As noted previously, the percentage by which social security payments are up-rated is based on the September CPI rate; however the costs of basic necessities such as food and heating fuel have increased by a significantly higher rate (see Annex B for details). With price increases in such key areas, there is increasing financial pressure not only on those already receiving social security payments, but also on those whose earnings have suffered significant loss of purchasing power in relation to these basic necessities, but nevertheless remain beyond qualifying thresholds. The ONS has also reported that average wages across the UK have not risen at the same pace.^[45]

This is reflected in reports from stakeholders; the Poverty & Inequality Commission, for example, have noted that organisations and groups they have spoken to have described increases in the numbers of people contacting them for advice or assistance who were “experiencing in-work poverty and whose income was just marginally above the level where they would be eligible for benefits”.[46]

“People who are on the financial margins and working poor is what we are seeing more of. Those whose income might be just £10 above the benefits levels. They are the ones we are seeing more of.” – Community Organisation [47]

We note that the regulations increase earnings thresholds for some social security payments by around 10%; we discuss two particular exceptions below. The disparity between increases in earning thresholds and decreases in relative spending power, particularly with respect to vital purchases such as food and heat, risks leaving people who now find themselves under greater financial pressure than their incomes can accommodate excluded from social security support.

Observation 3: In view of the levels of inflation of prices for basic necessities such as food and fuel, re-examining the earnings thresholds for devolved social security payments may be an area for the Scottish Government to consider going forward.

SCoSS notes that the measure of “circumstances in which a person is or is not to be treated as gainfully employed” has been raised by 5.5%, from £132 to £139 per week. Through its Agency Agreement with the Department for Work and Pensions the Scottish Government is required to replicate changes to the earnings limit made by the Department for Work and Pensions. SCoSS intends to consider earnings limits for the new Scottish Carer’s Assistance in more detail during its consideration of draft regulations for Scottish Carer’s Assistance, which are expected to be received later in 2023.

We welcome the Scottish Government’s plans to remove income thresholds from qualifying benefits for best start foods[48] as contributing towards the reduction of in-work poverty and may contribute to the efficient delivery of the benefit in line with principles (e) and (h),[49] and note that this is expected to come into effect mid-2023-24.[50]

[45] Are wages keeping up with high inflation in the UK? (www.ons.gov.uk)

[46] Poverty & Inequality Commission Cost of Living Project

[47] Poverty & Inequality Commission Cost of Living Project

[48] Annex D: Detailed Analysis of Equalities and Fairer Scotland Issues by Portfolio (www.gov.scot) p. 175

[49] The relevant principles are as follows: (e) social security as a contribution towards reducing poverty; (h) the Scottish social security system is to be efficient and deliver value for money.

[50] Scotland’s Economic and Fiscal Forecasts – December 2022 | Scottish Fiscal Commission p. 84