What is a minimum income guarantee?

Recently, the Minimum Income Guarantee (MIG) expert group has published their interim report. A Minimum Income Guarantee is one of the core policy commitments that we want to see made reality at IPPR Scotland.

Given this, we have set out an explainer, exploring what MIG is - and why we believe it can make a transformational difference in the lives of millions across Scotland.

Defining a Minimum Income Guarantee

A Minimum Income Guarantee (MIG) is a universal guarantee: an income floor beneath which no one should fall. For most people, paid work and collective services can give people the income they need, and reduce their costs, to meet their income floor. For others who face barriers to securing secure and well-paid work, a targeted payment would lift their incomes up. It is a simple idea which can offer a long-term aim and an organising principle for the here and now.

What difference can a Minimum Income Guarantee make for people in Scotland?

A MIG, when designed effectively, can reduce poverty, inequality and insecurity for people across Scotland – regardless of their work status. It would ensure that everyone can feed themselves and their families, heat their homes, and live with dignity. We estimate a MIG could benefit an estimated two and a half million people in Scotland, and effectively eradicate working age and child poverty in Scotland*.

How could a Minimum Income Guarantee work in practice?

There are various policy approaches we can take to seeing a MIG fully realised in Scotland. At IPPR Scotland, we believe a MIG should be rolled out through a targeted MIG payment and supported by better routes into fair work.

What is the income floor of a Minimum Income Guarantee?

This can vary depending on design and importantly will also vary based on your household circumstances – for example, a household with children will face higher costs which their income floor would respond to.

At IPPR Scotland, we believe the income floor used to set a MIG must meet two tests: first of all, that no household lives in relative poverty; secondly, that this floor provides a secure income that ensures all households can meet their basic needs.

Doesn’t our social security system already provide a Minimum Income Guarantee?

Our social security system as is, is inadequate in meeting the needs of people across Scotland – it does not provide the bare minimum standard to enable people to live a life of dignity. Previous IPPR Scotland research with JRF has shown that current social security provision does not always provide income households can rely on.

A minimum income guarantee can transform our social security system – ensuring that it provides a springboard to fall back on, not merely a tightrope over poverty. It would represent a substantial increase in social security provision, and in the level of support offered by the state to both those in and out of work. It would also mean there would be no caps, limits or punitive sanctions associated with eligibility for social security support.

How can a Minimum Income Guarantee tackle inequalities?

A MIG can be a powerful tool to tackling intersecting inequalities in Scotland when this is ‘baked into’ its design from the outset. Due attention at the design stage must be given as to how these intersect to shape peoples’ everyday lives and experiences.

Currently in Scotland, the richest Scots are 200 times wealthier than the poorest. Additionally, one in three Scots do not have the required savings to keep themselves above the poverty line should they lose their job. A MIG can help to narrow this divide, and provide a safety net below which no-one should fall, irrespective of circumstance.

In Scotland, more than two in five (44%) people from a minority ethnic background were living in poverty between 2017-20 compared to one in five white people. The relative poverty rate for Scots with disabilities in 2015-18 was almost twice as much (30 per cent) among households with a disabled member, compared to those without a disabled member (16 per cent)**.

If a MIG is designed to recognise any additional costs associated where households have reduced capacity for paid work, this can transform the financial situations of people with disabilities across Scotland.

A MIG payment and guarantee could also transform the lives of many women across Scotland, who are shouldered with the vast majority of unpaid care work. In addition, childcare costs are a key driver of poverty and financial insecurity across the UK. Offsetting these through a MIG can enable more women to return to full-time work, resulting in the narrowing of the gender pay gap. MIG could also bolster financial independence for women and safeguard against financial abuse – so long as payment is household assessed but individually paid. This would ensure individual control over income is in-built, rather than opt-in, for each member of the household.

Existing research suggests that more generous welfare provision can help unemployed people find better quality work. Women and people of colour are disproportionately employed in some of the most precarious sectors – such as retail and hospitality – improving the quality of work therefore inherently improves the living standards for groups facing marginalisation in Scotland today.

How could a Minimum Income Guarantee be funded?

Long-term, further devolution over Scotland’s tax raising and social security powers is needed to raise the revenue required for a truly transformative minimum income guarantee. However, there are substantial first steps the Scottish government can take within the boundaries of existing tax-raising powers. Income tax reform, the phasing out of the outdated and inequal council tax system, and the introduction of property value tax could all be ways the Scottish government uses its existing revenue raising powers to their full potential.

What do people in Scotland think about a Minimum Income Guarantee?

Four in five Scots – 79 per cent - would support the introduction of a minimum income guarantee in Scotland, according to polling commissioned by us in 2022, conducted by Diffley.

What is the progress toward a MIG in Scotland?

At IPPR Scotland, we want to see a Minimum Income Guarantee delivered in Scotland by 2030. Thus far, we’ve seen some positive steps in this direction by the Scottish government.

The Programme for Government (2021-22) set out the Scottish government’s commitment to develop a minimum income guarantee. Following this, a Steering Group – made up of a cross-party strategy group, and an expert group with representation from academia, trade unions, poverty and equality organisations, and other people with lived experience of poverty and inequality was established.

Today’s interim report from the group shows that there has been some great high-level thinking on this, and the ambition and drive to see a MIG realised is clear. However, translating these ambitions into the reality of policy implementation will be the real litmus test. The Scottish government must not kick these high-level ambitions into the long grass and must turn to what can be done in the immediate term to help households in the here and now, while getting us closer to seeing a MIG realised in Scotland.

What work have IPPR Scotland done on MIG?

A MIG is one of the key strands of our research work and analysis at IPPR Scotland. Our director, Philip Whyte is one of the members of the MIG expert group, and much of our research has informed and put onto the agenda the ongoing policy discussion around MIG today.

For our most comprehensive report on MIG, which sets out our proposal for its realisation for Scotland by 2030 – take a look at our 2021 report, ‘Securing a living income in Scotland: Towards a minimum income guarantee’.