Europe 2020: Scotland's National Reform Programme 2018

Chapter 7: Poverty And Social Exclusion

Promoting inclusive growth is central to Scotland’s Economic Strategy. Improving equality and tackling inequalities – social, regional and inter-generational – are not only desirable outcomes in themselves, but are also essential for improving economic performance.

This chapter sets out the actions being undertaken throughout Scotland to deliver inclusive growth, tackle child poverty and income inequality and maximise the potential of all areas of Scotland. These policies and actions cover one of the European Commission’s Country-Specific Recommendations to the UK relating to improving the availability of affordable, high-quality, full-time childcare, and strongly support the Europe 2020 flagship initiative, “European platform against poverty and social exclusion”.

Europe 2020 headline target:

The number of Europeans living below the national poverty line should be reduced by 25 per cent, lifting over 20 million people out of poverty.

Current Scottish Performance

Progress in Scotland in this area is measured through the Scottish Government’s National Performance Framework, which includes measures relevant to poverty and social inclusion. Scotland’s current performance is presented in Table 5.

Table 5: Current Scottish Performance Against Poverty and Social Inclusion Indicators

Indicator	Current Level	Change Over Year	Reference Period
Solidarity target: “Increase the proportion of income earned by the three lowest income deciles as a group by 2017” [22 23]	121	Decreased from 138	2015-16
Reduce the proportion of individuals living in poverty - this is measured in terms of the percentage of people living in relative poverty (below 60% of UK median income before housing costs) [24]	17% of the population in relative poverty	unchanged	2015-16
Reduce children’s deprivation National Indicator - this is measured in terms of percentage of children in combined material deprivation (based on a suite of questions in the Family Resources Survey) and low income (below 70% of UK median income) [25]	10% of children in combined material derivation	unchanged	2015-16

As indicated in Table 5, the share of income earned by the lowest four income deciles has increased compared to the previous year, while the proportion of the population in relative poverty and the share of children living in material deprivation have remained broadly unchanged. In addition to the National Performance Framework measures, in 2017, the Scottish Government introduced four statutory child poverty targets to assess progress in tackling child poverty.

Delivering Inclusive Growth

The Europe 2020 vision of inclusive growth is for a high-employment economy delivering economic, social and territorial cohesion. The Europe 2020 Strategy identifies that this will require making full use of labour potential; spreading the benefits of economic growth to all areas; ensuring access and opportunities for all throughout the lifecycle; and promoting gender equality.

As highlighted in Chapter 2, inclusive growth is a central priority of Scotland’s Economic Strategy . The Scottish Government is committed to ensuring that economic growth is inclusive and is shared across all of the people and parts of Scotland. A more cohesive economy that improves the opportunities, life chances and wellbeing of every citizen in Scotland not only improves outcomes for individuals and households, but is a critical driver of economic performance over the long term. This approach – which includes investing in the early years, promoting fair work and protecting households from current economic pressures – is embedded in the foundations of Scotland’s Economic Strategy .

The Scottish Government is committed to creating a fair and inclusive jobs market in which every individual can participate to their full potential. Scotland’s Labour Market Strategy sets out the action we are taking to deliver this ambition. This includes supporting the Fair Work Convention to embed a culture of Fair Work throughout all workplaces in Scotland, encouraging employers to adopt Responsible Business practices, and promoting workplace equality.

The Fair Work Convention produced its Fair Work Framework for Scotland in March 2016. The Framework sets out the Convention’s vision and definition of Fair Work which are endorsed by the Scottish Government.

• Vision: By 2025, people in Scotland will have a world leading working life where Fair Work drives success, wellbeing and prosperity for individuals, businesses, organisations.
• Definition: Fair Work is work that offers effective voice, opportunity, security, fulfilment and respect that balances the rights and responsibilities of employers and workers and that can generate benefits for individuals organisations and society.

Regardless of size, sector or location of a business, the Fair Work Framework is an accessible guide to adopting Fair Work practices. It demonstrates that not only is Fair Work a moral imperative, but that Fair Work actually improves productivity and innovation in the workplace which will help businesses to thrive.

We are working with the Convention to drive change and to promote fair work through engaging in a new type of dialogue with employers, employees and trade unions. Our approach is to persuade and influence where we cannot legislate, and we continue to make great progress using the levers which we have. For example:

• Through public procurement we have published statutory guidance addressing fair work practices.
• The number of Scots-based Accredited Living Wage Employers has now risen to over 1,100. Furthermore, Scotland is the best performing of all four UK countries in terms of both the proportion of the workforce paid at least the living wage and the proportion of accredited companies paying the Living Wage.
• Through initiatives like the Scottish Business Pledge and public procurement actions, we remain committed to opposing exploitative zero-hours contracts. The proportion of people on zero hours contracts in Scotland (2.7% of all employees) is lower than the UK as whole (2.8%).
• We see Trade Unions as our social partners and a huge strength for our country. That is why we opposed the UK Government’s Trade Union Act which is a threat to unions; to the fundamental rights of workers; and to the collaborative approach we take here in Scotland. We continue to offer support to the Scottish Trades Union Congress via Scottish Union Learning and the Trade Union Fair Work Modernisation Fund,
• We support the work of Business in the Community Scotland ( BITCS) to bring those from a background of poverty and limited opportunity closer to the workplace. They have four leadership groups which focus on Innovation, Employability, Communications and Education.

Looking forward, the Scottish Government will build on our progress to date and publish a Fair Work Action Plan by the end of 2018.

Equity

Making growth more inclusive is important for improving both Scotland’s economic competitiveness, reducing wider inequalities, and improving opportunities for all. As highlighted previously, the Scottish Government is working with partners to drive this agenda across a range of areas, including:

• Initiatives to improve the quality of workplaces in Scotland, such as the Business Pledge.
• Carrying out an Enterprise and Skills Review to ensure that public agencies are delivering the support that young people, universities, colleges and businesses need.

Tackling poverty and inequality is central to what the Scottish Government is seeking to achieve. In October 2016, the Scottish Government published the Fairer Scotland Action Plan ^[26] , which sets out 50 selected actions over this Parliamentary term under five themes of: A Fairer Scotland For All; An End To Child Poverty; A Strong Start For All Young People; Fairer Working Lives; and A Thriving Third Age.

Key commitments within the Fairer Scotland Action Plan include:

• A significant increase in the level of funded early learning and childcare provision by 2020.
• The introduction of a new Best Start Grant for low-income families in the early years.
• A new socio-economic duty on public authorities, which will ensure that public bodies are all working consistently towards the same anti-poverty goals.
• Commitments to promote good flexible working to help families maximise their incomes and achieve a better work-life balance.

The Fairer Scotland Action Plan is underpinned by a new £29 million programme, including £12.5 million from the European Social Fund, to tackle poverty across Scotland.

Every Child, Every Chance

In March 2018 the Cabinet Secretary for Communities, Social Security and Equalities published ‘Every Child, Every Chance: The Tackling Child Poverty Delivery Plan 2018-22’ ^[27] . This is the first of three delivery plans which will be published by the Scottish Government in order to meet the ambitious targets set out in the Child Poverty (Scotland) Act 2017. The Plan sets out a range of actions aimed at meeting the targets by increasing family incomes and reducing household costs. Key commitments include:

• An additional £12 million for parental employment support, helping parents to enter and progress in work; alongside launching Fair Start Scotland, the new devolved employment service.
• A new guaranteed minimum amount for School Clothing Grant, providing more money for school uniforms and sports kits.
• £1 million investment to providing help for children experiencing food insecurity during the school holidays.
• A commitment to introducing a new income supplement for low income families, and introducing the new Best Start Grant from summer 2019.
• Investing £2 million to expand the Children’s Neighbourhoods Scotland programme to improve a range of outcomes for children.
• A new £7.5 million innovation fund with the Hunter Foundation

Progress reports will be published annually on the Delivery Plan, and Local Authorities and Health Boards will commence reporting on their action from next year.

There are also a number of social security powers that have been devolved through the Scotland Act 2016 that will help people on low incomes, in particular Universal Credit Scottish Choices. The new Universal Credit Scottish Choices, sometimes known as “The Scottish Flexibilities”, make Universal Credit payments more flexible and adaptable by giving people in Scotland the choice to be paid either monthly or twice monthly and have the housing cost in their Universal Credit award paid direct to their landlord.

We are also introducing a new grant targeted at young people aged 16-24 who are starting work after a period of 6 months or more unemployed. The Scottish Government has made a commitment of a cash payment of £250 to young parents (or £100 for people without children) and a three month bus pass. The Job Grant aims to meet the immediate costs of transitioning into employment, as well as contributing towards longer-term outcomes, such as improvements in employment and health.

Expanding Early Learning And Childcare

The Scottish Government has noted European Commission recommendations that action is taken to improve the availability of affordable, high-quality, full-time childcare. This is an area where the Scottish Government continues to take strong action.

In Scotland, through the Children and Young People (Scotland) Act 2014, entitlement to funded early learning and childcare ( ELC) increased to 600 hours for all 3 and 4 year olds and to eligible 2 year olds. The Act also made it a legal requirement for local authorities to consult parents in order to increase flexibility and choice over how ELC is accessed. Since 2014, the Scottish Government has provided local authorities with nearly £810 million to fully fund these changes.

The Scottish Government is committed to further expanding the entitlement and will nearly double the funded early learning and childcare entitlement to 1,140 hours per year by 2020. This will require substantial increases in the workforce and investment in infrastructure. Since 2017-18, the Scottish Government has provided local authorities with over £270 million to support the expansion to 1,140 hours.

The Scottish Government is committed to providing local authorities with additional funding to allow them to agree rates with providers in the private and third sectors that enables them to pay all childcare workers delivering the funded early learning and childcare entitlement the ‘real’ Living Wage from August 2020.

The total benefit to families from 1,140 hours of funded entitlement is estimated to be worth around £4,500 a year per child, enabling more families to keep more of their income. This will make a vital contribution to the Scottish Government’s priorities to grow Scotland’s economy, tackle inequality, and close the attainment gap.