Taking Forward the Government Economic Strategy: A Discussion Paper on Tackling Poverty, Inequality and Deprivation in Scotland

The UNISON Scotland Submission June 2008

Introduction

UNISON Scotland is the largest public sector trade union in Scotland representing over 160,000 members. UNISON welcomes the opportunity to contribute to this consultation on Taking Forward the Government Economic Strategy: A Discussion Paper on Tackling Poverty, Inequality and Deprivation in Scotland.

Response

UNISON firmly believes that poverty in Scotland is not created by a shortage of resources. It is the uneven distribution of these resources that leaves people living in poverty. Eradicating poverty is therefore about reducing inequalities and ensuring a fairing distribution of wealth. This means that the government has a key role to play. UNISON Scotland welcomes the Scottish Governments' commitment to meet the target set by the UK government and the previous Executive to half child poverty by 2010 and eradicate child poverty by 2020. The key target for halving child poverty is only two years away. We are therefore disappointed that the government's plans to meet these targets are at such an early stage. Far from having limited levers to effect change as Communities Minister Stewart Maxwell claims the Scottish Government has many levers within its control to contribute towards reducing poverty in Scotland. It is not good enough just to call on the UK government to do more. The Scottish Government must also take action.

It is clear from the title of the consultation that the government believes that tackling poverty belongs in its economic strategy. The Government has also indicated that increasing economic growth in Scotland is its key priority. The Government's own figures show that Ireland saw increases in poverty during their recent fast growth. It is important to note that focusing on economic growth will not in itself eradicate poverty. Countries like Denmark and Sweden have a long held commitment to tackling inequality and so have low levels of child poverty. Eradicating poverty requires definite focused action it will not happen as a by-product of other activities. Monitoring progress is also essential. UNISON would like to see specific targets to reduce inequality in any anti poverty strategy.

Poverty and work

It is now widely accepted that work is the best and most effective route out of poverty. While UNISON supports this view, it is clear that work is only an effective route if the work is properly paid, secure and safe. The problem of in-work poverty will get worse as the cost of living is now rising sharply. Pay levels across the economy are simply not keeping up with living costs, even amongst unionised public service workers like those UNISON represents.

A recent report by USwitch, an independent price comparison service, said that the average net salary increase in 2008 is expected to be £44 a month, while higher-than-inflation increases on basics like food, fuel, energy and mortgages will push monthly household costs up by £148. That is more than £100 a month that the average household will have to find from somewhere.

UNISON Welfare, the union's own charity, is noticing a sharp rise in members asking for help with rent deposits and fuel subsidies. Last year UNISON Welfare gave over 2,200 grants to UNISON members in need - most of them low-paid workers. 700 adults and children who could not afford a holiday were provided with a wellbeing break. Research shows that many UNISON members are struggling to pay for their children's school trips, uniforms and activities.

Long hours of overtime needed to keep the household afloat means less time to help children with homework or attend school events. Even parents of adult children are continuing to help them out financially, particularly to subsidise their children's housing costs.

Unskilled workers, women, ethnic minorities and young workers are all more likely than others to be low-paid. These jobs also tend to be more insecure. This means that many people live through a cycle of "low pay, no pay, low pay". There is also no evidence that staying in low paid work will lead to better-paid work. The UK government, in an effort to ensure that work does pay, has introduced both a National Minimum Wage and a range of in-work benefits administered through the tax system, but half of all poor children now live in a working household.

The current minimum wage still leaves many workers in poverty. The Low Pay Unit and the Council of Europe's Decency Threshold have both set higher minimum hourly rates than the current UK level. Employer's organisations continue to lobby for lower rates claiming a high minimum wage will lead to job cuts. While UNISON continues to campaign across the UK for a higher national minimum wage there is much that should be done by the Scottish Government to raise wages in Scotland.

Although the Scottish Government cannot raise the national minimum wage it could use its role as a major Scottish employer to set a minimum "living wage" for public sector staff. According to Child Poverty Action Group, a third of low pay in Scotland is in the public sector. The Scottish Government has a direct lever to lift these families out of poverty.

In some sectors, casual, temporary and agency posts have replaced jobs that were once full-time, in-house and reasonably paid. Employers have taken the chance to push wages and conditions down, cutting out sick pay, carers' leave, maternity provision and pensions. The public sector spends substantial funds buying goods and services from the private and voluntary sector. The Government should insist on a living wage clause in contracts and on appropriate health and safety, equality proofing etc in these contracts and so raise wages across Scotland. This will lift many children out of poverty.

Women and poverty

Supporting women into work has been a key part of both UK and Scottish governments' strategies over the last ten years to lifting children out of poverty. Key problems with this strategy are the availability, cost and quality of childcare and many women are only able to get low-paid work leaving many trapped in a cycle of "low pay, no pay, low pay". The Scottish government has a particular role to play in improving the pay of women.

Despite more women than men being employed in education, health and social work they are still more than twice as likely to be low paid as their male colleagues. The government has a direct role to play in overcoming the gender pay gap in the public sector and ensuring that all employees earn a living wage. The scale an impact of the pay gap has been revealed by the ongoing equal pay crisis in the public sector. Local authorities, for example, have paid between £260 and £510 million in compensation to low paid women in the last three years despite the fact that there is not one concluded equal pay claim of this type in Scotland. These figures demonstrate the scale of the legitimate income women have been denied for decades. The public sector can make significant inroads on poverty by adopting progressive equal pay policies - a move that would have a positive spread effect on low wages across the economy.

The current General Equalities Duty also empowers them to include equalities proofing clauses in contracts with the private and voluntary sector. This will ensure that attempts to improve the efficiency and effectiveness of public services do not drive down wages and push more people into poverty.

Gender segregation in the workplace is a key cause of the gender pay gap. The pay gap will not close if women continue be trapped in low wage sectors of the job market. The government has a key role to play in education and training to ensure that girls get the opportunities at school to study subjects that enable them to enter well paid jobs and to access on going training in the workplace. This must be the case for those who enter the job market at all levels. Modern apprenticeships still see girls moving into training for jobs that will be lower paid in the long-run than boys.

Childcare

UNISON believes that childcare and early years education should be expanded and be delivered by a fully trained and appropriately rewarded childcare workforce. This would to reduce poverty in two ways. Firstly, the high cost and availability of suitable childcare is a key barrier to work for many women. UNISON would prefer universal free childcare delivered by the public sector but any expansion of the current free early years education would help women balance work and family commitments and make them better off financially. Significantly, as women make up the substantial majority of the childcare workforce (97%) then a well-paid and well-trained childcare workforce can also provide a path out of poverty for many women.

Workers rights

The government can support tougher enforcement of the minimum wage and other employment rights. While UNISON has argued that this rate should be higher, vulnerable workers will not benefit at all unless the legislation that is in place is promoted and enforced. The government should work in partnership with trade unions to support improved education for workers including migrant workers about their rights. Trade unions like UNISON are keen to work in partnership with the government to increase awareness and enforcement of workers rights. Employees who are members of trade unions earn around one-third more than non-unionised workers. Supporting the work of trade unions to improve the terms and conditions of workers is an effective way to eradicate poverty.

Poverty and health

There is a clear causal relationship between poverty and health. Economic poverty and social inequality cause poor health and health inequalities. These in turn mean high economic costs including lost working time, expensive treatment for preventable illnesses and costs of dealing with increased social problems. Any economic strategy must address health inequalities.

Life expectancy remains lower in Scotland than the European average by almost a year for men and almost two years for women. Meanwhile, within Scotland, the gap between the council areas with the highest and lowest life expectancy has not decreased at all over the last ten years. For men living in East Dunbartonshire average life expectancy is 78.0 years, whereas in Glasgow City it is only 70.5 years.

The Scottish NHS must be allowed and encouraged to continue developing a model of co-operation to enable joint work with other agencies and tackle the whole social environment, so that we can finally begin to close the health gap between well-off areas and deprived areas.

Fuel poverty

The government's own review has shown that almost 543,000 Scottish households are fuel poor. The current sharp rises in fuel costs are making the situation worse: for every 1% rise in average annual fuel price, an estimated 8,000 more households would go into fuel poverty. With increases in income unlikely to keep pace with fuel price rises, tackling fuel poverty still needs a high priority. The government needs to take urgent action to ensure that the gains of previous initiatives are not lost as costs rise. UNISON is concerned about the implications of The Cabinet Secretary for Health and Well-being's announcement that the central heating programme for pensioners will be subject to more targeting. UNISON fully supports Energy Action Scotland's Keeping Scotland Warm recommendations issued in partnership with UNISON Scotland and National Grid.

Including:

• continuation of the current schemes for heating, insulation and other energy efficiency measures with more funding and full grants for the over 60s.
• Simplification and a single point of access to the Warm Deal and Central Heating Programme.
• Additional funding for hard to treat homes
• Better communication with private landlords and incentives to improve the energy efficiency in the private rental sector
• Extra funding for income maximisation assessment for those identified as living in fuel poverty.

Finance

It is important that the spending priorities of the government support the commitment to tackle poverty in Scotland. The government has focussed on tax cutting measures: freezing the council tax and cutting business rates. This means that the money available for the essential public services is at best tight. There is also a demand for a further 2% efficiency savings. The budget for social housing has been cut by 6% in real terms. Government policies like freezing the council tax have done nothing to benefit the poorest, as they were already exempt from this charge. The proposed extra income tax to replace it will also hit low paid workers in multi-earner households. Local government is cutting jobs and services to balance their budgets. There have also been above-inflation increases in charges for services such as home care visits. Council rents have gone up by on average £2.08 per week. These charges impact adversely on many people struggling to make ends meet pushing them into poverty.

The true test of the government's anti-poverty strategy will be whether there is adequate funding for both specific projects and the essential public services on which people rely.

Conclusion

UNISON welcomes the government's commitment to eradicating child poverty but is yet to be convinced that the government is focusing enough resources to achieve this aim.

For further information please contact:

Matt Smith, Scottish Secretary

UNISON Scotland
UNISON House
14, West Campbell Street,
Glasgow
G2 6RX

Tel 0845 355 0845 Fax 0141 342 2835

e-mail matt.smith@unison.co.uk