Europe 2020: Scottish National Reform Programme 2016

Chapter 6: Inclusive Growth and Equity

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.

Ensuring that shared and sustainable growth provides the most disadvantaged areas and people in Scotland with opportunities to prosper lies at the heart of Scotland's Economic Strategy.

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 CSRs to the UK relating to expanding 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 6.

Table 6 - 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." [68]	14.4%	0.3% pts increase	2013-14
Reduce the proportion of individuals living in poverty [69] - this is measured in terms of the percentage of people living in relative poverty (below 60 per cent of UK median income before housing costs).	14.0% of the population in relative poverty	1.7% pts decrease	2013-14
Reduce children"s deprivation National Indicator [70] - 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 per cent of UK median income).	13.2% of children in combined material derivation	2.4% pts increase	2013-14

As indicated in Table 6, the share of income earned by the lowest three income deciles has remained broadly unchanged in recent years, whilst the proportion of individuals living in poverty has decreased and the share of children living in combined material deprivation increased slightly over the year to 2013-14.

Delivering Inclusive Growth

The Europe 2020 vision of inclusive growth is for a high-employment economy delivering economic, social and territorial cohesion. The 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.

Promoting the Living Wage

The Scottish Government is committed to creating a fair and inclusive jobs market. We fully support the campaign for a true Living Wage ^[71] and recognise the real difference that fair pay makes in both reducing inequalities and improving productivity. To this end the Scottish Government is protecting the pay of the lowest earners which it has direct responsibility for by committing to support the Living Wage in our public sector pay policy.

As well as supporting public sector pay, the Scottish Government is committed to increasing the number of Living Wage Accredited employers in Scotland's private sector. ^[72] After meeting our target of 150 accredited employers 8 months ahead of schedule, a new target of 500 Scots-based Living Wage Accredited Employers by the end of March 2016 has now been set and we are working with the Poverty Alliance to achieve this.

In addition to our work with the Poverty Alliance, the Scottish Government has prioritised payment of the Living Wage in other ways. This includes a Living Wage Summit hosted by the First Minister in June 2015 with key business leaders and representatives from the retail, hospitality and tourism sectors, and a Living Wage Expo held in October 2015 for accredited employers to share their experiences of the Living Wage with other accredited employers and those with an interest in paying the Living Wage.

Scotland's Programme for Government 2015-16 set out a commitment to continue to promote Fair Work practices through procurement activity. On 6 October 2015, the Scottish Government announced new statutory guidance on Addressing Fair Work Practices, including Living Wage, in Procurement. This statutory guidance, published under section 29 of the Procurement Reform (Scotland) Act 2014, requires public bodies to consider, before undertaking a procurement exercise, whether it is relevant and proportionate to include a question on fair work practices, which should be evaluated along with other relevant criteria, while ensuring the appropriate balance between quality and cost of the contract.

Supporting Gender Diversity

The Scottish Government is committed to making boards representative of the communities and customers they serve, have better access to talent and have improved board governance, decision making and performance. Scotland's Programme for Government encourages the public, private and third sector to set a voluntary target for gender balance on their boards of 50:50 by 2020, by signing up to the Partnership for Change - a network of organisations and individuals who share a common ambition to improve gender balance on boards. The Scottish Cabinet sets an example by having 50:50 gender balance, and figures published in March 2016 showed that in 2015, more women than men were appointed to the boards of regulated public bodies in Scotland for the first time.

Social Justice

The Scottish Government has a vision for a Scotland where people are healthier, happier and treated with respect, and where opportunities, wealth and power are spread equally. To understand the key issues that stand in the way of achieving this vision, a national conversation on 'Creating a Fairer Scotland' was launched, as outlined in Box 8.

Box 8: Consultation on Creating a Fairer Scotland

The 'Creating a Fairer Scotland' discussion paper was launched in June 2015, with the outline vision that "By 2030 Scotland is a place where people are healthier, happier and treated with respect, and where opportunities and power are spread more equally."

The intention of the consultation was to speak to as many people as possible, through events, online and in person, to hear first-hand from those with lived experience of poverty and inequality the issues that matter to them and how Scotland can become Fairer by 2030.

Since then, over 7,000 people have taken part in Fairer Scotland public events and locally organised discussions covering many areas of the country from Stornoway to Dumfries and everywhere in between.

Even more have engaged with us online, with the number of visitors to our social media platforms edging towards 17,500. Almost 200 events were held as part of the Consultation, including a series of in-depth discussion groups run in eight locations across Scotland.

A summary of the Fairer Scotland discussion was published in March 2016, ^[73] which identified issues around five key themes: Work and living standards; Early years, education and health; Community participation and public health; and Respect and dignity.

A Social Justice Plan, which will take into account the responses to the Fairer Scotland Consultation, will be published later in 2016, with Fairer Scotland Phase 2 (focused on delivery) expected to begin thereafter.

In addition, in June 2015 the First Minister appointed Naomi Eisenstadt as Independent Advisor on Poverty and Inequality, to make recommendations to the Scottish Government on its approach to reducing poverty, and holding the Scottish Government to account for actions that act to affect poverty and inequality in Scotland. Ms Eisenstadt published her report to the Scottish Government, Shifting the Curve ^[74] on 20 January 2016. The report identifies 15 recommendations, focused on helping those who are in in-work poverty, affordability of housing, and improving the life chances of young people. The Scottish Government welcomed this report and is considering its response to the recommendations.

Expanding Early Learning and Childcare

As part of its CSRs to the UK, the Scottish Government has noted that the Commission recommends action is taken to improve the availability of affordable, high-quality, full-time childcare. This is an area where the Scottish Government is already taking strong action.

The Scottish Government's ambition is to transform childcare in Scotland to help make Scotland the best place in the world to grow up. The beneficial effects to children of high quality early learning and childcare is evident throughout primary school, and international evidence suggests that the benefits can persist into secondary school. As well as being of direct benefit to children, improving access to high quality childcare reduces a significant barrier to participation in the labour market faced by parents, particularly women.

Through the Children and Young People (Scotland) Act 2014, ^[75] the Scottish Government is investing £329 million over two years to expand early learning and childcare to 600 hours per year for 3 and 4 year olds. In August 2014, we expanded this to the most vulnerable 15 per cent of 2 year olds. ^[76] These measures were expanded to 27 per cent of 2 year olds based on free school meal eligibility from August 2015.

As well as increasing the number of funded hours, the Act will also increase the level of flexibility of the entitlement, to better meet the needs of young children and parents seeking to balance their childcare responsibilities with work, study or training commitments.

As part of the Programme for Government, the Scottish Government is committed to expanding the level of funded early learning and childcare from 600 hours per year to 1140 hours per year by the end of the next Parliament.

To further support families with young children, the Children and Young People (Scotland) Act 2014 contained provisions that will expand the provision of free school meals for the youngest school children in Scotland. £70.5 million revenue funding has been committed over 2015-17 to provide all Primary 1 to Primary 3 children in Scotland with free school meals. The measure was implemented in January 2015, and is expected to benefit around 135,000 children.

Tackling Child Poverty and Supporting Vulnerable People

The Scottish Government's approach to tackling poverty is underpinned by our Solidarity Target to increase overall income and the proportion going to the poorest, by National Outcomes on tackling inequalities and improving children's life chances and by National Indicators to reduce both numbers in poverty and children's deprivation.

Child Poverty Strategy

The national approach to tackling child poverty through early intervention and prevention is articulated in the Child Poverty Strategy for Scotland 2014-17. The Strategy put in place an innovative measurement framework which addresses both the wide range of drivers of poverty and the impacts poverty has on the lives of children and their families. The measurement framework is based around the 3 Ps - Pockets, Prospects and Places. This means that we focus on maximising household resources, improving children's wellbeing and life chances and provision of well designed, sustainable places. Progress on key outcomes in each of these areas is measured and reported on annually.

The latest Annual Report on the Child Poverty Strategy for Scotland was published on 9 October 2015. The vast majority of the indicators in the report are stable and in a few areas performance has improved. However, we recognise that there are also areas for improvement, and we will use this report to inform our approach and actions going forward.

The Scottish Government will continue to refine and develop a Scottish approach to tackling poverty, in collaboration with our Ministerial Advisory Group on Child Poverty, our Independent Poverty Advisor and others - reflecting the importance we continue to place on this challenge.

Scottish Welfare Fund

The Scottish Welfare Fund is providing crisis grants and community care grants which can act as a safety net in an emergency when there is a threat to health and safety, or enable independent living, preventing the need for institutional care. The Fund is delivered by Local Authorities, meaning the scheme is tailored to meet local needs. From April 2013 to September 2015, £81 million has been spent, supporting around 178,000 vulnerable households on low incomes, including around 59,000 families with children. Around half of all funding has gone to communities in the 20 per cent most deprived areas of Scotland. Initially established on an interim basis, the Welfare Fund will be set in a permanent, statutory footing from 1 April 2016 through the Welfare Funds (Scotland) Act 2015.

Communities and Regeneration

As set out in the SES, the Scottish Government is focused on ensuring that all of Scotland can maximise its potential and that the disparities in economic performance across Scotland are reduced.

Regeneration

The Scottish Government's Regeneration Strategy, ^[77] responds to the challenges faced by our most disadvantaged communities to help create a Scotland where all places are sustainable and where people want to live, work and invest. To help meet these aims, the Scottish Government is supporting regeneration in a number of ways:

• To support regeneration in disadvantaged areas, the Scottish Government provided £12.6 million in 2015-16 through the People and Communities Fund to support 197 community-led projects in disadvantaged communities across Scotland. The fund supports projects that can demonstrate that they will tackle poverty and help achieve social inclusion. Projects approved for 2015-16 include volunteer support and development services, workshops to build peoples' confidence and skills, and advice services for financial capability.
• The £25 million per annum Regeneration Capital Grant Fund, developed in partnership with the Convention of Scottish Local Authorities ( COSLA). This fund focuses on projects that engage and involve local communities and those that can demonstrate the ability to deliver sustainable regeneration outcomes. Over the two funding rounds that have taken place in 2014-15 and 2015-16, 40 projects have been supported that will deliver large-scale improvements to deprived areas. Over £21 million of grant funding was provided for projects in 2014-15, which included town hall restoration and town centre regeneration. Twenty-six projects have been recommended for funding in 2016-17, including community and leisure centres and creative industries hubs.

Community Empowerment (Scotland) Act 2015

The Community Empowerment (Scotland) Act 2015 ^[78] strengthens opportunities for communities to take action to achieve their own goals and aspirations, including through the ownership of land and buildings, and to have their voices heard in the decisions that affect them. This includes provisions which: extend the community right to buy, making it simpler for communities to take over public sector land and buildings, and strengthening the statutory base for community planning, for example.

Scottish Ministers are now developing secondary legislation (orders and relations) and guidance before the legislation can come into effect. This will be done through a process of engagement and co-production with people affected by the legislation.