The Minimum Income Guarantee is the simple idea that there should be a minimum level of income beneath which nobody in Scotland is allowed to fall. Listen to Russell tell Mubin how it would work in Scotland and how close they are to making the Minimum Income Guarantee a reality.

Full transcript

Mubin: Welcome to the Financial Fairness podcast with me Mubin Haq.

In today’s episode we’ll be talking about the Minimum Income Guarantee in Scotland.  I’m joined by Russell Gunson, formerly Head of IPPR Scotland and now Head of Policy and Research at the Robertson Trust and he’s been central to the development of this idea.

We’ll explore what the Minimum Income Guarantee is and how far he’s got with building support for implementing it in Scotland.

Thanks for joining us, Russell. The Minimum Income Guarantee may not be a concept many of us are familiar with, it's fairly new and is aiming to improve living standards across the board. But before we get into that, can you set the scene a bit in terms of what living standards are like in Scotland, especially in comparison to the rest of the UK?

Russell: Yeah. So I think you've seen across the UK, a period for the last 20 years or so, of something we've never seen before. So, an unprecedented length of time where living standards have pretty much stagnated. So, by that we mean real wages have stayed dropped and come back up, but they haven't increased, disposable incomes the same, poverty rates, of course, across the UK have begun to go through the roof over that period of time after big drops in the early noughties, late 90s. We've seen that reverse, almost completely reverse, certainly to a large extent. And Scotland has had many of those trends. So you know, whilst on many measures, Scotland is slightly better than the rest of the UK, so we have slightly lower poverty rates, we have lower levels of low paid work, our average wages are around the same as average wages in the UK. So, we've got some signs that are actually marginally better than the rest of the UK. If you were to compare Scotland to other countries, you know, similar sized countries like Denmark or some of the Nordics or the rest of Europe, you would be pretty shocked at the high levels of inequality and disadvantage that you see. So, it's a complicated picture. Compared to the rest of the UK we're sort of best of the rest outside of the Southeast of England, and arguably better than the rest in terms of inequality rates. But compared to outside of the UK, we do not have a strong record at all.

Mubin: As you say on some areas, I think particularly housing, isn't it, there's a marked difference in terms of housing costs.

Russell: Yeah, actually, housing isn't putting lots and lots of people over the poverty line in Scotland. Now, some of that is down to the market, the broader sort of housing market in Scotland hasn't been as hot, as in England, and in the rest of UK. There are pockets just like in the rest of the country where that is the case in Scotland. But also some of that's down to policy choices, social housing has been a big theme for 5, 10, 15 years really since devolution. And what you're seeing is that that's showing through the poverty rates and through more broadly, housing costs in Scotland. You can see that government action is beginning to make a difference in some small ways.

Mubin: Recently, I had on the podcast, Paul Lewis, who hosts Radio Four’s Money Box programme, and he had this acronym TABIS, ‘Things Are Better In Scotland’ - probably not the weather - does that resonate with you?

Russell: TABIS. That's a new one, a new one on me, I like it, I think, yes, is the very short answer. So, there are things to be positive about in Scotland and to reinforce and to be proud of. So the new social security payment using the new powers that were devolved to Scotland, just in the middle of the last decade, called the Scottish Child Payment. It provides 25 pounds a week to low-income families per child. And you are seeing a difference on the back of that in terms of the levels of struggle that low-income families are facing in Scotland, it's still high - but there are beginnings of hints that there are quite large differences opening up between Scotland and the rest of the UK.

But having said all of that, you can’t overplay it in the sense that Scotland is better if you're frame is looking at the rest of the UK, there are many reasons to be cheerful, in that sense. Look beyond the UK, and you can see that actually, there's a lot of road left for us in terms of improvement. And those I think underpin the arguments in Scotland that are growing and growing, which is - are we going far enough? Is comparing to the rest of the UK good enough anymore? Should we be aiming higher than that?

Mubin: And there’ve been things like tuition fees as well, and obviously there's some housing reforms as well, in terms of rents, and in terms of trying to cap the amounts there too.

Russell: You know, the ‘social contract’, if that's not too jargony a term – it is, isn't it - but you know, the things that we invest in collectively, let's call it that in Scotland. So, whether it's higher education, whether it's social care, so the fees for personal care in Scotland have been free, since very early in devolution. And you're right, Scotland's lead the rest of the UK around housing security for private renters and reforms more broadly. I think, where if you were to take, you know, my colleagues working in the third sector or working to try and tackle poverty and inequality in Scotland, in a room, I think, what you find is frustration that there's a big gap, often between the rhetoric and the ambition around many of these measures and the reality on the ground. So sometimes that's because there isn't the legislation on funding to back it up. Sometimes that's because there is, but implementation of that hasn't been strong and we're impatient, I think for improvement in Scotland on a quicker basis, so that we can really bring that reality and that rhetoric closer together.

Mubin: Yeah, and it's good to see that people are being ambitious. I think for similar colleagues in the rest of the UK, they probably look to Scotland with a bit of envy in terms of, you know, things like local welfare assistance schemes which are much more generous and holistic, than the support available in local authorities in England in the main. And obviously with Scottish Child Payment, which you touched on, which is let's just repeat that again 25 pounds a week extra per child. And there’ve been other reforms as well in terms of trying to minimise some of the impacts of austerity, too.

Russell: That's totally right. And, and looking at the Scottish child payment, there's no two-child limit on that. And the Social Security Agency in Scotland is set up around principles around dignity and fairness and rights, which, actually speaking, when you do talk to folk that have experience of the Social Security system up front, right now, that can often be some of the biggest things that they want to see change. So yes, the level of support needs to improve massively, it's on any measure far too low, across the UK, and the Scotland top ups help with that. But also, how people are treated through the system is what often strips people of dignity, of hope, and some of the tools that people need to get themselves out of the situation that they're in too. So you've got attempts, at least in Scotland to try and move in a very different direction.

Mubin: So, from what you're saying, that's not really having the same transformational effect at the moment. It's, it's rhetoric with some moves to inch closer to where this vision and goal is. But we're not there yet. Is that right?

Russell: I think that's right. So, things are better in Scotland, but let's not overplay it. And certainly, in Scotland, I don't think we want to be patting ourselves on the back in the midst of all of this that we see around us right now, you know, extreme levels of injustice and inequality on a scale that we haven't seen for some time, many, many decades.

Mubin: So let's get back to the minimum income guarantee. And you know, this is something we worked on Russell when I first came up into his job, really, and it's a concept you coined I think when you were at IPPR Scotland and the Director there. Just tell us what is a minimum income guarantee?

Russell: So yes, this comes out of work that I, and lots of other colleagues and lots of other organisations worked on around 2018.  The Minimum Income Guarantee, is the simple idea - but potentially transformational idea - that there should be a minimum level of income beneath which nobody in Scotland is allowed to fall. So, if you like, that's the simple version, how you turn that into reality is a much more complicated question. So, for example, to be fair, that level would need to change by your needs. So if you’re a household with one person in it, versus a couple household with three or four children, you obviously need different levels of income. And of course, some people, in fact most people would reach over that minimum income level through work, others through reform of  and reducing of costs of essentials, would need less to reach that level. But for the rest, there will be a social security payment that would top you up.

Mubin: In essence, that sounds like boosting income levels, considerably more than they are at present. And for most people that would happen through work, and they might get some top ups like they do already through Universal Credit. But for people who are completely reliant on benefits, that sounds like a sizable rise. How will incomes actually be boosted? It's - I'm presuming there's a combination of activities that are underpinning the Minimum Income Guarantee Russell?

Russell: That's right. So obviously, it depends where you set the level, so the minimum income level, you know, it could be set at the relative poverty line - it could be set higher than that. But that's the first step. You know, what, level are we saying as a country we want to get everybody up to and what’s intolerable for people to be beneath?

Mubin: And that's not been set, has it?

Russell: No, we haven't yet set a level for it. But we have sort of set an ambition, if you like, in the sense that, you know, you couldn't ultimately set this beneath poverty line if, if that's one of your ambitions as a country to tackle poverty.

And there are other things out there that, like the minimum income standard, that Loughborough University and JRF do, which looks already and asked the general public, in fact, what they think the minimum level of income is necessary in order to deliver basic quality of life. And the short of it is that setting a minimum income level against either of those would increase incomes for many and reduce massively reduce poverty and inequality.

But crucially, it's also around security - if you like the ‘guarantee’ side of the minimum income guarantee. People need to know it's there, like furlough was when the COVID 19 pandemic hit. That level of security, knowing that for everybody, a universal guarantee is there, ensuring that if you need this minimum income payment, it's there for you. And that it covers everybody. So, a bit like the NHS, you know, it's not like we use the NHS every day unless we need to, but we all know it's there for us if we need it, and this Minimum Income Guarantee would have a similar effect.

Mubin:  And it's worth just saying that this changes considerably for different age groups, for different household types, as you outlined already, Russell and in some ways, we've got a minimum income guarantee, haven't we because we've got the state pension and pension credit, which really provide that guarantee level and that's why pensioners are so close to the minimum income standard. But some groups are clearly really far, far behind that.

Russell: So you can see on pensioner poverty, the massive progress that's been made over that 20 year period, 25 year period. And that's a variety of things. But it includes, of course, the triple lock, it includes pension guarantee, it includes the pension itself. But for many, it is a guaranteed payment that can form a core of your income, if not more than that. And for others, there is a top up if their income needs it.

Mubin: And I'm guessing no one else has something like this at the moment, no one guarantees incomes to a certain level in the rest of the world?

Russell: Not by right. And I think again, you can see systems that do in essence put an income floor in, but there are hoops usually to jump through in order to get it. And there are conditions and sanctions if you don't behave in certain ways. One of the crucial aspects is that security point that guarantee point, the universal aspect of it, which is that it’s yours by right, this would be a right to a minimum income guarantee, not a handout. And if you combine implementing something like this, with reform to the world of work, with regulation to costs, particularly costs for essential items, you can see this as a big-ticket item that can you know, begin to reshape the economic model that we have not just the Social Security intervention.

Mubin: So, there is a danger that this just becomes about a massively increased social security budget. But to achieve a guarantee, we need much more to happen in areas such as employment and also the development of ‘universal basic services’. Do you want to say a bit more about that aspect?

Russell: Yeah, that's absolutely right. So, you could introduce this solely as a social security reform. But that would be very expensive. And you'd be missing massive tricks in the sense that we all have an obligation to each other - employers included - to make sure that everybody has enough to live that dignified quality of life. And so implementing reforms to the world of work alongside this is important. So, on work, looking at things like minimum hours, as much as minimum wages, looking at progression, looking at sector by sector, rather than trying to get a one size fits all, minimum ‘terms and conditions’. Those are things that happen in other countries very successfully, and you could look at introducing them alongside this, equally around services or universal basic services. Clearly, there are essentials that everyone needs. And so looking at whether that's regulation, whether that's changing how we provide them and pay for them, looking at childcare as an obvious example of that, where if you move to a more collective service, whether that's universal and free, or whether that's a hybrid - what you can do is begin to reduce the costs of childcare and reduce barriers for work. And in doing so, you're delivering on a Minimum Income Guarantee without the need for Social Security necessarily. So those two prongs of the three – work, costs, but also social security are really important. And it shouldn't be seen as a ‘Social Security only’ intervention.

Mubin: We've obviously talked about the benefits of giving people financial security that they need and the aspects of reducing income inequality and poverty. But people who aren't in Scotland may or may not be so familiar with the child poverty targets that the government has as well. Do you want to just touch on that and how this Minimum Income Guarantee could help with that?

Russell: Yeah, so we have in Scotland - in fact, I think Scotland is the only part of the UK that still has child poverty targets. When they were abolished at the UK level, the Scottish Government put them in place for Scotland. And what they aim for is to reduce child poverty across a number of measures, the headline being relative poverty. And that's to reduce child poverty down to 10%. So currently, it stands at around 24% in Scotland. And there's interim targets in between, that 10% figure is for 2030, so, still seven, eight years away. The interim targets are this year, which we'll find out about, when the stats come out, now that's an 18% target.

Now in Scotland the child poverty rate is lower than the rest of the UK. And due to things like the Scottish Child Payment, it will be lower still. But whether we'll meet those targets or not without big significant change? That's the question, I think, facing this new First Minister, and the next parliamentary term. So, things like a minimum income guarantee, the first steps of it, need to be seen in that light.

Mubin: When you were at IPPR Scotland, you managed to get cross party support for a minimum income guarantee, I think it was in all of the manifestos. Can you just say about how the government has been taking this forward?

Russell: So yes, so in the build up to the 2021 Holyrood elections, we and others managed to get cross party support for this. So, three out of the five political parties, the Scottish Labour Party, Scottish Greens, and the SNP signed up to implementing this. And following that, the Scottish government set up an independent steering group to guide how that can be implemented. Now, I co-chair that with the Cabinet Secretary for social justice, and there are all five political parties represented on that through a strategy group. And then I chair the expert group that's getting into the detail on this, as you know, because you sit on it, Mubin too…

Mubin. Yes, I should declare an interest in having some vested interest in this.

Russell: And so, the expert group, we've just released the interim report. And we're just now going to phase two, which is really where we get into the detail of this whilst also getting above the surface. So people in Scotland, people beyond Scotland that are interested, should begin to see this more and more and understand where we're going with it more and more. So that by towards the end of 2024, end of summer, we will have a full report outlining what the options are for delivering this.

Mubin: And what did that interim report come out with in terms of its findings and recommendations?

Russell: Firstly, it talks through what we've been doing with our time for the year and a bit. It sets out some key principles that we as a group have set ourselves - the things around the design of a Minimum Income Guarantee but also things around the approach. So, making sure for example, experts by experience are right at the heart of this process, making sure that what we come out with has to have support and coalitions of support beyond us. And crucially making sure that it's implementable. We don't want to fall into the trap that we see with so many other things in Scotland around the rhetoric being strong, but the reality not being so strong. And so things like setting a level, at least at the poverty line, and ideally, up towards the minimum income standard. The fact that, that level needs to change by household, the fact that it would likely replace Universal Credit. And so you're seeing lots of detail begin to come into focus. But a lot more detail still left to do.

Mubin: Just picking up on what one thing that you said about replacing Universal Credit because we've had a huge headache getting Universal Credit in already. So, you're saying this might replace it?

Russell: Yes. So, crucially, for this work, you have to split down what you can do first steps through existing powers, what you could do with further powers, and thirdly, if you had the full powers, whether that be through devolution, or through independence, what you would do in those scenarios and I think those are all quite different.

So, in that full scenario, which is a longer-term vision, it would be no surprise that a Scottish Government of any colour would want to replace the Universal Credit System, given how there are inbuilt weaknesses there, you know, incredible hardship at the heart of much of that system. However, in the nearer term, it's less about those bigger moves through the existing powers, and more about what you could do around the existing system to begin to make steps towards a minimum income guarantee.

Mubin: So, you've touched on some additional powers that might be needed? How far do you think we can go with the existing powers that we have?

Russell: So are there things we can do around the benefit cap, are there things that we could do around the two child limit, around the five week wait, can we move the system for those people that receive Social Security in Scotland much, much closer to a guarantee than what we have just now? Secondly, I think with the Scottish child payment, you can see for some population groups, we can shift that much closer to a minimum income.

And then, of course, like we've touched on, this isn't just social security. So what can the Scottish Government do around work? What can the Scottish Government do around reducing costs of essentials, for at least those underneath the minimum income, now some of that is law and regulation. Some of that might be however, more about persuasion, more about trying to rethink how you use the existing resources, and how agendas like the Fair Work Agenda, something Scottish Government has talked about for a long time now, move from being rhetoric to reality.

Mubin: Can I get into costs. And I mean, it's a hard one, really, and I know when you were at IPPR, there was some costings related to this. But how much might this cost, is there a minimum and a maximum?

Russell: I think in that full version you are talking about significant sums into the billions of pounds a year. But to give that some context, about three and a half billion pounds a year of Social Security spend has been cut out of spend in Scotland since 2010. So even just reinstating those cuts would get you a very significant way towards the Minimum Income Guarantee in that full scheme version. Beyond that, I think you also have to understand that the cuts and the sort of degradation of the system has happened over many years. And so rebuilding it and building something new is likely to take time as well.

But I suppose the last thing I’d say is that tackling poverty and boosting financial security isn't ever going to be free. There isn't a free way to do it. This is about redistribution of income to those at the lowest end relative to the rest.

Mubin: How much public support is there for this? Do people talk about a Minimum Income Guarantee in Scotland, because we had quite a lot of support for something called the universal basic income in Scotland. And maybe if you could just explain how the Minimum Income Guarantee differs from that and where the public is on this?

Russell: A Minimum Income Guarantee differs in a really fundamental way from a universal basic income. So, a universal basic income is mainly flat, it doesn't vary by needs beyond an adult payment, and a child payment. It’s assessed as an individual, so you get that, regardless of whether your circumstances as a household are different to the next or not. And it's a universal payment, whereas a Minimum Income Guarantee is a universal guarantee. A UBI, everybody gets it all the time, a minimum income guarantee, everybody knows it's there but it's a targeted payment to those who need it. That's the key distinctions.

In terms of support, I think this is a newer idea. It's homegrown, it's Scotland based, you don't see pilots of it in other countries yet, or in the past. And UBI does have all of those things, it is a global movement, with pilots of forms of UBI, at least in the past in other countries. So I think we're at a different stage with a minimum income guarantee. But where they do have a similarity is about the simplicity of the idea. And also, the big level of the idea, you know - this is a simple, potentially transformative idea, which is, everybody should have a minimum income level beneath which their income will not drop. And that could be transformational in the same way as I think proponents of a UBI would argue that that would be.

In terms of public support. So I think the awareness of a Minimum Income Guarantee is lower as things stand compared to a UBI. Although I wouldn't want to overstate awareness of a UBI. But when asked, there's really significant support for this idea.  IPPR Scotland, found almost 80% of people in Scotland supported the idea. And that really is overwhelming support, I think you don't want to overplay it in the way that I probably just did, in the sense that, you know, you're not looking at the downside, you're not looking at how you pay for it. And that's why the work of the steering group is really important, because what we can do is get the level of detail there, that allows us to get underneath whether the support is quite thin, or whether it's quite deep, and how to persuade people to really push for this to happen. So, I think, yeah, in short, there's a lot of support there for the idea. But we need to test whether that support is strong once you get into some of the downsides and tradeoffs that inevitably will be there.

Mubin: And how high is this on the government's agenda in terms of, they've got lots of challenges from climate change, the child poverty targets, huge problems in relation to health inequalities - where does something like a Minimum Income Guarantee sit within all of those priorities?

Russell: It is certainly protected in many ways and a high priority in many ways in the sense that it's a manifesto commitment, in a sense that there's cross party support for it. And there is support beyond the politicians for this, the expert group is made up of organisations from across Scotland that are interested and supportive of this idea. So, the support is there. Politicians do things when they see the support is there for them to happen. And I think it's down to campaigning groups, it's down to policy groups, it's down to those that are in the third sector and beyond to really flesh this idea out and push it. And that will be how this happens. It won't just happen. It won't just be presented into our lap.

Mubin: And finally, where do you think we'll be in, say, a year's time in relation to final report and say, by 2030? Where do you think we’ll be?

Russell: So I think 2030, you know, that level it’s so hard to plan ahead. You know, we've seen, we've seen even in the last year or two never mind, over the next seven, the changes that have happened, that weren't predicted that weren't planned. But I think…

Mubin:  - yeah, that's a bit unfair of me. Sorry.

Russell: No, I think it's a fair challenge in one sense, you know, this is a multi-year commitment. I think by 2030, if there has been further devolution, you will see a social security system much closer to what this looks like. You can see already opposition to conditions and sanctions to the benefit cap to the two-child limit, to the five-week wait - to those parts that strip people of their dignity, but also strip people of a guarantee of support in the existing system.

At the same time, we have powers now. So over this next year, I think you will see in the response to the cost of living emergency that we're still in, but also in response to those child poverty targets that we are bound by and want to as a country make progress on, improvements to Social Security into work, too. So, I'm hopeful in a year that if we all do our jobs well - don't ask me in a year – if we all do our jobs well, we will see the first steps on that long road towards a minimum income guarantee.

Mubin: Brilliant. Thank you, Russell for explaining Minimum Income Guarantee and what is and how we might make it become a reality.

Russell: Thank you.

Mubin: If you enjoyed this episode, please like, share and subscribe on your preferred podcast platform, it really helps us spread the word. And don’t forget, series one is available now across all major podcast platforms and on our website. Until next time, thanks for listening.