Budget (Scotland) (No.2) Bill - stage 1 debate

SCVO briefing to Scottish Parliament

31 January 2018

Our position

Income tax cuts for the low paid will not significantly reduce poverty in Scotland, given that large numbers of those in poverty in Scotland do not pay income tax. The Scottish Government must use the benefits system to really dig into poverty alleviation: as today’s research from IPPR shows, we need a rounded approach that considers both tax and benefits if Scotland really is to reduce poverty rates.

Briefing in detail

Ahead of today’s Scottish Parliament debate on the Budget, SCVO and others in our sector have supported IPPR Scotland to look in detail at the effect of income tax cuts on poverty rates in Scotland, using the Scottish Government’s own proposals. That research can be found on IPPR’s website. Perhaps surprisingly, IPPR Scotland have found that a reduction in income tax rates does not help the poorest in our society. This is because large numbers of those in poverty do not pay income tax in the current system – perhaps because they are out of work, or they earn at levels low enough to fall under the personal allowance threshold. So, if the intention of the tax cut put forward by the Scottish Government is to help reduce poverty, then, arguably, it has failed. Assuming that the intention of Government – and of Parliament – is to overcome poverty in Scotland, what can be done? IPPR Scotland’s analysis looks at a couple of potential changes to the benefits system, additions that can be made by Scottish Government. We recommend that these are considered seriously by the Parliament. But, moving forward, what is important to recognise here is that the analysis of policy choices, undertaken by Government and Parliament, should be robust enough to have undertaken this kind of analysis itself, and to weigh-up the various policy options in order to achieve the desired outcome. It would be a real shame to forgo the very best possible policy-making purely through lack of time or due to political calculations, especially as Scotland now has increased powers over a variety of areas. We applaud the importance that both this Government and Parliament have placed on reducing poverty – let’s see that commitment in action in all of the Parliament’s work

About us

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the third sector. There are over 45,000 voluntary organisations in Scotland involving around 138,000 paid staff and approximately 1.3 million volunteers. The sector manages an income of £5.3 billion. SCVO works in partnership with the third sector in Scotland to advance our shared values and interests. We have over 1,900 members who range from individuals and grassroots groups, to Scotland-wide organisations and intermediary bodies. As the only inclusive representative umbrella organisation for the sector, SCVO:

• has the largest Scotland-wide membership from the sector – our 1,900 members include charities, community groups, social enterprises and voluntary organisations of all shapes and sizes
• our governance and membership structures are democratic and accountable - with an elected board and policy committee from the sector, we are managed by the sector, for the sector
• brings together organisations and networks connecting across the whole of Scotland
• works to support people to take voluntary action to help themselves and others, and to bring about social change.

Further details about SCVO can be found at www.scvo.scot.

Contact

Jenny Bloomfield Policy team Email: politicalengagement@scvo.scot Tel: 0131 474 8000