Hansard

I start by thanking the Social Security Committee for bringing this important matter to debate today and for its hard work during the inquiry. I welcomed the opportunity to give evidence to the committee last year and I am grateful to be able to contribute to the debate.

The committee’s report on in-work poverty makes for stark reading and shines a light on the urgency of the issue. The support provided by the UK Government to those in low-paying work is simply not enough for them to make ends meet.

Just last month, our poverty and income inequality statistics showed that, after housing costs are taken into account, 60 per cent of working-age adults and two thirds of children who are living in relative poverty in Scotland are in working households. Alongside record levels of employment in the UK, there are record levels of households entering in-work poverty. In its briefing, “Budget 2018: tackling the rising tide of in-work poverty”, the Joseph Rowntree Foundation rightly highlighted that

“Jobs that are low paid and insecure, offering only a dead-end and not a stepping stone to a better job, trap people in poverty.”

That is why the Government has committed to a fair work future by supporting the real living wage, opposing exploitative zero-hours contracts and helping families to work and earn more.

As the convener highlighted, the Scottish Government has estimated that the UK Government’s cuts will have reduced spending on welfare in Scotland by approximately £3.7 billion by 2020-21. The benefit freeze accounts for the biggest single reduction in social security spending—a reduction of about £370 million by 2021. The level of benefits has been frozen since 2016, which has led to the support that people desperately rely on falling further behind the cost of living. We have repeatedly pressed the UK Government to lift the benefit freeze and have called for benefits to be uprated in line with inflation, but our call has, to date, been refused.

It is impossible to speak about in-work poverty without discussing the impact of universal credit. Previously, people in low-paying work relied on working tax credits to help them manage, but the option of making a new claim for tax credits is now gone and people are forced to turn to universal credit. As many of us will have seen from our constituency mailbags, there is a growing mountain of evidence that universal credit pushes people further into poverty, rather than helping them out of it. The Social Security Committee’s report adds to that evidence.

The committee quite rightly highlights the five-week wait for the first UC payment as being “unacceptable”. The Scottish Government has made that point several times to the UK Government, as have many organisations. It is worth pointing out that the five-week wait is the minimum waiting time, with many people waiting much longer for payments. Unbelievably, the DWP told the National Audit Office that it is unreasonable to expect all UC claims to be paid on time. However, when someone is forced to rely on the DWP for financial support, I fail to see how the DWP can possibly justify that position.

The committee noted that there is a lack of information available on the DWP’s plans for managed migration—that is hardly surprising given that the DWP keeps delaying it. In the meantime, people who naturally migrate to universal credit through a change in their circumstances will do so without transitional protection, which means that their entitlements will be significantly reduced. I am deeply concerned that natural migration will hit households even harder than managed migration, and those households are already struggling to make ends meet. The longer the DWP takes to begin managed migration, the more people will find themselves moving to UC without protection. We have urged the UK Government on numerous occasions to halt managed migration until the universal credit system is made fit for purpose.

Universal credit was supposed to make work pay, and a key part of achieving that aim was the work allowance, which lets people keep more of their earnings before their benefit is reduced. However, the UK Government reduced the availability of work allowances so that they are now available only to people with responsibility for a child or to those with limited capability for work. For everyone else, as soon as they begin earning, their benefit is reduced. That means that more and more working people in Scotland are losing out as they move to universal credit. In its report, the committee recommended the complete reversal of the cuts to work allowances, and I fully agree with that recommendation.

I turn to what the Scottish Government is doing on those issues. Unfortunately, we are limited in what we can do in relation to universal credit, but we are using our limited powers to make the delivery of universal credit more flexible and better suited to the needs of those who claim it in Scotland.

Since October 2017, the Scottish Government’s universal credit Scottish choices programme has given people the choice of receiving their award twice monthly, and of having the housing costs element of their award paid directly to their landlord if they wish that to happen. The take-up rate of the choices has been high. From November 2017 to August 2018, more than 66,000 people were offered Scottish choices, with 32,000 people—almost half—taking up one or both of the choices. That tells us that people want more flexibility and adaptability in how they receive the support to which they are entitled, and it provides further evidence that changes to the DWP’s benefits system are needed.

We are also committed to introducing split payments of universal credit awards for couples. That will provide everyone claiming universal credit in Scotland with access to an independent income, and will promote our values of equality, dignity and respect in the social security system. We are currently working with the DWP to carry out an impact assessment of two policy options, allowing us to refine our policy proposals further.

Despite that work, there is no doubt that the impact of the UK Government’s cuts is staggering. As I have said, they amount to a lowering of social security spending in Scotland of £3.7 billion by 2020-21. We are already spending more than £125 million this year to mitigate some of the worst impacts of the UK Government’s cuts and to support those on low incomes. That includes more than £60 million to cover the cost of discretionary housing payments and to continue to mitigate the UK Government’s bedroom tax. Discretionary housing payments of £10.9 million have been distributed to local authorities to help address the impact of other cuts, including £8.1 million in recognition of the impact of the benefit cap.

Our spending also includes £38 million on the Scottish welfare fund, which provides a vital lifeline for people in need, providing support through crisis and community care grants. As of September last year, more than 316,000 households in Scotland have been helped with awards totalling £181.6 million. By the end of this financial year, the Scottish Government will also have provided more than £1.7 billion in funding for the council tax reduction scheme.

However, the Scottish Government is not here simply to paper over the cracks in the UK Government’s welfare cuts. We simply cannot afford to cover the billions of pounds that those cuts cost each year. I hear regular calls for us to cover the cost of further cuts, but no suggestions as to what we should scrap if we were to do so. To be clear, every pound that we spend in offsetting a UK Government cut means that we cannot spent that funding on other public services and priorities.

I want this Government to be able to invest funds in pulling people out of poverty. That is why we are working hard to develop our new income supplement, which will provide additional financial support for low-income families, who are the most at risk from the impact of UK Government cuts. However, we risk all of that if the extent of our ambitions is to mitigate the decisions of another Government—something that the UN special rapporteur on extreme poverty and human rights, Professor Philip Alston, last year described as “outrageous”.

I finish with some more words from Professor Alston, who said of the UK Government’s approach to welfare that

“compassion for those who are suffering has been replaced by a punitive, mean-spirited, and often callous approach”.

He continued:

“Successive governments”—

UK Governments—

“have presided over the systematic dismantling of the social safety net in the United Kingdom. The introduction of Universal Credit and significant reductions in the amount of and eligibility for important forms of support have undermined the capacity of benefits to loosen the grip of poverty.”

I welcome the Social Security Committee’s report. It is yet more damning evidence that the UK Government’s welfare system is simply no longer fit for purpose. I assure the Parliament that we in the Scottish Government will continue to press for the urgent changes that universal credit requires, and that we are committed to using the powers we have over welfare to build a system that is based on dignity, fairness and respect.