases and protect those most vulnerable 
• Work with partners to strengthen the safety net of emergency food/fuel provision, prioritising a 'cash first' approach
• Provide further advice to households on using energy more efficiently and reducing consumption

The Resilience Committee will meet on a weekly basis for the foreseeable future to oversee and direct progress on these immediate actions and keep under ongoing review any further steps that the Scottish Government can take.

In addition to doing everything possible within its powers, the Scottish Government is renewing its call for urgent and substantial action from the UK Government including:

• An immediate doubling of the direct financial support already provided, with payments made by October. It is estimated that for an out-of-work couple with two children, the payments already announced by the UK Government fall around £1,600 short of meeting the recent changes to benefits and living costs – a gap that must be filled
• Cancellation of the forthcoming increase in the energy price cap, followed by urgent work between the government and energy companies on energy market reforms and associated financing options to ensure sustainable costs for consumers in the long term
• The urgent introduction of an energy price cap for Small and Medium Enterprises
• Support for business to prevent closures due to energy price rises and investment in economic stimulus to minimise the scale of the projected recession
• A further windfall tax to ensure nationalisation of the profits being made out of the current pressures
• Additional funding to support public sector pay increases and protect the recovery of public services from the pandemic

The First Minister said:

“It is clear that the UK currently faces a rapidly escalating emergency that goes beyond simply the cost of living and is now a more general cost of everything crisis. This emergency may be of a different nature to the COVID-19 pandemic, but it is on a similar scale.

“In the absence of substantial and urgent action, this emergency will cause acute deprivation and suffering. It will affect access to practical necessities for millions of people across the UK. Bluntly, it will cost lives.

“To illustrate the severity of the situation, the Scottish Government estimates that, even with current UK Government mitigations, at least 700,000 households in Scotland - 30% of all households - will be living in extreme fuel poverty by October. That number could be even higher, if the Ofgem price cap for October 2022 is above £2,800. 

“It is essential, therefore, that the response from government at every level is commensurate, in scale and speed, to the nature and magnitude of the emergency.

“In developing a response, governments must first and foremost address immediate need. We must all focus on supporting individuals, businesses and jobs by addressing the principal root causes of the problem.

“Scottish Ministers are clear that the powers and resources needed to tackle this emergency on the scale required - access to borrowing, welfare, VAT on fuel, taxation of windfall profits, regulation of the energy market - lie with the UK Government. This is reflected in the actions we have proposed and set out today.

“At the same time, the Scottish Government will continue to do everything within our resources and powers to help those most affected.”