Chamber and committees

New analysis by the International Monetary Fund has found that the United Kingdom is set to be the only major economy to shrink in 2023, with all other developed nations experiencing growth, even sanctions-hit Russia. That, on top of everything else, will severely impact on devolved nations and our responsibilities.

Why does the First Minister think that the UK is performing so poorly compared with other economies? Could it be because of the perfect storm of Westminster’s economic incompetence and a disastrous Brexit that Scotland did not vote for?

I welcome the opportunity to speak on behalf of the Social Justice and Social Security Committee in the Finance and Public Administration Committee debate on the Scottish budget.

During this budget cycle, we have been acutely aware of the challenging economic circumstances in which the Scottish Government has prepared its budget. Notwithstanding that, the committee has been keen to ensure that budgetary decisions within its remit focus on protecting people on low incomes, as they are most affected by the cost of living crisis. Crucially, that includes the third sector, which provides vital support to some of the most marginalised groups.

To support that work, the committee has also examined how the Scottish Government is taking a human rights approach to its budget decisions and what that means for achieving social justice and addressing inequality. The cost of living crisis has brought poverty and the right to an adequate standard of living into sharp focus. The Scottish Human Rights Commission drew our attention to the need for poverty to be viewed in human rights terms and emphasised that

“Poverty represents a failure (a violation) to fulfil the right to an adequate standard of living that is established in international human rights law. Other rights, like the right to education, to work and decent working standards, to health and adequate food and adequate housing, are also affected by poverty ... Poverty, viewed through this lens, is thus best viewed as a cluster of human rights violations in Scotland.”

The Scottish Government has prioritised tackling child poverty—it is one of the four key priorities that it set out in the resource spending review. We welcome the increase in the Scottish child payment to £25 per eligible child per week, which the cabinet secretary has indicated should reduce relative poverty to 1 per cent below the interim target of 18 per cent. Of course, we will not know whether that is the case until statistics are available in 2025. The committee will therefore keep a watchful eye on progress throughout this parliamentary session.

With inflationary increases eroding the value of financial interventions, we actively encourage other committees to keep challenging the Scottish Government to tackle child poverty through policies that lie within their remit. Social security is just one way to invest in people.

The committee notes that, in 2023-24, the Scottish Government needs to find £776 million above what it receives in social security block grant adjustments, which is more than double what is needed this financial year. According to the Scottish Fiscal Commission’s recent forecast, that funding requirement is expected to continue to grow, reaching £1.4 million by 2027-28. How to address that gap and the impact of the cost of living crisis proved to be a little more controversial for the committee. However, we wait to hear the outcome of the review of the fiscal framework and whether that will ease the pressure. Still, the fact remains that social security is, rightly, a demand-led budget and that, as such, funding will need to be made available.

It is therefore critical that we double down on preventative measures. We heard that for preventative policies to make a difference and to lead to sustainable and consistent improvements, such measures need to be funded over the longer term. We took evidence from the Deputy First Minister on the £53 million in-year cut to employability funding. The committee was concerned that that would slow down progress on parental employment, which is a preventative approach aimed at reducing child poverty. We recommended that the cut should be time limited and asked the Scottish Government to provide a timescale in which the funding will be reinstated to the level before the cut. In response, the Government has committed to reinstating funding for 2023-24.

As I set out at the beginning of my speech, we have maintained our focus on the funding issues that the third sector faces. The issues that the sector is experiencing are long running. However, the pandemic, which was swiftly followed by the cost of living crisis, has seen the situation worsen to levels that have not been encountered previously.

Voluntary organisations face increased costs, including transport, supplier and materials costs, and rent—the most significant costs are energy and staffing. The Scottish Council for Voluntary Organisations reminded us that the sector provides public services. It advised that

“voluntary organisations employ more than 135,000 people, which is 5 per cent of the Scottish workforce.”

The Poverty and Inequality Commission explained the impact on volunteers. It told us that

“volunteers who were offering to drive to deliver packages and care support to people can no longer afford the fuel”.

On the consequences of single-year funding on advice services, the Child Poverty Action Group said that

“short-term funding means that they cannot take someone on and train them up, because by the time they have done that, the funding will be over and the person will have had to leave.”—[Official Report, Social Justice and Social Security Committee, 22 September 2022; c 22, 25, 28.]

The Scottish Government has acknowledged that the sector needs stability of funding and the opportunity for longer-term planning and development. The Cabinet Secretary for Social Justice, Housing and Local Government advised us that the Government has adopted fairer funding practice, and that it is committed to increasing multiyear funding, with multiyear settlements as the default wherever possible, which is a welcome step forward. We will, of course, follow progress to see whether that approach is having the desired impact on the sector, as we are aware that other grant funders also need to deliver multiyear funding.

Before I come to the end of my speaking time, I would like to cover homelessness. Having a place to call home is an important aspect of an adequate standard of living. Following publication of the budget, Shelter Scotland raised concerns that funding for homelessness services had been frozen and that funding for the delivery of new social homes had been cut, impacting on the Scottish Government’s international obligations on the progressive realisation of rights.

We asked the cabinet secretary about that. She clarified that funding

“for the affordable housing programme remains at £3.5 billion.”

However, she recognised that that translates to a real-terms reduction from the previous budget, which, the cabinet secretary noted, is due to the

“impact of high inflation”

and

“a 3.4 per cent real-terms reduction in our UK Government capital allocation between 2022-23 and 2023-24.”—[Official Report, Social Justice and Social Security Committee, 19 January 2023; c 15.]

However, the cabinet secretary did highlight that the Scottish Government was taking “steps to mitigate” the impact. On funding to eradicate homelessness, the cabinet secretary hoped to have two clear purposes—a reduction in the use of temporary accommodation and the prevention of homelessness—which would bring about a “sharper focus”. Again, we will continue to scrutinise progress in that area.

In conclusion, we have used our scrutiny to ensure that the Scottish Government’s budget takes account of low-income households and the impact of poverty and related preventative actions.

We acknowledge that this coming year’s budget is set against a very challenging fiscal context, not least because of the current cost of living crisis. It is essential in times such as these that the budget works to maintain the right to an adequate standard of living for the people of Scotland.

We move back to Pam Duncan-Glancy, who joins us online.

Our next agenda item is an evidence session on the Scottish Government’s 2023-24 budget, which was published on 15 December. I welcome to the meeting the Cabinet Secretary for Social Justice, Housing and Local Government, Shona Robison. Joining her are Shirley Laing, director for tackling child poverty and social justice at the Scottish Government, and Kevin Stevens, head of strategic and programme finance at the Scottish Government. All the witnesses are joining us in person.

Before we move to questions, I invite the cabinet secretary to make an opening statement.

We move to questions from Jeremy Balfour.

Theme 3 is homelessness. We start off with questions from Miles Briggs.

Absolutely.

That would be very helpful, cabinet secretary.

Good morning, everyone, and welcome to the first meeting in 2023 of the Social Justice and Social Security Committee. As this is the first time that we have met in 2023, it seems only right to say happy new year to everyone, although the beginning of the year seems like a long time ago now.

Our first item of business is to decide whether to take agenda item 4 in private. Do members agree to do so?

Members indicated agreement.

Thank you very much, cabinet secretary.

You mentioned some of the difficulties that the budget is set against this year. Can you outline what impact the cost of living crisis and the inflationary pressures have had on the budget and explain how the budget is different from previous budgets?