Cost of Living (Tenant Protection) (Scotland) Act 2022 - proposed extension of section 10: statement of reasons

Annex B: Further Economic Context

As set out in the latest report to Parliament on the operation and necessity of the Cost of Living (Tenant Protection) (Scotland) Act 2022, the key updated economic data is as follows:

• Households in the rented sector entered the cost of living crisis in a more vulnerable position than owner occupiers, and the most recent (November 2023) YouGov polling for the Scottish Government shows that private renters continue to be more likely to report concern about paying mortgage/rent than households generally (15% vs. 9%) as well as more likely to say that they were struggling at least a little to pay for household bills (65% vs. 47%).
• While consumer price index (CPI) inflation has fallen from 11.1% in October 2022 to 3.9% in November 2023, it remains above the Bank of England's 2% inflation target, and the level of prices remains much higher than it was prior to the cost of living crisis: over the two years from November 2021 to November 2023, the overall CPI is 15% higher, and the CPI subindex for the category "electricity, gas and other fuels" is 48% higher.
• As a result of the continuing high level of energy prices, it is estimated that the fuel poverty rate in the private rented sector will stand at 47% during the January-March 2024 Ofgem price cap period, as compared to the 36% in 2019 prior to the cost of living crisis.
• While there have been increases in real pay in recent months, this follows a period of sustained falls; for example, median real pay in Scotland based on HMRC PAYE records was 2.6% lower in the period September-November 2023 than at its peak in March-May 2021.
• The Scottish Fiscal Commission (SFC) expects that overall living standards in Scotland will fall slightly in 2023-24, which after the large fall in 2022-23, will result in a cumulative fall of 2.7% from 2021-22 to 2022-23, the largest since records for Scotland began in 1998. The SFC expects that it will take until 2026-27 for living standards to return to their 2021-22 levels.
• The decline in inflation in recent months has led to a fall in interest rates, including on buy-to-let mortgages, although rates remain significantly above pre-crisis levels.