Economic Impact of a Minimum Income Guarantee: Analysis of economic theory and policy evidence - Executive Summary

Introduction

The Scottish Government is exploring innovative ways to tackle poverty and inequality. This includes via a Minimum Income Guarantee – an income level under which people could not fall. It has established an independent Expert Group to consider how this could be delivered in Scotland.

The overarching policy aim of a Minimum Income Guarantee is to tackle poverty, inequality and financial insecurity and ensure a socially acceptable standard of living, which promotes dignity and a decent quality of life. The independent Expert Group has been tasked with defining the level of a Minimum Income Guarantee and producing a final report in 2024 with a series of recommendations to the Scottish Government. The Expert Group expects that the implementation of a Minimum Income Guarantee in Scotland will be a longer-term change with an initial goal (i.e. over an initial 10-15 year period) of achieving, as far as possible, 75% of the Minimum Income Standard (MIS) for everyone in Scotland.^[1] The final goal over the longer term is 100% of the MIS – dependent on further devolved powers and financial constraints.

There are three mutually supportive areas under consideration that would form the basis of an approach to creating a Minimum Income Guarantee in Scotland.

• Reform of the social security system so that it provides a guarantee of a dignified quality of life;
• Improving the fairness of the labour market, in particular to boost quality and security of work and to promote labour market access; and
• An expansion of free and/or affordable services and the potential regulation of costs of essentials, with a prioritisation of addressing those that promote labour market access e.g. childcare and transport.

This report provides a summary of the expected economic and social impacts of a Minimum Income Guarantee, based on both theoretical literature and existing policy implementation of Minimum Income Guarantee-type policies across Europe. It then concludes with the key policy lessons and recommendations to consider as the Minimum Income Guarantee is designed and moves towards implementation. Full findings can be found in the main report.