Tag: analysis

Pathways to Work? Health and disability Green Paper analysis

Welfare Green Paper: what we know and what we don’t know

Work and Pension Secretary Liz Kendall made a statement to the House of Commons yesterday outlining the main areas of ‘Pathways to Work”, the UK Government’s Green Paper that has been in the rumour mill for weeks. The statement contained some well trailed announcements and some new details, although there are also still some significant gaps in our understanding (writes FRASER of ALLANDER INSTITUTE team).

PIP will not be frozen, but eligibility will be restricted

The Secretary of State’s headline announcement was in line with news over the weekend, which suggested that rates will not be frozen. Instead, the criteria for getting the daily living element of the Personal Independence Payment (PIP) will be raised, with a minimum of four points on one daily living activity.

The Green Paper in this section is heavily focussed on the ‘sustainability’ of the disability benefits system, and on needing to make the system more ‘pro-work.’ It’s worth noting, however, that work status is unrelated to being in receipt of disability benefits, which are designed to address the additional costs of living with a disability, whether or not someone is in work.

Sustainability too is a nebulous concept in this space. But while it makes sense to talk about sustainability of the public finances as a whole, it is not immediately clear that a growing area of spending is necessarily unsustainable, especially when responding to a clear need in society. The Government has choices – for example, to raise taxes or to cut other areas of spending. So far from being a macroeconomic imperative, to focus on disability benefits seems clearly a political choice.

There is little in the way of details of how much the UK Government intends to save in the Green Paper, but the Secretary of State mentioned the much bandied about £5bn by 2029-30 that it intends to include in the OBR forecast. We do not know how much of this figure will be generated from PIP rather than other changes.

What we now know is that the whole of the spending reductions on PIP will come from the lower end of the average award, as it is being driven through the raising the bar for claiming. But that also means that all else equal, even more people will lose access to the benefit. A quick calculation suggests that for every £1bn a year saved, it could mean around a quarter of a million fewer people receiving PIP, which would be a huge change.

Work capability assessment scrapped from 2028

This is a significant change, and one for which consequences in Scotland are still unknown. At the moment, the work capability assessment (WCA) is used to assess fitness for work. From 2028, the assessment for PIP will instead be used as the basis for universal credit (UC) elements related to health conditions.

This creates an issue in Scotland, because Social Security Scotland runs its own (different) assessment for Adult Disability Payment (ADP), which is the devolved equivalent of PIP. But UC is a reserved benefit administered by DWP, and that means that potential claimants in Scotland would not have access to the PIP assessment that would be used for determining eligibility for health-related UC elements. And with the PIP assessment being tightened, it will be likely further out of step with ADP.

We’ll have to wait and see what solution there will be to this – the Green Paper merely states that “consideration will be needed.” But this is an important issue that requires action on the part of both UK and Scottish departments to ensure access by claimants to this is maintained. It highlights a broader issue of the interaction between the benefits systems which is likely to be put under further strain as systems evolve separately in Scotland.

On a broader point, these proposed changes come at a time when people in receipt of Employment and Support Allowance are due to be migrated to UC by the end of 2026. Our research with people with learning disabilities showed that many are already really concerned about the upcoming changes, and these will be further changes to an already complex system. It will be crucial to clearly communicate all the changes, particularly in accessible formats.

UC rates to be rebalanced, and access to health elements restricted for those under 22

The Secretary of State also announced a big change in the relative levels of the standard and health elements of UC. The health element of UC – which is paid on top of the standard allowance – will be frozen in cash terms for the rest of the decade for those already in receipt of it, and new claims will be paid at around half the current rate (£50/week compared with the current £97/week). Alongside this, the UK Government says it will uprate the UC standard allowance by more than inflation (6% in 2026-27).

The health element of UC will also be tightened in several ways. One is that claimants will be expected to have “much more active engagement and support” in relation to work. The other large change proposed is the consultation on delaying access to the health element of UC until potential claimants are 22, with the justification being the lower likelihood of those in receipt of that element being in employment as well as the fact that those under 22 will be covered by the Youth Guarantee of employment support, training or an apprenticeship.

We note, however, that employability is an area of devolved competence, and indeed a similar scheme already exists in Scotland.

A consultation on a new ‘unemployment insurance’

The UK Government is consulting on an interesting proposal for a unified ‘unemployment insurance’ benefit, which would replace both contribution-based Jobseeker’s Allowance and Employment and Support Allowance with a single, time-limited entitlement. This is a step more in the direction of most European systems, in which contributory systems provide a much higher level of income replacement than UC, although for a limited period of time. The proposed rate is much higher than contributory JSA, which has never been a big part of the welfare system in the UK.

Higher income replacement systems are the basis of highly successful active labour market policy systems such as the Danish ‘flexicurity’ approach, and which could help smooth out cliff-edges in the labour market and incentivise retraining, but this proposal – while probably a good idea – falls well short of that kind of system. In any case, it’s also purely consultative – and as it might well cost money on net (at least in the short run), we wait to see if anything will come of this.

‘Right to try’ – a welcome development

One of the measures mentioned in the Green Paper that could have a big positive impact is the announcement of legislation to guarantee that simply starting work will not lead to a reassessment or award review. The fact that this can happen at the moment is acts as a barrier to entering employment, especially if people want to work but are unsure if it will be a good fit for their situation as they might have to reapply for benefits subsequently.

Our research with people with learning disabilities indicates that this ‘right to try’ approach might work well, as the binary ‘can work/can’t work’ doesn’t fit well for them. Many people want to work and just need the right support – so we are hopeful that some of these changes will provide just that.

We know very little about how most of the announcements will affect Scotland

PIP is being replaced in Scotland with ADP, and migration is expected to be concluded this year. None of the announcements therefore affect Scottish claimants of ADP, but they do affect the finances of the Scottish Government. As we discussed last week, the Scottish Government’s block grant adjustment is based on the projected expenditure in England and Wales, and therefore a tightening of access to PIP will (all else equal) make the Scottish Budget worse off. It is then the Scottish Government’s decision to move in lockstep or to find the additional funds from other sources.

Because the Green Paper has no costings for how much of the £5bn a year in savings comes from PIP, it’s impossible for us to say how much this will mean for the Scottish Government’s Budget. But the ready-reckoner we provided last time out – showing an effect of £90-115m for every £1bn reduction in PIP spending by the UK Government – still applies.

As we discussed before, the use of the PIP assessment for health-related UC claims is problematic in the absence of any further action, as this is not available in Scotland and the systems are diverging. The UK Government’s Green Paper says this will require “consideration”, but this is a pretty substantial change that we hope will be solved in good time. Given the proposal is for this to be done from April 2026, it is fairly urgent to get this resolved.

Employability support is a devolved area, but the UK Government says it will include an additional £1 billion to create a guarantee of personalised employment, health and skills support. Given that, we’d expect Barnett consequentials to flow from this, but the Green Paper does not explicitly state that – we’ll wait to see if there are news on this.

The restrictions on health-related UC claims for under 22s will apply in Scotland, as it’s a reserved benefit. Notwithstanding the issues with the PIP/ADP assessment compatibility, this is an area where there has certainly been growth in the past few years: in December 2024, 11,300 people aged 16-21 were in receipt of the health element of UC, compared with 4,600 in December 2019.

This gives us a first glimpse of the amount of people that might be affected by this change if it were to be introduced.

Green Paper delivers tiny income gains for up to four million households, at cost of major income losses for those who are too ill to work or no longer qualify for disability benefit support, says RESOLUTION FOUNDATION

The Health and Disability Green Paper will boost Universal Credit (UC) support for up to four million families without any health conditions or disability by around £3 a week. But these tiny gains are overshadowed by reforms that risk causing major income losses for those who are too ill to work, or those who no longer qualify for disability benefits, the Resolution Foundation said yesterday (Tuesday).

The Green Paper today sets out major reforms on entrances into the benefits system, entitlements within the system, and exits into work that aim to cut spending by £5 billion a year by the end of the decade, and change how people interact with the system.

The main savings are to be achieved through restricting entitlement to PIP – a benefit that is paid regardless of whether someone is in work, to compensate for the additional costs of being disabled.

The Foundation says that if the Government plans to save £5 billion from restricting PIP by making it harder to qualify for the ‘daily living’ component, this would mean between 800,000 and 1.2 million people losing support of between £4,200 and £6,300 per year by 2029-30.

With seven-in-ten PIP claimants living in families in the poorest half of the income distribution, these losses will be heavily concentrated among lower-income households. This looks like a short-term ‘scored’ savings exercise, rather than a long-term reform, says the Foundation, given that Ministers have also said they will look again at how PIP is assessed in the future.

Further savings are to be achieved by cutting the level of the health-related LWCRA element within UC, which is currently claimed by 1.6 million people. The proposed cuts are focused on young people (aged 16-21), who may no longer be eligible for any extra support, and those who fall ill in the future, as their additional support will be halved, from £97 per week in 2024-25 to £50 per week in 2026-27.

Reinvesting some of the cuts to health-related UC into boosting the basic award for UC (which, at around £3 more per week, is roughly a sixth of the temporary £20 a week uplift to UC during the pandemic), and greater support for the newly unemployed should benefit up to four million families who don’t receive health-related UC.

Reducing the financial gap between health-related and basic UC should reduce the incentive for people to claim incapacity benefits (which, for a single adult, is over twice as much as basic UC at present). Along with the additional employment support provided to people on UC, the Government hopes this will boost employment, although figures will not be available until the Office for Budget Responsibility publishes its spring forecast next week.

Louise Murphy, Senior Economist at the Resolution Foundation, said: “The package of measures announced in today’s Green Paper should encourage more people into work. But any living standards gains risk being completely over-shadowed by the scale of income losses faced by those who will receive reduced or no support at all – irrespective of whether they’re able to work.

“Around one million people are potentially at risk of losing support from tighter restrictions on PIP, while young people and those who fall ill in the future will lose support from a huge scaling back of incapacity benefits.

“The irony of this Health and Disability Green Paper is that the main beneficiaries are those without health problems or a disability. And while it includes some sensible reforms, too many of the proposals have been driven by the need for short-term savings to meet fiscal rules, rather than long-term reform.The result risks being a major income shock for millions of low-income households.”

Money and Mental Health Policy Institute: Response to government welfare green paper

The government has published its welfare green paper, which outlines its proposals to reform the welfare system.

In particular, the green paper sets out plans to make it harder for people to qualify for Personal Independence Payments (PIP) — a benefit which people with disabilities and long-term ill-health can claim to help cover the extra costs associated with their disability, and which is not connected to work. In addition, people aged under 22 will not be able to qualify for the health top-up element of Universal Credit.

The government has also announced £1bn additional funding for personalised employment support to help people with disabilities move into work, and that people receiving benefits will be given a “right to try” work without losing their benefits entitlement.

Commenting on the proposals, Helen Undy, Chief Executive of the Money and Mental Health Policy Institute, said: “PIP is an absolute lifeline for thousands of people with mental health problems. It can be the difference between being able to afford basic things like a phone to call your crisis team or help to clean your home, or living in disarray and increasing isolation.

“Making it harder to access will jeopardise people’s financial security and cause serious distress, which won’t set up people to go back into work and to thrive. 

“These changes will mean that needing help to wash or get dressed because of your mental health wouldn’t be enough to qualify for PIP.

“The government says it will ensure people with ‘genuine need’ aren’t affected, but we’re really concerned that these new reforms will take us further back to the days when people with mental health problems were treated as less worthy of help than those with physical health issues.

“The new ‘right to try’ a job without losing the benefits is welcome, as is the funding for personalised employment support for people with disabilities or health conditions. But introducing these measures alongside cuts to PIP and stopping young people from getting incapacity benefits will do more harm than good.

“It is a short sighted approach that will have a devastating impact on many people’s finances and mental health, and we urge the government to rethink these plans.”

Green, growing and successful?

EDINBURGH by NUMBERS 2024 REPORT PUBLISHED

Edinburgh remains one of the most prosperous and green places to live in the UK, according to findings collated by the City of Edinburgh Council. 

The 18th annual Edinburgh by Numbers is based on data from a variety of sources including the ONS, National Records of Scotland and the Scottish Household Survey.

Looked at together, the figures reveal that residents in the Scottish capital are 1.5 times more likely to take up cycling and running – with most (74%) able to enjoy local green spaces within a five minute walk from home.

With 144 parks making up almost half of the city (49%), 92% of people surveyed are satisfied with local green spaces and Edinburgh has almost halved greenhouse gas emissions over the last decade (by 40.9% since 2012).

Highlighting the city’s economic resilience, Edinburgh has retained its position as the UK’s most economically productive city outside of London with some of the highest wages, skilled workers and employment.

Tourism continues to recover from the pandemic, with hotel occupancy rates at their highest in 6 years (81.4%) and 5 million visitors staying overnight in Edinburgh, and air and travel also rebounding.

The city is growing almost three times faster than the rest of Scotland and house prices are valued at the highest in the country. In 10 years, our population has grown by 8.4% to 523,250 people but for the first time, fewer babies are being born.

Further statistics reveal:  

  • Edinburgh’s weather is changing, with April to June now the wettest months
  • Finance leads Edinburgh’s local economy, generating £7.2 billion – that’s as much as the next three largest sectors combined
  • Satisfaction with public transport is very high at 86% of those surveyed, well above Scotland’s 64% average
  • There are more university students in Edinburgh than school pupils (together, they make up 161,000 of the population)
  • 75.8% of workers have a degree, which is far higher than other UK cities
  • Audiences are eager to return to top rated visitor attractions and events with visitors flocking to Edinburgh Castle (1.9m visitors) the National Museum of Scotland (2.19 million visitors) and the festivals (4.59 million in person and online attendees).

Council Leader Jane Meagher said: “This edition of Edinburgh by Numbers reminds us of the strength and success of our capital city, which continues to punch far above its weight as a place to live, work, invest in and visit.

“Thanks to our fantastic parks and air quality, ‘Auld Reekie’ is no more. We’re leading the way in climate consciousness and outdoor living – with the data pointing to more of us cycling and running, high satisfaction rates with public transport and positive scores for wellbeing.

“We know that the results of Edinburgh by Numbers are hotly anticipated by professionals from across the tourism sector at home and abroad, and the outlook for hospitality is healthy – people are flocking back to the city’s main attractions and festivals and 5 million visitors are staying overnight. That’s 40% of Scotland’s total overnight tourism with hotel occupancy rates their highest in six years (81.4%).

“So, we’re getting outdoors and we’re enjoying our city and, in this report, there is much to celebrate. That said, these numbers also speak to the challenges Edinburgh faces. Drawn by good jobs and a good quality of life, migration means our population is growing three times faster than other Scottish cities. We’re living longer, but the birth rate has dropped. Many residents are struggling with the cost of living – meaning poverty and homelessness remain two of the biggest challenges of our time

“All of this leads to unprecedented demand for homes and public services. Initiatives such as our affordable housebuilding programme, Visitor Levy, climate adaptation and better connectivity around the city will give us more resources and solutions for sustainably managing Edinburgh’s continued economic success and growth.”

Denise Hamilton, Head of Communications at Cycling Scotland, commented: “It’s really encouraging to see 68% of short trips now being made on foot or by bike in Edinburgh. New dedicated cycle routes, like the City Centre West to East Link and Leith Walk, are showing big increases in the proportion of journeys being cycled, compared with other transport.  

“As Edinburgh continues to build its planned citywide network of safe, on-street cycle lanes, it’s likely more and more people will choose to get around by bike and benefit from being active, saving money and getting to their destination quickly. And everyone living in or visiting Edinburgh can enjoy cleaner air and less congestion.”

Edinburgh_by_Numbers_2024Download

 

New protections for workers closer as MPs back Employment Rights Bill

A major step was taken towards resolving key issues in the labour market last night after MPs voted to approve the government’s Employment Rights Bill

Significant measures in the Bill include:

  • The right to guaranteed hours for zero hours workers.
  • Protection from unfair dismissal from day one in the job.
  • Sick pay for all workers, from the first day of absence
  • The right for unions to access workplaces to speak to workers.
  • The establishment of a state Fair Work Agency to bring together existing bodies to better enforce the law.

The common sense reforms take a step towards resolving key issues for many workers, such as being parked on zero hours contracts for months or years on end. Or workers being afraid to take a better job because currently they can be dismissed for no reason within the first two years.

Such steps take the UK closer to equivalent countries in the strength of its employment law.

They could also provide a £13 billion annual boost to the UK’s lacklustre economy.

After consultations with businesses, trade unions and the wider public at the end of last year, the government tabled a number of other notable changes when the Bill returned to parliament this week.

Here are some of the key ones:

Zero hours contracts

Agency workers will have to be offered guaranteed hours contracts reflecting their normal hours, based on a 12-week reference period. This closes a loophole that could have allowed employers to switch from employing zero hours workers directly to hiring them via an agency.

There is a provision that new rights to guaranteed hours, reasonable notice of a shift and payment for cancelled, moved and curtailed shifts can be changed if workers and an employer agree alternative arrangements in a collective agreement. This means arrangements can be tailored to suit particular workplaces.

Sick pay

The government has confirmed that workers will be entitled to receive minimum sick pay of 80 per cent of their normal wages or statutory sick pay, whichever is the lower. This largely affects workers who are not currently entitled to statutory sick pay. The government had modelled a rate as low as 60 per cent.

Union access

The right for a trade union to access a workplace to support workers and talk to them about joining has been extended to a digital right of access as well. This will be especially important where workers work outside an office and are better contacted by digital means such as email or intranet posts.

Unions have been given stronger rights to access workplaces when workers are seeking recognition. Employers will be barred from carrying unfair practices to undermine unions from the start of the process.

Trade union rights

Current law deliberately ties unions up in red tape, which gives employers great opportunities to challenge strike action in the courts on technicalities. This will reduce somewhat as the government reduces the amount of information unions must disclose to employers when they launch a strike ballot.

Meanwhile, notice for strike action will be cut from 14 days currently to ten days. And the mandate for taking strike action after a vote in favour doubled to 12 months.

Industrial action is a last resort for trade union members. After all, workers usually suffer a significant loss of income. But a vote for action can give real weight to union negotiations and kickstart talks when progress has stalled.

These changes mean some of the artificial barriers to action have been removed.

Work still to do

While the Employment Rights Bill will take important steps towards a fairer economy, there are further reforms required. These include:

  • Some workers could receive less sick pay under these changes than they currently receive. This should be remedied and a review conducted to improve the paltry headline rate of SSP.
  • A huge amount of detail will be set out in subsequent regulations laid by the government. It is crucial that new “initial periods of employment” during a worker’s first nine months in the job provide sufficient protection from unfair sacking, including a route to take a case to the employment tribunal. And that loopholes are not opened up stopping workers getting guaranteed hours contracts.
  • The Bill makes it easier for workers to gain recognition for their trade union. But leaves in place a law requiring a three-year gap between recognition attempts, benefiting union-busting employers. This gap should be significantly reduced.
  • The government will delay the repeal of a Tory measure that requires a 50 per cent turnout for a strike law to be valid until after it has introduced electronic balloting.
  • The government has pledged to reform current employment status rules that govern whether someone is self-employed, a worker with some rights, or an employee with full rights. An overhaul is needed to stop exploitative employers attempting to deny workers their protections.

The passage of the Employment Rights Bill represents another significant step forward for working people.

The recent amendments further strengthen government efforts to crack down on worker exploitation and strengthen their voice in the workplace. 

TUC: Work-related ill-health is costing the UK economy over £400 million a week

  • New analysis shows that number of days lost due to work-related ill-health has rocketed by a third since 2010 to 34 million days 
  • Work-related ill-health reduced economic output by £22bn in 2023
  • TUC says findings highlight the importance of driving up job quality in the UK and stronger rights at work ahead of Employment Rights Bill returning 

Work-related ill-health is costing the UK economy over £415 million a week, according to new TUC analysis published on Monday. 

The analysis of official statistics shows that the number of days lost due to health conditions – including stress, depression and anxiety – has shot up by a third since 2010. 

In 2023 to 2024 (the latest year for which figures are available) 34 million working days were lost to work-related ill-health – compared to 22 million in 2010. 

The TUC says the findings – which are published as the Employment Rights Bill returns to parliament – show the “urgent importance” of improving the quality of work in the UK. 

In 2022 to 2023 (the latest year for which figures are available) work-related ill-health is estimated to have reduced economic output by £21.6bn. 

Boom in insecure work 

The TUC says the rise in days lost to work-related ill health has coincided with a huge boom in insecure work. 

The union body estimates that over a similar period (2011-2023) the number of people in precarious employment also rocketed by a third to over 4 million. 

A separate report out this week from the Commission for Healthier Working Lives suggests that poor quality work can harm employee health. It states:

“Most health conditions develop outside work, but for a significant number of people, work itself is the cause. Persistent insecurity, workplace discrimination and extreme demands take a serious toll on health. In some cases, poor-quality work is even worse for health than being unemployed.” 

The TUC says driving up employment standards will help improve staff well-being, health and productivity. It will also ensure that more people with disabilities or health conditions can stay in work.  

This view was backed up by polling last autumn which revealed that:  

  • Three-quarters (75 per cent) of managers think that strengthened employment rights will improve employee health, compared to just 4 per cent who disagree  
  • Seven in 10 (74 per cent) believe that strengthening employment rights will improve workforce retention, compared to just 6 per cent who do not.   

Employment Rights Bill back in parliament 

The government’s Employment Rights Bill returned to parliament this week for its report stage. The Bill will deliver “common-sense reforms” which bring the UK closer to the European mainstream on workers’ rights, the union body says. 

The TUC says the legislation will help to deliver better quality work in every corner of the country by cracking down on insecure work and banning exploitative zero-hours contracts. 

TUC general secretary Paul Nowak said: ”Improving the quality of work in Britain is good for workers and our economy. Work related ill-health is costing us hundreds of millions each week – that’s billions of pounds down the drain every year. 

”That’s why the government’s Employment Rights Bill is so important. Cracking down on exploitative practices like zero-hours contracts and giving people more security will boost workers’ health, well-being and productivity. It will also help more people stay in work.  

“We need to turn the corner on Britain’s low-rights, low-pay economic model that has been tested to destruction over the last 14 years. Giving working people more control and predictability over their lives will help create a happier, healthier and more robust workforce.” 

Action for healthier working livesDownload

Fraser of Allander analysis: The welfare bill under pressure

We have heard this week that the UK Government Chancellor Rachel Reeves intends to make cuts to the welfare bill to bring UK Government borrowing down in line with her fiscal rules ahead of the next OBR forecasts due at the end of the month (writes Fraser of Allander Institute’s EMMA CONGREVE). 

Reports state that the axe is likely to fall on health and disability related benefits for working age people.

Here we produce a bit of an explainer to get people up to speed on the benefits in scope and what has been happening in recent years.

Which benefits could be in line for cuts?

There are two types of benefits in Great Britain (benefits in Northern Ireland are arranged differently) that working age people with disabilities and ill health can claim.

Incapacity Benefits

The first type is an income replacement benefit that tops up income for families where the disability or health condition limits their ability to work, commonly referred to as incapacity benefits. They are means tested so that the amount you receive depends on your household income and reduces as income (e.g. from a partner’s earnings) rises.

Chart: Caseload of incapacity benefits for working age adults, Scotland

Notes: Universal credit and ESA exclude those in the assessment phase in line with OBR Welfare Trends Report analysis. Northern Ireland not included.

Sources: DWP, ONS

Universal Credit (UC) has been slowly replacing Employment and Support Allowance (ESA) for this group of people since 2018 so the reduction in ESA over time reflects migration over to UC rather than a change in disability/health status.

Disability Benefits

The second type of support for those with disabilities and ill health comes from payments to cover additional costs, for example due to reduced mobility, and are commonly referred to as disability benefits. They are not means tested and people do work whilst they are on these benefits.

In Scotland this type of benefit is now devolved, with Adult Disability Payment (ADP) slowly replacing Personal Independent Payment (PIP). PIP itself was a replacement for Disability Living Allowance (DLA) which no longer takes new applications and has a caseload that is reducing over time.

Chart: Caseload of disability benefits for working age adults, Scotland

Note: Adult Disability Payment started to replace PIP in Scotland from 2022. In England and Wales, PIP remains the main payment.

Source: DWP, ONS, Social Security Scotland

Which benefits are devolved?

Incapacity benefits (UC and ESA) are reserved benefits which means they largely operate in the same way across Great Britian, with the cost of the benefit in Scotland met by the UK Government. Any cuts made by the UK Government would apply in Scotland.

Disability benefits (PIP. SDA and ADP) are devolved, and there are differences in how the benefits operate in Scotland. The Scottish Government meets the costs of the benefit. To offset this, an amount is paid from the UK Government in the block grant, equivalent to the UK Government’s spending in Scotland if the benefits hadn’t been devolved and if spending had grown at the same per capita rate as in England and Wales.  

The Scottish Government has to find additional money if expenditure on Scotland starts to diverge from the rest of GB trend due to policy changes (or perhaps, if our population gets relatively sicker).

Any cuts to PIP or SDA made by the UK Government would not apply in Scotland, but the block grant from UK Government would fall. If the Scottish Government did not replicate the cuts, they would have to find additional money from elsewhere in the Scottish Budget to offset the fall.

What has changed since the pandemic and has it been the same in Scotland as the rest of Great Britain?

As the above charts show, the caseload (the number of people claiming these benefits) has been rising steadily in recent years for both these benefits across GB and is forecast to continue to do so.

The caseload in Scotland has long been higher than in England and Wales due to a higher prevalence of people with disabilities and long-term health conditions.

In recent years, incapacity benefits caseload growth has been slower (49% in Scotland compared to 59% in rGB between May 2019 and August 2024) but due to different levels of population growth caseload per capita (which is the caseload measure shown in the charts) has been slightly higher in Scotland (7% to 11% of working age population compared to 5 % to 8% for rGB).

For disability benefits, the introduction of Adult Disability Payment makes it difficult to compare like-with-like. Although eligibility has remained broadly the same, the application process has been made more accessible and this appears to have led to an increase in people applying following its introduction.

For more detail on this, see this paper from our sister organisation the Scottish Health Equity Research Unit (SHERU). It’s also possible that some people in Scotland delayed making a PIP application to DWP in anticipation of ADP opening for applications.

This may help to explain why, since 2019, the growth in the caseload in Scotland has been only slightly higher than rGB (63% increase in Scotland between May 2019 and Aug 2024 compared to 61% for rGB). In per-capita terms, due to lower population growth in Scotland, the growth has been a bit more significant (increase from 8% of the working age population to 14% in Scotland between May 2019 and Aug 2024, compared to 6% to 9% for rGB).

Do we know why rates have increased?

There are many theories as to why rates have increased but, for a number of reasons, it has been difficult to fully evidence exactly what is going on.

We know from IFS research that rates have increased more in Great Britain than they have in other countries. The IFS also looked at entry and exit rates for disability benefits England and Wales and concluded that around 2/3 of the increase is due to people starting claims and 1/3 is due to fewer people ending their claim.

There are likely to be a number of intersecting factors. We summarise some of these issues below but overall emphasise that we don’t fully know the extent to which these interact.

The working age population is getting older

On average, people’s health deteriorates as they age. With falling birth rates there are currently proportionally fewer younger working age people than older working age people. Coupled with this, pension age changes mean that more older people have become classified as ‘working age’ in recent years. The Resolution Foundation have calculated that an ageing working age population accounts for 1/5 of the rise in caseloads for health-related benefits since the pandemic.

The increases for younger people are concerning but the biggest impact on expenditure would come from tackling ill-health and disability in older age groups

For disability benefits, the growth has been highest in the older working age population, with then broadly comparable rises across other age groups. For incapacity benefits, after the 55-64 age group the second largest rise has come from 25-34 year olds. Growth in the number of young people out of work due to disability and ill health are concerning and needs attention, but if rates are going to come down, focussing on the older generation is key. Whilst we can’t fully attribute the rise to longer waiting times in the NHS, this is likely to be part of the explanation.

Some of the rise may be due to people struggling financially and needing to maximise benefit income

This rise in benefit caseloads has coincided with relatively high rates of inflation and the ‘cost of living crisis’. People struggling financially may have been more likely to make claims during this period compared to previous years when they did not feel they needed the extra income.

There is also some suggestion that people may have switched the type of claim they make for out-of-work benefits to benefit so they can receive a higher level of payment for disability and ill-health related claims. The fact that they are successful in these claims means that people are simply claiming what they are entitled to rather than somehow ‘gaming the system’.

Mental health related claims have grown, but so have claims related to other conditions

The largest absolute rise in claims for disability benefits has been related to mental health conditions, but across Great Britain, there have been rises in a range of physical conditions too (see IFS and SHERU work on this linked above). The extent to which this is due to an increased prevalence of health conditions versus an increased likelihood to claim a health-related benefit is difficult to disentangle.

There has been a rise in the in-work population reporting a disability as well and it may be that people are becoming more comfortable with disclosing mental health conditions. This could mean that people with multiple health conditions are more comfortable with citing mental health as their primary condition in benefit claims now than was previously the case.

We don’t know how much is due to long-covid or longer-term impacts of the pandemic

The extent of available data frustrates efforts to pin down the emergence of new or worsened conditions due to the pandemic and how this has changed people’s financial circumstances (for example, ability to work).

Issues with the official Labour Force Survey have limited the usefulness of the data collected there on reasons for ill health and inactivity (see SHERU blog on this issue here) and qualitative research that is able to produce more in-depth insights usually can’t be scaled up to population level.

As more longitudinal data is made available that tracks people through the period, alongside progress towards more routine data linkage of health records to other administrative data sources such as tax records, we might be able to get a better picture of the intersecting factors that have changed people’s health, benefit and work status in recent years.

What happens next?

The Spring Statement is due on the 26th March. When we know what the proposals are, we’ll be able to unpick what this will mean for people in Scotland and for Scottish Government budgets.

Whilst cuts to welfare spending may help in the short term, longer term solutions are tied up with efforts to improve both living standards and the ability of public services to support people further upstream (for example, through the NHS and employability services) which can reduce their need to recourse to the social security system.

Any decision to make cuts could come with fiscal risks. Cutting benefits for people already experiencing ill health and disability could make their conditions worse and increase demand for public services and/or lead to longer-term reliance on non-health related benefits.

A recent BBC verify article also provides a note of caution: reducing spending on the welfare bill is historically difficult and estimates of savings are often not achieved.

As well as looking at the details of the cuts, we’ll be looking at what the OBR say regarding their effectiveness of cutting UK Government spending with a keen eye.

Fraser of Allander: Annual Health Checks for People with Learning Disabilities

As part of our ongoing work on the lives of people with learning disabilities, we continue to track the latest research, policy developments, and data shaping their experiences (writes Fraser of Allander Institute’s DAVID JACK).

In previous round-ups, we’ve explored topics ranging from employment and social care to education and healthcare access. For this edition, we turn our attention to the rollout of annual health checks for people with learning disabilities in Scotland.

What are Annual Health Checks?

An Annual Health Check is a yearly check-up offered to individuals with learning disabilities to help identify and manage their health needs. It typically includes a review of medical history, physical health measurements (such as weight and blood pressure), checks on long-term conditions, discussions about mental health and lifestyle, assessment of healthcare access difficulties, medication reviews, and the development of a health action plan if required. The goal is to detect potential health issues early and support overall well-being.

Why Annual Health Checks Matter

Annual health checks are seen as a vital tool in addressing health inequalities. Many people with learning disabilities face challenges in communicating their symptoms, making proactive health assessments essential. Research consistently highlights the poorer health outcomes this group experiences, including higher rates of undiagnosed conditions, preventable illnesses, and premature mortality.

Just this week, researchers at the University of Glasgow released new findings revealing that young adults (aged 25-34) with learning disabilities are nine times more likely to die from treatable causes than their peers in the general population. The study, led by the Scottish Learning Disabilities Observatory, underlined the severe health inequalities faced by this group—particularly young women, who were found to be at disproportionately higher risk of premature death from treatable conditions.

Scotland’s Commitment and the Reality of Implementation

In May 2022, the Scottish Government pledged to offer annual health checks to all adults (aged 16+) with learning disabilities by 31st March 2023. To support this, NHS Boards were allocated £2 million annually. However, implementation struggles led to a revised deadline of 31st March 2024.

The first official data on Scotland’s progress has now been released by the Scottish Government. The 2023/24 figures reveal that despite identifying 23,758 eligible individuals, only 1,405 (6%) health checks were offered, with just 1,128 completed. This means fewer than 5% of eligible individuals have received a health check—highlighting that the rollout remains far from comprehensive. Notably, while 80% of those offered a check went on to complete it, the vast majority of eligible adults have yet to be given the opportunity.

The failure to fully implement the annual health check programme points to deeper systemic challenges within Scotland’s healthcare system. While the Scottish Government has made reassurances that health checks remain a priority, the delay of the Learning Disabilities, Autism, and Neurodivergence (LDAN) Bill has raised concerns about long-term commitment.

In a letter to the Health, Social Care, and Sport Committee, Minister Maree Todd reaffirmed the Scottish Government’s dedication to expanding health checks, including exploring new settings such as the State Hospital and prisons. However, these recent figures suggest that rather than expanding, the programme is struggling at a foundational level. The challenge appears not to be a lack of policy ambition but a failure in execution, which risks slowing or even obstructing progress in reducing health inequalities in Scotland.

A Troubling Lack of Progress

While 2024 marks the first year of formal reporting, and some allowances can be made for scaling-up challenges, the level of delivery remains lower than expected, particularly given the dedicated £2 million in annual funding. The current data does not include a breakdown of uptake by NHS Board—an important detail that should be incorporated into future reporting. The next set of figures, due in June 2025, will be key in providing greater transparency on regional disparities, and we also encourage the publication of more detailed demographic data when appropriate.

Back in November 2024, media reports stated that none of Scotland’s NHS Boards had fully met the target of offering health checks to all eligible individuals. In some areas, such as NHS Lanarkshire and NHS Shetland, there were indications that not a single eligible patient had received a health check. Greater clarity on this is needed through more detailed official statistical reporting to ensure timely, accurate and transparent data on progress.

Encouraging NHS Boards to report on how they are utilising the allocated £2 million per annum could provide valuable insights and help address delivery challenges. Additionally, assessing the effectiveness of public awareness campaigns would help identify what has worked well and what could be improved to ensure that people with learning disabilities and their families are fully informed about their right to an annual health check.

Varied Approaches

The Scottish Government provided directives outlining the framework for annual health checks, while allowing flexibility in local implementation. This flexibility has resulted in varied delivery models across NHS Boards, reflecting differences in workforce capacity, healthcare structures, and local resources. Some Boards will conduct checks primarily through GP practices, while others may incorporate community-based assessments, specialist learning disability health teams, or partnerships with third-sector organisations.

For example, NHS Lothian recommended a model where Community Learning Disability Nurses work closely with GP practices. Other Boards are integrating health checks into community services or collaborating with third-sector organisations to improve outreach. However, these varied approaches risk creating inconsistencies in data recording, as different systems are likely being used.

The Scottish Government has emphasised the need for standardised data collection across all Health Boards. A uniform approach is essential for assessing the effectiveness of health checks and ensuring equitable service delivery. The Annual Health Checks National Implementation Group aims to assist NHS Boards in aligning practices and reporting methods, with members expected to share real-time delivery data to collaboratively address challenges, overcome barriers, and provide peer support.

Beyond the Census: How Health Checks Could Bridge the Data Gap

If Scotland’s annual health checks for individuals with learning disabilities had been fully implemented as intended, they could have provided a valuable and reliable dataset on the number of people with learning disabilities in the country. Interestingly, the number of adults (23,758) identified through the Annual Health Check Survey Return to the Scottish Government already exceeds the number of adults reporting a learning disability in Scotland’s 2011 Census (21,115) by 12.5%.

This first set of published data for the Annual Health Check Survey states, “The method by which eligible people are identified varies by Health Board – the numbers identified only represent people with learning disabilities who are known to services.” Coupled with the fact that these checks are not yet being delivered at full capacity, this suggests that the true number of adults with learning disabilities in Scotland is likely to be higher than 23,758.

Scotland’s 2022 Census faced significant challenges in identifying the learning disability population. Instead of reporting learning disabilities separately, the published data currently combines them with learning difficulties and developmental disorder—a disappointing step backward compared to 2011.

The National Records of Scotland (NRS) identified learning disability as the primary category of concern, noting an “unrealistically large increase” in the number of people selecting this category compared to the previous census. As we previously explained, quality assurance efforts primarily relied on triangulating data with Scotland’s Pupil Census, which only captures those in school education and does not account for the broader adult population.

A fully functioning health check system could have served as an essential alternative data source, refining population estimates, improving census accuracy, and informing future data collection. Crucially, it could have also helped assess discrepancies in reported numbers—and given the challenges with learning disability recording in the 2022 Census, it still could—helping to clarify the scale of potential misrepresentation and ensuring that individuals with learning disabilities are properly represented in National Statistics and policy planning.

Policy Changes in England: A Warning for Scotland?

Recent developments in England signal changes to the NHS’s approach to annual health checks for individuals with learning disabilities. In an effort to prioritise reducing waiting times, Health Secretary Wes Streeting has announced a reduction in the number of NHS targets from 32 to 18.

This streamlining includes the removal of the specific target to provide annual health checks to 75% of people with learning disabilities across England. It is worth noting that unlike England’s previous approach, Scotland’s current policy is to offer a health check to all eligible individuals, without a set percentage target for delivery.

The Health Secretary’s recent decision has raised concerns that removing these targets could also lead to the loss of ring-fenced funding in England. Historically, funding has been directly tied to national targets to support their delivery, and without this financial safeguard, there is a risk that annual health checks could be deprioritised.

Mencap has warned that removing this target could have “deadly consequences,” as people with learning disabilities already face a life expectancy up to 23 years shorter than the general population.

While healthcare policy in Scotland is devolved, pressures on workforce capacity and financial resources remain significant challenges. If services continue to be overstretched, there is a risk that learning disability healthcare may receive less focus. This could make it more difficult to address health inequalities, potentially leaving those already at high risk of poor health outcomes further marginalised.

Conclusion: Turning Commitment into Action

The rollout of annual health checks for people with learning disabilities in Scotland remains a work in progress, with ongoing challenges still to be addressed. Despite the Scottish Government’s assurances that expanding access remains a priority, the reality is that progress has been slow, and only a small percentage of eligible individuals have received a health check so far.

Beyond improving individual health outcomes, a fully implemented programme could play a crucial role in shaping policy by providing more accurate data on Scotland’s learning disability population—particularly given the shortcomings of the 2022 Census.

As concerns over widening health inequalities grow and policy shifts in England raise further questions about long-term commitments, Scotland must ensure that these health checks move beyond ambition and become a fully embedded, effective service.

Fraser of Allander: Scotland’s Budget

Budget Deals, Budget Revisions, and Budget Pressures

There was a lot of focus this week on the Budget deal struck by the Scottish Government, which will allow the Budget to be supported by the Scottish Green Party and the Scottish Liberal Democrats (write Fraser of Allander Institute’s MAIRI SPOWAGE and SANJAM SURI).

In early January, Anas Sarwar announced that Scottish Labour would abstain on the Budget as the Scottish Government were likely to secure support from the budget from one or other of these parties. Of course, this meant that the Scottish Government did not need to secure support from other parties to ensure that the budget would pass.

However, no doubt John Swinney will be pleased that he can demonstrate working across the chamber, and particularly constitutional boundaries, to come to a deal.

On the face of it, the price paid for the support of these parties seems pretty cheap (in the scheme of the SG Budget!), totalling £16.7m.

With the Scottish Liberal Democrats (TOTAL £7.7m):

  • Increase Drugs and Neonatal Service Investment. +£2.5m
  • Strengthen support for Hospices. Increase the funding from £4m to £5m. +£1m
  • Invest in targeted support for the College sector. +£3.5m in creating an Offshore Wind Skills Programme and College Care Skill Programme.
  • Support the continuation of Corseford College. + 0.7m
  • Offer flexibility to Orkney Island Council in terms of capital and resource funding.

With the Scottish Greens (~£9m):

  • Establish a £2 bus fare cap pilot in a regional transport partnership area. +£3m in 25-26 (£10m in total)
  • Increase Nature Restoration funding. increase from £23 million to £26 million. +£3m
  • Extend free school meal eligibility in S1-S3 in 8 local authority areas – covering pupils in an urban, rural, semi-urban and island authorities in receipt of Scottish Child Payment. +£3m (although it looks like most costs will fall in 2026/27, so not sure about the exact cost in 2025-26)

The Scottish Government say that this will be funded by another draw down from the Scotwind fund (more on Scotwind below) of £3 million to support the capital spending on nature restoration, and the remaining amendments are funded through debt servicing costs which they expect will be lower than they expected at the Draft Budget in early December.

The Spring Budget Revision changes the picture for 2024-25 considerably

Getting less coverage this week is the Spring Budget Revision, which was laid before parliament on Thursday. This is a pretty technical document, with the “supporting notes” document running to 146 pages. This is for the current year, and now reflects the additional Barnett consequentials which were announced through the UK Budget for 2024-25

[By way of background, these revisions happen twice a year, once in the Autumn and once in the Spring, to update the parliament to changes in the funding positions for the current fiscal year. The Budget bill will normally be passed by late February. The ABR comes in roughly Oct/Nov, then the Spring one in Jan/Feb]

The Government did not include any of these announcements in the baseline comparisons for the Budget in December. When asked about the uplifts for 2024-25 in the wake of the UK Budget, they said that the £1.4bn extra in resource funding for 2024-25 was “in line with internal planning assumptions”. This was in the context of the clear budgetary pressures earlier in the financial year, which lead to the emergency budget announcements in September 2024.

The Scottish Fiscal Commission were not please with this, saying “This is a material limitation to information available to the Scottish Parliament for its scrutiny of the Budget and in the spending analysis we can do.”

The SBR published yesterday shows how this money has been allocated in the current year.

The highlights for us are:

  • The £338m resource borrowing that had been planned to cover for a forecast error reconciliation will not be necessary (so they had planned that borrowing into the 2024-25 budget due to this negative reconciliation from previous years, and now do not need to use it because of the funding received)
  • That the planned £424m drawdown for the Scotwind licencing fund will all now be returned (they had already announced that they would reduce this drawdown by £300m at the Budget but now they are returning all of it because of the funding received)
  • That £103m more than planned will be put into the Scotland reserve.

Two things are demonstrated by where the money has gone – first, that it does not seem credible that it was in line with “internal planning assumptions”, in the context of emergency budget measures prior to the UK Budget followed by cancelling of already planned borrowing. Second, it would have helped scrutiny for the 2025-26 Budget if this had been included in the baseline presented at the Scottish Budget, given the SFC role in assessing borrowing and use of the reserve and the role of the Finance and Public Administration Committee.

The restoration of the Scotwind fund is welcome – let’s hope now it will be exclusively committed to capital/infrastructure spending to support the energy transition. It would be good if this could be formally done so the money cannot be used in this way in the future.

Employer NICs likely to cause more budget pressures

We’ve covered the impacts that the employer NICS rises could cause to public services in Scotland.

As a reminder, the Chancellor increased both the rate of employer NICS (from 13.8% to 15%) and lowered the threshold at which employers have to start paying NICS (from £9,100 to £5,000). At the time of the Budget, the Treasury said that public sector employers will be compensated – but no amounts were confirmed, which caused the Scottish Government to (quite rightly) raise concerns about the uncertainty that this would cause.

We’ve heard from the Scottish Government that the expected impact is expected to
range anywhere between £550m (for public sector workers), and £750m (including indirect employees such as childcare, higher education, social care).  We estimated around £500 for the direct public sector. The rumoured amount on the table from the Treasury is £280-300m. Our blog explains the reasons behind these different amounts.

[But, in short, the difference between the SG and the Treasury is what “compensating” the public sector means – the actual cost, or the actual cost if the size and pay bill of the public sector in Scotland was proportionately the same as the UK.]

Whatever the final amount, it is unlikely the whole cost to the public sector will be covered. We said at the time of the Budget that the Scottish Government hadn’t budgeted for this likely shortfall.

Kate Forbes said this week that the public sector in Scotland will have to “absorb” the shortfall- which basically means that the public sector would have to find savings or efficiencies elsewhere to absorb the budgetary impacts of higher NICS.

The confirmation of the compensation will not come until the Supplementary Estimates are published (which might be as late as the end of February). This means that bodies like councils, who are currently trying to set their budgets, will likely have to plan on the basis of absorbing maybe 40-70% of this additional cost until they get confirmation.

Given the scale of financial challenges councils face, this may well impact on the proposed council tax changes they have to consider.

Capital, just capital: The Edinburgh housing market remains a law unto itself

DEMAND FOR GOOD FAMILY HOMES KEEP PRICES BUBBLING

As the old year slips away, home buyers and sellers – as well as property professionals – can look back on 2024 as one of those rare interludes when supply and demand came more closely into alignment, resulting in fewer dramatic ups and downs (writes DM Hall’s KIRSTEN NICHOLSON).

And, although the last month of Q4 is typically quieter than the rest of the year, transactions have still been taking place around Home Report value, with an encouraging number achieving up to 10% over, after going to very good closing dates.

Such deals remain the exception, however, and we are nowhere near the post-Covid boom period when numbers between 10% and 20% above Home Report went unremarked. Closing dates are not as common as in the past with good sales generally being driven by single buyers who come to a mutually acceptable personal arrangement with a willing seller.

There is a significant and ongoing demand for family homes, with people looking for more room and outdoor space in suburban areas close to good school and in easy-living modern developments, both inside and out of the city bypass.

The big challenge, which is definitely throwing grit in the wheels of a more fluid market, is chains. What Scots used to view as a quaintly English phenomenon is becoming more common as buyers find they are not selling in time to commit to a purchase.

These hiccups are exacerbated by the fact that bridging finance, which used to solve this problem, is now virtually impossible to obtain, and people are being advised to not even think about concluding missives until their own are tied down and unshakeable.

The fashion for making an offer subject to the sale of your own property is not helping here, since sellers are imposing unrealistic timescales – sometimes just a number of weeks – for buyers to come up with the goods.

Flat transactions, for so long the reassuringly reliable engine of the local market, have taken a bit of a beating in the past year as buy-to-let landlords cut and run in the face of a storm of legislation which has persuaded many of them that the game is no longer worth the candle.

Concerns about tax relief and a regulatory regime which seems heavily weighted in favour of tenants will not be helped by the two per cent increase this year of Scotland’s Additional Dwelling Supplement (ADS), which now adds eight per cent to the total purchase price of extra properties.

There are exceptions, of course. ADS is not diminishing enthusiasm for upscale apartments such as those at New Eidyn, in the St James Quarter “lifestyle destination”, where cash buyers have been attracted from London and abroad as moths to a flame.

And large lateral flats in the £750,000-plus bracket, in prime Edinburgh suburbs, are seeing good business from downsizers who are selling bigger homes and still trousering a handsome profit.

But in general, there are an unusual number of empty ex-rental flats on the market, and this is likely to remain the case as building and labour costs have eroded the attraction of a “doer-upper”, and buyers now seem to sniff at anything less than move-in condition.

Joppa and Portobello, with their panoramic views across to Fife, are currently very popular, boasting solid Georgian homes, good state and private schools and access to the golf courses and attractions of East Lothian.

Gullane and North Berwick are perennially in favour. Formerly fast-moving areas such as Bruntsfield and the New Town are less so at the moment, largely because of the factors mentioned above affecting the flats market.

The most recent Office for National Statistics report puts the average price for a house in Edinburgh at £347,000 – a country mile ahead of the rest of the country and more evidence of the fact the capital remains a market unto itself.

It was to be expected this year that a General Election and a Budget would cause some jitters, and they certainly slowed Q4 of 2024 down a bit – so it could well be reasonable to look for quite a substantial bounce in the quieter political waters of 2025.

That is not to say that we will necessarily see house prices shooting up, but we can be fairly certain that they won’t be dropping.

Kirsten Nicolson is a Director in the Edinburgh residential offices of DM Hall Chartered Surveyors.

Fraser of Allander Institute update

Budget speculation, the economy returns to growth, the impact of cuts, and the disability employment gap

Three weeks still to go, and speculation about what will be in the Budget on 30th October continues (writes Fraser of Allander Institute’s MAIRI SPOWAGE, SANJAM SURI and EMMA CONGREVE).

Will the Chancellor change her fiscal rules? It looks likely that there will be some movement on this, whether in the definition of debt or something more fundamental, however much that could undermine their commitments in the manifesto.

Will there be increases in Capital Gains Tax? The speculation on this has reached fever pitch, with some stories suggested rates from 33% to 39% are being considered. (Interestingly, when we look at the ready reckoners from the HMRC, changes of this magnitude in some forms of CGT actually may result in less revenue when behavioural effects are taken into account). There certainly seems to be expectations out there in the economy that the rate may change, with lots of signs that disposals have increased hugely in anticipation.

Will there be increases to employer national insurance contributions? There has been much discussion about this, given the commitment of the UK Government not to “raise taxes on working people”, and due to the fact that the PM would not rule this out this week. A 1 percentage point rise in employers NICS would raise almost £9bn according to the ready reckoner (although we think that doesn’t include the additional costs to departments).

We’ll be going into the detail of some of these issues in the run up to the Budget, so there will be plenty for you all to chew over as we wait… and wait… for the Budget.

UK Economy Returns to growth in August

Data released this morning showed that the UK economy posted its first monthly GDP increase since May 2024. ONS reported this morning that monthly real GDP grew 0.2% in August 2024.  There were no revisions made to the “no growth” months of June and July.  While monthly numbers were in line with consensus forecasts, they show an economy that has slowed down from the beginning of 2024.

The good news is that growth in August came from all key sectors- with services rising by 0.1%, and production and construction rising by 0.5% and 0.4% respectively. Crucially- August was also the first time all three sectors positively contributed to growth since March 2024.

A more granular breakdown of service sector growth indicates that the biggest positive contribution came from the professional, scientific, and technical activities subsector- where monthly change in output was +1.6% from the previous month.  Despite overall growth in services sector- seven subsectors saw decline in economic activity- with arts, entertainment, and recreation falling 2.5% over July 2024.

The production sector grew by 0.5% in August after hefty decline of 0.7% in July. Despite a rebound in August, the production output is essentially flat since the end of May 2024. The biggest contributor to production sector came from 1.1% rise in manufacturing activity- driven by transport equipment manufacturing However, mining and quarrying output declined 4.0% over July 2024- continuing their downward trend since end of December 2023.

What is the impact of cuts in spending?

When the Scottish Government presented their Fiscal Statement to parliament in early September, the Cabinet Secretary for Finance said that impact assessments had been done to understand the impact that the announced cuts could have on different groups.

These assessments were not published at the time, but finally were published last week. We welcome the publication of these, and although there are lots of criticisms that could be made of the assessments, it is good to see this transparency. One area of weakness is assuming that if funding was maintained at previous levels, there will be minimal impact, which assumes that previous levels was the correct level… so why was the budget being increased in the first place?

One of the main things to note though is the lack of analysis of cumulative impact on groups. A number of “minimal impacts” could still add up to something significant if they are affecting the same group.

Final report of the parliamentary Inquiry into the disability employment gap published

In 2016, the Scottish Government published A Fairer Scotland for Disabled People, which outlined how the government intended to shape policy – especially labour market policy – for disabled people living in Scotland.

One of the key goals this report outlined was reducing the gap in the employment rate between disabled and non-disabled adults. In 2016, 80.4% of non-disabled working aged adults were employed in Scotland, compared to 42.8% of disabled working aged adults, making for an employment gap of 37.5 percentage points. The government’s goal was to cut this gap in half by 2038.

In 2023, the Economy and Fair Work Committee in Scottish Parliament launched an inquiry into how this policy goal was going. In fact, in 2023, it seemed like it was going quite well.

The gap was down to 30.3 percentage points, which was actually ahead of schedule: if progress were linear, the disability employment gap would drop by about 0.85 percentage points each year, meaning that it would be 31.5 percentage points in 2023.

However, the inquiry turned up less-than-optimistic findings, which have been published in a report out today from the Scottish Parliament.

Two of our economists at the FAI, Allison Catalano and Christy McFadyen, contributed to this inquiry through a fellowship with the Scottish Parliament Information Centre (SPICe). Their work, which we published back in January, found that the majority of the change in disability employment is due to a rise in disability prevalence, rather than any specific policy.

Their report also highlighted some significant data issues: people with different types of disability have vastly different capacities for employment, vastly different support needs within employment, and vastly different rates of employment. Yet, in Scottish data and policymaking, disabled people are often treated as a singular entity, meaning that it is not possible to understand where policy interventions might be most effective.

The final inquiry publication highlights our work and a variety of other issues which will need to be addressed in order to improve work access for disabled people, all of which can be found here. They have produced 44 recommendations to improve employment prospects for disabled people.

SQA Insight highlights success for Edinburgh pupils

Edinburgh’s pupils continue to be among the best performing in Scotland

Results from the SQA Insight report shows Edinburgh’s learners are performing better than their virtual comparators in 14 out of 15 key measures,  with 7% more pupils gaining at least one Advanced Higher than in other areas in Scotland.

Edinburgh learners are also out-performing their virtual comparators in Literacy and Numeracy for all stages and levels.

A virtual comparator is a sample of students from other areas of Scotland who have similar characteristics to a school’s students.

The news builds on the SQA exam results in August showing levels of attainment for pupils across Edinburgh remaining above those achieved before the Covid pandemic.

Insight provides teachers and lecturers with a summary of how learners have performed in their exams and coursework for each subject at National 5, Higher and Advanced Higher level over the past year.

Councillor Joan Griffiths, Education Convener for the City of Edinburgh Council, said: “This has been another positive year for our pupils. I want to congratulate them, as well as all our teaching and support staff. Their hard work has certainly paid off and praise should go to them as well as all the parents and carers who have supported the children.

“I welcome the results from the SQA Insights report. We have invested heavily in improving the skills of our workforce and I am confident that our staff will continue to improve the quality of teaching and learning to meet the needs of the city’s young people.

“Let’s not forget there is no wrong pathway for our young people as everyone’s learner journey is different. School is about ensuring all our young people are able to fulfil their potential by attaining the highest level of achievements possible and by receiving the best possible experience.

“We want all our learners to find their pathways into the world of higher and further education, employment or training and to narrow the gap between those living in different areas of affluence.”

Course reports – written by principal assessors and principal verifiers – are published to give an insight into how learners performed, detailing which areas of the course assessment where learners performed well, and which areas proved to be more demanding.

Principal assessors and other senior appointees are experienced teachers and lecturers who work with SQA to produce the course reports and highlight examples where candidates have performed well in their external assessments.

The reports also contain advice for teachers, lecturers, and training practitioners on preparing learners for the coming year’s assessments, as well as statistical data relating to grade boundaries.

First Minister outlines his ambitions for Scotland’s economy

The First Minister has set out his ambitions for Scotland’s economy during a speech in Glasgow.

Speaking at the Barclays Campus in Glasgow’s financial district on Friday, First Minister John Swinney outlined his government’s approach to economic policy making.

Mr Swinney said poor decision-making at UK level, typified by Brexit and immigration policy, means the Scottish Government must work even harder with its limited powers to help businesses and workers thrive.

The First Minister stated his determination to bring hope and optimism and said he will “go all out” to encourage economic investment.

John Swinney said policy making will be governed by:

  • Moderate left of centre, progressive values
  • A partnership approach with unions and business
  • A focus on actions
  • Problem solving based on evidence

The First Minister will highlight significant announcements in Scotland’s renewable energy sector this week and actions the Scottish Government is taking to boost high growth businesses.

The First Minister said: “My goal is to help people live happier and healthier lives with higher living standards and to help businesses boost profitability.

“The evidence shows that independent countries that are comparable to Scotland are wealthier and fairer than the UK.

“Scotland has the talents and resources to match that performance with independence but in the here and now and in the face of Brexit we must work even harder to help Scotland’s economy with the powers we have.

“I will go all out to encourage investment in Scotland and I will ensure people know my government is a firmly pro-business administration.

“A partnership with trade unions and business will be at the core of my approach and through that approach and given our resources, not least incredible renewable energy, we should look to the future with hope and optimism.” 

ANALYSIS: FRASER of ALLANDER INSTITUTE

New FM – new approach on the economy?

Today, the new First Minister John Swinney set out his broad economic aspirations for Scotland (write MAIRI SPOWAGE and EMMA CONGREVE).

In a speech at the impressive Barclays Glasgow Campus (which he said embodied the ambition he wished to have for the economy), he set out the vision he had for Scotland to have a strong, successful, innovative and dynamic economy.

For people who were after specific policy actions, the speech was light on detail, but it was not perhaps fair to expect the FM to outline these sorts of specifics in a speech like this.

The FM also had a difficult line to tread, given (as he himself pointed out) that he has been a Minister in government for 16 of the last 17 years and wanted to talk about successes in a record he is “immensely proud of”. At the same time, he needed to recognise that there were failings in the previous administration that had led to him being in office as First Minister.

Economic Growth is front and centre

The First Minister had said as he took office that eradicating child poverty was his key policy objective. This morning he was keen to set out that there is no conflict between eradicating child poverty and boosting economic growth – rather, they go hand in hand. He set out that boosting the economy will create opportunities for people and raise living standards and that reducing poverty raises spending power and boosts productivity. This is to a large degree true, but there will at times be trade-offs that will require one to be prioritised over the other.

Given the key stakeholders from businesses and business organisations in the room for his speech today, he was very keen to set out that his government was going to work collaboratively with businesses and other organisations to design and implement policies to strengthen the economy. Even more broadly, the FM said that he wished to bring more consensus building back into Scottish politics to try to achieve outcomes – to “build up, not tear down” as he put it.

There was a clear “Scotland is open for business” from the FM today. Supporting more investment in Scotland (particularly related to the Energy Transition and Housing) is clearly a priority for this new administration. This featured heavily in this speech and has been supported by some of the policy announcements made earlier this week.

We will do, rather than write strategy documents

A widely welcomed aspect of the speech is likely to be the FM’s acknowledgment that his government could probably do with carrying out “more concrete actions and fewer strategy documents”.

We have been on record a number of times as saying that the Scottish Government produces too many and too weighty strategy documents. So this is a crowd pleaser to a room of people who are likely to want to see action rather than just warm words and have seen endless strategies come and go.

However, it is important to remember what the problem sometimes was with these documents. Sometimes, in the case of recent economic strategy documents, the problem is that they aren’t really strategies – if they set out high-level principles that no one can disagree with, but don’t provide a meaningful framework for prioritisation and dealing with trade-offs, then they aren’t particularly useful.

In other cases, even where strategies are set, they can often gather dust on a shelf rather than meaningfully drive activity in government.

All of this from the FM is likely to be broadly welcomed – it’s an easy sell to say there will be less bureaucracy. But let’s not forget that we still need a clear economic strategy from the FM and the DFM – and that a strategy is not a strategy unless it rules some things out and recognises trade-offs and carries through into day-to-day activity. This clarity and policy stability is what is likely to be required to inspire the confidence in investors that this new administration would like to see.

Looking forward, not back

Many of the questions from journalists in the room today were designed to get the FM’s views on what went wrong with economic policy under the previous leadership, In addition, he was asked what his government was likely to do on policies like rent controls, short term lets legislation, and tax increases (specifically income tax) that have been put in place at the past budgets. Essentially, people were keen to hear what, in these specific areas, might change under a John Swinney government.

The FM said clearly that he was “looking forward, not back” in response to the question about what went wrong under Humza Yousaf.

With regards to specific policies where regulation was impacting businesses, he said his Cabinet colleagues were looking at lots of areas of policy and that more details on specific policies would be following in the weeks and months to come.

On tax, he was more forthcoming – acknowledging that the higher tax rates on above-median earners in Scotland are an important component of raising revenue in straitened fiscal times, but also saying that “we can’t keep raising taxes”. It will be interesting to see how this approach to tax is reflected in the Government’s Draft Tax Strategy, which is due alongside the Medium Term Financial Strategy (date currently tbc). That is if these two documents survive the cull of strategies …

Evidence-based approaches

The FM today said a number of times that the government he leads will be more practical and will be driven by the evidence of “what works”. We are very supportive of this, of course, and hope it signals a shift of more meaningful appraisal and assessment of policy options within the Scottish Government, with the associated investment in evaluation.

In doing this, unintended consequences, whether economic or otherwise, are more likely to be identified and can be proactively mitigated, and/or it can allow the government to change course at an earlier stage.

In addition, progress and continuous improvement can only happen in a culture of meaningful evaluation and being prepared to learn from what worked and what didn’t work.

For example, how well has the policy on rent freezes and caps worked to date? It would initially appear from rental costs that it has had the opposite effect on rents than the government presumably desired, and it would also appear to have had an impact on investor confidence in the sector. Given the FM’s focus on housing in his speech today, and his commitment to be evidence-based, it will be interesting to see how this policy area progresses.

Is this a meaningful shift in approach?

With his speech today, that is certainly what the FM is trying to convey. He was saying many of the right things to hearten those who want to see the government focus on economic growth.

However, the proof will be in the policy action that is actually taken. So, let’s wait for these details in the weeks to come.