Too many people in Scotland are being failed by the UK Government’s social security and employment support systems and we have seen rising poverty levels in recent years. Finding employment is sadly no longer the protection against poverty it once was, with in-work poverty now at an all-time high and the majority of adults and children in relative poverty living in households where someone is in paid work.

 

Likewise, income and wealth inequality in Scotland and the UK, although it has been relatively stable for the last 20 years, has shown no sign of reducing. While there is no quick fix for wealth inequality, there are steps that governments can and should take to close the gap between the richest and poorest in society.

 

We know sustainable and fair work is a long-term route out of poverty so we, and other administrations, must be committed to creating opportunities that support this.

 

In Scotland, we have stressed the importance of promoting inclusive growth – growth which everyone has a fair chance to contribute to, and from which everyone in society can benefit. There are moral, economic and political reasons to support this. Our Economic Strategy focuses on the two mutually supportive goals of increasing competitiveness and tackling inequality.

 

There are a wide range of factors that cause income inequality and these must all be addressed to effectively tackle the issue. In Scotland we have committed to reduce the gender pay gap and increase the labour market participation rates for disabled people and those from minority ethnic groups.

 

New UK legislation which requires large listed companies to publish the pay ratios between their chief executive and their average worker, as well as their gender pay gap, will help maintain focus on such inequalities. While this is a step in the right direction, we would like this legislation to go further and require companies to publish what actions they will take to address such pay gaps.

 

Both governments and businesses also need to address structures and cultures in workplaces that can perpetuate income inequality.

 

Changing the perception of ‘valued’ jobs is one step to reducing such inequalities. For example caring jobs such as social care and childcare tend to be lower paid and undertaken in the main by women. It is argued that that the undervaluing of skills required to undertake caring jobs contributes to the low pay which characterises these and other low paid sectors. We are using the Living Wage Scotland initiative to  highlight the value of workers in low paid sectors and encourage more employers to become Accredited Living Wage employers.

 

In addition to taking steps to reduce income inequality, we also want to deliver a new Scottish social security system with dignity, fairness and respect at its centre to better meet the needs of the people of Scotland.

 

We are already taking steps to improve the benefits being devolved to Scotland by increasing carer’s allowance, introducing the Best Start Grant for parents and carers on low incomes to help at key stages of children’s lives and transforming the disability assessment process.

 

As well as the existing historic factors that can lead to wealth inequality, advances in technology and increasing automation of services means the world of work is constantly changing. That is why innovative ideas to tackle these new challenges should be debated by both current and future leaders.

 

One such radical approach to social security which has gained attention recently is the idea of a universal basic income (UBI) – a universal, non-taxable, non-means tested payment made to all citizens from cradle to grave. It is paid regardless of past national insurance contributions, income, wealth or marital status. While a simple concept in principle, its implementation is highly complex.

 

One of the main complexities of UBI is determining the level at which it is set – ranging from a minimum payment to prevent destitution to a higher level which on its own gives individuals an adequate but basic standard of living.

 

It is usually assumed that UBI replaces all other social security payments

and this is reflected in one of the most profound concerns around UBI – the impact it could have on people in poverty and people facing additional costs in their day to day life.        

 

As a universal benefit, it removes the stigma of ‘being on benefits’. That can only be good for society but there are concerns about whether governments will be able to afford both UBI and a generous welfare state. In Scotland, we already provide many universal benefits such as free school meals, personal care, prescriptions, eye tests and university tuition and the respective role of UBI and these benefits would have to be considered. 

 

Supporters of UBI suggest it provides a greater incentive for those out of work to take up employment and can encourage people to be more entrepreneurial as they already have a basic income to support them.

 

Most models of UBI suggest that anything over the UBI value is taxed at a single rate. However, this does not align with our more progressive approach to income tax in Scotland where those who can afford to pay more will make a higher contribution through increasing tax rates to support better public services.

 

The Scottish Government is supporting four local areas to carry out further scoping of the idea in Scotland. These pilots will help inform our thinking around the future of UBI in Scotland and I look forward to seeing the results.

 

We want Scotland to be prosperous and reducing inequality is a key part of this. We believe we should tackle poverty and wealth disparities by sharing opportunities, wealth and power more equally.