Scotland fuel scheme is tax break for almost 1 in 3 of highest earners while not going far enough for low income families

NEW ANALYSIS REVEALS SCOTLAND FUEL SCHEME IS TAX BREAK FOR ALMOST 1 IN 3 OF HIGHEST EARNERS WHILE NOT GOING FAR ENOUGH FOR LOW INCOME FAMILIES

A leading think tank has warned that urgent action is needed to prevent families in Scotland already struggling to make ends meet from experiencing “catastrophic consequences”.

IPPR Scotland has found that the Scottish Government’s plans to administer a council tax discount in response to rising fuel bills is a missed opportunity to support people who need it most. While the Scottish government’s plans to introduce a £150 payment for households in receipt of Council Tax Reduction goes some way to help low-income families who would otherwise lose out, the scheme, which mirrors the UK Government’s own, and has been widely criticised for being poorly targeted, will see almost 1 in 3 of those with the highest household incomes - the top 10 per cent - get a tax cut, despite having a lesser need for support.

Researchers at IPPR Scotland have today joined anti-poverty organisations across Scotland in calling for an “urgent rethink” of plans, which they say are not designed in a way that will prevent more people in Scotland from being pulled into poverty as they face unaffordable bills following the UK Government’s fuel cap price rise, and the rising cost of living.

Scotland’s progressive think tank is urging the Scottish Government to consider, as a matter of urgency, the “targeted measures that will help those most in need”, using all available routes, immediately, to get support to people living on low incomes. In the immediate term, this could be achieved through local government routes that direct support towards people in receipt of low-income benefits.

IPPR Scotland are also calling on the Scottish government to urgently bring forward the proposed winter heating benefit, which would replace the cold weather payment ,and be made available to low income households across Scotland. Researchers say that there should also be a significant increase in its value this year.

IPPR Scotland’s Rachel Statham said:

“The cost of living crisis we now face is a crisis for low income families in Scotland. But while the Scottish Government has previously set bold and ambitious and child poverty targets, we are not on track to meet them. A scheme that fails to meet the mark risks catastrophic consequences for people who were already struggling to make ends meet and are now hardest hit by rising fuel costs. This will push us further from those targets.

“It is disappointing that the Scotland Government’s fuel scheme replicates the mistakes made by the UK Government scheme where they could have taken a different path. It will spread scant resources so thinly that it will barely make a dent in the hole in families’ budgets. All while delivering a tax cut to 1 in 3 people on the highest incomes, despite them being less in need.

“While it's clear the funding made available by the UK Government falls far short of what is needed, the Scottish Government could have done so much more with it. As we look ahead to the Scottish Government’s forthcoming Tackling Child Poverty delivery plan – which must set a credible and ambitious path to meet child poverty targets, backed by the necessary investment – we need urgent action to better get greater support directly to the poorest households”.

ENDS

Contact

Rosie Lockwood, head of media and advocacy for IPPR Scotland on r.lockwood@ippr.org or 07585772633.

Notes

IPPR Scotland’s Rachel Statham is available for interview.

IPPR Scotland is Scotland’s progressive think tank. We are cross-party, progressive, and neutral on the question of Scotland’s independence. IPPR Scotland is dedicated to supporting and improving public policy in Scotland, working tirelessly to achieve a progressive Scotland. For more information, visit: https://www.ippr.org/scotland.

Analysis uses the Family Resources Survey and Households Below Average Income in the latest 3 years of available data: 2017/18 through to 2019/20. The “richest” group refers to people in the top 10 per cent of UK households after adjusting for housing costs and household composition.