Ian Murray welcomes recommendations by Joseph Rowntree Foundation and vows to work with Scottish Government to tackle associated issues and break down barriers
Scottish Secretary Ian Murray spoke at the launch of the Joseph Rowntree Foundation’s (JRF) annual report into poverty in Scotland this week [7 October].
The report, summarised here, found that one million people in Scotland are living in poverty and that one in four of them are children. Recommendations were made to overhaul the social security system to tackle the problem and, in particular, for the UK and Scottish Governments to work together to make the process smoother in terms of reserved and devolved policy areas.
Ian Murray said: “I want to outline some of the steps that the new UK Government is taking to reduce poverty in Scotland and across the whole of the UK.
“We are committed to working together with the Scottish Government, and to reset the relationship between our two governments. Because, as this latest report highlights, it is vital that we can deliver on behalf of the people of Scotland.
“I’ve spent a lot of time with organisations such as Poverty Alliance to understand fully the complexities of what’s happening.
“Having one million people in poverty – a quarter of those children – is really sobering. But I think the most sobering thing is that none of us are surprised, and that really should be the thing that we need to tackle in terms of policy.
“We are only 95 days into this new government and we’ve already done a lot of engagement to make sure we can develop these policies, whether it be in social security or regarding the underlying parts of poverty.
“With the Budget coming up on 30 October, the Chancellor has been clear on two things. One is the economic inheritance that we’ve got to try and deal with and that those with the broadest shoulders will carry the majority of what needs to be done to grow the economy for all parts of our country.
“Reducing poverty across all sections of society, particularly child poverty, is in our DNA. We did it before. Unfortunately, we’re going to have to do it again.
“We will be publishing our Employment Rights Bill this week to fundamentally transform work and pay. It will ban exploitative zero-hour contracts, outlaw fire and rehire and will make sure that the National Minimum Wage becomes a genuine living wage.
“It’s still sobering that two-thirds of children in poverty are in households where one or both adults are working full time, and that means that there’s a big problem with pay. We hope that our New Deal for Working People will start to resolve some of those issues.
“I think it’s also important to highlight our Universal Credit review, which will look at everything from the two-child cap to housing allowances.
“We’ve also launched our Child Poverty Task Force, chaired jointly by the Secretaries of State for Education and the Department of Work and Pensions. It looks at all the other big issues that are around in terms of poverty.
“Yes, it’s about the social security system, Universal Credit, but it’s also about housing, educational attainment, health inequalities, pay in the workplace, progression and skills. It’s about those underlying causes of poverty that are inherent in our society that we need to find a way to resolve once and for all.
“Having grown up on a council estate, I know that having that security of tenure of a house was the bedrock in which the family was built, and without that it’s difficult to see how you can get yourself out of poverty.
“Housing is devolved, but both governments are working very closely together to make sure that we can resolve the housing emergency that’s been declared across a lot of our local authorities.
“We’ve made a good start over the last 95 days. There will be bumps in the road, because these are fundamental challenges, but the whole culture of the new government is to try and resolve these issues.
“We want to make sure the system can work better, and joint working is really important in this area. There’s no reason why Social Security Scotland and the DWP can’t work jointly in terms of the delivery of social security, to make sure that we get the best out of both systems for the benefit of everyone who needs to access that system.
“Regarding the low update of benefits by ethnic minorities, I think that’s a huge challenge for us. Not just finding those individuals and families, but actually being able to engage with them and get them what they deserve to be claiming. That’s a huge battle for us all to try to work together and resolve.
“We’ve got four big priorities as a new government and as a Scotland Office. Growth is the number one priority, but that also feeds into our green agenda, which is our second priority. Our third one is Brand Scotland to try and increase our exports, to improve our businesses and create more jobs. And the fourth one, which attached the first three, is the eradication of poverty.
“That’s something that myself and Ministerial colleague Kirsty McNeill are fundamentally committed to doing. We can only do that by all of us – devolved governments, the UK Government and organisations like JRF working together. We must find ways we can not only make the system better, but make sure that those who require access to the system, get access to that system and get the funds and support they deserve.
“There’s a huge amount of work to be done and this report gives us that very sobering starting point.”
On 7 October, we’ll be launching our Poverty in Scotland 2024 report.
A key event in annual Challenge Poverty Week, this year’s report looks in detail at how the social security system is impacting on households in Scotland, as well as offering an overview of poverty rates in Scotland for different demographic groups.
Social security is an area where both the UK and Scottish Governments can have a huge positive impact on people’s lives. But how can policymakers in Holyrood and Westminster make the necessary changes to reduce the hardship faced in Scotland?
Find out at our launch event, available to join in person and online!
Technology and Innovation Centre, University of Strathclyde, 99 George St, Glasgow, G1 1RD
“Poverty statistics that hide the real scale of increases risk policymakers missing what is truly happening to poverty.”
Many households remortgaging or taking out new mortgages since 2022 have experienced sharp falls in their disposable income as higher interest rates have pushed up housing costs, and by December 2023 this is set to have pushed 320,000 such people into poverty. But official data do not measure mortgage interest payments properly, so official poverty statistics will only capture about two-thirds of this effect (230,000 people).
These are the findings of a new IFS report, released on Thursday and funded by the Joseph Rowntree Foundation, which examines recent trends in poverty and deprivation. Other key findings include:
Despite the pandemic and the cost-of-living crisis, the overall rate of absolute poverty was the same in 2022–23 as in 2019–20 (18%, or 12.0 million people), though it did rise slightly by 0.8 percentage points (520,000) between 2021–22 and 2022–23. But there was a significant increase in more direct measures of hardship. For example, the proportion of working-age adults who reported being unable to keep their home warm enough rose from 4% to 11% (1.8 million to 4.6 million) between 2019–20 and 2022–23, and the share who reported being behind on bills rose from 5% to 6% (2.1 million to 2.5 million).
Part of the difference is likely to relate to how the official statistics measure incomes and hence poverty. Higher energy and food prices mean that lower-income households and pensioners faced a higher inflation rate than average – but this is not captured by the official poverty statistics. Taking account of higher inflation for these households implies poverty rose by 210,000 more people than implied by official statistics for 2021–22 and 2022–23 (730,000 people rather than 520,000), including 80,000 pensioners.
In addition, the official statistics do not measure households’ mortgage interest payments directly, instead modelling them based on average interest rates. This matters when there is a growing spread of interest rates as some households come off their fixed rate: in 2022–23, mismeasurement of mortgage interest payments resulted in the number in poverty being understated by 70,000; as more fixed-term mortgages end, that number is set to rise to 150,000 (based on December 2023 interest rates).
There is evidence that mortgage rate rises have pushed some adults into financial hardship. Adults remortgaging in 2022 were 2 percentage points more likely to fall into arrears on bills than those with mortgages who had not remortgaged. This suggests that, once all households have remortgaged, the number of adults behind on bills could rise by 370,000.
Sam Ray-Chaudhuri, a Research Economist at IFS and an author of the report, said:‘Rising mortgage rates have played and are likely to continue to play an important role in many households’ living standards. But, perhaps surprisingly, they are not measured properly in the official income data.
“This has led to the headline statistics understating the number of people in poverty, something set to get worse in next year’s data. Poverty rises have also been understated due to the unequal impact of inflation.
“At a time when rates of deprivation and food insecurity have risen substantially, poverty statistics that hide the real scale of these increases risk policymakers missing what is truly happening to poverty.’
Peter Matejic, JRF Chief Analyst, said:‘This research shows the cost-of-living crisis wasn’t felt equally by everyone. Compared with before the COVID pandemic, many more people, especially those on a lower income, struggled to heat their homes or keep up with their bills.
‘One reason lower-income households went without essentials is because they faced a rate of inflation even higher than the headline numbers. High interest rates also saw many households forced into financial hardship after they remortgaged.
‘This report raises many questions about whether social security is adequate for the challenges looming over struggling households. The new government can’t wait for growth, after years of cuts, caps and freezes to social security have left families without the financial resilience and security they needed to cope with higher prices and costs.’
Commenting on the IFS report IFS on poverty, which shows that 320,000 people pushed into poverty because of mortgage interest rate rises, TUC General Secretary Paul Nowak said: “This surge in poverty shows the awful impact on people’s lives of the Conservatives’ economic and policy failures.
“It’s a poverty crisis that has been created by poor growth and social security cuts. Interest rate hikes came on top of the longest period of pay stagnation for more than 200 years.
“Rapid delivery of the government’s plan to make work pay will ensure more better-paid, secure jobs and help reduce poverty among working families.”
All political parties must explain how they will urgently tackle hardship this #GeneralElection, says the Joseph Rowntree Foundation. .
The latest findings from our cost-of-living survey, out today, found the number of households going without essentials hasn’t dropped below 7 million since May 2022. This is unacceptable.
Millions of low-income households are having to take drastic measures to cope with a crisis that is far from over:
-1.6 million households turned off their fridge or freezer
– 4.9 million households couldn’t replace worn out clothing
– 5 million households reduced showers
Meanwhile, party leaders remain silent on what they would do to address this in power. This should bring shame to a country as wealthy as ours.
Politicians must set out how they will bring an end to this relentless hardship. They need to tell us their immediate plan to help families who can’t afford life’s essentials – as well as their long-term strategy to tackle poverty.
Find out more about the relentless reality of years-long hardship for low-income families, here:
New research from the Joseph Rowntree Foundation (JRF) shows the relentless reality of years-long hardship for low-income families, with almost 5 million households finding themselves having to cut back on showers.
Those on the lowest incomes, over 5 million households, have continued to go hungry, skip meals and cut back on food.
Carried out immediately before the general election was called, the latest data shows the number of low-income households who are going without essentials like food, adequate clothing and a warm home hasn’t fallen below 7 million since May 2022.
JRF is calling on the politicians to set out their plans to tackle ongoing hardship. It found the bottom 20% of low-income households are facing levels of hardship that refuse to budge and whose situation is no better compared to last year, despite some improvements to the economic situation for families higher up the income scale.
Research from the Joseph Rowntree Foundation (JRF) finds that:
7 million low-income households (60%) were going without essentials in May this year. [3] [4]
5 million low-income households (42%) took fewer showers or baths due to cost during the cost-of-living crisis so far.
7 in 10 (71%) low-income households in the bottom 20% were going without essentials in May this year, the same as May last year.
Families on low incomes say they are still taking the same drastic measures to try and save money that were widely reported at the height of the cost-of-living crisis.
In May 2024, low-income households reported that they had taken the following measures through the cost-of-living crisis to cope, due to cost:
4.9 million couldn’t replace worn out or outgrown clothing (42%)
3.7 million sold their belongings (32%)
1.6 million turned off their fridge or freezer (13%)
6.8 million reduced their use of appliances (58%)
7.2 million heated their homes less than they needed to or less often (62%)
Those with the least are struggling the most, with levels of hardship staying at stubbornly high levels. In the last 12 months, the proportion of households going hungry, cutting down on food or skipping meals in the previous 30 days has not budged for those in the bottom 20% of incomes. But there is a slight improvement for those in the bottom 20-40% of incomes. [5]
Our social security system should act as a safety net for families who’ve fallen on hard times. However, 86% of low-income households who received Universal Credit were going without the essentials in May this year.
Rachelle Earwaker, Senior Economist at JRF, says: “The number of low-income families in our country who’ve been forced to choose which essentials to go without because they can’t afford them hasn’t fallen below seven million since May 2022. Despite inflation falling there has been no let up for the poorest families, who are just as likely to be going without food as last year.”
“We need our politicians to set out how they will bring an end to this relentless reality of hardship in the general election campaign.
“Political leaders need to tell us what they will do straight away to help families who can’t afford life’s essentials, as well as their long-term plans to tackle poverty.”
Today’s official annual poverty figures show that 600,000 more people, half of them children, are living in absolute poverty – the government’s preferred measure of poverty
Today’s official annual poverty figures show that:
600,000 more people, half of them children, are living in absolute poverty, the government’s preferred measure of poverty
This is the second year in a row absolute poverty has increased
In comparison to 2020/21, 900,000 more people are living in absolute poverty, 400,000 of them children
This the joint highest increase in this statistic for 40 years (since 1982) and is the same increase as was seen following the Global Financial Crisis (between 2010/11 and 2011/12)
100,000 more children are living in relative poverty since 2021/22, a slight increase. The overall figure has slightly decreased by 100,000. In comparison to 2020/21, 900,000 more people, 400,000 of them children, are living in relative poverty
Food insecurity has risen dramatically, increasing from 4.7 million people (7%) in 2021/22 to 7.2 million (11%) in 2022/23
Peter Matejic, Chief Analyst at the Joseph Rowntree Foundation, said: “The annual poverty figures published today confirm that the Government failed to protect the most vulnerable from the cost of living crisis. Absolute poverty, the Government’s preferred measure of poverty, has risen for the second year in a row. This is as big as we have seen for 40 years.
“At the same time, there is little to celebrate in the slight fall in overall relative poverty levels. This is largely due to the incomes of middle-income households falling, rather than people on the lowest incomes being better off. This is also likely to reverse now that earnings are growing faster than inflation.
“The Government’s short-term interventions to date haven’t stopped the incomes of poorer households from being swallowed up by the soaring cost of essentials. This is despite Jeremy Hunt speaking of his commitment to protect the most vulnerable in his Autumn Statement in 2022. These results show just how far away our social security system is from adequately supporting people who have fallen on hard times.
“The prospects for people on the lowest incomes should be at the forefront of politicians’ minds as we head into a general election. We need all political parties to treat this rise in poverty with the seriousness it deserves at the coming general election and set out an ambitious plan to reverse it.
“This must involve embedding an Essentials Guarantee into Universal Credit to ensure that everyone has a protected minimum amount of support to afford essentials.”
Hardship deepens as millions find the poverty line further out of reach
New analysis in the Joseph Rowntree Foundation (JRF) flagship UK Poverty report quantifies for the first time how many thousands of pounds are needed by families to escape poverty – and how that has got worse over time.It is now20 years and 6 prime ministerssince there was a sustained fall in poverty.
New analysis in the Joseph Rowntree Foundation (JRF) flagship UK Poverty report quantifies for the first time how many thousands of pounds are needed by families to escape poverty – and how that has got worse over time. It is now 20 years and 6 prime ministers since there was a sustained fall in poverty.
How much you would need to move out of poverty
The poverty gap, or the amount of money needed to bring the incomes of people in poverty to the poverty line, has grown wider. Six million of the poorest people – those living in very deep poverty – would need on average to more than double their income to move out of poverty.
Analysis of the latest data shows that the average person in poverty has an income 29% below the poverty line, with the gap up from 23% in the mid-1990s. The average income of people in very deep poverty – is 59% below the poverty line.
This is equivalent to a couple with two children under 14:
in poverty needing an additional £6,200 per year to reach the poverty line. In the mid 90’s, the gap was £3,300 after adjusting for inflation.
in very deep poverty needing a whopping £12,800 more to reach the poverty line.
Poverty increased in the latest official data, returning close to pre-pandemic levels
Over one in five people in the UK (22%) were in poverty in 2021/22
This equates to 14.4 million people in total, with 8.1 million working-age adults, 4.2 million children and 2.1 million pensioners living in poverty
Nearly two-thirds (64%) of working-age adults in poverty live in working households. This has increased by 3 percentage points, from 61% to 64%, between 2020/21 and 2021/22
The number and proportion of children and pensioners in poverty rose between 2020/21 and 2021/22, as well as overall poverty
Around two in every ten adults are in poverty in the UK, with about three in every ten children being in poverty
Around 6 million people lived in very deep poverty in 2021/22
JRF analysis of broader trends since the 1970s shows that poverty rates grew rapidly under the Thatcher Government, reaching around a quarter in the mid to late 1990s, and have remained stubbornly high since then.
Poverty fell during the first half of the New Labour administration but started to rise after 2005. Overall, poverty has barely moved since Conservative-led Governments took power in 2010, with every year’s poverty rate since then being between 20% and 22%.
At the same time, the British public is more conscious of rising poverty levels in society. Since 2017, the majority agree that the government should increase tax and spending on health, education and other social benefits.
As we approach a general election, political parties must urgently address entrenched high levels of poverty by:
Introducing an ‘Essentials Guarantee’ into Universal Credit, to ensure that everyone has a protected minimum amount of support to afford essentials like food and household bills.
Beyond this, future governments must focus on expanding the foundations of economic security to everyone in our society. People experiencing poverty, especially deep poverty, will be looking for plans from parties to ensure that they are not left unprotected when times are hard.
Paul Kissack, Group Chief Executive of the Joseph Rowntree Foundation, says: “It has been almost twenty years and six Prime Ministers since the last prolonged period of falling poverty in the UK. Instead, over the last two decades, we have seen poverty deepen, with more and more families falling further and further below the poverty line.
“Little wonder that the visceral signs of hardship and destitution are all around us – from rocketing use of foodbanks to growing numbers of homeless families. This is social failure at scale. It is a story of both moral and fiscal irresponsibility – an affront to the dignity of those living in hardship, while driving up pressures on public services like the NHS.
“It’s a story which can – and must – change. Governments are not powerless to act, as we have seen throughout our history. One way politicians can take action in the next parliament is to enshrine in law a guarantee that people will always be able to afford the essentials, such as food and household bills, through our benefits system.
“2024 will be a year of choices, and any political party wishing to form a new Government must set out a practical and ambitious plan to turn back the tide on poverty in the UK. That plan – to ensure the dignity and respect of every member of our society – will be essential for achieving any broader ambitions for the country”.
Martin Lewis, Founder of MoneySavingExpert.com & The Money & Mental Health Policy Institute Charitysaid: “I warned at the start of the energy crisis that I was out of tools to help many on the lowest incomes. “
“Now we have hit the stark reality that 100,000s of people in the UK, even after they’ve had professional help from money charities, are still deficit budgeting – so their income is less than their minimum necessary expenditure.
“Definitions of poverty are tricky, especially when based on relative incomes, but that smells like a clear indication the problem is getting worse.
“And let’s be plain, once people are in the deepest mire, it’s not a Money Saving Expert you need, its policy makers and regulators to sit up take note and address these deep rooted problems – which is exactly what I hope they do with this Joseph Rowntree Foundation report highlighting the situation and calling for change.”
Number of people in poverty and poverty rates for different groups, UK, 2021/22
Plan for stronger economy will reward hard work, putting £450 back into the pocket of the average worker earning £35,400 a year thanks to National Insurance tax cut from 12% to 10% for 27 million working people from January.
Tax to be cut and simplified for 2 million of the self-employed, abolishing an entire class of NICs and cutting the rate of the NICs top rate from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year.
Biggest permanent tax cut in modern British history for businesses will help them invest for less and boost investment by £20 billion per year over the next decade.
Triple lock maintained for pensioners, benefits to rise in line with inflation and Local Housing Allowance increased to continue supporting families with the cost-of-living. Government is making work pay.
National Living Wage rise represents boost of £1,800 to the average annual earnings of a full-time worker, and the Back to Work Plan will help over a million people start, stay, and succeed in work while ensuring tougher consequences for those choosing not to.
Great British pubs, breweries and distillers backed by freezing alcohol duty for six months to August 2024.
Public finances in a better position than in March thanks to government action, with borrowing and debt as a share of the economy down on average across the next five years.
Autumn Statement gets the economy growing, debt falling and helps return inflation to its 2% target – long-term decisions to build a brighter future.
Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ yesterday.
Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers – the biggest tax cut on work since the 1980s.
With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.
To that end, Mr Hunt announced that a 2 percentage point cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.
For the average worker earning £35,400 a year, that amounts to an over £450 annual tax cut – almost immediately improving living standards for millions of people and rewarding hard-work as the government builds an economy for the future.
Taxes for the self-employed will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, saving the average self-employed person on £28,200 a year £350 in 2024/25.
Taken together, this is a tax cut of over £9 billion per year and represents the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) says these reductions will lead to an additional 28,000 people entering work.
Cutting National Insurance will not lead to any change in NHS funding or pension payments. Services will remain unchanged and continue to be funded as they are now.
Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.
Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy.
With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany.
Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.
To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase.
The Chancellor also reinforced the new £2.5 billion Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to.
The Chancellor also announced that the government will honour its commitment to the triple lock in full, with the state pension to increase by 8.5% in April in what is the second biggest ever cash increase. Universal Credit and other working age benefits will also be boosted by 6.7% in April, in line with September’s inflation figure as is convention.
Further action to help families includes increasing the Local Housing Allowance rate to cover the lowest 30% of rents from April – benefiting 1.6 million households with an average gain of £800 in 2024/25 – and an alcohol duty freeze to 1st August 2024, following common-sense changes of the duty system made possible by Brexit.
Measures today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.
Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.
Tax
With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.
The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate. The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.
Business
Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.
Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
A business rates support package worth £4.3 billion over the next 5 years will help high streets and protect those small businesses that are the backbones of communities. This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.
Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.
The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.
Work and welfare reform
Mr Hunt set out steps to reward work, help make work pay, and reform welfare in recognition of the need to expand the workforce and get those out of work back into work to deliver growth.
The OBR expect that the measures announced at Autumn Statement will support a further 78,000 people into work by 2028-29, on top of the 110,000 resulting from action taken at Spring Budget.
From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2.7 million low paid workers.
The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.
The government is reforming the Work Capability Assessment to ensure that people who can work are supported to do so via the welfare system. Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.
The boosting of four key programmes – NHS Talking Therapies, Individual Placement and Support, Restart and Universal Support – will benefit up to 1.1 million people over the next five years.
The government is exploring reforms of the fit note process to provide individuals whose health affects their ability to work with easy and rapid access to specialised work and health support.
Mandatory work placements will boost skills and employability for those who have not found a job after 18 months of intensive support. Those who choose not to engage with the work search process for six months will have their claims closed and benefits stopped.
Infrastructure and levelling up
The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities.
£4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure.
Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade.
The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up.
£500 million of funding over the next two years will help establish two more Compute innovation centres, supporting the development of artificial intelligence as a growth opportunity for Britain.
The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.
To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
Scottish Secretary Alister Jack said: ““This is an Autumn Statement to support hard working families and grow our country’s economy. It is great news for Scotland.
“The National Insurance cut and increase in the National Living Wage will mean a pay boost for millions of workers right across Scotland. We have honoured the pensions triple lock, meaning pensioners will get a £900 a year increase.
“Vital new support for Scottish businesses will ensure we get growth back into our economy.
“The Chancellor confirmed more than £200 million of new, direct UK Government investment in exciting projects across Scotland, which will create jobs, boost growth and transform communities.
“Plus, there will be an additional £545 million in Barnett Consequentials for the Scottish Government, on top of their record block grant.
“There is a lot to cheer about, not least the duty freeze on spirits to support Scotland’s biggest export industry.”
Rain Newton-Smith, Chief Executive, Confederation of British Industry said:“With tough decisions to be made, the Chancellor was right to prioritise ‘game-changing’ interventions that will fire the economy.
“While the move on National Insurance will give hard-pressed households some much needed breathing room, making full capital expensing a permanent feature of the tax system can be transformational for accelerating growth and improving living standards in the long-term.
“Helping firms to unleash pent-up investment is critical to getting momentum into the economy. Making full expensing permanent will give firms the stability they need to press on with decisions on investment whilst keeping the UK at the top table internationally for investment incentives.
“Moves to speed up planning and grid connectivity should also bolster business confidence to invest in high growth areas like green technologies, renewable energy and advanced manufacturing.”
Eve Williams, General Manager, eBay UK said: “The hundreds of thousands of UK small businesses who use eBay and other online marketplaces will warmly welcome the Chancellor’s cuts in national insurance, more support for the self-employed, as well as the decision to make permanent full expensing.
“There are enormous productivity gains to be had from encouraging the long tail of Britain’s SMEs to invest in existing digital technologies. And given that around half of our online businesses also trade offline, they will benefit hugely from the measures on business rates for retail as well as freezing the business rate multiplier.”
Kate Nicholls, Chief Executive, UKHospitality said:“The Chancellor has brought forward a significant package of business rates measures that will help hospitality businesses across the country. UKHospitality led the calls for Government to extend relief and take action on the multiplier and I’m delighted the Chancellor has acted on our asks.
“Reforms to the planning system to drive quicker approvals will remove a significant barrier to business investment. This type of reform to reward the best performing local planning authorities is exactly the type of change we have been suggesting to drive growth in hospitality.
“We’re also pleased that the Chancellor has acted on our proposal and frozen alcohol duty until August next year to support our supply chain.
“The reduction in National Insurance for employees will put more money in people’s pockets and provide a boost to hospitality in the New Year, often a challenging time for the sector.”
Responding to the freeze in alcohol duty until 1 August 2024
Nuno Teles, Managing Director, Diageo GB said:“Today we raise a glass to the Chancellor and the Prime Minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK.
“Drinkers and pub-goers across the country now have even more reason to celebrate this festive season. Cheers, Chancellor!”
Responding to the announcement of £7million of funding to tackle antisemitism
Mark Gardiner, Chief Executive, Community Security Trust (CST) said:“The commitment to fund education to tackle antisemitism in universities and schools, alongside the promise to continue the increase in funding for security guarding in the Jewish community, is not just a welcome, concrete contribution to the fight against antisemitism: it sends an important and powerful message to the Jewish community that we have the sympathy and support of government in this struggle.
“We are grateful for the Chancellor for this commitment and we will work with government and communal partners to ensure it is put to effective use.”
Responding to the protection of the Triple lock
Caroline Abrahams, Influencing Director, Age UK said:“We’re pleased and relieved the Government kept its promise to older people to honour the Triple Lock.
“For the 4.2 million older people who recently cut back on food and groceries to make ends meet, having a State Pension that delivers the basics in life is essential.
“Today’s decision also crucially makes is more likely that older people will keep their homes adequately warm this winter, with less fear of facing an energy bill they simply cannot afford to pay come the spring.”
Responding to the support for Veterans
Anna Wright, Chief Executive, the Armed Forces Covenant Fund Trust said: “We are delighted by Chancellor of the Exchequer’s announcement of an additional £10 million to support the Veterans’ Places, People and Pathways programme.
“These projects have delivered significant work already to support our veterans, growing collaborative cross sector working and giving a more seamless interface between statutory and charity or not for profit support.
“They have great potential to help even more veterans, and further develop better, more inclusive local support and better coordination and communication that sustains into the future”
Autumn Statement offers ‘worst case scenario’ for Scotland
Deputy First Minister responds to announcements from Chancellor
The Autumn Statement delivered the ‘worst case scenario’ for Scotland’s finances and failed to live up to the challenges posed by the cost of living and climate crises, Deputy First Minister Shona Robison has said.
The statement failed to deliver the investment needed in services and infrastructure, Ms Robison said. While welcoming the increase in the statutory minimum wage, she said this did not go far enough and fell well short of the Real Living Wage of £12 an hour for 2024-25.
The Deputy First Minister said: ““Today’s Autumn Statement from the UK Government has delivered what is the worst case scenario for Scotland’s finances. Scotland needed a fair deal on investment for infrastructure, public services and pay deals – the UK Government has let Scotland down on every count.
“We needed investment in the services that people rely on and in infrastructure vital to the economy, but the Chancellor’s actions failed to live up to the challenges we are facing as a nation, while not doing enough to help those on the lowest incomes.
“The cut to National Insurance shows the UK Government has the wrong priorities at the wrong time, depriving public services of vital funding. Shockingly, the health funding announced today represents an increase of less than 0.06% to Scotland’s health budget in 2023-24 of £19.138 billion.
“The increases to the state pension and Local Housing Allowance are welcome, but the increase to the minimum wage falls well short of the Real Living Wage. Some of the measures for businesses are also positive, but they come in the face of UK growth having been projected downwards as a result of Brexit and the UK Government’s mismanagement of the economy.
“As global temperatures push ever higher, the Autumn Statement was a chance to fund efforts to cut the UK’s carbon emissions – but it did not. It’s not enough to say they support measures to encourage more renewable energy developments and expand the UK’s electricity grid need. It needs to be matched with funding to actually deliver and help us meet our net zero targets.
“We will now assess the full implications of today’s statement as we develop a Budget that meets the needs of the people of Scotland, in line with our missions of equality, community and opportunity.”
The Scottish Budget will be announced on 19 December.
TUC: Hunt’s Autumn Statement “is a plan for levelling the country down”
Chancellor has confirmed “another round of punishing spending cuts to public services and investment”
Cutting NI won’t make up for “13 continued “years of economic failure on living standards and growth”
Growth forecasts revised down with real wages set to remain below 2008 level until 2028
“The Conservatives have broken Britain. They cannot be trusted to fix it,” says TUC
Commenting on the Autumn Statement, TUC General Secretary Paul Nowak said: “This is not a plan for rebuilding Britain. It’s a plan for levelling the country down.
“At a time when our schools and hospitals are crumbling – the Chancellor has confirmed another round of punishing and undeliverable spending cuts to public services and investment.
“Be in no doubt – if the Tories win the next election, even more austerity is on the way.
“Cutting national insurance won’t make up for 13 continued years of economic failure on wages and living standards.
“Jeremy Hunt has nothing to smile about when working people are on course for a 20-year real wage freeze.
“The Conservatives have broken Britain. They cannot be trusted to fix it.”
Responding to the 2023/24 Autumn Statement, SCVO Chief Executive Anna Fowlie, said: “I share the disappointment of other voluntary sector bodies that this week’s budget Autumn Statement did not recognise the essential services and support of voluntary organisations both in Scotland and across the UK.
“Our sector is a major employer, a partner in delivering public services, and a vital contributor to society and the economy.
“The last few years have been a period of significant change and upheaval for Scottish voluntary organisations, their staff and volunteers, and the people and communities they work with. Rising inflation and the resulting cost-of-living crisis and running costs crisis has strained sector finances and increased demand for the support and services many organisations provide, as demonstrated in our Third Sector Tracker.
“This crisis is not over. We welcome the increase in the National Living Wage which will offer some support to the lowest paid, but to meet the rising cost-of-living this needed to go further, lifting both the National Living Wage and the National Minimum Wage to at least Real Living Wage.
“Our sector is central to building a stronger economy and offers specialist support to those furthest from the labour market and should be included in these plans.
“To protect our sector’s essential contributions for the future, underfunding and a lack of inflation-based uplifts in grants and contracts needed to be addressed in this statement. As people and communities struggle through the largest reduction in household incomes since records began in the 1950s, our support will be needed more than ever.”
The UK has seen a “shameful increase” in destitution, though Scotland has had “by far the lowest” rise in the numbers, a new report has found.
Research by the Joseph Rowntree Foundation (JRF) found that across the UK, there were an estimated 3.8 million people suffering from destitution – with this including more than one million children.
According to the report, rising levels of destitution mean almost two-and-a-half times as many people are suffering as there were in 2017, with nearly three times as many youngsters affected.
Rates of destitution – where people are not able to afford to meet their basic needs to stay warm, dry, clean and fed – were highest in the London borough of Newham, it found.
While Glasgow City Council was ranked 26th in the 30 local authorities with the worst rates of destitution, it had dropped 16 places from the previous report in 2019.
The report found that at a regional level, London had the highest destitution levels in 2022, followed by the North East and the North West of England, and then the West Midlands.
The regions in the south of England had the lowest rates of destitution, with both Wales and Scotland having rates comparable with the Midlands.
While destitution had increased in all regions of the UK over the period 2019 to 2022, the report found Scotland’s position had improved “with by far the lowest increase since 2019”.
It added: “This may be indicative of the growing divergence in welfare benefits policies in Scotland, notably the introduction of the Scottish Child Payment.”
The benefit, which was introduced in Scotland in 2021, gives £25 per child under 16 a week to eligible low-income families.
The report, the fourth in a series by the JRF, with research carried out by Edinburgh’s Heriot-Watt University, found overall “there has been a shameful increase in the level of destitution in the UK”.
It highlighted the “growing number of people struggling to afford to meet their most basic physical needs to stay warm, dry, clean and fed”, insisting there was now an “urgent need for action”.
Stating that the problem has “been increasing at an alarming rate since 2017” the report added: “Around 1.8 million households were destitute in the UK at some point over the course of 2022.
“These households contained around 3.8 million people, of whom around a million were children.”
It found that as in previous studies, food was the most common essential that people struggling with destitution lacked in 2022.
But with energy bills having risen rapidly, heating was the second most common thing for people to struggle with, followed by clothes and toiletries.
The report calls on the UK Government to introduce an “Essentials Guarantee” into Universal Credit payments, ensuring that the basic amount people receive covers all basic needs “such as food, energy, toiletries and cleaning products”.
Doing this “would have a significant impact on destitution”, the report says.
However, Chris Birt, associate director for the JRF in Scotland said governments at both Holyrood and Westminster needed to “step up” to deal with the problem.
He said: “The UK is a country with dramatically increasing destitution, where millions of people can’t afford heating or can’t afford the basic essentials like clothes or food. In a country this wealthy, that is outrageous.
“But this needn’t be the case, destitution in Scotland is rising much more slowly than in other parts of the UK with the Scottish Child Payment and local welfare support offering some protection.
“Despite this, there is no cause for celebration when destitution numbers aren’t falling.
Mr Birt continued: “It is time for both governments to step up to this challenge that years of failed government policy have caused.
“This is particularly acute for the UK Government and all the parties that are bidding to run it after the next election – they must come through for the Scottish people by embracing the Essentials Guarantee.
“The Scottish Government can also do more and will need to show it is willing to turn the tide on destitution in its forthcoming budget.”
Social Justice Secretary Shirley-Anne Somerville said that this year and last year the Scottish Government had “allocated almost £3 billion to support policies to tackle poverty and to protect people as far as possible during the cost-of-living crisis, especially those are most impacted”.
She added that as of the end of June, the Scottish Child Payment was providing 316,000 children with support worth £25 per week, with the Scottish Government also making £83.7 million available through Discretionary Housing Payments to “mitigate UK government welfare cuts”.
Ms Somerville said: “We estimate that 90,000 fewer children will live in relative and absolute poverty this year as a result of our policies, with poverty levels nine percentage points lower than they would have otherwise been.
“We continue to urge the UK Government to introduce an Essentials Guarantee to ensure people can afford life’s essentials and ensure vulnerable people are properly supported.”
An NSPCC spokesperson said: “Everybody, of any age, deserves to live with dignity. These shocking figures are a stark wake-up call about the increasing number of children facing the physical and emotional hardship of living in extreme poverty.
“Evidence shows that poverty can result in families, through no fault of their own, struggling to meet their child’s most basic needs so they can grow up in a happy, healthy and safe environment.
“Governments in the UK need to act now to address these spiralling levels of poverty and turn the tide for families who desperately need help.
“This means concerted action to reduce child poverty as well as significant investment in children’s services so families who are struggling get timely and meaningful support.”
Discussions about the necessities and trade-offs around the transition to net zero are back on the news agenda this week (write Fraser of Allander Institute’s EMMA CONGREVER and CIARA CRUMMEY).
The changes required to meet net zero targets are complex and challenging yet the risks of not doing enough are immense. Inherent in this are trade-offs but also opportunities. An ordered transition where businesses and households have certainty over what they will need to do is the best way to minimise harm to incomes and to maximise the benefits that can be realised.
For many businesses and households, the costs associated transition to net zero will be manageable, and perhaps even cost effective in the long run. But for some, the upfront costs will be difficult to manage.
Whilst there is a general awareness of the direct costs that will fall on households from, for example the phasing out of gas boilers (a devolved policy, so not affected by the UK Prime Minister’s recent announcement) there is also the impact in livelihoods due to changes in the structure of the economy.
At the moment, all the attention is on the ‘just transition’ for workers in carbon-intensive industries, in the North East in particular. But the impact on jobs could be far wider than this.
The Joseph Rowntree Foundation asked us, along with colleagues in the Strathclyde Business School, to look into the potential for disruption to jobs in the wider Scottish economy, particularly in relation to low paid jobs. Our assessment of the available literature and various Scottish Government plans, reports and action plans didn’t provide much to go on, so we embarked on some experimental mapping and modelling of the potential intersection of net zero and low pay.
Today we published a report that we hope provides a rationale and a way forward for government, and others, to consider this issue fully. Whilst we can’t yet confidently put a figure on it, we have found that there is potential for significant disruption to jobs in sectors that employ large numbers of low pay workers, including retail and hospitality.
The mechanisms through which this impact could be felt are varied. Issues we looked at included the knock-on impact from depressed wages in areas where carbon intensive businesses cease trading. We also considered the impact on the viability of businesses with large commercial footprints who may need to invest large amounts to bring buildings up to new energy efficient standards.
There are many unknowns in this type of analysis, including the sufficiency of government policy and the behavioural response from consumers. For example, the Scottish Government is hoping to see car use reduced in Scotland.
Households may also independently decide they wish to reduce car use. It is easy to see how this could impact on the viability of out-of-town shopping centres that rely on customers arriving by car and if there aren’t serious efforts to provide adequate replacement public transport or alternative active travel routes, these large centres of employment may become unviable.
Some of the scenarios that we work through may not lead to jobs disappearing completely, but simply shifting to other places or other sectors. There are two further issues to consider here. Firstly, low paid workers tend to be less flexible on where they can work, due to a variety of factors including available transport and difficulties finding affordable childcare to cover long commuting times.
They also tend have less of a financial buffer to deal with even short periods of unemployment. Secondly, simply moving low paid jobs from one place to another misses a crucial opportunity to maximise the benefits that the transition to net zero could bring by providing career pathways into new, higher paid, growth sectors.
There is an opportunity here to better join up Scottish Government ambitions on tackling poverty and the transition to net zero that is currently missing from both the Just Transition plans and the Fair Work Action Plan. We hope this analysis will be useful in informing the future development of this work.
BPS SUPPORTS CAMPAIGN TO MAKE UNIVERSAL CREDIT ENOUGH FOR PEOPLE TO AFFORD TO COVER ESSENTIALS
The British Psychological Society has joined the Joseph Rowntree Foundation (JRF), the Trussell Trust, and other leading health and care organisations and charities to call for an “Essentials Guarantee”, a new law to make sure Universal Credit’s basic rate is always at least enough for people to afford the essentials.
The organisations are warning that so many people are routinely going without the essentials it poses a serious risk to the UK’s health.
Together, they have written to the Prime Minister to express their worry that, as the high prices of everyday essentials like food and housing persist, too many people are expected to live with what can be devastating knock-on consequences.
JRF’s own analysis shows the weekly Universal Credit standard allowance is £35 less than the cost of essential items for a single person, contributing to millions of people forced to use food banks because they can’t make ends meet.
Dr Roman Raczka, President-Elect of the British Psychological Society, and Chair of its Division for Clinical Psychology, said:“Nobody should be in a position of being unable to afford the essentials they and their families need to sustain their health and wellbeing, and it’s clear the current level of Universal Credit falls woefully short.
“Poverty is one of the major risk factors for the development of physical and mental health problems, and we know that children growing up in poverty are three-to-four times more likely to develop mental health problems, which also leads to long-term impacts upon their education, life chances and quality of life.
“If the government is truly committed to preventing health inequalities from widening further, tackling poverty, and reducing pressure on our already stretched and underfunded public services, it must commit to the Essentials Guarantee to protect this generation, and generations to come.”
About the Essentials Guarantee
The Essentials Guarantee would embed in our social security system the widely supported principle that, at a minimum, Universal Credit should protect people from going without essentials.
Developed in line with public attitude insights and focus groups, this policy would enshrine in legislation:
an independent process to regularly determine the Essentials Guarantee level, based on the cost of essentials (such as food, utilities and vital household items) for the adults in a household (excluding rent and council tax);
that Universal Credit’s standard allowance must at least meet this level; and
that deductions (such as debt repayments to government, or as a result of the benefit cap) can never pull support below this level.
The UK Government would be required to set the level of the Essentials Guarantee at least annually, based on the recommendation of the independent process. JRF analysis indicates that it would need to be at least around £120 a week for a single adult and £200 for a couple.
Technology and Innovation Centre, University of Strathclyde, 99 George St, Glasgow, G1 1RD
All political parties must explain how they will urgently tackle hardship this 
Politicians must set out how they will bring an end to this relentless hardship. They need to tell us their immediate plan to help families who can’t afford life’s essentials – as well as their long-term strategy to tackle poverty.
