Meeting of the Parliament 23 April 2019
I thank everyone for their work on this important report. We are debating the issue of in-work poverty at the same time as we are seeing record-breaking employment levels in Scotland and, indeed, across the UK. In January, we learned that the UK employment rate has risen to more than 75 per cent—the highest rate since comparable estimates began—while, for the first time in decades, we have a record low unemployment rate in Scotland. It has been referred to as the jobs miracle, and it is evidence of the attractiveness that the UK market continues to hold for business.
Creating jobs and ensuring that people are in employment are the basis of making work pay. Other policies and principles that have been adopted by the UK Conservative Government are equally important. The commitment to increase the personal allowance to £12,500 a year earlier than expected builds on the progress that has already been made, whereby 1.74 million of the lowest-paid workers have been taken out of paying income tax altogether. The national living wage, which has continually increased over the years, had helped some 300,000 workers out of low pay by 2017. Those policies should be welcomed across the chamber, as they provide longer-term solutions that allow people to keep more of their hard-earned money while developing skills and experience that can lead to happier and more fulfilled lives.
However, when people who are in work are still experiencing poverty, we must recognise that as a problem that needs to be tackled. Human lives, in which money can play an important part, are naturally complicated, so we should be careful about blaming any single set of circumstances or Government policy for in-work poverty. Relative income depends greatly on a list of factors including education, the performance of the economy and high living costs such as for housing and utilities. The powers to tackle those issues fall within both reserved and devolved responsibilities and require action from both the UK and Scottish Governments.
Universal credit is, of course, one policy that is scrutinised in detail throughout the report. Its intention, which is to simplify the welfare system and to design it around trying to help recipients to budget in the same way as they would with a monthly salary, should be welcomed. The UK Government is taking the time to correct things and has made a number of improvements, including raising work allowances by £1,000 a year and offering a more generous taper rate. Improving the welfare system in those ways will ensure that it fulfils the role that it was designed for, which is to support progression into work.
The sort of scrutiny that the committee carries out into social security, including its report on in-work poverty, is needed at this critical time for welfare reform to ensure that we get it right at Westminster and in Scotland as we take on greater powers. However, in understanding in-work poverty, we cannot simply pay lip service to certain factors. In tackling the problems, we need to adopt a holistic approach. Responding to in-work poverty requires us to think about why less money is coming into households and more is going out and about how that situation can change.
In this session of Parliament, the Economy, Energy and Fair Work Committee has looked at the performance of the Scottish economy—in which levels of gross domestic product growth are marginal, productivity is low and wages are stagnant. Our productivity performance has been stagnating for a number of years, and we are 20 per cent below our target levels of productivity. In a report into in-work poverty, the Institute for Fiscal Studies has said that the key to sustaining higher hourly wages is higher productivity, which could address the problem of in-work poverty. However, there is much work to do if we are to reach the levels of productivity that are achieved by other OECD countries, which bring higher wages.