Scottish Government pledges financial support to tackle cost of living crisis

Finance secretary Kate Forbes has confirmed a £290 million package of support to help people affected by the soaring cost of living, including council tax rebates to eligible households.

Scottish Government pledges financial support to tackle cost of living crisis

Finance secretary Kate Forbes

During the Stage 3 debate of the 2022-2023 Scottish Budget Bill in the Scottish Parliament yesterday, Ms Forbes said ministers have honoured the commitment and are going further to ensure those hardest hit have support.

New measures announced include:

  • £280m to provide £150 to every household in receipt of Council Tax Reduction in any Band and to provide £150 to all other occupied households in Bands A to D. This means 1.85 million households, or 73% of all households, will receive financial support through their council tax bill or a direct payment
  • £10m in 2022-23 to continue the Fuel Insecurity Fund to help households from rationing their energy use.

While the Scottish Government is awaiting final confirmation from the Treasury on funding allocations, Ms Forbes said the £290m for Scotland announced by the Chancellor of the Exchequer last week is not likely to mean net additional funding. This is due to an expected reduction of a similar amount in other consequential funding previously anticipated through the forthcoming UK Government Supplementary Estimates.

Ms Forbes said: “Large rises in energy bills, increased costs on every day essentials, rising interest rates and the UK Government’s new National Insurance hike are causing huge concern and worry, and people are struggling. These additional costs will hit the most vulnerable in our society, the hardest.

“That is why we will honour our commitment, whatever other Budget challenges we face, to pass on the full £290m to help families now. I am therefore today announcing that there will be three elements to the package of support today.

“Firstly, we will provide £150 to every household in receipt of Council Tax Reduction in all Council Tax bands. The Council Tax Reduction Scheme already identifies households in greatest need and will allow us to target this intervention.

“Secondly, I will provide local authorities with funding to pass on £150 to other occupied household in Bands A to D in Scotland. In total, combining these elements, 1.85 million, or 73% of all households, will receive £150 of support. I know that the cost of living crisis is affecting households who are not in receipt of benefits, who are not claiming a Council Tax Reduction. And they are facing hardship too. We must seek to do what we can to prevent those households and families on the edge of the poverty line, from falling over it.

“Thirdly I am also announcing £10m in 2022-23 to continue our Fuel Insecurity Fund to help households at risk of self-disconnection, or self-rationing their energy use, due to unaffordable fuel costs.

“Households across Scotland, across the UK, are struggling with the wide range of rising costs and many of the macro levers, for example, around energy regulation reside with the UK Government. That is why I will be writing to the Chief Secretary to the Treasury, again highlighting that we must work together urgently so we can use our joint powers to do more to tackle the cost of living.”

Age Scotland welcomed the announcement that the £150 energy bill support payment will include people in receipt of council tax reduction, irrespective of which council tax band they live in.

Chief executive Brian Sloan said: “We are grateful to Kate Forbes and the Scottish Government for listening to our calls and ensuring that tens of thousands of pensioners on the lowest incomes, who might otherwise have missed out, are now included and supported with this measure.

“There is no doubt that the rising cost of living is going to continue to bite for many more months to come and energy bills will be the greatest contributor to this. The scale and pace that these bills are rising is causing older people, especially those on low and fixed incomes, great concern and anxiety. Our conversations with them highlight that many just do not know how they will cope when their bills increase by 50%.

“Today’s announcement from the Scottish Government that people who receive Council Tax Reduction will receive the £150 payment irrespective of which band their home is in is very welcome indeed. We asked them to do this on the basis that council tax bands are not an accurate metric of a person’s financial situation or ability to pay. And while it may capture many people on the lowest income it will still miss large numbers who are most in need.”

The Federation of Small Businesses (FSB) in Scotland has warned that more needs to be done to help local and independent firms facing spiralling overheads.

Andrew McRae, the FSB in Scotland’s policy chair, said: “The Scottish Government is right to focus on recovery, and we’re pleased to see new covid grant support announced for operators that have had little or no help so far.

“One of the few bright spots over the last two years has been the number of smaller Scottish operators that built their digital skills to survive the pandemic. New cash for their popular and successful DigitalBoost programme is a savvy choice that’ll help many firms get ready for the future.

“However, today’s announcements do little to shield the bulk of Scotland’s smallest firms against punishing increases in energy bills. Governments in Edinburgh and London can’t leave local and independent firms to fend for themselves in a market that doesn’t care about the sacrifices of the last two years.”

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