Emergency Budget Review: equality and fairness - evidence summary

Summary of equality and fairness evidence for the Emergency Budget Review

The list and tables below summarise the in-year budget measures that form the Emergency Budget Review (covering savings, additional income and some new areas of spend). They provide a high level summary of the current evidence in relation to the equality and fairness impacts.

The expected impacts can be categorised into three groups:

• Measures which have an expected positive equality and/or fairness impact. These include additional funding for Fuel Insecurity, the Scottish Child Payment Bridging Payments and an Islands Crisis Emergency Fund.
• Measures with no expected direct equality or fairness impact. Including for example savings that can be made as a result of lower than expected demand for services (see below for further explanation). A high proportion of the savings set out in the Emergency Budget Review come under this category.
• Measures which have an expected negative equality and/or fairness impact. These are mainly savings/re-phasing in health and social care expenditure, and reductions in employability funding (see tables for further details, including of potential mitigations for these impacts).

What are the savings arising as a result of re-forecasting?

As is standard practice in large organisations, annual budget forecasts across the many areas of Government are made on the basis of a number of assumptions, based on the best available evidence. For example this may include:

• forecasts on the demands for, and uptake of, services or financial support
• forecasts of expected income, including from charges or other revenue streams.

In some cases, the demands for services over the year may not be as great as envisaged, or income streams may be higher than expected. For these and other financial management reasons, budget lines may be re-profiled, and savings or additional income be made available for funding elsewhere.

The list below summarises evidence on the equality and fairness impacts of some of the new financial measures confirmed in the Emergency Budget Review to help tackle the cost of living crisis.

Measure:

Doubling the value of the December Scottish Child Payment Bridging Payments, from £130 per eligible child to £260, benefitting around 145,000 school age children registered to receive free school meals on the basis of family low income.

Summary of Equality and Fairness Evidence:

The Scottish Child Payment Bridging Payments are awarded for each child in receipt of Free School Meals on the basis of low income, with the families of around 145,000 school age children set to benefit from the increased funding committed. The payment of £260 is anticipated to provide around £37.7 million to the lowest income families this winter, of which £18.85 million is additional funding. A total of around £169 million is expected to have been awarded through Bridging Payments across 2021 and 2022 ahead of the expansion of the Scottish Child Payment.

Families in receipt of Bridging Payments either have a low earned income, not more than £660 per month if receiving Universal Credit, or are not in receipt of income replacement benefits, including the likes of Employment and Support Allowance (Income Related) and Income Support.

As set out in the Tackling Child Poverty Delivery Plan^[24] there is a strong correlation between experience of poverty and equality characteristics. Almost 90% of all children in poverty in Scotland live within the six priority family types identified, with each group more likely to experience poverty than all children in Scotland (24%) and households which do not have any of the priority family characteristics (10%). Priority groups are more likely to still be in poverty despite working. The six priority family types identified include: Lone parent families, the large majority of which are headed by women; Families which include a disabled adult or child; Larger families; Minority ethnic families; Families with a child under one year old; Families where the mother is under 25 years of age.

Measure:

Doubling our Fuel Insecurity Fund to £20 million in 2022‑23, to help households at risk of self-disconnection or self-rationing of energy use as the energy price guarantee rises from October.

Summary of Equality and Fairness Evidence:

Some households who will receive additional support through mechanisms announced by the UK Government are already unable to pay for their energy costs.

Scottish Government analysis indicates that under the Energy Price Guarantee, with the price cap frozen at £2,500 for the average dual fuel customer paying by direct debit, around 860,000 households (35% of all households) will be in fuel poverty. Around 600,000 of these households (24% of all households) will be in extreme fuel poverty^[25]. Indeed, of the 860,000 households estimated to be in fuel poverty, 69% will be in extreme fuel poverty. Setting the price cap for the average dual fuel customer paying by direct debit at £2,500 under the Energy Price Guarantee will increase fuel poverty by around 110,000 households and extreme fuel poverty by around 150,000 households compared to the previous April 2022 price cap of £1,971.

Under the Energy Price Guarantee, we estimate that fuel poverty rates will be higher for households in rented housing (52% to 57% in the social rented sector and 48% in the private rented sector) compared to households who own their home outright (28%) and households with a mortgage (19%)^[26]

Groups with protected characteristics are also overrepresented among fuel poor households:

• Between 2017 and 2019, 36% of all fuel poor households were older households, i.e. small households made up of one or two residents, at least one of which is aged 65 or older.^[27]

• Disabled people often use more energy, as many need to keep heating on for medical reasons, or use electricity to charge essential equipment such as mobility aids.^[28] A UK survey in May-June 2022 found that households with a disability had taken greater steps to reduce their energy usage in 2022 with nearly half struggling to keep their home warm (48% compared to 30% of non-disabled households).^[29] Many disabled people have needs which mean that economising on energy can bring severe hardship. In their advice to the Scottish Government in June, the Poverty and Inequality Commission identified disabled people who faced higher energy costs, but were not on low income benefits as one of the groups who missed out under the May Cost of Living Support Package.In addition, almost half of carers recently surveyed indicated that increases in energy bills would negatively affect their health or the health of the person they care for.

• Minority ethnic groups are significantly more likely to live in larger households,^[30] and to live in private rented accommodation, both household type types with high rates of fuel insecurity. Among Gypsy/Traveller communities, low incomes, poorly insulated accommodation and the way some members of the community pay for their energy, mean that fuel poverty can be a particular issue, with feedback suggesting that some existing accommodation is cold, difficult to heat and prone to condensation.^[31]

We know from lived experience research that households living with fuel poverty are likely to self-ration their energy use due to financial hardship and/or concerns about accumulating debt. Using less energy than necessary can have serious implications for health, especially where this results in under-heating of the home. A wide range of stakeholders across the fuel poverty, housing, health and wider third sectors have raised issues around households experiencing severe difficulty in affording energy costs with increased risks of self-rationing or self-disconnection.

The Fuel Insecurity Fund support presents a lifeline for households struggling and includes fuel top up vouchers for those using pre-payment meters, help to manage fuel debt and support for those using non regulated fuel sources such as oil and solid fuel (most often off gas-grid households living in rural or island areas but also many Gypsy/traveller communities). Support is available for both households with pre-payment meters and credit meters.

We are already seeing unprecedented demand. The Fuel Bank Foundation (FBF) recently reported a 75% increase in demand for their services over the past year; Scottish Federation of Housing Associations (SFHA) reported that the third round of the Social Housing Fuel Support Fund was oversubscribed within 36 hours.^[32] Without the additional funding, it is therefore possible that the existing £10 million funding will run out before the worst effects of the energy crisis begin to bite for the disadvantaged groups highlighted above, especially if we have a harsh winter this year.

Measure:

Funding to local authorities for additional Discretionary Housing Payment support to mitigate the UK Government benefit cap as fully as possible within devolved powers, and providing local authorities more flexibility to take account of energy bills in their prioritisation of households for Discretionary Housing Payments.

Summary of Equality and Fairness Evidence:

Discretionary housing payments (DHPs) are an important tool to prevent homelessness and assist households who are struggling with housing costs to sustain tenancies. There may be particular demand in rural areas; a Scottish Government report shows that additional minimum living costs for households in remote rural Scotland typically add 15-30% to a household budget, compared to urban areas of the UK.^[33]

DHPs directly support households with the cost of housing where their benefits have been capped. To be eligible for a DHP a person must be in receipt of housing benefit or Universal Credit with a housing element; as such, the measure targets low income households who rent their homes, a socio-economically disadvantaged group who have experienced particular impacts from the cost of living crisis. The Joseph Rowntree Foundation (JRF) find that of those on low incomes across the UK, 75% of private renters and 73% of social renters are going without at least one essential, compared to 39% of those who own their homes outright.^[34]JRF's more recently published Poverty in Scotland 2022 found that renters in Scotland were at a higher risk of arrears, with around one in three renters being behind on one or more bills, and that renters feel more financially insecure than homeowners.^[35] Research on the challenges of living in Scotland's private rented sector showed that in winter last year, affordability pressures forced 34% of renters claiming Universal Credit or Housing Benefit to cut spending on other essentials such as food or heating to pay their rent; 44% of low income renters surveyed worried about being able to pay their rent, and women and people with a disability were more likely to report this worry.^[36]

Some protected characteristics groups have high rates of households struggling with housing costs, for whom this measure will also be of particular benefit:

• Increases in energy prices mean older renters are likely to struggle to meet housing costs. Age Scotland have highlighted that many of the older people who live in socially rented homes in Scotland report they will cut back on buying food, skip meals or heat just one room of their house to be able to pay their bills.^[37] In addition, children make up the majority of those impacted by the benefit cap, with around 14,000 children currently affected. 98% of households capped are families, 72% are lone parent families and 92% of lone parents are women.^[38]
• Black and minority ethnic families have recently been found to be much more likely to face unaffordable rents than White families (65% compared to 52%) driven by factors like geography, labour market inequalities and elements of the social security system (e.g. the benefit cap), which it is argued argue disproportionately impact Black and minority ethnic groups.Minority ethnic groups are significantly more likely to live in larger households^[39], to be unpaid carers and live in private rented accommodation, all household types facing high rates of difficulty with housing costs. Families with three or more children have also been found to be disproportionately more likely to be in arrears, with 64% in arrears, compared to 27% of households without children.^[40]In the six months to March 2022, the number of UK carers who worried that they would not be able to manage their expenses more than doubled during that time. Minority ethnic households are also more likely to have deeper levels of poverty^[41] and so a greater proportion of their income is likely to be spent on essentials which are subject to inflation. In May 2022, analysis from the New Economics Foundation (NEF) indicated that single Black, Asian or other ethnic minority households are experiencing costs that are 50% higher than their white counterparts as a portion of their income.^[42]
• People with disabilities are affected by the benefit cap such that, if someone in the household is in receipt of a qualifying disability benefit, they are exempt from the cap. Also, if someone is over state pension age then they are exempt. However, if they are living with a partner who is under state pension age and in receipt of certain working-age benefits then they may still be impacted. People with a disability renting in the private sector have been found to be more likely to worry about being able to pay their rent than other renters.^[43] Recent data from Scotland show that nearly one in four families (23%) where someone is disabled are behind on at least one bill or payment and 4% are behind on three or more.^[44] Findings from Disability Equality Scotland's weekly poll on the cost of living crisis show that (for week beginning 18 April 2022) 85% of participants were very concerned about the current cost of living. Disabled people (receiving qualifying disability benefits) were given an additional £150 as part of the Cost of Living Support Package. However, this will not cover the additional cost of inflation applied to disability-related benefits.
• Women are more likely to live in household types most exposed to the impacts of the cost of living crisis, including households with an unpaid carer and larger households. It has been argued recently that women are more exposed to cost of living pressures, due to lower earnings and savings (amongst other factors and structural inequalities) as well as some of the harmful consequences of the crisis, such as domestic abuse.^{[45] [46]}DHPS could particularly help lone parent households who account for 68% of eligibility, and are predominantly headed by women. Nearly half (45%) of single-parent families are behind on at least one bill or payment, nearly one in ten (9%) are behind on three or more. In May 2022, analysis from the New Economics Foundation (NEF) indicated that single female households are experiencing costs that are 50% higher than their male counterparts as a portion of their income. Single women will see average costs increasing by £1,400 (6% of income) compared to £1,110 (4% of income) for single adult male households. The NEF argue that these outcomes are partly due to pre-existing gender and racial inequalities such as those that contribute to pay gaps in the labour market and unequal responsibility for childcare.^[47] In a survey of those on low incomes living in Scotland's private rented sector, women were more likely to report worrying about being able to pay their rent.^[48]

Measure:

An Island Cost Crisis Emergency Fund of £1.4 million to support island households already experiencing higher costs of living, with geography, high fuel costs, a challenging climate as we head into winter and a lack of consumer choice exacerbating this.

Summary of Equality and Fairness Evidence:

This is designed to give the six island local authorities monies to fund island communities, and where necessary households in need due to the cost crisis. The delivery mechanism and criteria are currently being established. So whilst it is not possible to set out fully the beneficiaries of the scheme at this stage, it is likely that the recipients of grant will be more likely to be households in fuel poverty and pensioner households,^[49]given the overall demographics of island communities. Individual local authorities may however choose to tailor the grant to their local community's needs.

Between 2018 and 2019, rates of fuel poverty increased in remote rural areas (from 33% to 43%), increasing the gap when comparing overall urban (24%) to overall rural areas (29%). Similarly, levels of extreme fuel poverty increased in remote rural areas (from 23% to 33%), so extreme fuel poverty rates in rural areas (19%) were higher than in urban areas (11%).^[50]

Measure:

Building on the additional £300,000 provided to Business Energy Scotland (BES) earlier this year to expand and improve energy support for small to medium sized businesses by doubling the energy efficiency cashback element of the BES Loan & Cash Back Scheme to £20,000, covering up to 75% of the installation cost, helping many SMEs with their energy efficiency ambitions.

Summary of Equality and Fairness Evidence:

No direct equality or fairness impacts identified.