The next item of business is a debate on motion S4M-12678, in the name of Patrick Harvie, on an end to in-work poverty.
I am pleased to open our debate. The Scottish Green Party is campaigning for a £10 minimum wage for all by 2020, because no one should be expected to work for a wage that keeps them in poverty. That is the point of the debate; that is why we are campaigning.
During the referendum, we had plans for a more equal, jobs-rich and locally based economy, where work paid well. That principle is not divisive. I know that all MSPs agree that poverty is a bad thing, but do their parties’ plans add up to putting an end to in-work poverty?
The Greens’ £10 minimum wage will ensure that no one works for a wage that keeps them in poverty. We have for too long subsidised employers that pay poverty wages. Many of those employers are large multinationals that earn millions for shareholders, while their staff are paid poverty wages and kept off the breadline by public money. That corporate welfare must stop.
While the majority of children and working-age adults in relative poverty live in working households, at the other end of the pay scale, there are people earning millions of pounds. Chief executive officers in the FTSE 100 earn 400 times the average wage. Are those executives 400 times more entitled than the average worker? I do not think so. That inequality is profoundly damaging for society and wellbeing.
Ending poverty is inextricably linked to ending the vast gulf of inequality. Political scientist Susan George tells us to
“Study the rich ... not the poor”.
The Greens’ plans will link CEOs’ pay to the wellbeing of their lowest-paid employees. A maximum wage ratio for companies would mean that any rise in CEO pay required a rise for people on the lowest pay. That is only fair.
Does the member accept that many board directors can enhance their pay in many ways, including through share options and all sorts of other, unquantifiable things, which might well scupper such a policy?
That point is well made and should be taken into account. It means that directors’ wages are larger than they appear to be on their pay packet.
The Greens will introduce a wealth tax on the wealthiest 1 per cent—in other words, people who are worth more than £2.5 million.
Wage ratios and progressive taxation will tackle pay inequality, but vast differences in wealth need to be tackled, too. Recent Office for National Statistics data tells us that the richest 1 per cent of British households have the same amount of wealth as the poorest 55 per cent of the population. The amount of wealth that is held by the top 0.1 per cent has risen by 57 per cent over four years, whereas total UK household wealth has risen by only 12 per cent. Our wealth tax will tackle that drastic inequality and pay for public services.
The Green Party’s plan for social security is based on the idea that, as a society, we should treat those who are in need with compassion, rather than sanction and punish the poor. The post-world war two generation who built the welfare state suffered together, fought fascism together and mourned together. Those people’s collective will was that they should enjoy the benefits of peace together, but the welfare cuts have put people deeper into poverty.
It is a gendered austerity, too. Treasury data shows us that women have been hit hardest. Women are much more likely to be lone parents, they are the biggest users of public services and they are more likely to be affected by public sector job losses, pension changes and wage freezes. It is clear that any party that continues to talk about cuts has not been listening to Scotland’s women.
We will make the case for rebuilding a universal system without a poverty trap for people in work. We want to have a welfare system that does not subsidise poverty wages, that removes the stigma of benefits and that promotes equality. Green plans for a citizens income are emblematic of that approach. The Scottish Government’s expert working group on welfare recognised that a citizens income is one of the two main options for the future of welfare; it is the one that takes a universal approach and abandons means testing and complexity.
Would Alison Johnstone care to reflect on how full fiscal autonomy and the ripping out of £4 billion to £6 billion of public money would impact on her vision?
It is fair to say that, as part of the United Kingdom—we find ourselves in that situation at the moment—we need a system that is fair and sustainable.
The introduction of a citizens income is not a change to be made lightly. It will require a reform programme to replace almost all benefits apart from disability payments with a simple, regular payment to everyone—children, adults and pensioners. It will require consensus from a broad coalition of civic society, but it is a transformative idea, and the beginnings of such a system already exist with child benefit and state pensions.
This week, the Scottish Government published analysis of severe and extreme poverty that describes how people in the lowest income bands have been pushed deeper into poverty by coalition cuts. A little over an hour ago, George Osborne sat down after confirming the Tories’ ideological obsession with pursuing their programme of austerity. The UK budget has just been announced. I doubt that many of us will have digested the whole lot, but the austerity ideology is clear.
I am pleased that the issue of apprenticeship wages has been raised. Some young people up to the age of 25 are working 30 hours a week for a monthly wage packet of £327.60. The UK Government plans to raise that hourly wage by 57p, to £3.30. Any rise is welcome, but not all sectors feel that way—even that small rise has disappointed the Confederation of British Industry. I recall that, during the Economy, Energy and Tourism Committee’s inquiry into Scotland’s financial future, the then boss of CBI Scotland said:
“Inequality is an abstract term”.—[Official Report, Economy, Energy and Tourism Committee, 2 April 2014; c 4259.]
It also suggests that we are on the right track if the free-market think tank the Institute of Economic Affairs says that the Low Pay Commission is being used
“as a vehicle to reduce inequality”.
In October, the national minimum wage will be increased by 20p, to £6.70. That, too, is welcome, but is it enough? That increase has already been criticised for not tackling in-work poverty. The minimum income standard aims to define what households need in order to have a
“minimum socially acceptable standard of living”.
The reference rate that it suggests for the lowest socially acceptable standard of living is £9.20.
The Scottish Government analysis that I mentioned earlier is unequivocal. It says that, although employment remains a protection, it is
“no longer a guarantee against poverty”.
Our plans for a £10 minimum wage by 2020 are designed to really make poverty wages history. Small businesses will need support, and all businesses deserve time to plan. The change will be introduced in steps, but the days of big business paying poverty wages with the taxpayer making up the difference must stop.
Another aspect to consider is the picture across Scotland. My city of Edinburgh is at the top for paying at least the living wage but, in rural areas such as Angus and Dumfries and Galloway and in post-industrial areas such as Ayrshire, between a quarter and a third of people earn less than the living wage. We need to spread the creation of jobs throughout Scotland as well as improve public transport and childcare to ensure that people can get to work, education and training.
Of course, low wages are not the whole story, but successive Governments’ actions have allowed—even promoted—the slide into a low-skill, low-wage economy. For example, the Scottish Government gave Amazon a £4.3 million grant, with a further offer of £6.3 million. Last year, Amazon paid just £4.2 million in United Kingdom taxes, despite selling goods worth £4.3 billion. The excuse that ministers have given is that Amazon creates jobs, but let us examine that claim carefully. How many jobs were promised, compared with what has been delivered? Are those jobs well paid, satisfying and secure? Moreover, what jobs have been lost as a result of such a big company being helped to dominate the marketplace, and how comfortable are we that its profits are not recirculating in the local economy? We need investment in sustainable industries that pay decent wages, such as great-quality food producers, clean chemical sciences, the digital and creative industries, medical and life sciences, construction, engineering and the low-carbon energy industry.
We have food banks in a country with no shortage of food and fuel poverty in one of the planet’s most energy-rich countries. Let us take the steps that we need to take to redress the balance, pay all a fair wage and become the kind of Scotland that we aspire to be.
That the Parliament notes with deep concern that the majority of children and working-age adults in poverty live in working households; believes that in-work poverty has a profoundly damaging impact on Scottish society and its economy; recognises that poverty wages require to be subsidised through the welfare system in order to meet people’s most basic needs; considers that the purpose of social security should be to maintain human wellbeing, not to subsidise cheap labour for the benefit of employers and multinational corporations, and considers that the level of poverty and inequality at work must be addressed by an incoming UK Government with a £10 minimum wage by 2020, maximum ratios between highest and lowest pay within organisations, a wealth tax on the assets of the top 1% and a move toward a citizens’ income instead of the punitive and humiliating welfare system currently in place.
Many thanks. I remind members who wish to participate that they should press their request-to-speak button.
In the programme for government, we set out a range of cross-portfolio policies that were aimed at reducing inequality, including actions on fair work such as our commitment as an employer to pay the living wage and, as a Government, increasing funding to the Poverty Alliance to grow the number of accredited living wage employers. The programme for government also emphasises our commitment to empowering communities by handing over decisions on key issues to them, and to making Government open and accessible through public participation in the decisions we make that affect people. That should also cover the issue that we are discussing this afternoon.
We have committed to poverty proofing all our new policies and legislation through poverty impact assessments whenever we make a change, and we will appoint an independent adviser on poverty and inequality, who will hold public events with the First Minister to raise awareness of the reality of living in poverty, make recommendations to the Government on how collectively we should respond and, indeed, hold the Government to account on its performance. We want the Scottish Government’s work to be more open and accessible, and those measures will go some way towards achieving that. We also want to build on the momentum that has built up as a result of the debate that Scotland has been having over the past few years.
However, a lot needs to be done, and Alison Johnstone has already touched on a great many of the things that we will all no doubt wish to talk about while not necessarily agreeing on the specific ways forward. In 2012-13, 820,000 people in Scotland were living in poverty, and more than half a million of them were living in severe poverty. People tend to assume that those who are in work are okay, but although being in employment remains a protection against poverty, it is no longer a guarantee against it. Indeed, the last decade has seen a steady increase in working poverty.
While the risk of severe poverty increases significantly as household work intensity decreases, even full-time employment is not necessarily a protection against severe poverty. In 2012-13, nearly a third of working-age adults and four in 10 children in severe poverty lived in households with at least one person in full-time employment. Although a higher statutory minimum wage would certainly contribute to reducing in-work poverty, it is important to consider other issues beyond wage levels that drive such poverty.
Tackling in-work poverty is not just about increasing pay levels, although that is clearly one of the most important ways of addressing the issue; it is about ensuring that those in low-skilled work have the opportunity to develop their skills and to progress in employment. Unfortunately, that is not happening in a lot of places.
The First Minister has already called on the UK Government to increase the work allowance on the basis that
“if you receive universal credit, and pay income tax, a £600 increase to the personal allowance in the coming budget”— she was not arguing against that—
“would boost your income by £42. But the same increase to the work allowance would boost your income by £390.”
That would clearly make a significantly greater difference.
I welcome the increases to the national minimum wage that the United Kingdom Government announced yesterday, of course, particularly the larger-than-recommended increase to the apprentice rate, which will be widely welcomed. However, I am not sure that that goes far enough; it should go a lot further than that. I have written to Vince Cable to reaffirm the Scottish Government’s view that there is no justification for continuing to support the apprenticeship rate of the national minimum wage at £2.73 and to highlight that no one, no matter their age, should be working for less than £3 an hour, which is what has happened. I have also called on the public sector in Scotland to ensure that all modern apprentices are paid at least the UK adult minimum wage or, where affordable, the living wage if they are doing an equivalent job to that of someone on that level of pay. I will continue to press the UK Government to scrap the apprenticeship rate and to address the inequality and unfairness in young people’s pay.
We cannot, of course, ignore the effects of changes to the employment landscape over the past few years. There has been an increase in the use of exploitative zero-hours contracts. Not all zero-hours contracts are unwelcome to the individuals who sign up to them, but there has been a massive increase in the exploitative use of them. We need to look at that and address how we can deal with it.
The qualifying period for making an unfair dismissal claim has been increased from one year to two years, and the introduction of fees for employment tribunals has resulted in a dramatic fall of 65 per cent in the number of cases in Scotland.
A combination of factors is contributing to a culture of fear in too many workplaces. People fear to speak up in case they revert to zero hours that week.
One of the issues that I have raised with the minister before is the use of umbrella contracts. Last week, the Welsh Assembly issued a policy advice note on that issue for its public procurement process. Will the minister be in a position to do that very soon?
We saw what the Welsh Government issued, and officials are currently looking at that very carefully. We are always open to the possibility that good practice elsewhere can be copied here, but in the past, once we have looked very carefully at things that have been claimed, they have turned out not be quite as has been advertised. If Neil Findlay will allow me and the officials just a little time to scrutinise that note carefully, I will come back to him, as I promised when we had our meeting on the issue.
We fully recognise that the promotion of good-quality, well-rewarded jobs that foster greater innovation, co-operation and workplace democracy is central to eradicating in-work poverty. That is why we committed in the programme for government to establishing a fair work convention that will provide us with independent advice on how to develop, promote and sustain a fair employment and workplace framework for Scotland. An announcement on the membership of that convention is coming very soon. It will be at the forefront of ensuring that there are more well-paid jobs at all levels throughout the public, private and third sectors.
When we talk about issues to do with wages and fair work, as I did this morning at the national economic forum, we should realise that a huge number of employers out there really are on board with the discussion and conversation. We need to engage with them on those issues.
It is very important to engage across the board.
It is clear that there is a great deal that can be done. By working together, we can have an impact. As a Government, we have already taken action to tackle in-work poverty, but, as always, we can do more.
I move amendment S4M-12678.2, to leave out from “with a £10” to end and insert:
“; is further concerned regarding the damaging impact that £6 billion of welfare cuts will have on some of the most vulnerable people in society; recognises the Scottish Government’s commitment to tackling inequalities and promoting fair work practices through its establishment of the Fair Work Convention and the Scottish Business Pledge; believes that the minimum wage has been eroded by the last two UK governments and should be increased in real terms and demands an increase for apprentices to the same as the national minimum wage for under-18s, and calls for a significant increase in the work allowance to help ensure that those in work have a better chance of lifting themselves and their families out of poverty.”
The low-pay and insecure job culture that we see at present is like a cancer in our society. It damages people. It eats away at their pride, relationships, morale, and health and wellbeing. It is not just bad for individuals; it is bad for society and our economy.
That is no accident. Over the past 30 or so years, the share of wages from gross domestic product for working people has reduced at the same time as massive concentrations of wealth have gone to the rich and the super-rich. That inequality is what is supposed to happen when the market is left unchallenged. In a recent lecture, Professor Prem Sikka of the University of Essex rejected the term “austerity”. He called it the organised humiliation of working people. It is characterised by underemployment, low pay and insecurity, with temporary and zero-hours contracts a key feature.
We see 414,000 of our fellow Scots living on less than the living wage of £7.85 an hour and 90,000 working on zero-hours contracts, many of whom are young people just setting out on their working lives. At the same time, eye-watering profits are being made by some of the world’s biggest and most wealthy companies, such as Google, Amazon, Starbucks and Apple. Those companies practise tax avoidance on an industrial scale, sucking vast sums of money out of the wage packets of the poor and the budgets of the services that we rely on.
That organised humiliation proves again that this is not a moral economy. It is not a just or remotely fair economic system; it is a thoroughly immoral, unjust and exploitative economic model. As politicians, either we can do something about it, take our responsibility seriously and act to challenge and change that system, or we can shrug our shoulders, blame someone else—anyone else—and look the other way.
Throughout our history, the organised labour movement has led with action on the big issues for people in the workplace. Holiday pay, sick pay, pensions, health and safety legislation, equal pay, trade union rights and the national minimum wage were all won, not because of the generosity of the rich and powerful but because working people campaigned for change with their industrial and political representatives, and that change was delivered. We need the same now.
The Scottish Government can no longer hide on some of those issues. Yes, of course, significant elements of welfare and the setting of the national minimum wage are reserved but, as we have seen with previous Administrations, change can occur if there is the political will.
At our low-pay summit yesterday, we heard Mark Macmillan, the leader of Renfrewshire Council, explain how his council addressed low pay in the social care sector. Now every one of the council’s care staff, whether they are employed directly or contracted, is paid the living wage. They all get travelling time and their uniforms are all supplied by their employer; the workers no longer have to pay for them.
If that Labour council can do it, there is no reason—no excuse whatsoever—for the Scottish Government not to do the same through negotiation and contract drafting across the public sector. That would give an increase of up to £2,500 a year to around 50,000 workers who are working on contracts that were issued by the public sector but who are being paid less than £7.85 an hour.
The Scottish Government must act. It can act and it can do better than ministers just rolling their eyes and pointing the finger at somebody else. Last year, the Government rejected our amendment to the Procurement Reform (Scotland) Bill that would have ensured that all those who are working on public contracts would be paid at least the living wage. It also rejected our amendment to prevent companies from hiring people on exploitative zero-hours contracts. How does that fit with the Government’s stated objective of making work fairer?
The reality is that if we are to see change, it will again come through the organised labour movement. Labour will redistribute through raising the top rate of tax and ending millionaires’ tax breaks. Labour will introduce a mansion tax and a bankers’ bonus tax and clamp down on tax avoidance; it will close off the loopholes that allow the exploitation of agency workers, which the Scottish Government actually uses when employing its own people. Labour will tackle zero-hours contracts and use procurement legislation and the tax system to see workers paid the living wage.
The Scottish Government can act on those issues. Unfortunately, it chooses not to.
I move amendment S4M-12678.3, to leave out from “recognises” to end and insert
“notes that the Scottish Government’s own statistics show that, under the last Labour administration, the number of people in in-work poverty fell by 30,000 and the number in absolute poverty fell by over half a million; recognises that, since 2006-07, the number of people in in-work poverty has increased by 50,000; notes that 414,000 people across Scotland would benefit from Scottish Labour’s plans to extend the payment of the living wage, incentivising more businesses to pay the living wage by using Make Work Pay contracts and increasing the national minimum wage to £8; believes that these actions, alongside the banning of exploitative zero-hours contracts, will improve the lives of working people across Scotland, and calls on the Scottish Government to amend the Procurement Reform (Scotland) Act 2014 to extend the payment of the living wage to public sector contracts.”
People who work hard for their families, try to put some money aside and make the right choices deserve reward and the security of a decent standard of living. Creating the conditions for hard-working people to enjoy what they earn is one of our most important duties. I acknowledge that in-work poverty is a concern, but poverty for those who are not in work at all is also a concern.
I will first say something on the link between poverty and work. I have little doubt that work remains the most sustainable route out of poverty for most people. That is well reflected in the Scottish Government’s most recent publication on poverty, which was released earlier this week. It recognises that those who are most severely hit by poverty are likely to be those who are
“furthest from the labour market”,
with workless households tending towards the lowest income deciles. Although it acknowledges that, as the cabinet secretary said, employment is not “a guarantee against poverty”, it concedes that it is “a protection”. It also identifies, starkly:
“For families not in employment, there is little opportunity to increase income.”
Supporting people back to work must therefore be central to any plan to reduce poverty overall. To me, it is a deeply disturbing poverty of ambition that says that all that we can do for the worst-off in our society is to modestly boost benefits.
Let us put aside the notion in the Greens’ motion that our welfare system is “punitive”. It is a system that makes 258,000 payments to people in Scotland every day, spending more than £22 billion to help the poorest in our society in the past year.
I have a constituent who was asked to be both at the jobcentre and at an interview for a training course at the same time, which resulted in him having his benefits stopped instantly. He had to apply for a hardship loan and was placed in truly dire straits. Surely that is punitive.
That is certainly illustrative of an element of very bad practice in the system. I do not dispute that, but that is not to say that the system as a whole is not a workable and welcome source of support.
I believe that a strong and growing economy that provides more jobs gives opportunity to those who are seeking work and greater choice to those who are in work. However, let us look at some of the specific suggestions to address in-work poverty. The motion asks us to consider a £10 minimum wage by 2020. As the cabinet secretary said, it was announced yesterday that the minimum wage is to rise in line with the recommendations of the Low Pay Commission. Indeed, the chancellor said today that the objective is an £8 minimum wage by the end of the decade, and that is to be welcomed.
The system that we have is one of progressive rises linked to what the economy can reasonably afford, based on recommendations not by Government but by an independent body. With now-visible economic growth, it is reasonable to anticipate that the minimum wage will rise. It is not reasonable to pluck a figure out of the air without the slightest attempt to model its economic impact.
No. I am pushed for time. I am sorry.
Of course it is right to challenge businesses, where they are able to do so, to pay their employees fairly. The living wage is a positive concept that we encourage where it is affordable. Businesses that can pay the living wage should pay the living wage.
However, we can also provide a model of childcare that works better than the current one—a model that is flexible in location and in times of provision and which meets parents’ actual needs. We do not have that model in Scotland, and we should have it.
We can also help people who are in work to get more of their earnings back. Someone who is working full time on the minimum wage has already had their income tax bill cut in half. I want to see as much of working people’s pay as possible go into their pockets. In Scotland, the increases in the personal tax allowance have cut taxes for 2.3 million people and taken 261,000 out of tax altogether.
I am sorry. I am pushed for time.
The further increases announced by the chancellor today will mean even more money being kept by the earner. That is real help.
The UK Government has reduced the cost of energy bills. That is also real help. The cost of transport, which is a major area of spend for working people on low incomes, has been lowered, with fuel duty 20p a litre lower than it would have been under the previous Government’s plans, and a further fuel duty cut has been announced today.
We can do more in this Parliament. We can make social housing work better to support people; we can support further education, which has been so drastically cut in recent years, to improve skills and enhance job opportunities and choice; and we can provide help and advice to people who are underemployed. Those are sustainable ways of reducing poverty.
All of that depends on the framework of a productive economic plan that supports growth and investment and creates jobs. I am delighted to say that that is exactly what we have at present in the UK.
I move amendment S4M-12678.1, to leave out from “notes” to end and insert:
“acknowledges that increasing employment, growing the economy and creating opportunity remains the most sustainable way of moving people out of poverty; recognises the opportunities and positive outcomes associated with regular employment for those who can work; welcomes the drop in unemployment and rise in employment under the UK Government; believes that the additional 187,000 new jobs created in Scotland since 2010 have been effective in providing more families with the security of a regular wage; notes the phased increases in the income tax personal allowance since 2010, which by next year will have enhanced incomes by reducing the tax bills for 2.32 million people in Scotland and will have taken 261,000 of the lowest paid out of paying income tax altogether; appreciates the increase in the national minimum wage that was recently announced by the UK Government in line with the recommendations of the Low Pay Commission, which is likely to be the largest real-terms increase since 2007, and acknowledges that such improvements can only be sustained by a responsible macroeconomic policy.”
We turn to the open debate. I ask for speeches of four minutes, please.
I very much identify with the tenor of the independent and Green motion. It is ironic that we are having this debate on budget day. Members can call me cynical, but I suspect that the gap between the rich and the poor will get even greater. I say to Neil Findlay that it is regrettable that, under Labour Governments over the years, I have also seen the gap between rich and poor getting greater.
No one in work should need to apply to the benefits system to enable them to meet the level of the living wage. In principle that is wrong, and in practice it means that the state—you and I—are subsidising employers, which is just plain wrong. I congratulate the SNP Government, which is paying all Scottish Government employees across central Government, its agencies and the national health service the living wage—the living wage, not the statutory minimum wage. Of course, our powers in this Parliament are so limited that we can apply only elastoplast and not the invasive surgery that is needed, as Neil Findlay said, to deal with the cancer of poverty, both in work and out of work.
In the Midlothian part of my constituency, 15.6 per cent of those who are in work earn less than £7 an hour. That figure comes from “Addressing Child Poverty in Midlothian: Action Plan 2012–17”. Average weekly earnings for Midlothian residents, both male and female, are currently significantly less than both the Scottish and British averages, and for women the picture is worse.
The picture in the Borders is even worse than in Midlothian. In the Borders, 19.7 per cent of workers earn less than £7 per hour, because although employment rates are high in the Borders, there is a lack of well-paid work, both historically and currently—and, even then, as we all know, work is not a route out of poverty. There are even more barriers for people entering employment—for example, if they have a disability or are carers. Indeed, in terms of the lowest pay, Scottish Borders Council ranks 28th out of the 32 local authorities.
Those are the facts and statistics, but people are more than statistics. They are individuals trapped in low-paid jobs and zero-hours contracts, driven to apply to the state for financial assistance.
As for the benefits system, people must almost have a degree in mathematics to make a claim. There are 42 pages on the HM Revenue & Customs website as a guide to the working tax credit and the child tax credit. Applicants certainly need stamina—or perhaps desperation will get them there. Even if they do claim and receive payment, it can all go skew-whiff, and months or years later the tax man could come knocking at their door looking to claw back some so-called overpayment.
Added to the stress of being underpaid, and hence undervalued—which is key—people’s problems are compounded by a benefits system that will grind them down even further. I take issue with Annabel Goldie’s claim that the example given by Alison Johnstone is only one illustration. Such instances are too commonplace.
Still, people can always be referred to the local food bank, although having to get provisions has nothing to do with poverty and benefits cuts, according to David Mundell, our only Tory MP in Scotland. He refutes the evidence from MSPs, academics, charities and religious organisations of a link between welfare reform and the use of food banks, as brought out in a report by Holyrood’s Welfare Reform Committee. There we have it: in Scotland, poverty, both in work and out of work, has nothing to do with Westminster’s policies. We have David Mundell’s word for that.
I am in the last 30 seconds of my speech.
As for the Labour amendment, I have a lot in common with Neil Findlay’s sentiments, but Labour hitched itself to the Tory political wagon during the referendum campaign, when this Parliament had the opportunity to have macroeconomic power, to move towards equality and to try to eradicate poverty.
If Christine Grahame is looking for evidence that Government can act to reduce poverty, it is the previous Labour Government that she needs to look to. Under that Administration, 200,000 children in Scotland were lifted out of poverty as a direct result of Government policies—[Interruption.]
More than 1 million pensioners were lifted out of poverty as a direct result of Government policies. The sad thing is that, between 2011 and 2013, the number of Scots living in poverty has gone up by some 15 per cent because of policies that come directly from a Tory Government in Westminster and, sadly, the inaction of an SNP Government in Scotland. That is a fact. What we do not have in Scotland is an anti-poverty strategy that is driven by Government through all departments and into local government and local communities. That is what is lacking, and that is what is needed if we want to go forward.
I was struck by the briefing from NHS Health Scotland, which said:
“Reducing in-work poverty is likely to have direct and indirect positive consequences for population health and health inequalities. For example:
Increasing the National Minimum Wage to ... £7.20 per hour is estimated to result in 77,000 years of life gained and prevent 56,000 hospitalisations among the Scottish population ... Low income is associated with poorer mental health for adults ... in Scotland.”
The briefing goes on to say:
“Childhood poverty is associated with poorer social, emotional and educational development”.
If we are serious about it, an anti-poverty strategy has to involve tackling inequalities in our communities.
The briefing from Citizens Advice Scotland emphasised the fact that we are talking about real people experiencing real difficulties day in, day out. Let me give one example. Neil Findlay’s amendment mentions procurement, and I will refer to procurement that is linked to local authorities, and in particular to the home care and care home sectors. Across Scotland, there are 916 care homes, which provide 38,645 beds to 33,636 residents. Seventy per cent of care home workers work in the private and independent sectors. I remember being very proud, as the leader of Fife Council, when we introduced the living wage, although I realised that the majority of care home workers in Fife did not work in the council sector. The workers who worked in the council sector caring for people were being paid well above the living wage, but the majority of care workers across Scotland in the private sector are being paid the minimum wage.
That is an area where we could act. We could focus on it, and we could act now if the Government was willing to do so. We should do that. We should work together with local government.
I ask members to imagine achieving a living wage in Scotland. It would be a major achievement to lead the rest of the UK by bringing about a living wage. We have to start some place, and we could do that if the Scottish Government had the political will to work with local government and to look at procurement.
There is no better place to start than with care homes. How much is a care worker worth? I am talking about people who care for our elderly when they need support and care. Right now, the majority of care workers are worth no more than the minimum wage. We have to address that. As a minimum, we should seek the living wage. We could achieve that.
That is the point of having debates such as this one. If we are to have such debates, we need to consider what action we can take to bring government together and generate the political will to drive a strategy that will move us from talking about the issues to actually doing something about them. Let us work together. Let us aim for a living wage across Scotland and unite on that.
I am very grateful to the Greens for the motion. It covers far too many things to deal with in one afternoon, so I will have to pick just two or three.
I will start with the idea that Tory policy is doing something to reduce inequalities. Of course, the Tory policy that we are living with at the moment is doing absolutely nothing to reduce inequalities. However, I have just heard Alex Rowley telling me that he has finally understood why reducing inequalities is what it is all about: there are huge benefits to it, well beyond financial ones. I welcome one more to the fold of people who understand that.
Evidence that Tory policy is not doing anything to reduce inequality comes from a report that the Welfare Reform Committee discussed only last week. Its authors, Christina Beatty and Steve Fothergill, turned up from Sheffield Hallam University. Their report states:
“Families with dependent children are one of the biggest losers ... In all, families with children lose an estimated £960m a year—approaching two-thirds of the overall financial loss in Scotland.”
Crucially for this debate, the report also said that
“Nearly half the reduction in benefits might be expected to fall on in-work households.”
Will Nigel Don acknowledge that that statistic includes families in which there is a member earning a wage of over £60,000 a year and which will have lost their child benefit?
I accept that there are all manner of complications; I am about to tell Alex Johnstone about some of them. However, before I get to that, I want to deal with the issue of the Scottish Government and the living wage. Let us be absolutely clear: the Scottish Government is doing what it can on the living wage, and I hope that others will talk about that. I want to put on the record the words of former European Union Commissioner Michel Barnier. I cannot give the entire context, but he said:
“the Court held in the Laval case that requirements regarding the level of wage payable to posted workers may not go beyond the mandatory rules for minimum protection provided for by the Directive. A ‘living wage’ set at a higher level than the UK’s minimum wage is unlikely to meet this requirement.”
I am sorry, but I do not have time.
Before I turn to the other issue that I want to address, I note that, with regard to inequality, on the Gini index—which is well worth looking up—Scotland does better than the rest of the UK, principally because of things that the Scottish Government is doing.
On marginal tax rates—or what appears to be the marginal tax rate—the rich seem to have a lot of difficulty in realising that they should perhaps pay 50 per cent in tax at the top end. I am grateful to the Association of Chartered Certified Accountants, which came up with an entirely credible example in which someone on a low wage pays a 73 per cent marginal tax rate. I would like to draw members’ attention to it. The example concerns a single person with no children who works 40 hours a week and earned £10,000 during 2013-14. He is entitled to maximum working tax credit—the ACCA gives the figures for that—as his income exceeds the threshold of £6,420. The ACCA then provides a calculation that shows that if he receives a pay increase of £1,000, he will pay an extra £730 in tax and national insurance, which is a marginal tax rate of 73 per cent for someone who is earning not very much at all.
I accept Alex Johnstone’s point that there are complications in such calculations—tax credits, child benefits and so on—but could we please sort out the system? A marginal tax rate of 73 per cent on an income of £10,000 is simply not acceptable.
As Nigel Don did, I thank the Greens and the independent members of the Parliament for committing what for them is limited and therefore precious debating time to the subject matter. We might not all agree on how in-work poverty has reached the scale that it has reached or how it should be tackled, but across much of the chamber—if we set aside the usual tribalism—there is on this issue more that unites us than divides us.
Therefore, it is good to have the opportunity to shine a light on the disgrace that is in-work poverty—and what a disgrace it is. Some 53 per cent of adults and 110,000 children who live in poverty reside in households in which at least one person works; 18 per cent of employees—more than 400,000 people—in Scotland are paid less than the living wage; and as Alison Johnstone highlighted, the situation is worse in rural areas, where the costs of transport, heating and so on are higher.
It is incumbent on all of us to push the issue of the living wage as far as we can, and to be seen to push it. The Scottish Government has taken a lead by ensuring that all staff who are covered by public sector pay policy receive at least the living wage, and it has brought influence to bear beyond that where it can—most notably in the new ScotRail franchise. Parliament has followed by becoming an accredited living-wage employer, joining more than 140 others.
A number of MSPs—including me, Linda Fabiani, Christina McKelvie, Drew Smith, Willie Rennie, Jim Hume and Neil Findlay—have gone down that road as individual parliamentarians who employ people within this institution. I urge colleagues who have not already done so to join those of us who have and to reinforce the message that paying at least the living wage—which is currently 21 per cent higher than the minimum wage, although the latter is, of course, to increase by 20p an hour come October—should become the norm. I suspect that the vast majority of MSPs, if not all of us, would qualify to become accredited, so why not make it official? It might be only a relatively small gesture, but it is one that plays its part.
What does Graeme Dey have to say about use in this Parliament of interns who do not get paid?
All I can say is that that is not a practice that I support.
The Scottish living wage accreditation scheme—which will soon celebrate its first birthday—not only ensures a fairer wage for employees, but promotes to employers the benefits of paying the living wage. I did not need to be told of the benefits that might be in it for me as an employer: as the other participants in the scheme have no doubt done, I simply viewed it as being not only the right thing to do, but as supporting a message that is worthy of endorsement.
However, human nature being what it is, especially in tough economic times large-scale employers will want to know that there is something in it for them if they do the right thing: there is. Research indicates that 80 per cent of employers that have introduced the living wage believe that it has enhanced the quality of their employees’ work. Employers also report a quarter less absenteeism than there was before they introduced the living wage, and 66 per cent of employers think that it makes a difference to recruiting and retaining staff. That message needs to be spread, because there are too many employers paying the minimum wage or employing—if that is the right word—people on zero-hours contracts.
As other members no doubt were, I was struck by two examples of the impact of zero-hours contracts that Citizens Advice Scotland offered ahead of the debate: the laundry worker who was laid off for three weeks due to a mechanical breakdown and had to be referred for food-parcel support, and the individual who had only three days’ work in a month, which earned him only £150, and who was also directed to the local food bank. How can that be considered acceptable in this day and age?
It is a pleasure to speak in the debate, but it is one of the debates to which—I was going to say “sadly” but I suppose that I should say “in reality”—we each bring different experiences, backgrounds and understanding of the situation that we are describing.
It is ironic that we have again heard Labour take the year-zero approach in a debate. That approach suggests that everything in the garden was rosy under the previous Labour Government. Perhaps it was in 2005 or 2006, but Labour’s refusal to understand its part in what happened between 2008 and 2010 puts it on thin ice. I will continue suspension of my disbelief when I talk about some of the other speeches.
I am proud of the record of the Conservative Government. I genuinely believe that the Government that we have in Westminster and the many Conservative Governments that went before it have done all that they could to further the objectives of the welfare state and the national health service.
No thank you.
We must remember that, when the national health service celebrated its 50th year, 35 of those years were under Conservative Governments and that the 15 years during which the Labour Party had responsibility were not distinguished in any way. I knew one 17-year-old student nurse who, in 1978, tore up her union card and had to fight her way across the picket line to fulfil her responsibility to look after her patients in Aberdeen royal infirmary. She later joined the Conservatives and, sadly, married me.
That circumstance demonstrates that the Conservative Party has a great deal to be proud of.
Even before today’s budget announcement, 2.3 million working people in Scotland had had a tax cut.
No, thank you.
Before the budget announcement, 261,000 people had taken out of tax altogether and 187,000 jobs, three quarters of which are full time, had been created.
I have spoken about the living wage before, but we need to address it: we Conservatives believe that it is worthy of pursuit. The UK Government has increased the minimum wage, but the living wage is significant and we must acknowledge that for many employers paying it is an impossible dream. Vast numbers of people in the Scottish economy are self-employed and many of them have family businesses to support. Many of those businesses fall within what we can loosely describe as our immigrant communities. If they employ anyone at all, many of those individuals are struggling to do so and to maintain a decent standard of living for themselves. Whether in the self-employed sector or the public sector, where money is also tight—we all know that—if we increase the payments that are made to achieve a higher living wage, there is a significant danger that the number of jobs that are available might reduce.
Alex Johnstone says that money is tight. Money is only tight for some people; Mr Osborne gave every millionaire a £43,000 tax cut, so money is tight only for the people at the bottom end of the scale, not those at the top end of the scale.
As was also pointed out in today’s budget speech, the wealthiest 1 per cent in the United Kingdom today pay a significantly higher and increasing proportion of the total tax take.
Let me address universal credit once and for all—
It is very much the case that the imposition of universal credit will support those who are in work and will minimise the marginal tax rates that have been described. Frank Field, who was its author under a previous Labour Government—
Frank Field has made a significant contribution by being the architect of the system. It works, it will work when it is introduced, and it will support people who are in low-paid jobs to ensure that they get a reasonable return.
Like most members, I am disheartened by the figures that we have been discussing today. We heard from Graeme Dey that in Scotland there are now 370,000 people in poverty who are living in households where at least one person works. That is 45 per cent of the people who are living in poverty in Scotland. In addition, 110,000 children in poverty live in households in which at least one adult is in employment. Furthermore, it is estimated that 940,000 households are living in fuel poverty in Scotland, which is equivalent to 39 per cent of all households. One further dismal statistic is that in 2014, 10 per cent of all employees in Scotland earned £6.79 an hour or less and 20 per cent earned £7.85 an hour or less.
Those are thoroughly depressing figures. However, we know that with the right policies and ambitions those figures can change. For instance, under the last Labour Government, the number of people who were in in-work poverty fell by 30,000—nearly 10 per cent. I do not believe that that figure is good enough, but it demonstrates that we can do something other than just talk about this life-destroying issue.
The Scottish Government report on in-work poverty says that we require action in three main areas: low pay, the number of hours worked, and the link between earned income and the rate at which benefits are withdrawn.
I will not, at the moment.
The cabinet secretary, Roseanna Cunningham, said that full-time employment is not in itself a barrier to poverty. That is why we need a more joined-up approach to tackle the problem. I hope that the cabinet secretary will examine her policies on the issue and undertake socioeconomic impact assessments on them to assess the real impact of legislative changes. That might be the start of the anti-poverty strategy that Alex Rowley spoke so passionately about.
Alison Johnstone spoke about the welfare state and, in particular, the benefits system, and made an important point. Many people in Scotland today have to claim benefits to top up their salaries; we need to make work pay, but we also have to ensure that benefit payments for people who are unfit for work are fit for purpose, as Christine Grahame pointed out. People who are in that position should not be subjected to a life of poverty. Incidentally, I say to Alex Johnstone that I do not see that as the advancement of the welfare state.
All the issues that have been spoken about are issues that affect people across Scotland daily. Labour members do not want to just talk about the matter anymore: we want action, which is why we have put forward our own plans to tackle the matter head on. As Neil Findlay stated earlier, 414,000 people across Scotland would benefit from the living wage, which is promoted by Scottish Labour’s plans. Given that 14 per cent of men and 20 per cent of women earned less than the living wage last year, I believe that that would be a step in the right direction for those workers, but it is not a magic bullet.
We know that there are a number of contributors to in-work poverty. One cause that is not often discussed is underemployment, which is a huge problem for many people in Scotland. Annabel Goldie spoke about that in her speech. According to a Scottish Parliament information centre briefing,
“an estimated 58,600 people aged 16-24 ... were regarded as underemployed. This equates to around 19% of 16-24 year olds”.
I believe that we need to do more to utilise our workforce and I hope that the Scottish Government will produce a report on how that can be achieved. One simple way of doing that would be to introduce more flexible working practices across our public sector. We could be doing that now; I hope that the cabinet secretary will listen to that suggestion.
In conclusion, I say that we can tackle in-work poverty by increasing the minimum wage, extending the living wage, banning exploitative zero-hours contracts and taxing bankers’ bonuses, all in order that we can guarantee jobs and training opportunities. Those policies would make a difference to people’s lives, so I urge members to vote in favour of our proposals tonight.
To give members a fuller picture, I should state at the outset that just over 80 per cent of Scottish workers are currently paid the living wage or more. We need to remember that—in fact, we should celebrate it. We should commend those employers who already pay the living wage; the 80 per cent figure suggests that a great number of employers do so. The figure for Scotland is higher than the figure for the UK as a whole, and higher than anywhere else in the UK outwith the south-east of England. We should therefore, at the very least, acknowledge in this context that we are, in many places, pushing at an open door.
However, that raises the question of why those employers are not gaining accreditation. I have pursued that conversation with many employers who hold themselves up as paying the living wage, to establish exactly what the basis is for that.
The price of accreditation was among the issues that were raised at the low-pay summit yesterday. If a charity or third sector organisation wants to gain accreditation, the cost of £200 is a barrier for them.
Yes, there is a cost for accreditation. That may be a barrier for some people, but it is not a barrier for some of the much bigger employers that we know are paying the living wage but are not accredited. It is part of my job to ensure that the accreditation process works.
I wanted to set out the situation to ensure that members understand the global context. We are talking about the people in the 19 per cent who are earning less—in some cases, considerably less—than the living wage and are therefore in difficult circumstances all round. That is contributing to in-work poverty.
Alex Johnstone somewhat stretched the bounds of credulity with his congratulations for the Conservatives’ care of the welfare state. The hollow laughter in the chamber at that point rather said it all. However, his comments boil down to the argument that it is okay to pay wages that do not allow people to live properly. It is not. The state simply ends up subsiding those low wage rates and low-paying employers. That is the crazy cycle that we are in, and we need to intervene to break it.
That is the import of the Conservative position today, and it does not make sense. It makes no logical sense, nor does it make sense for the people who are currently living—or trying to live—on poverty wages.
The cabinet secretary’s interpretation of our position is wrong. Does she factor in the increased cost of public services in Scotland if we were to elevate the pay of the least well-paid to the level that is suggested in the Green motion?
Alex Johnstone still falls into the trap of justifying a situation, and an economic model, that is predicated on the basis of paying people less money than they need to live on. At a basic level, that is what needs to be challenged across the board.
Neil Findlay was, as always, passionate in his contribution, but he was somewhat careless about recognising the constraints that exist. He knows that there is an on-going consultation on procurement guidance right now, which includes fair employment practices and the question of how to promote the living wage in the public sector. A very current conversation is taking place on procurement.
I highlight to Neil Findlay that Labour-controlled Glasgow City Council, in its response to a freedom of information request last April, stated:
“at present the EU regulations do not allow the living wage as a mandatory requirement within our contracts”.
Earlier, Glasgow City Council’s operational delivery scrutiny committee said:
“it would be considered anti-competitive by the European Union to require the bidders to pay the Glasgow Living Wage rate”.
Labour-controlled Renfrewshire Council, West Lothian Council and Inverclyde Council have all responded to FOI requests stating that their contracts do not include a mandatory requirement that suppliers pay the living wage.
That is because those councils were given advice by the Scottish Government that that is the case. However, is it not the case that they can individually negotiate on that, as Renfrewshire Council has done? Why is the Scottish Government not doing that?
What on earth makes the member think that we are not having those negotiations? Of course we are, but the issues have to be individually negotiated and looked at carefully. We are doing that right now. I suggest that the member considers the work that the Cabinet Secretary for Health, Wellbeing and Sport is doing in relation to the issues that Alex Rowley raised about the care sector. It is not the case that the Government is ignoring the issues.
Alex Rowley spent quite a lot of his allotted time talking about the low wage rates in the care sector. I hope that he asks Shona Robison for a conversation about that, so that he understands what is happening.
I am sorry that I have run out of time, as I would have liked to have said a lot more. The problem is complicated and has no simple answer that will work immediately—not even bringing in the living wage immediately. I notice that not even the Labour Party suggests for a single minute that we do that. We need to work together. The Government is committed to that and I know that Labour is committed to it, although I am less certain about the Conservatives. I know that the Greens are on board. I hope that we can have the conversation constructively.
I am grateful for the opportunity to wind up the debate, and I thank members for their contributions to it.
I am reminded of a much earlier debate—it might have been one of the first that the Greens brought in the 2003 to 2007 session—which was one of the first in which we tried to explore the notion, which is core to the purpose of the Green Party, that growth is not the same as wellbeing and that economic activity alone does not create quality of life. One thing that we were told bluntly and which has stuck with me was that earning a wage gives people dignity and having a job gives them quality of life. That very simplistic argument was put to us almost as though we should go away and talk about trees, fluffy animals or something else that we were expected to talk about in those days. I wonder whether today anybody would seriously make the argument that earning a wage gives people dignity and having a job gives them quality of life, when we know the lived reality of too many jobs and too many people on poverty wages.
I heard a couple of people interviewed on the radio this morning. One of them, who is on a zero-hours contract, can get a text message anything up to 20 minutes before his shift is due to start saying, “Please take another rest day.” Very often, he is already at the door of his employer and has gone into work. He said that he has a work ethic and he wants to work, but he turns up at the door of his employer only to find that he has just been sent a message saying that he is not required. After his basic living costs have been met, he can end up with £40 a week, and that is on a good week; some weeks, he has a disposable income of £8. He never knows on the Monday morning what his income will be by the end of the week. That job does not give that man quality of life. That poverty wage does not give him dignity.
Bizarrely, the Conservative amendment comes close to repeating that simplistic argument, in asking us to acknowledge that
“increasing employment, growing the economy and creating opportunity remains the most sustainable way of moving people out of poverty”.
Maybe in some circumstances, it can be. Increasing well-paid, secure and dignified employment can lift people out of poverty. Growing the economy might lift people out of poverty if we ensure that the wealth that is generated is shared fairly across society rather than hoarded by the lucky few. That can lift people out of poverty but, all too often, as history has shown, it has just not been the case.
I welcomed much of what the Scottish Government had to say, but there has not been enough follow-through on some elements. Roseanna Cunningham said that one of our priorities should be ensuring that there are more well-paid jobs, but doing that will not necessarily mean that there are no poorly paid jobs. We need to end the situation in which any jobs in our society are paid such poverty rates. There was a focus on skills and progression, to ensure that a person can move through employment and find a better job. That will still leave the poverty-pay job behind for somebody else to endure. We need to eradicate this kind of undignified, exploitative employment practice and ensure that everybody has enough to live with dignity.
As for the Labour contributions, Neil Findlay was spot on with one argument. He said that in-work poverty is no accident. Quite right—this is our current economic system working as it is supposed to. It is working as it is designed to, which is why we must challenge its basis and ensure that something better happens.
Our generation has such an opportunity. Our generation of politicians can see the failure of that economic system. Over the past few years, that failure has been manifest, not just in this country but around the world. We need to take the opportunity to say, “Enough is enough.” Let us stop digging ourselves deeper into that hole and build a fairer system.
Neil Findlay and Alex Rowley focused on many aspects of their party’s contribution to progress, and I understand the passion with which they claim those achievements. I suspect that both Neil Findlay and Alex Rowley, in private moments, would be as willing as I am to acknowledge the bad, as well as the good, of what happened during Labour’s last tenure in office. Yes, the creation of the minimum wage was an important step, but it was allowed to stay static and fall behind living costs for far too long, and the purpose of the welfare state was turned from one of basic wellbeing into one of bullying people into low-paid work and subsidising that work. That created the situation that is being fulfilled by the current UK Government’s disastrous welfare policies.
Patrick Harvie acknowledges good stuff that Labour has done and he criticises things that we have not done. Will he name one thing that his party has delivered?
Even from the position of opposition we have managed to persuade the Scottish Government to spend a great deal more on measures that will reduce people’s living costs, for example on energy. However, I will welcome the day when Neil Findlay can quiz us on our record in government, and I am sure that he will relish the opportunity to do that.
There is a need to begin a debate about repurposing these systems. Work and welfare must be based on the idea that everyone’s dignity matters. I regret that all three amendments that have been moved would delete the specific measures that the Green and Independent group have brought to the debate, such as a £10 minimum wage. Annabel Goldie asks us to consider minimum wages only if the economy can afford them, and suggests that there has been no attempt to model the impact. I wonder who assiduously modelled the impact of the systematic hoarding of the majority of the country’s wealth in the hands of the smallest number. That is the change that has been happening since the beginning of the 1980s—the incredible accumulation of high incomes and wealth in the hands of the minority. Did anyone model that? Did anyone ask whether the economy could afford that lavish remuneration at the top? I do not think so. They just went in for what they could get, frankly.
Quite right. That is the situation that we must turn around.
Wage ratios were mentioned and we will not solve the problem by talking about safety nets at the bottom. We will address inequality only if we address high pay as well as low pay. We mentioned a wealth tax in our motion, and the Government briefing, which is at the back of the chamber, makes it very clear that Scotland is doing very poorly on wealth inequality, with the wealthiest 10 per cent of households more than five times wealthier than the bottom 50 per cent of households combined. Finally, we mentioned moves towards a citizen’s income, because what matters is the dignity of everybody, not just hard-working families.
I commend the Green motion to the chamber and I will be voting against all the amendments today.