Scottish Budget 2024 to 2025: equality and fairer Scotland statement

Annex C: Case Studies

This annex contains eight case studies looking at how equality and socioeconomic evidence has fed into budget decisions, and how budgets are being delivered. In these case studies, we use the framework of six key questions for policy makers, which were developed in collaboration with the Equality and Human Rights Budget Advisory Group (EHRBAG).

What are the case studies?

The case studies in this analysis are as follows:

• Alcohol and Drugs Policy
• Primary Care Dental Services
• Early Learning and Childcare
• Social Security
• Equality, Inclusion and Human Rights Directorate
• Concessionary Fares
• Employability
• Scottish National Investment Bank

Why are we taking this approach?

We know that parliament and our stakeholders are looking for transparency as to how equality and socioeconomic evidence has fed into budget decisions. We agree, and so we are trialling this approach for the 2024-25 budget.

In doing this, we also recognise the challenge of attempting to collate and summarise this analysis across every budget line. There are over 200 budget lines at ‘Level 3’ (the most detailed level in this budget document), and many of these cover a number of sub-programmes, as can be seen in the Level 4 (more detailed) tables. So we have taken a case study approach to allow us to look in more depth at individual budget lines.

How have we selected the case studies?

We have worked with colleagues in portfolios and different policy areas across government to identify and develop our case studies. We have a selection of case studies which:

• are spread across a range of different policy areas, from education, transport, employment and others;
• provide a range of different sizes of budget lines – from the Social Security budget of £6 billion to much smaller budget lines;
• include some budgets with particular equality and Fairer Scotland impacts – such as Drugs and Alcohol policy and the Equality, Inclusion and Human Rights Directorate and others, recognising that all budget lines have an impact; and
• in the context of the challenges facing the budget, some case studies are in areas under significant financial pressure – such as dental services.

The most accurate figure has used for each case study. Depending on the circumstances of the case study, these may not always directly match to the Level 3 headings in the budget.

Overall, the selection of case studies is intended to provide a deeper insight into the decision making process across the whole government, and the use of evidence in these decisions.

What are the six key questions?

In 2019 the Scottish Government, in collaboration with the Equality and Human Rights Budget Advisory group, developed a very useful set of 6 questions for policy makers when making budget decisions ‘to identify ways in which budget decisions could be improved to advance human rights and address inequalities’.

The questions are as follows:

1. What outcome is the policy and associated budget decision aiming to achieve?

2. What do you know about existing inequalities of outcome in relation to the budget area?

3. How will your budget decisions impact upon different people and places?

4. How will your budget decisions contribute to the realisation of human rights?

5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

6. How will the impact of the budget decisions be evaluated?

Alcohol and Drugs Policy

Budget Line

Alcohol and Drugs Policy

2024-25 forecast expenditure (£m): £99.1m

1. What outcome is the policy and associated budget decision aiming to achieve?

The overall aim of the National Mission and the additional £250 million contributed to it, is to reduce drug deaths and improve the lives of those impacted by drugs. The National Mission plan, published on 9 August 2022 sets out how we plan to deliver the National Mission over the duration of this parliament. See: National Mission on Drugs plan 2022: 2026

All funding is agreed to, and distributed with the intent of achieving the overall aim and the supporting outcomes set out in the outcomes framework:

Outcome 1: Fewer people develop problem drug use.

Outcome 2: Risk is reduced for people who take harmful drugs.

Outcome 3: People at most risk have access to treatment and recovery.

Outcome 4: People receive high quality treatment and recovery services.

Outcome 5: Quality of life is improved for people who experience multiple disadvantage.

Outcome 6: Children, families and communities affected by substance use are supported.

There are also six priorities which cut across all our work and inform decision making.

2.  What do you know about existing inequalities of outcome in relation to the budget area?

Below is a summary of some of the work and data trends in relation to the protected characteristics and drug and alcohol use. A systematic evidence review was carried out to support the Equality Impact Assessment work for the strategy development and is used as a live document by the division. While quantitative data is limited for many of the Protected Characteristics, improvements to data collection are being delivered through the introduction of the Drug and alcohol information system database (DAISy) which has started to collect this data.

Socioeconomic status/where people live

• Drug and alcohol death rates are linked to deprivation. In 2022, people in the most deprived areas of Scotland were almost 16 times as likely to die from drug misuse than in the least deprived areas and over 4 times as likely to die of alcohol-specific causes. These ratios are much higher than for deaths from all causes where the ratio is around 2.
• Over one third deaths of people experiencing homelessness in 2022 were due todrug misuse (36 per cent, 89 deaths). Alcohol specific deaths accounted for 13 per cent.
• Around half of individuals completing an initial assessment for specialist drug treatment are unemployed.

Protected characteristics

Sex

• Males are around twice as likely to have a drug misuse death as females. This gap has narrowed in recent years. Males make up around two-thirds of alcohol-specific deaths.
• A comprehensive review looking at drug related deaths among women was published by Scottish Government in 2018. This highlighted intersections between gender and other axes of inequality such as public sector austerity measures, abusive or coercive relationships, commercial sex work, experiences of trauma and mental health issues.

Age

• The age at which people die from drug misuse has increased over the past two decades, from 32 in 2000 to 45 in 2022. Average age tends to be similar for males and females.
• Alcohol-specific deaths in females tend to be at slightly younger ages than for males. In 2022, the average age of death for females was 58.7 years and for males it was 60.0 years.
• Scottish Government published an evidence review exploring changing trends in drug and alcohol use and harms among younger people. Scottish Drugs Forum were commissioned to look at the needs of older people with drug problems (classed as those over 35). There have also been a number of qualitative studies looking at the needs of older people with alcohol problems.

Disability

• There is limited quantitative data in relation to disability however there is strong evidence that people with drug problems often have co-occurring health conditions – most commonly mental health conditions, respiratory conditions and pain-related conditions. Disability and incapacity rates are likely to be higher, although it is widely recognised that underdiagnosis is also an issue for this population.
• There is also a growing body of evidence showing an association between problem drug and alcohol use and learning difficulties and neurodiversity.

Race

• There is no routine data in relation to drug or alcohol use/morbidity/mortality by ethnic group in Scotland through regular household surveys, as representative sampling is inhibited by the small size of this group (<5 per cent of the population according to the most recently available census).
• In England and Wales there is more data by ethnic group however as BME groups make up a significantly larger share of the population these findings cannot be considered indicative of the Scottish context.

The research from England suggests:

• BME groups declared lower rates of alcohol use than white groups. People of Asian background report significantly less alcohol (Health Survey for England).
• BME groups report significantly less drug use (Crime survey for England and Wales).
• BME groups were more likely than average to be arrested for a drug offence. Thirty five per cent of drug crime offences were people of BME origin (18 per cent were of Black origin).
• ‘The Colour of Injustice’ report by StopWatch, Release, and London School of Economics’ International Drug Policy Unit, documents the disproportionate impact that drug law enforcement continues to have on black and minority ethnic communities in England and Wales.

Religion

• Similarly for religion there is very limited data for the Scottish context. However, UK-wide research suggests there is a clear cultural dynamic to some drug use which is concentrated to individuals of specific faiths or ethnic origin. Similarly many recovery groups and initiatives are rooted or originated in faith-based organisations (such as the 12 Step programme).

Sexual orientation and gender identity

• We do not yet have reliable data on problem drug and alcohol use or treatment by different ethnic groups or for LGBTQ+ communities, however qualitative research highlights that there are diverse trends and needs among these groups. Scottish Health Action on Alcohol Problems (SHAAP) recently published a review entitled What are LGBTQ+ people’s experiences of alcohol services in Scotland? which found that LGBTQ+ people are more likely to drink excessively and become dependent on alcohol and face additional barriers.

3.  How will your budget decisions impact upon different people and places?

As highlighted above there is a stark social-economic dimension to problem drug use (and problem alcohol use), therefore our substantial financial commitment to the National Mission can be seen as a wider effort to tackle socioeconomic inequalities.

The majority of drug and alcohol funding to local areas is distributed on an adjusted National Resource Allocation (NRAC) formula to ensure that areas of most need are prioritised. The formula is largely the same as the standard NRAC with minor adjustments to reflect higher prevalence of problem drug use.

In addition, some specific funding streams are distributed on a formula based on prevalence rates of drug-related deaths and Medication-Assisted Treatment (MAT) standard funding is adjusted according to local need. Funding via the Corra Foundation to grass roots organisations takes into account local need and inequalities at the assessment stage.

4.  How will your budget decisions contribute to the realisation of human rights?

• In January 2021 the former First Minister announced a new National Mission to reduce drug deaths and harms supported by an additional £250 million over the lifetime of this Parliament, to 2026:
  • In 2021-22, the total Drugs and Alcohol budget was £140.7m.
  • In 2022-23, the total budget was £141.9m.
  • This budget has increased again to £155.5m in 2023-24.
• The increase of funding into drug policy represented a 67 per cent increase in funding from 2014-15 to 2022-23 in real cash value terms.
• Around three quarters of our total available budget is distributed through health boards and alcohol and drug partnerships through both a baseline allocation direct to Health Boards and through allocations via the drug and alcohol policy budget line.
• We also invest money in third sector and grassroots organisations to ensure better outcomes through more holistic approaches to service delivery.
• The remaining budget is managed centrally to support national initiatives, policy development and support third sector partners.

5.  Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

An improved, human rights based framework for decision making

• We are supporting the National Collaborative – a participatory process – to develop a Charter of Rights for people affected by drugs and alcohol.
• The Charter will set out how existing rights, and rights in the forthcoming Human Rights Bill apply for people affected by substances.
• The purpose of the Charter is twofold:
  • to help people understand their rights in an everyday context and how to challenge situations which aren’t right; and
  • to provide a framework to improve decision making – including future budgetary decisions – at a local and national level.
• The Charter will be accompanied by an implementation framework and guidance for duty bearers. Throughout 2024, the Scottish Government – as a ‘duty bearer’ – will engage in an InterActions process with people who have been affected by substance use to strengthen the implementation framework and further develop guidance.

Increasing local flexibility to maximise impact

• Most of the budget is devolved to local areas to respond to local need. Alcohol and Drug Partnerships (ADPs) report their activity to support initiatives designed to support people with the protected characteristics as part of the annual reporting process.
• In line with the Verity House Agreement, we are considering ways in which to increase local engagement on budgeting and increase local flexibility.

Responding to future threats and trends

• Surveillance: Increased prevalence of new substances is a concern across the whole of the UK and could result in increased deaths and harms. We have invested in surveillance and monitoring systems to increase access to evidence on changes in drug supply and drug use trends.
• Workforce: A resilient and skilled workforce has been identified as a cross-cutting priority underpinning the national mission to reduce deaths and improve lives. The Scottish Government has published a Drugs and Alcohol Workforce Action Plan, setting out the actions that we will take to deliver a skilled, resilient and sustainable workforce.
• Concerns over the trend of a disproportionate increase in drug deaths among females is of concern and we are actively looking at ways to ensure services are gender-inclusive and trauma-informed and working with local areas to meet the needs of women who use drugs.

6. How will the impact of the budget decisions be evaluated?

Alcohol and drugs policy takes an evidence-based approach building on the strong evidence base for both harm reduction and treatment approaches, alongside wider targeted, universal and environmental prevention. Much of this is outlined in the drug death task force evidence paper.

Monitoring

A set of metrics is under development which will be used to monitor progress towards the National Mission Outcomes. This broad range of measures aims to provide a detailed understanding of National Mission progress. An analytical report outlining progress will be published annually from winter 2023.

Evaluation

The National Mission is being independently evaluated by Public Health Scotland (PHS), ensuring that the evidence around impact is considered in a balanced and objective way.

The National Mission outcomes framework will inform the development of a more detailed and comprehensive evaluation framework designed by PHS. Lived and living experience is being consulted throughout the evaluation process. The development of the evaluation framework is ongoing and baselining workstreams are underway.

The Scottish Government has also commissioned individual evaluations of key policy areas which will also be led by PHS. Residential rehabilitation is one of these areas of focus and evaluation will specifically monitor and assess the impact of National Mission funding on access to residential rehabilitation services and recovery outcomes for individuals. This work will establish a solid evidence base around the range of residential rehabilitation treatment models and establish what works best for whom. Baselining workstreams for this evaluation are underway and an evaluation baselining report is expected early 2024.

Primary Care Dental Services

Budget Line

General Dental Services

2024-25 forecast expenditure (£m): £497.2m

1. What outcome is the policy and associated budget decision aiming to achieve?

The General Dental Services (GDS) budget line is used to fund the provision of NHS dentistry across Scotland, within the primary care sector, as well as to deliver the wider actions necessary to address oral health inequalities. The budget line includes the gross costs of treatment, with associated patient charges treated as an income recharge.

Dentists providing NHS care are directly reimbursed, through the budget line, in accordance with the payment schedule set out in the Statement of Dental Remuneration. This statement, which is maintained and updated by Scottish Government, sets out the key payments made to high street dentists namely:

• item of service payments, for each treatment item provided under the auspices of the NHS; and
• capitation fees which are paid monthly to dentists for maintaining their list of registered patients.

Patients who are non-exempt pay 80 per cent of the total cost of item of service treatment, up to a maximum of £384; and this relationship is set in statute.

In addition to these payments, the Statement of Dental Remuneration includes a number of allowances payable to dentists to incentivise certain behaviours and these are also paid through the budget line. For example, Recruitment and Retention (R&R) and Scottish Dental Access Initiative (SDAI) payments may be made to practices operating within designated rural and island areas. These allowances help to ensure the continued presence of NHS dentists in these areas.

Since 2014, NHS Boards have also operated Public Dental Services (PDS) and both the salary and treatment costs associated are funded through the budget line. PDS dentists are directly employed by NHS Boards and provide general dental services to patients in the same way as high street dentists. While the operation of PDS varies across Board areas, it is predominantly used to deliver routine dental care for patients with additional needs or specialist requirements who may otherwise be unable to register or receive treatment with a high street dentist. PDS also delivers emergency-only care for patients who cannot register with a high street dentist.

The budget is also used to fund specific projects which target oral health inequality on a macro scale, supporting those on low incomes to pay for dental care, and on the micro scale through targeted project interventions to improve preventive and anticipatory services.

2. What do you know about existing inequalities of outcome in relation to the budget area?

Literature review indicates a body of evidence for the existence of social gradients within oral health care, namely the correlation of poorer oral health outcomes with both individual and area socioeconomic deprivation.

The 2021 Scottish Health Survey collects data across a number of oral health indicators, including: gum bleeding; number of natural/retained teeth; time between dental visits; self-assessed treatment needs; and problems with mouth/teeth/dentures. The results of the 2021 survey echo the findings set out in literature with defined step-changes in outcomes for Scotland’s most deprived areas.

	Treatment need	< 10 natural teeth	Seen in last five years
	Yes (%)	Yes (%)	Yes (%)
SIMD 1 (most deprived)	42	18	87
SIMD 2	38	11	90
SIMD 3	37	6	94
SIMD 4	27	4	95
SIMD 5 (least deprived)	24	4	97

Similar step-changes can be evidenced across quintiles of equivalised income (a measure of household income which takes into account the differences in size and composition of households). Interestingly there is no significant difference in the prevalence of gum bleeding, as an indicator of periodontal health and overall mouth hygiene, across either area or individual socioeconomic quintiles.

Public Health Scotland regularly publishes data at NHS Board and national level on registration and participation (attendance) with primary care dentistry. The latest release from January 2023 reports data as at 30 September 2022 (i.e. including the pandemic period) and indicates that, while registration is high across all groups, oral health inequalities in participation have continued to grow:

• The gap between adult participation rates for the most and least deprived quintiles in September 2008 was three percentage points, rising to eleven percentage points in the most recent data.
• In September 2008, the gap between child participation rates for the most and least deprived quintiles was three percentage points; this had increased by an even greater extent, to twenty percentage points in September 2022.

Evidence on inequalities in protected characteristics, as defined by the Equality Act 2010, is less conclusive. A report on oral health inequalities as actioned by the UK Government in 2021 indicated the following:

• evidence on inequalities by ethnic group is ‘inconsistent’; and
• ‘no conclusions’ can be drawn on correlation between religion and oral health, or between sexual orientation and oral health.

The impact of disability on oral health outcomes is varied by nature of disability and it is therefore difficult to draw general conclusions. Evidence indicates that people with learning difficulties have greater risks of periodontal and gingival disease, toothlessness and unmet needs while also facing poorer access, overall, to dental services¹. Meanwhile those with physical and mental disabilities may have greater determinants for poor oral health due to limited dexterity and reduced attention to oral hygiene, respectively².

The 2021 Scottish Health Survey also includes data on oral health indicators disaggregated by age and sex. The data on age indicates that there is an inverse correlation between number of natural teeth retained and age with 22 per cent of those aged 75 or over having no natural teeth compared to 4 per cent on average for the rest of the population.

With respect to sex, while anecdotally there is suggestion that women have better oral health practices and hygiene³, there are hormonal changes – particularly during pregnancy – which increase risk for periodontal issues and tooth decay. Women are also more likely than men to work in flexible or part-time employment, thereby increasing financial insecurity which may impact on their seeking oral health care.

There is also evidence of disparity in outcomes for those in vulnerable groups such as homeless people or those experiencing substance misuse issues. Smile4Life, a report published in 2011 following work with the University of Dundee, indicated that 98 per cent of the 853 people experiencing homelessness surveyed had experience of dental decay, and that 68 per cent only accessed dental care when in pain or in an emergency⁴. Similarly, anecdotal evidence from those with lived experience of substance misuse points to the significant stigma attached to poor oral health, often exacerbated by dependence issues.

3. How will your budget decisions impact upon different people and places?

In November 2023, the Scottish Government undertook dental payment reform which both streamlined and improved the fee schedule operated by dentists working in the NHS while retaining a comprehensive care and treatment package for patients. The number of claimable items was reduced to 45, from around 700, via the consolidation of items into broad categories of treatment.

Due to the inter-relation between dental fees and patient charges, the charges paid by patients for courses of dental treatment have also increased although they remain significantly below the cost of private dental work, and a maximum cap of £384 per course of treatment remains in force.

The budget continues to protect a number of full exemptions to patient charges, with further specific detail set out below. This means that around 40 per cent of the population, including all those aged under 26, are exempt from paying dental charges. Dental examinations are also free for all patients, irrespective of any exemption held, with Scotland the only UK country to offer universally free dental examinations.

Socioeconomic status

With specific reference to incentivising and increasing care for those in the lowest SIMD quintile, enhancements are made on the payments to dentists for both registration (capitation) and treatment (item of service) of patients in SIMD1 areas.

The GDS budget is also used to fund both i) patient charge exemptions and ii) delivery of a national low income scheme, Help for Health Costs, which may be beneficial to those from lower socioeconomic quintiles.

Patients who are in receipt of qualifying benefits, such as Income Support or Credit Pension Guarantee Credit, are automatically entitled to free dental care on the NHS. For those on lower incomes, or in receipt of other benefits which don’t provide automatic entitlement, support for dental charges can be sought through the Help with Health Costs scheme. This is operated on behalf of all UK administrations by the NHS Business Services Authority (NHSBSA) with annual costs for Scotland recharged centrally. The scheme provides either partial or full remittance of costs, depending on individual circumstance as assessed by NHSBSA.

For children’s oral health, Scotland operates a national programme, Childsmile, which is designed to reduce oral health inequalities in children and promote good oral hygiene. Childsmile has three broad areas of work: toothbrushing, fluoride varnish, and community and practice, with both universal and targeted interventions. For example, all children in Scotland receive toothbrushing kits on at least six occasions until the age of five, while all nurseries and at least 20 per cent of P1 and P2 classes in areas with the highest level of need receive supervised toothbrushing visits from accredited providers. The recent NDIP report indicates that significant improvements in closing the gap have been made since 2009. In 2023, 71.9 per cent of Primary 7 children surveyed in the most deprived quintile had no obvious experience of dental decay compared to 88.0 per cent in the least deprived quintile; comparative figures in 2009 were 49.9 per cent and 76.2 per cent, respectively.

Age

In 2021, the Scottish Government brought forward legislation to support the provision of free dental care to all children and young people aged under 26. This was an increase on the previous arrangements which afforded free care to those under 18 or in full-time education only, building on evidence that younger adults are more likely to earn less than the living wage and thus face relative poverty. The cost of treatment is met in full from the GDS budget.

In addition to the provision of free treatment, the Childsmile initiative is specifically targeted to young children and is focused on preventive approaches to securing good oral health habits.

As previously noted, there is an inverse correlation between the prevalence of natural teeth and age, thereby increasing the likelihood that older adults require major restorative treatments such as dentures. While dental payment reform has increased patient charges, a maximum cap of £384 per course of treatment has been retained and costs above this are met in full from the GDS budget.

Dental payment reform has also resulted in increases to the fees paid to dentists for domiciliary care, thereby incentivising delivery of care to elderly housebound patients or those living in care homes.

Sex

The GDS budget covers full exemptions on patient charges for pregnant and post-partum women. The maternity exemption certificate is eligible for 12 months after giving birth, noting the particular hormonal and lifestyle factors during this time which may have an adverse impact on oral health.

Race and ethnicity

The GDS budget funds Eat Well For Oral Health, a pilot initiative based in the Lothians which works with Linknet and Edinburgh Community Food to address health inequalities. The community-based programme works with groups of parents/carers from minority backgrounds to teach healthy cooking and the links to good oral health.

The 1 November reform removes the previous distinction between registered and unregistered patients which prevented the provision of many treatment items to those without a registration. Anecdotal evidence suggests that the previous distinction adversely impacted on certain communities, such as Gypsy/Traveller communities, who are less likely to be registered and therefore the reforms ensure better equity of service provision.

Disability

Patients in receipt of income-based Employment and Support Allowance (ESA) are automatically exempt from patient charge, while those not in receipt of ESA may be eligible for remittance through the Help for Health Costs scheme.

For patients with particularly complex conditions or co-morbidities, and who may struggle to access a high street dentist, access to dental services is through the salaried Public Dental Service.

Other forms of inequality

Several external factors – most notably the pandemic which had a significant impact on the operation of NHS dentistry, and the impact of EU exit on the workforce – have given rise to some disparity of access across Scotland, with rural and island areas particularly affected. Such areas have had historic difficulties with recruitment and retention of staff, and therefore the GDS budget covers a number of programmes which seek to address inequality posed by rurality.

The Scottish Government operates a number of allowances designed to bolster the number of dentists working, or choosing to work, in rural and island areas or areas where there is evidence of unmet need:

• Scottish Dental Access Initiative (SDAI) grants pay for provision of either a new practice within designated Board areas, or for additional surgeries to extend existing practices.
• Recruitment and Retention (R&R) allowances pay out £12,500 per annum, for up to three years depending on eligibility, for dentists joining dental lists for the first time within designated areas.

4. How will your budget decisions contribute to the realisation of human rights?

Our approach to delivering NHS dental care is directly aligned to human rights with respect to rights on equality, freedom from discrimination and the right to adequate standards of living. The NHS dental offering provides a universal NHS service, with specific provision made to promote equity in access.

In 2023, the GDS budget was used to deliver a marketing campaign with the principal purpose of ensuring that patients are aware of their rights and entitlements to NHS dental care. The ‘Brush Up’ campaign ran from 31 October 2023, aligned to the introduction of dental payment reform, and ensures that patients are empowered with respect to the treatments offered, the costs of treatment, and any exemptions available to them. In particular, the campaign focuses on age and sex, as protected characteristics, and makes clear that treatment is free for young people and pregnant and post-partum women.

5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

Our approach to monitoring the impact of budget decisions is set out below. Given the significant reforms enacted in November 2023 – and which constitute the biggest change to NHS dentistry in Scotland in a generation – there is now a need to give sufficient time for reform to bed in and therefore no further changes are proposed at this time.

We will continue to review data on access and oral health in the wake of the significant intervention made by Scottish Government, and will use this data to drive any future reforms or changes in an informed way. It is right and proper that any further changes are made with reference to oral health needs under the new system from 1 November 2023, with a view to addressing any gaps or issues which may emerge within that system.

6. How will the impact of the budget decisions be evaluated?

Public Health Scotland regularly publishes statistics on performance within NHS dentistry, and this will continue under the reformed system.

On a quarterly basis, statistics on treatment activity, registration, and participation, will be published and we will continue to use these to evaluate the efficacy of reform in improving patient access to dental services.

With respect to our wider programmes of work, such as Childsmile, the National Dental Inspection Programme (NDIP) is published annually. This provides trend data on the oral health status of children, and at the aggregated level, shows prevalence of oral health disease at national and individual NHS Board level.

Early learning and childcare

Budget Line

Early Learning and Childcare

2024-25 forecast expenditure (£m): £996m

Note: the £996 million above is the overall resource funding to local authorities to deliver 1,140 hours of funded Early Learning and Childcare.

1. What outcome is the policy and associated budget decision aiming to achieve?

The funding to local authorities enables them to fulfil their statutory duty to deliver 1,140 hours of high-quality, funded Early Learning and Childcare (ELC) to all eligible children. The statutory amount of funded ELC increased from 600 hours to 1,140 hours in August 2021. All three and four year olds, and two year olds who need it most, are eligible.

As set out in our Strategic Early Learning and School Age Childcare Plan 2022-26, all of our current and future childcare offers are designed to support three outcomes. These draw on available evidence to describe how we expect our policies to make a difference for children, parents, carers and families:

• children’s development improves and the poverty-related outcomes gap narrows;
• family wellbeing improves; and
• parents’ and carers’ opportunities to take up or sustain work, training and study increase.

Our three outcomes have been mapped against the National Performance Framework to show where evidence suggests that childcare can make the biggest difference (those focused on education, health, growing up loved, safe and respected, tackling poverty and fair work).

2. What do you know about existing inequalities of outcome in relation to the budget area?

Current evidence on protected characteristics

Within the current ELC Census¹, we collect data on whether a child is recorded as disabled, whether they have an Additional Support Need (ASN) and whether the child’s home language is not English. The current Census is based on an aggregated return provided by local authorities. We have also undertaken recent survey and research work with parents which provides additional evidence in relation to some protected characteristics.

• Of the 92,182 children registered for funded ELC in September 2023, 9,930 (11 per cent) were recorded as having a home language other than English, Scots, Gaelic or Sign Language. This is an increase from 10 per cent in 2022.
• As of September 2023, around 16,980 children (18 per cent of all funded ELC registrations) required additional support to overcome barriers and benefit from ELC. This compared with the same proportion, 18 per cent in 2022, a small increase of around 480 registrations.
• The 2022 Parent Survey found that 85 per cent of parents of children with ASN were satisfied with how funded ELC meets their child’s needs, while 9 per cent were dissatisfied (the main reasons for dissatisfaction included staff not fully /appropriately trained, not enough support given, and poor communications with the provider).
• The 2022 Parent Survey² found 31 per cent of parents of children with ASN said they had experienced difficulties accessing suitable provision in 2022. This compared with 48 per cent in 2017.
• As of September 2023, a total of 1,620 children registered (2 per cent of child registrations) were assessed or declared disabled, the same proportion as in 2022 when 1,410 children registered were assessed or declared disabled.
• A total of 9,840 children registered (11 per cent of child registrations) had a support plan in place at the time of the census, an increase from 10 per cent in 2022.
• A recent report³ by the Scottish Centre for Children with Motor Impairments (SCCMI) identifies significant inequalities between the experiences of children and parents of children with Profound and Multiple Learning Difficulties (PMLD) accessing their entitlement to funded ELC when compared to families where the child has no recognised ASN.

We are developing a new ELC Census which will be based on an individual child-level data collection. This will allow us to collect more comprehensive information on characteristics of children, including: sex; ethnicity; disability status; ASN and the home postcode of the child (to enable analysis by the Scottish Index of Multiple Deprivation, SIMD). As it will be based on child-level data, the new Census also offers the potential to undertake data linkage with other data sets, including those focused on children’s later attainment, to explore inequalities of outcome in more depth.

Our evaluation of the ELC expansion, due in 2025, will also cover inequalities of outcome for children with some protected characteristics.

Wider evidence about inequalities in children’s outcomes related to ELC

There is strong evidence that the early years of a child’s life are crucial for their social and emotional development, as well as their language and numeracy skills⁴. It is now accepted that early years experiences and outcomes have long-term impacts. Health and wellbeing prenatally and during the first three-to-five years of life affect future learning and attainment, behaviour, and health and wellbeing⁵. The earliest years of a child’s life also provide the greatest opportunity to influence a child’s development⁶. International research shows that high quality ELC provision is associated with sustained improvements in children’s later education, employment and health⁷. There is good evidence that children from disadvantaged backgrounds benefit most from ELC programmes⁸. Research also shows that ELC can help mitigate the impacts of developmental risks, acting as a form of early intervention for children who are at high risk of developing ASN⁹.

Developmental concerns reported in Child Health Reviews were steadily reducing before the pandemic. The latest statistics show that this positive trend reversed during the pandemic at all timepoints when child health reviews take place (13-15 months, 27-30 months and 4-5 years) and this has been maintained to June 2023. Children’s speech, language and communication have been particularly affected since the onset of the pandemic, with Public Health Scotland (PHS) data indicating that the proportion of children with a speech, language and communication concern at 27-30 months increased from 9.7 per cent in 2019/20 to 13.0 per cent in 2021/22¹⁰. There are persistent inequalities in the proportion of children who are found to have at least one developmental concern¹¹. A key risk is therefore that the poverty-related attainment gap grows as a result of the pandemic.

In the child health review data there is a clear deprivation gradient across all domains, but this is most pronounced in the problem solving domain at 13-15 months, and the speech, language and communication domain at 27-30 months and 4-5 years.

There is a wide range of policy work taking place to address these issues, particularly in relation to children in ELC with disabilities or ASN, or who have speech and language needs. This includes work with the SCCMI, investing in a new programme of early intervention in speech and language, and supporting councils to share best practice and learning.

Inequalities of outcome for parents and carers

The international evidence indicates that ELC provision can help to address gender inequality in pay, as well as supporting parents and carers to combine caring for their children with seeking or returning to work, or taking part in education or training¹². The literature has focused on the links between maternal employment and children taking part in ELC, suggesting that the existence of ELC provision helps to support mothers to work¹³.

As noted above, the new ELC Census will allow for a more substantive analysis of how different families use funded ELC and help to identify whether any additional policy interventions are required to improve awareness and uptake of the statutory entitlement. Our ‘1140’ expansion evaluation will also collect information on household income and parental economic activity, and postcode information will allow for analysis of variability in children and parent outcomes related to the SIMD and rurality.

Around 96 per cent of the childcare workforce is female. Improving pay and the terms and conditions of the childcare workforce is important for supporting greater gender equality. Scotland is the only part of the UK that is committed to paying the real Living Wage to staff delivering the funded hours. We are working with partners to promote ELC as a career choice to boys and men (who currently make up only 3 per cent of the childcare workforce, and 2 per cent of childminders), and to other groups who are less well represented in the workforce, including those from black and minority ethnic groups¹⁴.

3. How will your budget decisions impact upon different people and places?

As noted above, high-quality funded ELC makes a difference for all children. Funding for universal provision of high quality ELC is therefore seen as an important investment in Scotland’s future generations, and as a critical part of our education system. There is also strong evidence that children from disadvantaged backgrounds benefit most from high quality ELC programmes. This evidence has informed our approach to policy design, with universal provision for three and four year olds, and a targeted offer for eligible two year olds. In the longer term, the investment in children’s outcomes through funded ELC is anticipated to reduce interventionist public spending later in life, and have a positive impact on long-term health, wellbeing and productivity.

As set out above, funded ELC also contributes to outcomes for families focused on wellbeing and opportunities to work, train or study. Our current funded ELC offer makes a direct contribution to household living costs. If parents were to buy the equivalent to all the funded hours on the open childcare market we estimate it would cost them almost £5,000 per year.

The funding formula for ELC expansion funding ensures that all local authorities have sufficient funding to deliver the statutory entitlement to all eligible children. ‘1140’ is now in its third full year of implementation. We continue to monitor ELC spend by councils and programme delivery, and are seeing high levels of uptake (99 per cent for three and four year olds). We are also seeing positive initial results from our parent survey about the quality and flexibility of the offer, and how it is supporting parents to work. The 2022 Parent Survey¹⁵ found that 74 per cent of parents were enabled to work or look for work as a result of the funded ELC.

Our evaluation will set out evidence on the impact of the policy across each of the three outcomes we have set for the programme, including the impact for different groups.

4. How will your budget decisions contribute to the realisation of human rights?

In relation to core rights, our National Standard for funded ELC makes clear that all providers delivering the funded hours must adhere to existing equalities duties set out in legislation. This means that ELC provision must be delivered in a way that ensures equality of access for, and accounts for the varying needs of, all children. Children should be able to learn free from discrimination and in settings which actively tackle health and social inequalities. ELC settings should be able to show how they meet these criteria, including through Care Inspectorate scrutiny activities. The National Standard supports high quality through its requirements in relation to qualifications and children’s experiences. Our internationally recognised practice guidance, ‘Realising the Ambition: Being Me’ also has a strong focus on valuing and upholding the rights of children through the early years.

5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

From a policy perspective, as noted above, we see the current funded ELC offer as a vital part of the early education system which makes an important contribution to improving children’s and families’ outcomes. This policy approach has been informed by robust evidence.

The ELC funding model provides funding to local authorities as they have the statutory duty to provide the funded hours to all eligible children in their area. This funding model was developed through consultation with the sector and with local authorities in the run up to the ‘1140’ expansion. The duty to deliver 1,140 hours of funded ELC goes alongside important statutory duties on local authorities to consult parents about their childcare needs, to inform the funded ELC that is delivered.

We have plans in place to fully evaluate the outcomes achieved by the ‘1140’ expansion by 2025 (see question 6 below). Given this, and the fact that ELC funding supports statutory provision, there is likely to be limited scope to use the ELC budget differently. However, we are committed to continuing to realise the benefits of ‘1140’ and ensuring that we take the learning from this programme to inform the next phase of expansion, as we continue work to build a system of school age childcare and plan our expansion of Early Learning and Childcare for more families with a two year old.

It is worth noting that in relation to parental – and particularly maternal – employment benefits that other countries have invested in more generous systems of paid parental leave. However, powers relating to parental leave are currently reserved to the UK Government so these are not policy options that are available to the Scottish Government.

6. How will the impact of the budget decisions be evaluated?

We have a robust evaluation strategy in place for the ‘1140’ expansion programme. Our evaluation strategy sets out how we will assess the contribution of the expansion to outcomes for children, parents and families.

The bespoke Scottish Study of Early Learning and Childcare (SSELC) is the main vehicle for collecting evaluation evidence. The SSELC is a cross-sectional and longitudinal study, designed to evaluate the impact of the ELC expansion on child and parent outcomes.

Baseline data for the SSELC was collected during 2018 and 2019 from children and their parents accessing 600 hours of funded ELC and the same data will be collected during 2023 and 2024 from a sample of children and parents accessing 1,140 hours.

Within our Evaluation Strategy, we have also set out our plans for an economic evaluation of the expansion to ‘1140’. The economic evaluation will include analysis of the distributional impacts of the expansion in order to identify whether outcomes vary by socioeconomic group. Work on the economic evaluation is underway and the final phase of this work is due to be undertaken in late 2025 to allow the information from the SSELC to be used in the economic evaluation.

References

1. Scottish Government (2022) Schools in Scotland 2022: summary statistics

2. Scottish Government (2022) Early learning and childcare - parents’ views and use: survey findings 2022

3. The Scottish Centre for Children with Motor Impairments (2023) ELC-PMLD | Craighalbert Centre

4. OECD (2017) Starting Strong 2017: Key OECD Indicators on Early Childhood Education and Care.

5. OECD(2022) International Early Learning and Child Well-being Study - OECD

6. UNICEF (2022) Early childhood development | UNICEF

7. European Commission (2022) Building a better understanding of the impact of Early Childhood Education and Care on medium- and long-term educational and labour market outcomes in Europe; OECD (2017) Starting Strong 2017: Key OECD Indicators on Early Childhood Education and Care; Melhuish, E. et al (2015) A review of research on the effects of Early Childhood Education and Care (ECEC) upon child development.

8. OECD (2017) Starting Strong 2017: Key OECD Indicators on Early Childhood Education and Care; Passaretta, G. et al (2019) Inclusive Education and Social Support to Tackle Inequalities in Society (ISOTIS): Integrative Report (WP 1) Lessons and Policy Implications

9. There is strong evidence in relation to intensive and explicit programs of early intervention, and some evidence to suggest that programs of universal preschool have the potential to reduce risks within normal populations e.g. Hall, J. et al. (2013) Can preschool protect young children’s cognitive and social development? Variation by center quality and duration of attendance, School Effectiveness and School Improvement, 24:2, 155-176, DOI: 10.1080/09243453.2012.749793; Melhuish, E. (2004) A literature review of the impact of early years provision on young children, with emphasis given to children from disadvantaged backgrounds.

10. Public Health Scotland (2023) Early child development - Scotland 2021/22

11. Public Health Scotland (2023) Early Child Development Statistics - Scotland 2021/22

12. NHS (2017) Provision of early learning and childcare and parents’ outcomes: an evidence brief and IPPR (2014) Childmind the Gap: Reforming Childcare to Support Mothers into Work

13. OECD (2017) Starting Strong 2017: Key OECD Indicators on Early Childhood Education and Care

14. Proportion of ELC workforce: SSSC Workforce Data, 2017, Skills development Scotland Achieving Diversity in the Scottish Early Learning and Childcare workforce.

15. Scottish Government (2022) Early learning and childcare - parents’ views and use: survey findings 2022

Social Security

Budget Line

Benefit Expenditure (Excl. Scottish Welfare Fund)

2024-25 forecast expenditure (£m): £6,133m

1. What outcome is the policy and associated budget decision aiming to achieve?

We’ve established a radically different social security system built on dignity, fairness and respect to support those people in Scotland most in need and tackle inequality. Over the last five years we have paid our clients £12 billion through thirteen benefits, seven of which are unique to Scotland. We currently pay benefits to 1.25 million people, which is forecast to grow to an expected two million people by 2027-28.

Social Security is absolutely pivotal to delivering the Scottish Government’s national missions of equality, opportunity and community. International evidence shows that social security spend is an important means through which governments can reduce inequalities¹ and improve short-, medium- and long-term outcomes for individuals and households. This can serve to reduce future demand on services and increase tax revenues.

Whilst additional spend on social security can reduce inequality, cuts to benefits have the potential to widen inequalities². An example of this is the negative impact that the roll-out of Universal Credit and the introduction of the two child limit by the UK Government has had on child poverty³.

2.  What do you know about existing inequalities of outcome in relation to the budget area?

Inequalities and poverty

21 per cent of Scotland’s population (1.11 million people each year) were living in relative poverty after housing costs in 2019-22⁴. There are some households more likely to be in poverty than others. For example, many disabled people face additional living costs due to structural barriers.

In 2019-22, 24 per cent of children were in relative poverty⁵. Children living in some households are more likely to be in poverty than others.

Sex

Gender and child poverty are intrinsically linked. Children need to be cared for. Throughout Scottish society, irrespective of other protected characteristics, evidence shows us that women undertake the great majority of caring in both the formal and informal sectors.

Age

Poverty rates are particularly high for children in a minority ethnic household (39 per cent in relative poverty in 2019-22), in a lone parent household (38 per cent), and in families with a mother under 25 (55 per cent in 2015-18)⁶.

Disability

Disabled people experience higher rates of poverty and are more likely to access social security. Many disabled people face additional living costs due to structural barriers, for example, inaccessible physical environments, which disability-related benefits are paid to contribute towards. If income from disability benefits is removed from households to allow for a more like-for-like comparison, 29 per cent of households with a disabled member were in relative poverty in 2019-22 compared to 16 per cent of those where no-one was disabled⁷.

Race

An evidence review published by the Scottish Government reported that minority ethnic groups are more likely to live in low-income households and are most negatively affected by the cost-of-living crisis. This is also the case for households with a disabled person⁸.

Religion

The most recent published statistics show that there is a high percentage of social security clients with no religion (60 per cent), and this is likely linked to age (adults aged under 45 make up around 80 per cent of social security Scotland clients and are also more likely to have no religion)⁹.

Pregnancy and maternity

Women continue to be more likely to be the primary carers for children, which can restrict the type of work and working patterns they can take up. In a recent survey by Maternity Action, nearly two-thirds of respondents (64 per cent) said that they worried a lot about money while they were pregnant or on maternity leave and a further third said that they sometimes worried¹⁰.

3. How will your budget decisions impact upon different people and places?

The benefits delivered by Social Security Scotland primarily provide targeted payments to support low-income families to alleviate poverty; and financial support to disabled people to compensate them for the additional costs associated with disabilities. There are also benefits provided to financially support people caring for disabled people.

Social Security Scotland spend supports the achievement of a Fairer Scotland in a number of ways, including:

• Reducing Child Poverty. Scottish Government modelling suggests that the Scottish Child Payment could reduce the relative child poverty rate by around five percentage points in 2023-24, lifting around 50,000 children out of poverty¹¹.
• Reducing Income Inequality. Distributional modelling by the Scottish Government¹² and the Institute for Fiscal Studies¹³ shows that changes made to the tax and welfare system by the Scottish Government in previous budgets has served to reduce inequality and target financial support at those who need it most. The Institute for Fiscal Studies said that, on the action being taken in Scotland: “Amongst the poorest 30 per cent of households, those with children will see their incomes boosted by around a sizeable £2,000 a year on average, driven by higher benefits for families with children.”¹⁴
• Reducing Poverty and Protecting Households. There is emerging evaluation evidence that the new devolved benefits administered by Social Security Scotland are positively contributing to reducing financial pressure on households, reducing poverty, debt, material deprivation and food insecurity. Professor Danny Dorling, of the University of Oxford stated the impact of Scottish Child Payment was ‘stunning’ and ‘has an effect on changing the inequality level in Scotland, which I don’t see in any country for which there has been data for the last 40 years’¹⁵.
• Promoting Equality. Equality Impact Assessments show that women, disabled people and ethnic minorities are likely to benefit most from new Scottish benefits such as the Scottish Child Payment¹⁶.
• Improving Health. Early evaluation evidence of benefits such as the Scottish Child Payment¹⁷, Best Start Foods¹⁸ and Best Start Grant¹⁹ show that these benefits are improving health outcomes through, for example, enabling parents to provide more, and better-quality food for their children.
• Improving Wellbeing. The introduction of new family benefits has led to improved family wellbeing through reducing money-related stress and anxiety for parents, improving children’s wellbeing from having their basic needs met (for example reduced distress caused by being hungry) and improving parental confidence and self-esteem.
• Increasing Social Participation. The evaluation of Young Carer Grant²⁰ showed that the grant is helping young carers improve their own quality of life by taking part in opportunities which are the norm for their non-caring peers.
• Supporting Employment. Evaluation evidence²¹ shows Job Start Payment helps meet up-front costs of a new job, support young people to take up employment and increase confidence. Evidence²² also shows that Young Carer Grant is supporting carers with employment and training.
• Boosting the Economy. The longer-term economic benefits of new and devolved benefits will take time to fully understand. However, there is already evidence to show that most families spend rather than save the Scottish Child Payment and that this benefits the Scottish economy²³.

Social Security Scotland has actively targeted specific groups to promote benefits and maximise take-up rates. For example, people from non-White minority ethnic groups face particular barriers, especially those with English as a second language. Social Security Scotland creates all of its promotional materials in seven alternative community languages with other languages available on request. In 2022-23, 95 per cent of ethnic minority respondents agreed that Social Security Scotland staff made them feel comfortable, a higher proportion than among White respondents (89 per cent)²⁴.

To maximise awareness and promote take up of Adult Disability Payment and Child Disability Payment, Social Security Scotland delivered 110 engagement events with over 6,500 stakeholders signing up to attend²⁵. Over 3,000 people have benefitted from the Social Security Advocacy service, which supports disabled people to access and apply for Social Security Scotland assistance.

Social Security Scotland will collect information to support someone's application if they ask. This can take time – but under the Department for Work and Pensions, people had to do this themselves. Additionally Short Term Assistance is available to any client who is currently receiving Disability Living Allowance and does not meet the Adult Disability Payment criteria or sees a reduction in their mobility or care component. These are marked distinctions between the Scottish and UK systems, and the latest survey of people who applied for disability assistance shows that 93 per cent of people who attended a consultation about their application said they were treated with dignity and respect²⁶.

In summary, our Social Security budget decisions are directly leading to improved incomes, reduced child poverty and a consequential lessening of inequality caused by that poverty. This is particularly important in the context of the continued cost of living crisis.

4. How will your budget decisions contribute to the realisation of human rights?

We have built our system and our budget decisions around the essential principle that social security is a human right, essential to the realisation of other human rights. We enshrined this in the 2018 Social Security Act, which required the Scottish Government to create Our Charter²⁷, setting out what people should expect from the social security system. It underpins how the Scottish Government will ensure we are taking a human rights based approach to what we do and how we will demonstrate dignity, fairness and respect in all of our actions. In designing the Charter, people with lived experience were empowered to share decision making with Government; making key decisions about the commitments that should be made. The Charter Measurement Framework, also co-designed with people with lived experience, involves research with clients, staff and stakeholders on an annual basis to measure how people feel they are treated when they interact with Social Security Scotland.

5.  Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

The impact that devolved benefits make to recipients continues to be monitored through research and analytical activity conducted in line with our published evaluation strategies.

People with lived experience of social security systems continue to help us to shape both the development of policy as well as practical improvements such as the style and language used in letters, application process and accessibility of our buildings.

6. How will the impact of the budget decisions be evaluated?

Our approach to evaluation²⁸ of the first wave of benefits that were devolved to Scotland was published in 2019. Since then, we have published seven evaluation reports under this strategy. By drawing together evidence from a variety of sources, including management information, research conducted by Social Security Scotland, official statistics and bespoke qualitative research with clients and other organisations, we are able to understand the impact of the benefits on clients’ experiences and outcomes.

This helps us to understand the overall contribution of Social Security to reducing poverty and tackling inequalities. Further work is planned for 2024-25, including the next phase of evaluations of the Five Family Payments.

In October 2021, we set out our plans for evaluating the disability benefits being devolved to Scotland²⁹ to consider the impact of key policy changes.

As part of the annual progress report on the performance of the Social Security System, we undertake an assessment of how the system has affected the circumstances of people living in households whose income is adversely affected, or whose expenditure is increased, because a member of the household has one or more protected characteristics. This draws on a variety of sources, including Social Security client and diversity statistics which helps us understand the applications and outcomes by each of the equality groups³⁰.

References

1. tackling-income-inequality-the-role-of-taxes-and-transfers.pdf (oecd.org)

2. GM (closethegap.org.uk)

3. Two-child limit for universal credit: 200,000 more children put in poverty | CPAG

4. Poverty and Income Inequality in Scotland 2019-22 (data.gov.scot)

5. Poverty and Income Inequality in Scotland 2019-22 (data.gov.scot)

6. Supporting documents - Poverty and Income Inequality in Scotland 2015-18 - gov.scot (www.gov.scot)

7. Poverty and Income Inequality in Scotland 2019-22 (data.gov.scot)

8. Executive Summary - The Cost of Living Crisis in Scotland: analytical report - gov.scot (www.gov.scot)

9. Social Security Scotland - Social Security Scotland Client Diversity and Equalities Analysis for June 2021 to March 2023

10. Maternity cost of living survey - Maternity Action

11. Scottish Child Payment - estimating the effect on child poverty - gov.scot (www.gov.scot)

12. The Scottish Government’s Medium-Term Financial Strategy - gov.scot (www.gov.scot)

13. Analysis of Scottish tax and benefit reforms (ifs.org.uk)

14. Analysis of Scottish tax and benefit reforms (ifs.org.uk)

15. Scottish child payment ‘significantly’ impacting child poverty | The National

16. Equality Impact Assessment - Scottish Child Payment (www.gov.scot)

17. Interim Evaluation of Scottish Child Payment (www.gov.scot)

18. Best Start Foods: evaluation - gov.scot (www.gov.scot)

19. Best Start Grant: interim evaluation - gov.scot (www.gov.scot)

20. Young Carer Grant: interim evaluation - gov.scot (www.gov.scot)

21. Job Start Payment: evaluation - gov.scot (www.gov.scot)

22. Interim Evaluation of Scottish Child Payment (www.gov.scot)

23. Interim Evaluation of Scottish Child Payment (www.gov.scot)

24. Social-Security-Scotland-Measuring-Our-Charter-2022-23_2023-11-13-153455.pdf (socialsecurity.gov.scot)

25. Take-up rates of Scottish benefits: October 2022 - gov.scot (www.gov.scot)

26. Adult and Child Disability Payment Client Survey Jan - March 2023 (socialsecurity.gov.scot)

27. Social Security Scotland - Our Charter

28. Devolved benefits: evaluating the policy impact - gov.scot (www.gov.scot)

29. Devolution of disability benefits: evaluation strategy - gov.scot (www.gov.scot)

30. 6. Equality Assessment and Data - Social Security (Scotland) Act 2018: progress report 2022 tp 2023 - gov.scot (www.gov.scot)

Equality, Inclusion and Human Rights

Budget Line

Equality, Inclusion and Human Rights

2024-25 forecast expenditure (£m): £48.8m

1. What outcome is the policy and associated budget decision aiming to achieve?

The Directorate’s vision is for a Scotland which is inclusive, free from discrimination, where the human rights of everyone are respected, protected, and fulfilled. The aims of our funding programmes are to support civil society organisations and partners to: develop, embed, and mainstream equality and human rights within policy and practice; and, to build inclusive communities in Scotland, in line with the ambitions of relevant Scottish Government strategies and the National Performance Framework.

The budget for the Directorate for Equality, Inclusion and Human Rights of £48.8 million will ensure that we continue to invest in infrastructure support and policy development to protect and realise human rights, to build inclusive communities, and to advance equality.

Grant Funding

Over 50 per cent of the Directorate’s budget is spent through grant funding, the majority of which is managed through two large strategic funds, operated on our behalf by Inspiring Scotland: the Delivering Equally Safe (DES) fund and the Equality and Human Rights Fund (EHRF).

Delivering Equally Safe (DES)

• Equally Safe is Scotland’s strategy to prevent and eradicate violence against women and girls. It is co-owned by the Scottish Government and the Convention of Scottish Local Authorities (COSLA) and sets out a vision of a strong and flourishing Scotland where all individuals are equally safe and respected, and where women and girls live free from all forms of violence and abuse and the attitudes that help perpetuate it.
• DES (£19.1 million per year) is the Scottish Government’s funding programme to support third sector organisations and public bodies in contributing to the objectives, priorities, and outcomes of the Equally Safe Strategy. It supports 121 projects across 112 organisations: 80 per cent covers staff costs.

Equality and Human Rights Fund (EHRF)

• This is the government’s strategic investment in the Equality and Human Rights infrastructure in Scotland. It invests approximately £8.3 million each year, supporting 48 third sector organisations and around 300 jobs. These organisations are critical to the government’s ambition to tackle persistent and systemic inequality by properly developing and implementing policies across portfolios that are designed to deliver greater equality, inclusion, and human rights.
• The 48 funded organisations deliver a range of activities broadly categorised into three types: direct service delivery to individuals who share protected characteristics; building the capacity of other organisations; and strategic work for local and national policy makers. Since the start of the fund, a total of 158,363 individuals, and 10,164 organisations have been supported. At least 70 different government policy areas are supported in policy development through the external expertise of the funded organisations. Over 70 per cent of funding covers staff costs. Launched in 2021, EHRF runs for a three-year period until September 2024. Plans to develop successor arrangements are currently underway.

Equality

We support the Social Isolation and Loneliness fund, investing in community organisations with funding of around £800,000 each year. The fund enables a range of activities helping people to re-connect in their communities. Activities include lunch clubs, social group activities, community development, digital connection, creative arts, and befriending.

Priority groups targeted by the Fund are young people (aged 16-24), disabled people, people with a mental health condition, older people (aged 75+) and people living in areas of deprivation or on a low income.

Inclusion Grants, including refugees and asylum seekers

A range of grant funding supports inclusive, cohesive, and resilient communities. This includes over £700,000 of grant funding for initiatives and organisations that support and maintain the integration of newly arrived refugees and asylum seekers so that they can live with dignity in communities across Scotland. This funding helps ensure that all support provided is inclusive, person-centred, and grounded in equality which aims to benefit all refugees, asylum seekers, and their host communities.

Human Rights Grants

• Ongoing support for our Human Rights Bill Lived Experience Board, to ensure the voices of lived experience inform the development of the Bill.

Scottish Human Rights Defender Fellowship

• The Fellowship programme supports international human rights defenders working in difficult and dangerous situations to spend up to six months in Scotland where they can undertake research, acquire new skills, develop networks and continue their work in a place of safety.
• The programme is delivered by the University of Dundee, in collaboration with Amnesty International, Front Line Defenders, Peace Brigades International and other civil society and academic contributors.
• Core funding, of £110,000, is provided by the Directorate for Equality, Inclusion and Human Rights with additional funding leveraged in from other sources. Elements of the programme have benefitted from EU funding, and eligibility continues post-Brexit.
• For 2023-24 five Fellows are participating in the programme, which includes a new focus on women human rights defenders from the Global South, and the interface between human rights and the environment.

Policy spend

Policy spend includes activity across protected characteristic groups, asylum and refugee integration, hate crime and human rights. Key areas of spend include:

• supporting racialised communities (including Gypsy/Traveller) and developing anti-racism infrastructure, including a £750,000 investment to implement the Anti-Racism Observatory for Scotland;
• delivery of British Sign Language National Plan actions;
• our innovative Non-Binary Equality Action Plan;
• designing an Immediate Priorities Plan for disabled people;
• legislative and non-legislative work around banning conversion practices;
• supporting the work of the First Minister’s National Advisory Council on Women and Girls; and
• £1.5 million invested in a wide range of policy and project delivery across key areas of asylum and refugee integration. This includes funding for: the Ending Destitution Together Strategy; the Scottish Refugee Council; COSLA; and other key areas that Scottish Government supports.

2. What do you know about existing inequalities of outcome in relation to the budget area?

While we have made progress, inequality persists in Scotland and there remain significant challenges to people realising their human rights. This highlights the need to tackle structural and systemic barriers to equality. We recognise that disadvantage is experienced in groups beyond those defined under protected characteristics and, critically, that the intersection of forms of disadvantage compounds structural inequality.

To illustrate, we know that:

• While educational outcomes for minority ethnic young people are higher, their job prospects continue to be lower. There continues to be racism and discrimination in the workforce¹.
• In 2021, Scotland had the largest disability pay gap of UK countries, with disabled employees’ median pay (£11.54 per hour) 18.5 per cent less than non-disabled employees (£14.16 per hour)².
• Gypsy/Traveller pupils were almost twice as likely to be identified as having additional support needs than the general school population. Over a third (34.2per cent) of the school population in 2022 were found to have an additional support need compared with 14.7 per cent in 2011³.
• 40 per cent of households with disabled members were financially vulnerable in 2018-2020, compared to 25 per cent of households with no disabled members⁴.
• In 2019-22, 27 per cent of LGB+ adults were in poverty, compared to 20 per cent of heterosexual adults and 17 per cent of adults whose sexual orientation we do not know⁵.
• Of all those on persistent low pay, 72 per cent are women. The gender pay gap continues to exist⁶.
• Of all the victims of domestic abuse incidents recorded by the police, 83 per cent were female in 2021-22⁷.
• In 2018, 85 per cent of people who were ‘inactive’ in employment due to caring were women⁸.

In November 2023, Equality and Human Rights Commission (EHRC) published their review of equality and human rights in Scotland: ‘Equality and Human Rights Monitor 2023: Is Scotland Fairer?’. This provides comprehensive evidence on inequality in Scotland currently.

3. How will your budget decisions impact upon different people and places?

Our objectives are to fund, support, develop and learn from civil society organisations and partnerships that:

• provide frontline service support to some of the most marginalised in our society;
• develop and deliver work that is grounded in the progression, protection, and realisation of human rights;
• deliver support to address the needs of people facing structural inequality and develop and deliver work to increase participation and empowerment;
• support delivery of commitments within relevant Scottish Government equality and human right strategies, action plans and documents; and
• generate data, learning and insight into the experience of people to support analysis and challenge on equality and human rights issues, across a wide range of policy areas.

As noted above, funded organisations and projects deliver a range of outcomes for Scottish Government: directly delivering projects commissioned within Directorate for Equality, Inclusion and Human Rights, but also funding organisations to deliver their mission, which may be to support grass roots and community organisations to deliver direct support to some of the most vulnerable groups, but also to facilitate the voice of lived experience in policy making across some 70 policy areas through the EHRF alone. This in turn supports Scottish Government in delivering its three national missions of equality, opportunity and community, and in delivering on its Public Sector Equality Duties.

Funding for Asylum & Refugee Integration provides support across Scotland, helping to ensure these individuals can understand and access the support available to them to meet their individual needs. For instance, funding of a legal diagnostic service provides people with support to help them access legal advice on their immigration status and the rights they have.

The programmes being pursued by Directorate for Equality, Inclusion and Human Rights reflect a holistic and interconnected understanding of universal human rights and equality challenges. Scotland’s response is explicitly understood to be relevant in a local, national, and global context. Interventions and funding span a spectrum, ranging from support for local community initiatives to engagement with international human rights defenders.

4. How will your budget decisions contribute to the realisation of human rights?

There is a direct link between all the work of this Directorate and human rights. For example, spending addressing violence against women and girls supports the aspirations of the Istanbul Convention. There is, however, also spending that is specifically designated to support the realisation of human rights.

Funding to support the development of a Human Rights Bill for Scotland will help to ensure the development of an effective framework that can respect, protect, and fulfil human rights for the people of Scotland.

Funding for Asylum & Refugee Integration provides a range of opportunities for refugees and asylum seekers to design, themselves, the support they need, and to advocate to Scottish Government, and others, key areas of action to help ensure that people’s rights are understood and realised.

At the international level, core Scottish Government funding for the Scottish Human Rights Defender Fellowship enables human rights defenders working in difficult and dangerous situations to enhance their skills and impact by spending up to six months in Scotland, where they can undertake research, develop networks, and continue their work in a place of safety.

The Fellowship programme supports grassroots action to protect and promote human rights at a community level, including in situations where basic civil and political rights are under threat, Indigenous communities are at risk, environmental rights are being violated, or there is discrimination against women and LGBTQI+ people. In doing so, it implements commitments made in the UN Declaration on Human Rights Defenders. The programme delivers against Scottish Government priorities and contributes also to wider UK foreign policy objectives. In particular, it supports delivery of the UK’s commitment to the UN to support the vital work of Human Rights Defenders, through funding their work, monitoring their cases and raising concerns with other governments. The Fellowship aligns directly with both the National Performance Framework Human Rights and International National Outcomes.

5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

The current Equality and Human Rights Fund comes to an end in September 2024, and Delivering Equally Safe fund in March 2025. We are, therefore, undertaking a review of our Directorate’s approach to funding to ensure that we have a flexible, targeted, and dynamic strategy across both the successor arrangements to these large programmes and all our other work.

6. How will the impact of the budget decisions be evaluated?

Fund managers, Inspiring Scotland, report regularly on Delivering Equally Safe and Equality and Human Rights Fund – reports can be accessed at these links.

In considering successor arrangements for these programmes, and our remaining Directorate funding, evaluation will be a key factor.

For spend on asylum and refugee integration policy and projects, a monitoring and evaluation strategy will be developed with partners to ensure effective management of funds and achievement of outcomes.

References

1. Minority ethnic families - Tackling child poverty priority families overview - gov.scot (www.gov.scot)

2. Disability pay gaps in the UK - Office for National Statistics (ons.gov.uk)

3. Pupil census supplementary statistics - gov.scot (www.gov.scot)

4. Annual survey of hours and earnings: 2022 - gov.scot (www.gov.scot)

5. Poverty and Income Inequality in Scotland 2019-22 (data.gov.scot)

6. Poverty in Scotland 2023 | JRF

7. Domestic abuse: statistics recorded by the police in Scotland - 2021/22 - gov.scot (www.gov.scot)

8. Regional employment patterns in Scotland: statistics from the Annual Population Survey 2018 - gov.scot (www.gov.scot)

Concessionary Fares

Budget Line

Concessionary Fares

2024-25 forecast expenditure (£m): £370m

1. What outcome is the policy and associated budget decision aiming to achieve?

The overall aim of Concessionary Fares policy and the budget attached to it is to provide Scotland-wide free bus travel to all residents of Scotland aged under 22, eligible disabled people and everyone aged 60 and over.

The key objectives of the concessionary travel scheme for older people are to:

• allow older and disabled people improved access to services, facilities and social networks, promoting social inclusion;
• improve health by promoting a more active lifestyle for elderly and disabled people;
• remove the restrictions of the previous local off-peak concessionary fare scheme which was limited in offering access to facilities;
• promote a modal shift from private cars to public transport;
• maintain a viable position for bus operators with a standard reimbursement rate;
• provide opportunities for improvements to public transport, such as assisting development of multi-operator ticketing and the use of electronic ticket machine technology;
• facilitate a more effective administration of the system by adopting a standard reimbursement rate and shifting operational responsibility from local authorities to Transport Scotland; and
• provide a stimulus to the introduction of smart ticketing.

In addition, extending free bus travel to all children and young people under 22 aims to improve access to education, leisure and work, while enabling them to travel sustainably early in their lives, and contributes to tackling child poverty.

2. What do you know about existing inequalities of outcome in relation to the budget area?

Socioeconomic status/where people live

• People on lower incomes have less access to private modes of transport and are more reliant on public transport.
• People on lower incomes are more likely to use bus services and to do so more frequently than those on higher incomes. Fifty-one per cent of households with an annual income up to £10,000 had used a bus at least once in the past month compared to 27 per cent of households with an annual income of over £50,000, in 2019.
• Access to, and affordability of, public transport remain key issues for people on lower incomes which is and are particular issues for rural and island communities.
• Evidence of the experiences of low-income families indicates that transport often determines and constrains their options in terms of household spending and their day-to-day experiences. Transport is required for day-to-day engagement with services and support networks including accessing healthcare, education, childcare, caring responsibilities, employment, shopping and engaging in leisure activities.

Protected characteristics

• People aged under 22 rely on buses for transport more than any other age group.
• Disabled adults are more likely to use the bus than non-disabled adults and are less likely to drive.
• Particular minority ethnic groups are more likely to be reliant on bus travel and also more likely to be in poverty than non-minority ethnic groups.

3. How will your budget decisions impact upon different people and places?

As highlighted above, people on lower incomes and from particular protected groups rely on and use bus travel more than others. The schemes offer a range of benefits including financial savings, reduced isolation, a sense of greater independence, and increased confidence in using public transport.

A consultation held on the future of the Older and Disabled Persons Scheme in 2017 showed that bus pass holders see the scheme as having improved their mental and physical wellbeing, and that it had encouraged modal shift from car to public transport, and increased use of the bus.

The under-22s concessionary travel scheme launched in January 2022 to support children and young people living in Scotland to travel for free, reducing their travel costs. The scheme targets under-22s as they are more likely than older age groups to travel by bus, find other public transport expensive and be in low-paid or insecure work. More than 100 million free bus journeys have been made since the introduction of free bus travel for under-22s in January 2022. There are now over 700,000 cardholders signed up and over six million journeys being made each month.

4. How will your budget decisions contribute to the realisation of human rights? and 5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

With 100 million free bus journeys made by under-22s across Scotland, this policy is supporting the delivery of our National Transport Strategy by helping young people, and families with children, cut costs for everyday and leisure travel, while at the same time protecting our climate and supporting more active forms of travel.

This feeds into the National Transport Strategy’s priorities, which are to reduce inequalities; take climate action; help deliver inclusive economic growth; and improve health and wellbeing. In turn, the National Transport Strategy contributes primarily to the National Performance Framework Outcomes Communities; Economy; Environment; and International, and also to the following human rights:

• the right to an adequate standard of living;
• the right to a healthy environment; and
• the right to the enjoyment of the highest attainable standard of physical and mental health.

6. How will the impact of the budget decisions be evaluated?

Monitoring

Uptake and registration data for the scheme are routinely monitored, providing information on how many of those eligible for the scheme are taking advantage of concessionary travel.

Evaluation

The roll-out of the concessionary scheme to under-22s is subject to an evaluation. A baseline and one year on report have already been published, looking at uptake and benefits of the scheme from scheme users. A further evaluation is planned for five years after implementation of the roll-out to under-22s. Data has been gathered on all protected groups and socioeconomic status through the evaluation. One of the specific objectives of the scheme is on poverty and this will be reflected in monitoring and evaluation of the scheme.

Transport spend and perception of affordability is routinely monitored via questions asked in the Scottish Household Survey. This allows for analysis of spend level on public transport and whether this is affordable by socioeconomic background, protected characteristics, and geographic location. This feeds into monitoring and evaluation of the National Transport Strategy which has, as one of its four priorities, to reduce inequalities.

Employability and Workforce Skills; and Employability – Fair Start Scotland

Budget Line

Employability and Workforce Skills; and Employability – Fair Start Scotland

2024-25 forecast expenditure (£m): £90.0m

1. What outcome is the policy and associated budget decision aiming to achieve?

The ‘National Strategy for Economic Transformation’ (NSET)¹ has a vision for a Wellbeing Economy and an ambition to tackle structural inequalities in Scotland’s economy, as well as improving economic performance.

Through the actions we are taking we will deliver a labour market that is inclusive and offers equality of opportunity for all to access and to progress in work. The employability budget line helps deliver person-centred and place-based employability support through the ‘No One Left Behind’ approach and ‘Fair Start Scotland’, which will prioritise those facing complex barriers to accessing the labour market. This includes enhancing employability services’ support for parents and bringing together a range of services to help priority families² increase their income from employment, helping to tackle child poverty.

2. What do you know about existing inequalities of outcome in relation to the budget area?

An equality impact assessment (EQIA) for NSET Programme 5 (A Fairer and More Equal Society)³ was published alongside delivery plans for NSET, and a Fairer Scotland Duty Assessment summary⁴ has been published for the strategy as a whole. In addition, an EQIA for the ‘No One Left Behind’ employability approach was published in 2019⁵, and an updated EQIA was published in 2022⁶ in line with the next phase in the policy development. The EQIA is currently being reviewed, with a view to publishing another updated version to reflect further implementation of the approach from April 2024.

Socioeconomic status

• Individuals from socioeconomically disadvantaged backgrounds are more likely to experience barriers to participation in the labour market such as lower skills or social capital, or less flexible availability due to health or caring responsibilities.
• Many individuals face significant challenges and barriers to obtaining and sustaining work, including disabled people, those with long-term health conditions, lone parents and people from minority ethnic groups.

Protected characteristics

• The proportion of unemployed people who are long-term unemployed increases with age.
• Young people (aged 16-24) are more likely to be unemployed than older age groups and are vulnerable to long term employment ‘scarring’. Young people (18‑24) are more likely to earn less than the ‘real Living Wage’ and are more likely to be financially vulnerable and in unmanageable debt^7,8 .
• Disabled people are less likely to be in employment than non-disabled people⁹; earn less on average¹⁰; are less likely to be employed in contractually secure work¹¹; less likely to have access to fair work¹²; and are more likely to be under-employed, work part-time¹³ and work in lower-paid occupations¹⁴.
• The employment rate for people from minority ethnic groups is consistently lower than for white people¹⁵ and, compared with the general population in Scotland, they are more likely to earn low income and be in relative poverty¹⁶.
• Women experience a range of barriers in the labour market that lead them to be paid less on average than men, which drives the gender pay gap¹⁷.
• These barriers relate to the type of jobs women are more likely to do (job selection), how much these jobs pay (job valuation) and whether they can move into higher-paid jobs (job progression)¹⁸.
• Women (and particularly racially minoritised women)are more likely to be in insecure workand are over-represented in sectors that have historically low pay, low progression and low status, but that can provide more flexibility to allow women to undertake caring responsibilities¹⁹.
• People with multiple protected characteristics can face heightened barriers to employment, for example:
  • intersectional barriers further hamper women’s opportunities, such as those experienced by disabled women, racially minoritised women and women over 50. Women experiencing the menopause while in work can require additional support;
  • the ethnicity employment rate gap for women has been consistently higher than the gap for men²⁰, and a non-disabled white person is more than twice as likely to be in employment than a disabled person from a minority ethnic group²¹.

3. How will your budget decisions impact upon different people and places?

Through our ‘No One Left Behind’ approach, we aim to build a simplified employability system that tackles inequalities in Scotland’s labour market by creating a more responsive, joined-up and aligned employability system. This means a system that meets the needs of employers and local labour markets and helps people of all ages achieve their potential. This approach is delivered in partnership with local government and comes with a commitment to a wider economy of provision, ensuring expertise in wider sectors is leveraged to support our aims.

Through ‘Best Start, Bright Futures’, we committed to build upon and scale parental employability support, which was first launched in April 2020 as a key action under our first tackling child poverty delivery plan. As part of this, we expanded eligibility of the parental support to include those in low-income employment, in recognition of the prevalence of in-work poverty. As we look to develop this approach further, we will work with partners to ensure that the local flexibility afforded by the ‘No One Left Behind’ approach is balanced with a requirement to deliver on national priorities, including enhancing available support for those facing structural barriers to entering and sustaining work. Further details on actions will be included in our ‘Employability Strategic Plan’, due to be published by the end of the 2023-24 financial year.

4. How will your budget decisions contribute to the realisation of human rights?

Scottish Ministers have been clear on their determination for our employability services to be voluntary, with them being seen as an opportunity not a threat, with the principles of dignity, fairness and respect at their heart. In line with internationally recognised rights to work and to work in just and favourable conditions, the Scottish Government approach does not seek to push people into poor-quality work as quickly as possible, but rather to work with them to support a move into the right job, at the right time, with the aim of increasing sustainability of employment in the long term.

Local Employability Partnerships (LEPs) identify the services that will meet the needs of local people, supporting them to access employment or training, impacting positively on their lives, their family and wider neighbourhood and community. We will continue to work with delivery partners to better promote and communicate available employability support.

Lived experience is an important part of the policy and product development process around ‘No One Left Behind’ and there are specific targeted user groups that focus on listening to the people who are benefiting from the work. The ‘Shared Measurement Framework’ will help us understand the support needed by particular groups.

5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

‘No One Left Behind’ was developed out of a recognition that a person-centred, place-based model of support and associated funding would create the right conditions to maximise opportunities and reach for those who need this most. Local government partners were identified as best placed to lead on this as they know their local communities, and through the development of a partnership approach with the Local Employability Partnerships a wide range of partners are involved to represent and challenge all aspects of opportunity in all areas.

Through continued investment in our employability commitments in 2024-25 we will continue our work to tackle child poverty and prioritise support for those who face complex barriers to accessing the labour market.

We will continue to gather and use relevant data to help target activity to advance equality of opportunity for people of all ages.

6. How will the impact of the budget decisions be evaluated?

We have recently published an implementation evaluation covering ‘No One Left Behind’²², which presents positive findings regarding the delivery of our policy intent in practice, as well as recommendations to shape development moving forward. We are committed to ongoing evaluation of our devolved employability services. In addition, we collect information quarterly from each of the 32 Local Employability Partnerships on their provision, including participant characteristics aligned with census data, which informs quarterly statistical publications. This data allows us to monitor the impact of our services on an ongoing basis, and will be used to inform decision making at both a national and local level. The ‘No One Left Behind’ approach is in its infancy and we are committed to further development with Local Authority partners and wider stakeholders.

References

1. Scotland’s National Strategy for Economic Transformation - gov.scot (www.gov.scot)

2. Every child, every chance: tackling child poverty delivery plan 2018-2022 - gov.scot (www.gov.scot)

3. Scotland’s National Strategy for Economic Transformation Programme 5: A Fairer and More Equal Society Equality Impact Assessment (Record and Results) - gov.scot (www.gov.scot)

4. Scotland’s National Strategy for Economic Transformation: fairer Scotland duty summary - gov.scot (www.gov.scot)

5. Employment support programme: equality impact assessment - gov.scot (www.gov.scot)

6. No One Left Behind: equality impact assessment - update summary - gov.scot (www.gov.scot)

7. Wealth in Scotland 2006-2020

8. Annual survey of hours and earnings: 2022

9. Fairer Scotland for disabled people - employment action plan: progress report - year 2 - gov.scot (www.gov.scot); Disabled people in the labour market in Scotland - gov.scot (www.gov.scot); Labour Market Statistics for Scotland by Disability: January to December 2022 - gov.scot (www.gov.scot)

10. Fairer Scotland for disabled people - employment action plan: progress report - year 2 - gov.scot (www.gov.scot)

11. Disabled people in the labour market in Scotland - gov.scot (www.gov.scot); Labour Market Statistics for Scotland by Disability: January to December 2022 - gov.scot (www.gov.scot)

12. Work-and-Wellbeing-Discussion-Paper-1.pdf (d1ssu070pg2v9i.cloudfront.net); Coronavirus (COVID-19): impact on equality (research) - gov.scot (www.gov.scot)

13. Disabled people in the labour market in Scotland - gov.scot (www.gov.scot); Labour Market Statistics for Scotland by Disability: January to December 2022 - gov.scot (www.gov.scot)

14. Fairer Scotland for disabled people - employment action plan: progress report - year 2 - gov.scot (www.gov.scot)

15. Scotland’s Labour Market: People, Places and Regions – Protected Characteristics. Statistics from the Annual Population Survey 2021 - gov.scot (www.gov.scot)

16. Poverty and Income Inequality in Scotland 2019-22 (data.gov.scot)

17. Gender Pay Gap Action Plan: Analytical Annex (www.gov.scot); A fairer Scotland for women: gender pay gap action plan - gov.scot (www.gov.scot)

18. Gender Pay Gap Action Plan: Analytical Annex (www.gov.scot)

19. If not now, when? - Social Renewal Advisory Board report: January 2021 - gov.scot (www.gov.scot); Scotland’s Labour Market: People, Places and Regions – Protected Characteristics. Statistics from the Annual Population Survey 2021 - gov.scot (www.gov.scot); Scotland National Strategy for Economic Transformation: evidence paper - gov.scot (www.gov.scot); Tackling child poverty delivery plan 2018-2022: annex 3 - gov.scot (www.gov.scot)

20. Scotland’s Labour Market: People, Places and Regions – Protected Characteristics. Statistics from the Annual Population Survey 2021 - gov.scot (www.gov.scot)

21. Fairer Scotland for disabled people - employment action plan: progress report - year 2 - gov.scot (www.gov.scot)

22. No One Left Behind and the Young Person’s Guarantee: implementation evaluation - gov.scot (www.gov.scot)

Scottish National Investment Bank

Budget Line

Scottish National Investment Bank

2024-25 forecast net expenditure (£m): £177.1m

1. What outcome is the policy and associated budget decision aiming to achieve?

The Scottish National Investment Bank (‘the Bank’) provides patient (long-term) capital to businesses and projects throughout Scotland to support the development of a fairer, more sustainable economy. The Bank is a mission-focused investor, making investments independently of the Scottish Government and Scottish Ministers but in line with the three strategic missions set for it by Scottish Ministers:

• Achieving a just transition to net zero carbon emissions by 2045.
• Extending equality of opportunity through improving places by 2040.
• Harnessing innovation to enable our people to flourish by 2040.

The Bank’s commitment to advancing equality and non-discrimination is enshrined in The Scottish National Investment Bank Act 2020¹, which also places a duty on the Bank to maintain a Gender Equality Strategy. One hundred per cent of the businesses and projects that the Bank has directly invested in have committed to undertaking an annual gender pay gap report analysis.

Where the Bank invests equity, it will also typically have observer rights on investee boards, and this allows for a better understanding of the needs and challenges of individual businesses, enabling the Bank to support and signpost relevant guidance as required.

2. What do you know about existing inequalities of outcome in relation to the budget area?

Socioeconomic status

• According to ONS figures for Scotland in 2022, 2,244,000 employees aged 18 and over were paid the real Living Wage (1,059,000 men and 1,185,000 women) and 221,000 earned less than the real Living Wage (86,000 men and 135,000 women)².
• Entrepreneurs from socioeconomically disadvantaged backgrounds may face difficulty in accessing start-up finance and in accessing working capital once their businesses are up and running.
• Evidence from the British Business Bank³ indicates worse business outcomes for entrepreneurs from poorer backgrounds, regardless of ethnicity, gender, or place: 87 per cent of entrepreneurs with household income of £75,000 or more reported making a profit last year, compared to 76 per cent of those with income below £20,000.

Sex

• There is a clear and persistent gap between male- and female-led companies; a female Total Early-Stage Entrepreneurial Activity (TEA) rate of 7.2 per cent, compared to 10.5 per cent for men – an additional 60,000 women are estimated to be required to engage in early-stage enterprise in Scotland to match the male TEA rate⁴.
• Women receive far less investment than men at all stages of the entrepreneurial journey. Across all sectors, female-led businesses made up 12 per cent of companies receiving investment versus 73 per cent being male-led businesses – a gender gap of 61 per cent⁵.
• A review of women in entrepreneurship published in early 2023 found that, over the past five years, only two per cent of institutional investment went to female-led businesses⁶.
• In 2019 the British Business Bank reported that for every £1 of venture capital (VC) investment in the UK all-female founder teams get less than a penny; and 83percent of deals that UK VCs made had no women at all on the founding teams⁷.

Race

• Access to finance appears to be a major barrier for Black and Asian and Other ethnic minority entrepreneurs, and the reason why 39 per cent and 49 per cent, respectively, stop working on their business idea⁸.

3. How will your budget decisions impact upon different people and places?

The Bank has been established to invest in Scottish business, projects and communities in order to deliver positive environmental and social impacts and positive financial returns for the people of Scotland. The three missions provide strategic direction and enable the Bank to direct its investments to address the persistent grand challenges identified for the Scottish economy and people. The Bank is an impact investor, ensuring investments demonstrate alignment to at least one of the three strategic missions, with an Impact Report published annually. To date, the Bank has committed to £463.2 million in 29 investments, and has also co-invested alongside £680 million third-party capital across its portfolio.

During 2022, the investments made by the Bank directly supported around 1,200 jobs, with a further 1,100 supported by the indirect and induced impacts of the Bank’s investments. As part of the Bank’s portfolio management activity, it works closely with investee businesses to provide them with support in a range of areas, including approaches to equality, diversity and inclusion, and creating Fair Work workplaces. One hundred per cent of the businesses and projects the Bank has directly invested in have committed to adopting Fair Work First principles.

The Bank is also working to create equality of investment opportunity for people who are marginalised, minoritised or under-represented. It is collaborating with pioneering groups such as Investing Women Angels (IWA), which launched a new IW AccelerateHER Fund for female-founded companies in Scotland. This collaboration aims to provide finance to support the growth of Scottish female-founded businesses, unlocking entrepreneurial potential and supporting the recommendations of Mark Logan’s review of the Scottish tech ecosystem⁹.

The Bank also recognises that there are obstacles to accessing finance reported across a range of protected groups. As part of its 2022 ‘Equality Strategy¹⁰’, the Bank committed to researching the barriers to equal access to investment finance to better understand how it can promote equality and diversity within its own investment activity. The Bank has partnered with Black Professionals Scotland to support Black ethnic minority professionals across Scotland and provide greater opportunities, including through an internship programme.

In its ‘Equality Strategy’, the Bank highlights a commitment to continue to improve social mobility by providing greater access and opportunity for people from socially diverse backgrounds. It will provide communities with investment that delivers an increase in equality of opportunity, supporting the development of affordable homes and places that provide high quality work, training opportunities and local services. For example, the Bank’s investment of £35 million out of a total project cost of £420 million in Aberdeen South Harbour (ASH) has committed to a range of good employment and industry practices, including:

• proactive support to training and the just transition to net zero;
• implementing Fair Work (including the real Living Wage and proactive approaches to creating more diversity and inclusivity) to all employees and as appropriate through contracts to third parties;
• contracting that promotes local employment and supply chain growth; and
• community benefit programmes in Aberdeen and areas adjacent to ASH – employment data, supply chain spend and wider impact will be tracked over time.

4. How will your budget decisions contribute to the realisation of human rights?

The Bank is operationally independent from the Scottish Government and has its own thorough due diligence processes as outlined in its Business Plan¹¹. It is committed to a reduction in inequality, ensuring our communities are inclusive, empowered, resilient and safe. The Bank recognises the current systemic challenges that lead to inequality of access to finance and is actively working to understand and reduce these inequalities.

The Bank published its ‘Equality Strategy’ in August 2022 and an ‘Interim Equalities Report’ in April 2023¹². The strategy set out four Equality Outcomes for the period to 2025, which are designed to cover all protected characteristics as well as a commitment to consider socioeconomic disadvantage. It outlines steps the Bank will take to address the gender pay gap, as well as measures to:

• improve equality and diversity to create an inclusive environment within the Bank;
• assess and encourage ambitious, impactful approaches to diversity and equality in businesses and projects it invests in, contributing to a more diverse and inclusive business landscape in Scotland; and
• encourage suppliers the Bank engages with to develop appropriate equality policies and practices.

A key aspect of the work of the Bank aims to address place-based inequality through investing in regeneration, improving opportunities and outcomes for people and communities across social, health, economic and environmental dimensions.

5. Could the budget be used differently to better address existing inequalities of outcome and advance human rights?

While the Bank is operationally independent of the Scottish Government and Scottish Ministers, its ‘Investment Strategy’¹³ outlines that it will be an ethical investor, setting minimum ethical standards for its investments via its ‘Ethical Investment Policy’¹⁴.The Bank pays careful consideration to the ethical and governance standards of the business or project it is providing investment to. It focuses on encouraging businesses and projects to comply with common minimum ethical investment standards and also improve and report on compliance with these ethical standards and principles of good governance.

The Bank has also committed to carrying out human rights due diligence before making any investment. To this end, appropriate investigation and analysis will be carried out throughout the Bank’s consideration of a business or project, and will include assessment of a relevant organisation’s human rights record both in Scotland and worldwide.

6. How will the impact of the budget decisions be evaluated?

The Bank Act requires the Bank to report on its performance against the missions and submit an update to Ministers annually on the performance of investments. Both the Bank’s ‘Impact Report’¹⁵ and its ‘Annual Report and Accounts’¹⁶ outline its commitment to improve outcomes for the people of Scotland. In its ‘Interim Equalities Report’ the Bank stated that it would introduce a number of key performance indicators in the next reporting period that will provide an overview of its investments over time.

References

1. Scottish National Investment Bank Act 2020 (legislation.gov.uk)

2. Annual survey of hours and earnings: 2022 - gov.scot (www.gov.scot)

3. Alone together entrepreneurship and diversity in the uk final (british-business-bank.co.uk)

4. GEM Global Entrepreneurship Monitor (gemconsortium.org)

5. Pathways: A new approach for women in entrepreneurship - gov.scot (www.gov.scot)

6. Pathways: A new approach for women in entrepreneurship - gov.scot (www.gov.scot)

7. UK VC & Female Founders report - British Business Bank (british-business-bank.co.uk)

8. UK VC & Female Founders report - British Business Bank (british-business-bank.co.uk)

9. Scottish technology ecosystem: review - gov.scot (www.gov.scot)

10. bank-equality-strategy-2022.pdf (thebank.scot)

11. snib009-business-plan-fy22-23.pdf (thebank.scot)

12. Scottish National Investment Bank - Mainstreaming Equalities Report Apr 2023_FinalSml.pdf (thebank.scot)

13. the-bank-investment-strategy-2021.pdf (thebank.scot)

14. SNIB035 Ethical Investment Policy_Finals.pdf (thebank.scot)

15. Impact Investment Report_Finals.pdf (thebank.scot)

16. SNIB041 Annual Report 2023_WEB_reduced_0.pdf (thebank.scot)