MPs will examine whether the Government understands the true scale of the challenge of addressing financial exclusion, as well as what steps must be taken to make a meaningful difference to people’s lives.
It will also consider the effectiveness of current measures, such as banking hubs, and explore whether further interventions may be needed to improve financial inclusion in the future.
This follows the Committee’s report on whether organisations should be forced to accept cash, which was published earlier this year.
In its report, the Committee concluded that a lack of action from the Government to tackle declining cash acceptance could lead to a two-tier society with the most vulnerable bearing the cost.
Chair of the Treasury Committee, Dame Meg Hillier, said: “The Government has set out its stall on improving financial inclusion in this country, so now the Committee will have a closer look at whether it’s likely to make a meaningful difference to people’s lives.
“Improving financial inclusion must not be a box-ticking exercise. Words must lead to action.
“The Treasury must have a strategic vision, supported by concrete, integrated plans with clear methods for measuring their impact, and they must work closely with the private sector on this. My Committee will work to ensure that happens.”
Agreement reached with key stakeholders on the unfair dismissal elements of the Employment Rights Bill
ANOTHER MANIFESTO PLEDGE DITCHED?
The UK Government convened a series of constructive conversations between trade unions and business representatives.On the basis of the outcome of these discussions, the Government will now move forward on the issue of unfair dismissal protections in the Employment Rights Bill to ensure it can reach Royal Assent and keep to the Government’s published delivery timeline.
This will mean delivering day one rights to sick pay and paternity leave in April 2026 as well as launching the Fair Work Agency. Reforms to benefit millions of working people, including some of the lowest paid workers, would otherwise be significantly delayed if the Bill does not reach Royal Assent in line with our delivery timetable. Businesses too need time to prepare for what are a series of significant changes.
The discussions concluded that reducing the qualifying period for unfair dismissal from 24 months to 6 months (whilst maintaining existing day one protection against discrimination and automatically unfair grounds for dismissal) is a workable package. It will benefit millions of working people who will gain new rights and offer business and employers much needed clarity.
To further strengthen these protections, the Government has committed to ensure that the unfair dismissal qualifying period can only be varied by primary legislation and that the compensation cap will be lifted.
As a result of these constructive conversations, tabling of the necessary amendments, and a commitment by the Government to a robust process to ensure full, fair and transparent consultation and discussion on the detail and application of the secondary legislation, businesses and unions agree that the Bill can progress.
This will enable the Government to deliver the necessary consultations and implementation in line with its timetable and manifesto commitments to Make Work Pay.
The Government was pleased to facilitate these discussions and to set an example of the benefits of working together, and remains committed to continue engaging with trade unions, business and employers to make working lives better, support businesses and, vitally, deliver economic growth and good job creation.
The Government is particularly aware of the need to support small businesses in the effective adoption of these changes. Constructive dialogue and full consultation with business, employers and unions will continue beyond the passage of the Bill.
The TUC said: ‘Government will reduce the qualifying period for full protection from unfair dismissal from two years to six months. There’ll also be no statutory probation period.
“The Employment Rights Bill is essential to better quality, more secure jobs for millions of workers. The absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.
“Following the government’s announcement, it’s now vital that Peers respect Labour’s manifesto mandate and that this Bill secures Royal Assent as quickly as possible.”
Scottish families will benefit from a Budget to cut the cost-of-living, create more high skilled jobs and invest in public services, as the Chancellor reaffirmed her commitment to drive economic growth.
Chancellor announces fair deal for working families with removal of two-child benefit cap, energy bill saving and fuel duty freeze
Scottish industry backed by investments in Grangemouth, Greenock, Leith and Fife
Public services backed with extra £820 million for Scottish Government
Rachel Reeves recognised Scotland’s huge £204 billion annual contribution to the UK economy with investments in Grangemouth, Greenock, Leith and Kirkcaldy, and provided long-term certainty to the oil and gas industry to support North Sea jobs and investment.
Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.
Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves announced £150 off energy bills, a fuel duty freeze, and national minimum and living wage rises.
The Chancellor announced the removal of the two-child limit. 95,000 children in Scotland will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.
The Chancellor’s Budget also ensured that Scottish public services are fairly-funded, with an extra £820 million for public services in Scotland through the Barnett Formula, on top of a record settlement in June.
Secretary of State for Scotland, Douglas Alexander MP said: “This is a Budget which delivers for Scotland – raising children out of poverty and helping tackle the cost of living for working families with action on energy bills.
“Scrapping the two-child benefit cap will lift thousands of Scottish children out of poverty. Funded by raising online gambling taxes and tackling welfare fraud, it will result in the biggest reduction in child poverty at any Budget this century.
"This is a budget that we were determined to deliver and to make sure address the priorities and the needs of the people of Scotland."
“The UK Government has backed Scotland’s public services with an extra £820 million — on top of the extra annual £9.1 billion already committed at the Spending Review.
“The £14.5 million announced for Grangemouth is also vital investment in Scotland.”
Ms Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.
Backing Scottish industry
£14.5 million will back Grangemouth’s transition to a hub for low carbon technologies as the UK Government cements Scotland’s place as the home of the UK’s clean energy revolution.
A further £20 million for Inchgreen near Greenock will upgrade the port’s dry dock, creating up to 1,750 jobs.
Up to £20 million will transform Kirkcaldy town centre and waterfront, including the creation of ‘Adam Smith Growth Works’, boosting local business and tourism.
£25 million will be released following the full sign-off of Forth Green Freeport – spanning Leith, Grangemouth and Fife.
To support oil and gas workers, the UK Government is introducing ‘Transitional Energy Certificates’ to manage existing North Sea fields for the entirety of their lifespan, and a new Jobs Brokerage Service – offering end-to-end career transition support.
Tackling child poverty, the cost-of-living and economic inactivity
95,000 children in Scotland will benefit from the removal of the two-child limit.
Raising the National Living Wage by 4.1% and the National Minimum Wage by 8.5% —building on April 2025 increases to the National Living Wage and National Minimum Wage that already directly benefitted 220,000 workers in Scotland.
Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 1.1 million pensioners in Scotland.
Extending the fuel duty freeze and 5p cut, saving the average car driver £49 next year.
Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.
Public services investment
The Budget provides an extra £820 million for the Scottish Government to spend on its priorities such as education and tackling NHS waiting times— on top of the extra £9.1 billion already committed during the Spending Review.
The Scottish Government continues to receive over 20% more funding per person than equivalent UK Government spending across the rest of the UK reflecting the real costs of delivering services across Scotland’s diverse geography, from the Highlands to the central belt.
Holyrood: ‘Chaotic’ UK Budget fails to deliver for Scotland
Finance Secretary responds to Chancellor’s statement
The UK Budget “fails to deliver” for Scotland and will not move the dial on the cost of living for squeezed households, according to Holyrood’s Finance Secretary Shona Robison.
Responding to the Chancellor of the Exchequer’s statement, Ms Robison said: “This Budget has been absolute chaos from start to finish. Westminster has been consumed with leaks, briefings and out and out incompetence – with Scotland left as an afterthought and families left to pay the price.
“We needed a step change from the UK Government with investment in public services, support for jobs and industry in Scotland and serious action on energy bills. Instead, we got a chaotic mess and the increase in funding for the Scottish Government will not even cover half the cost of the employer’s national insurance contributions brought in this year.
“With UK energy bills £340 higher than the Prime Minister promised even after today’s announcement, the UK Government are not even trying to deliver on the their promises. It is insulting to see the UK Government stand up and trumpet a proposed reduction that does not even cover the increase since they came to office.
“It does not come close to meeting the Prime Minister’s pledge on energy bills – they have not even attempted to keep their promises.
“The electric vehicle tax is the wrong decision for motorists, the climate and for Scotland given its disproportionate impact on rural drivers.
“And there is no serious support for jobs and industry in Scotland. The Energy Profits Levy is to remain in place – risking thousands of jobs in Scotland and in the North East in particular. Yet again, Scotland is an afterthought.
“And while the moves on the two child cap are welcome, they are long overdue and the UK Government has been forced into this position by the Scottish Government and other campaigners. And without a simultaneous change to the benefit cap it falls well short of the bold anti-poverty measures we have been calling for from the UK Government.
“But the complete chaos around this Budget gets to the heart of the fact that we should not be leaving crucial decisions around the economy, public finances and household bills in the hands of a deeply incompetent Westminster UK government. We should take these decisions for ourselves with the fresh start of independence.”
The impact of the increase Employers National Insurance contributions on public services is forecast to cost the Scottish Government at least £2 billion over the next five years.
Responding to the UK Government’s Budget, Poverty Alliance Chief Executive Peter Kelly said: “The Chancellor’s decision to fully scrap the unjust two-child limit is the right thing to do.
“For eight years, this cruel policy has severed the link between what families across the country need and the support they are entitled to, pushing children into poverty and limiting their potential. Our children deserve better.
“Campaigners across Scotland have been unified in their demand to scrap the two-child limit and we are pleased that the UK Government has listened, sending a strong message that every child in this country matters. The end of this policy must be the starting point of reform which ensures that our social security system truly provides security.
“This decision also frees up money earmarked for the mitigation of the policy in the Scottish Budget. Coupled with the additional £820 million allocated to the Scottish Government in this UK Budget, this will allow further investment in the action we know is needed to meet our child poverty targets, including increases to the Scottish Child Payment.”
Commenting on the UK Government’s Budget response, Debbie Horne, Scotland Policy and Public Affairs Manager for Independent Age said: “The Autumn Budget was an opportunity to address pensioner poverty across the UK. However, the UK Government has sadly missed the chance to take action on an issue that now affects almost two million older people across the UK, including 160,000 pensioners in Scotland.
“While we welcome the retention of the Triple Lock, this measure alone does not go far enough for older people on the lowest incomes who are living across Scotland in cold homes and with not enough money to live on.
“We continue to call on the UK Government to increase the Warm Home Discount to ease the burden of escalating bills, to support older private renters by uprating Local Housing Allowance so no one has to make dangerous sacrifices to pay their rent, and to boost income through a comprehensive take-up strategy for entitlements, including Pension Credit.
“The absence of meaningful action to address later-life poverty will leave many older people on a low income in Scotland feeling forgottenand many will be worried about losing more of it in tax, because of the extension of the freeze on personal tax allowances to 2031, a year longer than was expected.
“We estimate that without decisive government intervention almost 190,000 pensioners in Scotland could be in poverty by 2040. Worryingly, nothing in this Budget suggests we are being steered away from this frightening outcome.”
Mary Glasgow, Chief Executive of Children First, Scotland’s national children’s charity said: “We welcome the UK Government’s decision to scrap the two-child limit as outlined in the Office for Budget Responsibility report. This is long overdue and frees up Scottish Government budget for other crucial support for children and families.
“Poverty has a devastating impact on children’s mental and physical health, development, happiness and ability to learn that can last a lifetime.
“Both governments must now work together to build on progress and meet the legal target to reduce child poverty in Scotland. Families need a stronger social security offer, for example, through the Scottish Child Payment and whole family support across Scotland to give every family the financial, practical and emotional help they need to tackle the root causes of poverty.
“Children can’t wait. The Scottish Government must use this opportunity to go further and faster in their stated mission to eradicate child poverty.”
Children First’s manifesto for the 2026 Holyrood elections calls on the next Scottish Government to deliver a comprehensive offer of whole family support to tackle child poverty and give every family the emotional, practical and financial support they need.
Helen Barnard, director of policy at Trussell, said: “Trussell is delighted to see the Chancellor take this bold step which will protect hundreds of thousands of children from growing up facing hunger and hardship. She has listened to the families and food banks across the UK who have been imploring her to act.
“The cruel two-child limit has driven countless families into hardship, forced to turn to food banks to survive. Today’s announcement of its full and swift removal will help ensure all our children have the best possible start in life, ease pressure on public services, and help to boost our economy.
“This government came to power promising to end the need for emergency food and reduce child poverty. Removing the two-child limit will make a vital and significant contribution towards delivering on those manifesto commitments.
“This move will pull 470,000 children out of severe hunger and hardship by 2027 and ease pressure on food banks throughout the UK.
“The government has built on positive steps in strengthening support for people facing severe hunger and hardship. But this cannot be the end. Food bank need remains well above levels five years ago and many people are still struggling to afford the essentials.
“We need more bold choices to transform lives across our communities.”
The Chancellor will deliver a Budget later today [26 November] that takes the fair and necessary choices to deliver on the Government’s mandate for change.
It will include action to cut NHS waiting lists, cut debt and borrowing, and cut the cost of living to secure a strong future for the country, built on fairness and fuelled by growth.
Action to keep prescription costs under £10 (in England – Ed.), freeze rail fares for the first time in 30 years and increase the National Minimum Wage and National Living Wage by £1,500 and £900 respectively has already been confirmed to put more money in people’s pockets at this Budget.
Investment for 250 Neighbourhood Health Centres (in England – Ed.) has also been confirmed as part of the Chancellor’s commitment to slash NHS waiting lists further and end the postcode lottery of healthcare access.
Ahead of her Budget speech, Rachel Reeves said:“Today I will take the fair and necessary choices to deliver on our promise of change.
“I will not return Britain back to austerity, nor will I lose control of public spending with reckless borrowing.
“I will take action to help families with the cost of living…cut hospital waiting lists…cut the national debt.
“And I will push ahead with the biggest drive for growth in a generation.
“Investment in roads, rail and energy. Investment in housing, security and defence. Investment in education, skills and training.
“So together, we can build a fairer, stronger, and more secure Britain.”
“GENERATION DEFINING” BUDGET MUST DELIVER FOR WORKERS
Scotland’s largest trade union body has issued a stark warning ahead of the Chancellor’s budget calling on Rachel Reeves to “deliver for workers” as the UK Government sets out, what the STUC call, a “generation defining” budget.
The Scottish Trades Union Congress (STUC) has set out five tax demands ahead of the statement, including actions on wealth taxes, bank profits and a “settling up” tax for those moving wealth and assets abroad.
The trade union body, as part of the wider Scotland Demands Better campaign, has also reiterated the call to scrap the two child-benefit cap in a move STUC General Secretary Roz Foyer said was “long overdue”.
The STUC is further calling for increased investment in publicly owned energy as well as direct support for workers in carbon intensive sectors such as those in Grangemouth and Mosmorran.
Commenting, STUC General Secretary Roz Foyersaid: “The upcoming statement from the Chancellor is generation defining. It will signal to all whether the UK Government will continue to adhere to self-imposed financial rules and chaotic quick fixes, or whether they will invest in the public services and the industries and jobs of the future, delivering for workers with bold, radical policies to redistribute wealth.
“We’ve set out how the Chancellor can target those with wealth and assets and use it for the public good. For too long Labour Government policy has been about meeting self-imposed fiscal rules rather than setting out a bold plan for public sector-led growth.
“That must change. We must see, once and for all, the long overdue scrapping of the two-child benefit cap in addition to targeted action on reforming Capital Gains Tax. The Chancellor must also reign in the wild-west of banking profits, raising the surcharge from 3% to 35%, potentially netting £50 billion over four years.
“The people of Scotland and the wider United Kingdom voted for change. It’s high time it was delivered and the Chancellor simply cannot afford to waste this opportunity come Wednesday.”
The Chancellor is expected to announce that 13 million pensioners are set to benefit from an above inflation rise to the State Pension next April.
Those on the full rate of the new State Pension are set to receive over £550 a year more.
Pensions boost comes ahead of the Budget where the Chancellor will take the fair choices to cut NHS waiting lists, cut national debt and cut the cost of living.
13 million pensioners are set to see their State Pension increase faster than inflation next April thanks to the Government’s commitment to the Triple Lock.
From next April the rate of the full new State Pension is expected to increase to just over £240 a week.
This is an increase worth over £550 a year, an extra £120 compared to what it would have been if it had been uprated only by inflation. The full basic State Pension is expected to rise by around an extra £440 a year.
Tackling the cost of living is at the centre of this week’s Budget, and this announcement comes following government action to freeze rail fares and prescription fees next year saving working families millions of pounds. Government is also cracking down on ticket touts that will cut costs for music lovers across Britain.
At the Budget the Chancellor will go even further to bring down bills, tackle inflation, and grip the cost of living.
Chancellor of the Exchequer Rachel Reeves said:“Whether it’s our commitment to the Triple Lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve.
“At the Budget this week I will set out how we will take the fair choices to deliver on the country’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”
The government ‘is committed to supporting pensioners’, and this boost will ensure the State Pension remains the foundation of a secure retirement. The Triple Lock guarantees that the State Pension increases annually by the highest of inflation, average earnings growth or 2.5 per cent.
This comes alongside other support for the most vulnerable pensioners through Pension Credit, worth on average £4,300 a year, and Winter Fuel Payments for nine million pensioners in England and Wales with an income of, or below, £35,000 a year.
The UK Government must invest in public services, support economic growth and take action on the cost of living, Finance Secretary Shona Robison has said.
Ahead of the UK Budget on Wednesday 26 November, Ms Robison is calling on the Chancellor to:
deliver more funding for Scotland’s public services, infrastructure, and cost of living support – including actions to lower household energy bills
ensure that any major taxation choices do not see Scotland losing out on vital funding
completely reform the Energy Profits Levy and replace it with a sustainable system, to support jobs and investment across Scotland’s energy sector
Finance Secretary Shona Robison said: “The UK Budget process has been chaotic and mired in damaging uncertainty. It is disappointing that neither the Prime Minister nor the Chancellor were able to meet with the First Minister in London this week.
“Given the limited time to consider the implications of any major policy changes between the UK Budget and the Scottish Budget on 13 January, this lack of engagement is a particular concern.
“Last year, the UK Government increased employer National Insurance contributions without any consultation, which led to a funding shortfall of around £400 million for public services in Scotland and acts as a tax on jobs. We cannot see a repeat this year.
“We need to see a change of course from the Chancellor – with investment in public services and infrastructure, which supports industry and jobs and delivers support on the cost of living challenges people across Scotland are facing.
“Energy bills in particular are a source of real worry for people this winter. While the UK Government promised to cut energy bills by £300, they have actually risen by almost £200 – so this Budget must provide some relief for households who are struggling.
“The UK Government must also listen to industry concerns around the Energy Profits Levy. This was always supposed to be a temporary measure and it is now affecting investment and jobs in Scotland.
“The UK Government needs to set out how a stable and long-term fiscal regime will be used to treat the offshore energy sector fairly, alongside other parts of the UK economy, and deliver business and investor certainty.
“Scotland must not be left as an afterthought yet again in the UK Budget.”
The 2026-27 Scottish Budget will be published by the Finance Secretary on 13 January.
New code will strengthen protections for players to mitigate against harm
Measures includes strict credit card limits and transparency on free entry routes
Omaze among more than 20 leading operators to sign up to the code
People entering prize draw competitions will benefit from stronger protections and greater transparency, as the Government today unveils a new voluntary code for operators.
Prize draws have exploded in popularity in recent years, with 7.4 million adults playing each year across the UK. The market is worth £1.3 billion annually. However, as these draws also offer a free entry route, they do not currently require a licence under the Gambling Act 2005.
In light of this growth, the Government is determined to ensure that players are able to enjoy prize draws safely. This Code establishes a clear set of industry standards which will help provide a uniform approach across the sector to strengthen player protections, increase transparency and improve accountability of prize draw operators.
The prize draw voluntary code includes:
A £250 monthly cap on credit card entries for prize draws – and complete ban on credit card entries for all instant-win competitions
A commitment to ensure free entry routes are sufficiently publicised and accessible to all
New measures for operators to identify and mitigate against harm, including signposting to support where necessary
The Voluntary Code of Good Practice for Prize Draw Operators can be viewed in full here.
More than 20 leading operators, including Omaze, Best of the Best and Raffle House have agreed to sign up to the code following extensive consultation between the sector and Government. Signatories will have six months to implement the code’s provisions.
Gambling Minister Baroness Twycross said: “Millions of people enjoy entering prize draw competitions every year, and they should be confident that reasonable protections are in place. Thanks to the introduction of this code, that will be the case.
“I want to thank all of the operators who have already signed up, both for their cooperation in developing the code, and their commitment to following it moving forwards.”
Omaze president James Oakes said: “Omaze is proud to be a founding signatory of the new Code of Conduct. As the UK’s largest prize draw operator, we’ve consistently set industry-leading customer safeguards, whilst raising over £100 million for charities across the country.
“As more and more companies offer prize draws, we welcome DCMS’s introduction of this Code and look forward to all operators committing to the same high standards.”
One of the key decisions that UK Ministers will be making ahead of Rachel Reeves announcing the Budget later this month is what to do about the two-child limit (write Fraser of Allander Institute’s SPENCER THOMPSON and HANNAH RANDOLPH).
This policy, which limits Universal Credit to the first two children in a family, has been widely criticised for driving up child poverty rates. And given that the UK Government has pledged to reduce child poverty, with the publication of its child poverty strategy expected sometime around the Budget, the pressure is on to abolish the policy.
The Scottish Government has committed to mitigate the two-child limit by introducing a new benefit, the Two-Child Limit Payment (TCLP). If the two-child limit is abolished, this payment would no longer be needed, freeing up resource for the Scottish Government. The First Minister has pledged that the savings would be spent on additional measures to tackle child poverty, which he has stated is the Scottish Government’s top priority.
How much would the Scottish Government save?
The Scottish Fiscal Commission has forecast the TCLP will cost £155m in 2026-27. This represents the amount that the Scottish Government will directly save if the two-child limit is abolished.
There would however be some offsetting costs to the Scottish Government, coming through two main channels. First, removing the two-child limit would push more families onto the Benefit Cap – unless this was also abolished – which the Scottish Government mitigates through Discretionary Housing Payments.
And second, it would bring more families onto Universal Credit, namely those whose incomes are just too high to be entitled with the two-child limit in place.
These families would in turn become eligible for devolved benefits that are linked to receipt of Universal Credit, including the Scottish Child Payment, raising spend on these benefits.
We estimate that these spillovers would amount to around £34m in 2026-27.
Whether this cost is met from within the £155m pot or counted separately is a political question. The fiscal context, which will become even more challenging if the UK Government chooses to raise income tax in the rest of the UK, may encourage the former choice. But this would likely be seen by campaigners as penny pinching at a time when urgent, ambitious action is needed to tackle child poverty.
Even with the two-child limit abolished, we would still be a long way off meeting the statutory child poverty targets in 2030 – and these are approaching quickly, with the final Delivery Plan due in March.
How could the savings be spent?
If the spillover costs from the abolition of the two-child limit (£34m) were funded from within the TCLP budget (£155m), that would leave £121m to be spent on other policies. We have modelled the child poverty impacts of five illustrative policy options, all of which we estimate will cost about this much in 2026-27 assuming no changes in behaviour or administrative costs. Clearly, a £155m policy could go further than a £121m one, so this represents a conservative scenario.
Impacts of policy options on relative child poverty after housing costs, 2026-27
Option
Raising the Scottish Child Payment to…
…and…
… would reduce child poverty by about…
1
£35
–
1ppt
2
£31
extending Scottish Child Payment from children under 16 to include dependents aged 16-19
1ppt
3
£34
increasing Best Start Grants and Best Start Foods by the same proportion
1ppt
4
£30
extending universal Free School Meals from P1-P5 to include P6-P7
–
5
£34
increasing the maximum discount on water and sewerage charges from 35% to 100% for families with children
1ppt
Source: FAI modelling using UKMOD. Notes: Dash indicates that impact is too small to report. Scottish Child Payment is currently projected to be about £28 per child per week in 2026/27. Free School Meals count as income for purposes of measuring poverty. Technical details of modelling available on request.
The impacts of these policies would be over and above the impacts of the two-child limit being abolished, which we estimate to be around 1 percentage point in 2026-27. All else equal, each of the options would reduce relative child poverty after housing costs by a further 1 percentage point in 2026-27, representing an additional 10,000 children who would be kept out of poverty.
The exception is Option 4: extending universal Free School Meals to all primary school students would not have a measurable impact on aggregate child poverty levels, even when coupled with an increase to Scottish Child Payment of around £2 per child per week.
Although most of the policies are similar in terms of their aggregate impacts, under the surface there are some important differences:
Option 1 is the simplest, but does involve steepening the so-called ‘cliff edge’, whereby households lose their entire Scottish Child Payment award if their incomes increase beyond the point at which they are entitled to Universal Credit – which could incentivise them to forego opportunities to earn more. This option also increases Scottish Child Payment for recipients who are not in poverty, including those kept out of poverty by the payment at its current rate.
Option 2 is arguably preferrable in these respects, since it extends Scottish Child Payment to families who are not currently eligible while also benefitting many multi-child families who currently are, with the overall cliff edge not steepening as much. However, it does favour older children, when families with young children have been identified as a priority group.
Option 3 targets younger children specifically – Best Start Foods is available until the child turns three, while Best Start Grants are paid to children at various points until the child starts school. This option would also channel some of the TCLP savings into one-off grants as opposed to recurring payments, which may be less distortionary when it comes to work incentives even though they have similar eligibility criteria as the Scottish Child Payment. By the same token, their one-off, targeted nature limits their direct impacts on overall levels of child poverty.
Option 4 removes a cliff edge of sorts in the form of the means test for Free School Meals that applies to children in Primary 6 and 7, who are typically between 10 and 11 years old. Although this policy would benefit some households that lie just above current eligibility, it would primarily benefit those with higher incomes. On the other hand, the distributional impacts would depend on take-up, and there could be wider benefits such as a reduction in stigma.
Finally, Option 5 is unique in featuring a gradient across households – both because discounts on water and sewerage charges are proportionately linked to Council Tax Reduction, which tapers with income, and because these charges themselves vary by council tax band. Other changes to Council Tax Reduction would also be possible, but these will tend to extend entitlement to higher-income households rather than just benefitting current recipients, most of whom already receive a 100% reduction.
These are by no means the only options available, but they highlight some of the factors that the Scottish Government will need to weigh up when reallocating the TCLP budget, along with the potential impacts of doing so, in a scenario where the two-child limit is abolished.
Time will tell
Whether or not that that scenario will transpire remains unclear. It is possible that the UK Government will take an intermediate approach by relaxing the two-child limit in some way without abolishing it entirely – for example by exempting certain groups, moving to a three-child limit, or introducing a taper.
Mitigating the remainder of the limit would cost less than the planned TCLP – meaning there would still be some savings – but may require more time to be designed and implemented. It is also possible that the Budget will include a commitment to eventually abolish the two-child limit, but not in the coming year, meaning the TCLP would be needed temporarily.
For now, all eyes are on Rachel Reeves – but the focus will quickly turn to the Scottish Government. Keep an eye on our website and social media for more analysis of the UK and Scottish Budgets over the next few months!
Home Secretary sets out controversial reforms to the UK’s asylum and returns system
HOME SECRETARY SHABANA MAHMOOD’s STATEMENT TO THE HOUSE OF COMMONS YESTERDAY:
I will make a statement about how we restore order and control to our borders. I do so as this Government publishes the most significant reform to our migration system in modern times.
This country will always offer sanctuary to those fleeing danger, but we must also acknowledge that the world has changed and our asylum system has not changed with it.
Our world is a more volatile, and more mobile, place. Huge numbers are on the move. While some are refugees, others are economic migrants seeking to use, and abuse, our asylum system. Even genuine refugees are passing through other safe countries searching for the most attractive place to seek refuge.
The burden that has fallen on this country has been heavy. 400,000 have sought asylum here in the last four years. Over 100,000 people now live in asylum accommodation, and over half of refugees remain on benefits eight years after they have arrived.
To the British public, who foot the bill, the system feels out of control and unfair. It feels that way, because it is. The pace and scale of change has destabilised communities. It is making our country a more divided place.
There will never be a justification for the violence and racism of a minority, but if we fail to deal with this crisis, we will draw more people down a path that starts with anger, and ends in hatred.
I have no doubt about who we really are in this country. We are open, tolerant and generous. But the public rightly expect that we can determine who enters this country, and who must leave.
To maintain the generosity that allows us to provide sanctuary, we must restore order and control.
[Political content redacted]
My predecessor as Home Secretary picked up this [political content redacted] inheritance, and rebuilt the foundations of a collapsed asylum system.
Decision making has been restored, with a backlog now 18% lower than when we entered office. Removals have increased – reaching nearly 50,000 under this Government.
Immigration enforcement has hit record levels, with over 8,000 arrests in the last year.
The Border Security Bill is progressing through parliament, and my predecessor struck a historic agreement with the French, which means small boat arrivals can now be sent back to France.
These are vital steps, but we must go further. Today, we have published “Restoring Order and Control”, a new statement on our asylum policy. Its goals are two-fold: firstly, to reduce illegal arrivals into this country, and secondly, to increase removals of those with no right to be here.
It starts by accepting an uncomfortable truth: while asylum claims fall across Europe, they are rising here, and that is because of the comparative generosity of our asylum offer when compared to so many of our European neighbours.
This generosity is a factor that draws people to these shores, on a path that runs through other safe countries. Nearly 40 percent come on small boats and over perilous channel crossings, but a roughly equal number come here legally, via a visitor, work or study visa, and then go on to claim asylum.
They do so because refugee status is the most generous route into this country. An initial grant lasts five years, which is then converted, almost automatically, into permanent settled status. In other European countries, things are done differently.
In Denmark, refugee status is temporary, and they provide safety and sanctuary until it is possible for a refugee to return home. In recent years, asylum claims have hit a 40-year low, and now, across Europe, countries are tightening their systems in similar ways.
We must act too. We will do so by making refugee status temporary, not permanent. A grant of refugee status will last two and a half years, not five. It will be renewed only if it is impossible for a refugee to return home. Permanent settlement will now come at 20 years, not five.
I know this country welcomes people who contribute. For those who want to stay, and are willing and able to, we will create a new ‘work and study’ visa route, solely for refugees, with a quicker path to permanent settlement.
To encourage refugees into work, we will also consult on removing benefits for those who are able to work but choose not to.
Outside of the most exceptional circumstances, family reunion will not be possible, with a refugee only able to bring family over if they have joined a work and study route, and if qualifying tests are met.
While over 50,000 were granted refugee status in the last year, more than 100,000 claimants and failed asylum seekers remain in taxpayer funded accommodation, and we know that criminal gangs use the prospect of free bed and board to promote their small boat crossings.
We have already announced that we will empty asylum hotels by the end of the Parliament, and we are exploring a number of large military sites as an alternative.
We will now also remove the 2005 legislation that created a “duty” to support asylum seekers, reverting to a legal “power” to do so instead. While we will continue to support those who play by the rules, those who do not – be that through criminality or anti-social behaviour – can have their support removed. We will also remove our duty to support those who have a right to work.
It is right that those who do receive support, pay for it if they can, so those with income or assets will have to contribute to the cost of their stay. This will end the absurdity that we currently experience. Where an asylum seeker receiving £800 each month from his family, and who had recently acquired an Audi, was receiving free housing at the taxpayers’ expense, and the courts judged we could do nothing about it.
These measures are designed to tackle the pull factors that draw people to this country, but reducing the number of arrivals is just half of the story. We must also enforce our rules and remove those who have no right to be here. This will mean restarting removals to countries where they have been paused.
In recent months, we have begun voluntary removal of failed asylum seekers to Syria once again; however, there are still many failed asylum seekers here from Syria, most of whom fled a regime that has since been toppled. Other countries are planning to enforce removals, and we will follow suit. Where a failed asylum seeker cannot be returned home, we will also continue to explore the possibility of return hubs, with negotiations ongoing.
We must remove those who have failed asylum claims, regardless of who they are. Today, we are not removing family groups – even when we know that their home country is perfectly safe. There are, for instance, around 700 Albanian families living in taxpayer-funded accommodation having failed their asylum claims.
This is true despite an existing returns agreement, and that Albania is a signatory to the European Convention on Human Rights. So, we will now begin the removal of families. Where possible, we will encourage a voluntary return, but where an enforced return is necessary, that is what we will do.
Where the barrier to a return is not the individual, nor the UK Government, but the receiving country, we will take action.
I can announce today that we have told Angola, the Democratic Republic of the Congo, and Namibia that if they do not comply with international rules and norms we will impose visa penalties on them. And I am sending a wider message here: unless other countries heed this lesson, further sanctions will follow.
Much of the delay in our removals, however, comes from the sclerotic nature of our own system. In March of this year, the appeals backlog stood at 51,000 cases. This Government has already increased judicial sitting days, but reform is required, so we will create a new appeals body, staffed by professional independent adjudicators, and we will ensure there is early legal representation available to advise claimants and ensure their issues are properly considered.
Cases with a low chance of success will be fast-tracked, and claimants will have just one opportunity to claim and one to appeal, ending the merry-go-round of claims and appeals that frustrate so many removals.
While some barriers to removal are the result of process, others are substantive issues related to the law itself. There is no doubt that the expanded interpretation of parts of the European Convention on Human Rights has contributed.
This is particularly true of Article 8: the right to a family life. The courts have adopted an ever-expanding interpretation of this right.
As a result, many people have been allowed to come to this country, when they would otherwise have had no right to, and we have been unable to remove others when the case for doing so seems overwhelming.
This includes cases like an arsonist, sentenced to five years in prison whose deportation was blocked on the grounds that his relationship with his sibling may suffer.
More than half of those detained are now delaying or blocking their removal by raising a last-minute rights claim.
Article 8 is a qualified right: that means we are not prevented from removing individuals or refusing an application to move to the UK if it is “in the public interest”. To narrow Article 8 rights, we will therefore make three important changes, in both domestic law and our immigration rules.
Firstly, we will define what, exactly, a family is – narrowing this down to parents and their children.
Secondly, we will define “the public interest” test so the default becomes a removal or refusal, with Article 8 rights only permissible in the most exceptional circumstances.
Thirdly, we will tighten where Article 8 claims can be heard, ensuring only those who are living in the UK can lodge a claim, rather than their family members overseas, and that all claims are heard first by the Home Office and not in a courtroom.
We will also pursue international reform of a second element of the European Convention: the application of Article 3 – the prohibition on torture and inhuman, degrading treatment or punishment.
We will never return anyone to be tortured in their home country, but the definition of “degrading treatment” has expanded into the realm of the ridiculous.
Today, we have criminals we seek to deport, but discover we cannot because the prisons in their home country have cells that are deemed too small, or even mental health provision that is not as good as our own.
As Article 3 is an absolute right, a public interest test cannot be applied. For that reason, we are seeking reform at the Council of Europe, and we do so alongside international partners who have raised similar concerns. But it is not just international law that binds us.
According to data from 2022, over 40% of those detained for removal claimed they were modern-day slaves. This well-intentioned law is being abused by those who seek to frustrate a legitimate removal.
So, I will bring forward legislation that tightens the Modern Slavery system to ensure that it protects those it was designed for, and not those who seek to abuse it.
Taken together Madam Deputy Speaker, these are significant reforms. They are designed to ensure our asylum system is fit for the modern world, and that we retain public consent for the very idea of providing refuge.
We will always be a country that offers protection to those fleeing peril, just as we did, in recent years, when Ukraine was invaded, when Afghanistan was evacuated, and when we repatriated Hong Kongers.
For that reason, as order and control is restored, we will open new, capped, safe and legal routes into this country. These will make sponsorship the primary means by which we resettle refugees, with voluntary and community organisations given greater involvement, to both receive refugees and support them, working within caps set by Government.
We will also create a new route for displaced students to study in the UK, and another for skilled refugees to work here. Of course, we will always remain flexible to new crises, across the world, as they happen.
I know the British people do not want to close the doors. But until we restore order and control, those who seek to divide us will grow stronger.
It is our job – [political content redacted] – to unite where there is division, so we must now build an asylum system for the world as it is. One that restores order and control. One that opens safe and legal routes to those fleeing danger across the world, and one that sustains our commitment to providing refuge for this generation and those to come.
I know the country we are. We are open, tolerant and generous. We are the greater Britain that those on this side of the House believe in. Not the littler England that some would wish we would become. These reforms are designed to bring unity, where others seek to divide.
Madam Deputy Speaker, I commend this statement to the House.
Campaigning organisation Asylum Matters said: ‘Today’s asylum reforms put the basic principle of refugee protection under threat. They won’t stop irregular migration.
‘But they would make us a country that has given in to extremists and abandoned vital protection principles set up after the horrors of the Second World War.’
Lord Macdonald of River Glaven KC has been appointed to lead an independent review of laws on public order and hate crime.
Following the terrorist attack in Manchester on 2 October, the Home Secretary announced an independent review of existing public order and hate crime legislation.
This resulted from concerns around community tensions and the impact of disruptive and intimidating protests and hate crime on the cohesion and safety of society.
The government will always protect the right to lawful protest and free speech, but we will not tolerate individuals or groups who intimidate others, incite hatred, or create disorder.
The review will therefore look at the powers police have to manage protests and the current hate crime laws, including offences for aggravated behaviour and “stirring up” hatred.
It will examine whether existing legislation is effective and proportionate, and whether it protects communities from hate and intimidation.
It will also consider if the law protects free speech and peaceful protest, while also preventing disorder and keeping people safe.
Home Secretary Shabana Mahmood said: “The terrorist attack in Manchester on 2 October shocked the nation and showed how hatred and division can fuel violence. It happened at a time of growing concern about protests and hate crime in this country.
“Our laws must protect the public, while upholding the right to protest and free speech. That is why we have asked Lord Macdonald to lead this review. His experience will ensure it is thorough and independent.
“Lawful protest and free speech are fundamental rights, but we cannot allow them to be abused to spread hate or cause disorder. The law must be fit for purpose and consistently applied.”
This review follows recent changes to the Crime and Policing Bill, which will require police to consider the overall impact of protests in one place before setting conditions on future demonstrations.
Lord Macdonald is the former Director of Public Prosecutions and brings extensive legal expertise and independence to this work.
He will be supported by Owen Weatherill, a senior policing expert who brings operational experience from his role as the National Police Chiefs’ Council Lead for Civil Contingencies and National Mobilisation.
The terms of reference for the review will be confirmed in the coming weeks with the review expected to commence imminently and conclude by February 2026.
