Further social security measures needed as part of Scottish Government’s actions to repair household finances ahead of COVID winter

Institute for Public Policy Research recommendations include bringing forward start date for Scottish Child Payments and introducing automatic payment of local administered benefits in time for 2021/2022

Further social security measures are needed as part of the Scottish Government’s actions to repair household finances before a COVID-19 winter hits, the Institute for Public Policy Research (IPPR) Scotland has said.

In Weathering the winter storm: Strengthening financial security in Scotland through the ongoing Covid-19 crisis, IPPR Scotland highlights that, despite gradual improvements to levels of financial security in Scotland over the last decade, 220,000 households (one in ten) were struggling to get by at the point the coronavirus pandemic struck (rising to one in four among the poorest households). In addition, it finds that 1.1 million people in Scotland (one in four) could cope for only one month or less if they lost their main source of income.

NB - the IPPR defines financial security as having an income that is adequate to manage living costs and that can be relied on; having a degree of control of finances and having a reasonable expectation that you will be able to make ends meet both now and in the future; and having access to ‘shock absorbers’ and safety nets that offer resilience in the face of unforeseen circumstances.

From this starting point, the IPPR finds that, despite the Scottish Government’s £350 million package of spending on welfare and wellbeing, some groups have been hit particularly hard by the economic impacts of the coronavirus pandemic, for example -

• people who were ‘struggling to get by’ pre-crisis were more than twice as likely to face an income hit throughout the crisis compared to those who were ‘living comfortably’.
• almost one in four of those ‘struggling to get by’ before the crisis experienced a pay drop of 20 per cent or more during the first lockdown;
• in May 2020, almost half (49 per cent) of families with children were struggling to make ends meet - working parents were also more likely to have experienced a significant and sustained fall in pay than workers without children; and
• renters, disabled people and black Asian and minority ethnic workers were all more likely to report ‘struggling’ financially coming into the crisis, risking greater exposure to the economic impacts of the virus.

Warning that families’ finances ‘have been tested to and beyond breaking point’, and that the new five-tier coronavirus system will lead to families being placed under even greater strain in parts of the country that fall under severe restrictions, the IPPR calls for the UK and Scottish Governments to take urgent action, including in relation to social security -

• the UK government should take steps to make its temporary uplift of universal credit and tax credits permanent, uplift legacy benefits by the same amount, consider additional support for families with children, remove the benefit cap and two-child limit within the benefit system, and reform its sanctions and assessment regimes;
• the Scottish Government should consider investing a further £40 million to help low-income families with children this winter - to be used to provide a new Winter School Clothing grant and backdating the first payment of the Scottish Child Payment due in March 2021 to December 2020;
• the Convention of Scottish Local Authorities and the Scottish Government should introduce automatic payment of local level benefits and entitlements - proactively identifying claimants and arranging payments automatically and, where families are identified as eligible for, or in receipt of, one payment, supporting automatic enrolment for other payments that are assessed by the same eligibility criteria.

As regards other policy areas, the IPPR's recommendations include the development of a financial hardship strategy for monitoring early warnings of financial difficulties facing people in Scotland; promoting ‘fair work principles’ within further COVID-19 crisis business support; and working with lenders, energy providers, housing associations and councils to deliver an arrears package - combining debt write-offs and interest-free loans to help people and families who have built-up COVID-19-related arrears and debt for household bills.

Commenting on the report, IPPR Scotland Senior Research Fellow Rachel Statham said -

‘Now that we can see the ongoing five tier restrictions many will face through a COVID-19 winter in Scotland, further support is required to keep families afloat. Over a million people in Scotland went into this pandemic with only very limited financial reserves, and this crisis has already tested families’ finances to - and beyond - breaking point. With likely further peaks of the virus and significant jobs losses across Scotland and the rest of the UK, there is now an urgent need to repair household finances across the country before winter hits.

Without urgent action we could see families’ finances tip over, damaging the health and wellbeing of hundreds of thousands of people now, and damaging Scotland’s economic recovery over the long-term.

We need to see urgent action from the UK and Scottish governments to go beyond the support already offered through the first phase of the crisis. This will require greater spending from the UK government to support jobs and businesses through the winter, as well as increasing UK-wide social security provision. While new funds announced by the Scottish Government to support families in crisis are welcome, we must now go further to strengthen our social safety net and prevent a winter crisis for families across Scotland.’

For more information, see Repair families’ financial reserves ahead of tough Covid-19 winter, urges IPPR Scotland.