Income and employment: policy context

Fair work, employability and skills

The Fair Work Convention defines Fair Work as work that provides effective Voice, Opportunity, Security, Fulfilment and Respect.

Scottish Government published its Fair Work action plan in 2022 aiming to become a Fair Work Nation by 2025. The action plan set out actions to promote fair and inclusive workplaces across Scotland, tackling the gender pay gap, the disability employment gap, and establishing an anti-racist employment strategy.

Scottish Government No One Left Behind: Employability Strategic Plan 2024 to 2027 aims ‘To deliver an employability system that tackles inequalities in Scotland’s labour market, creating a responsive and aligned approach that helps people of all ages who face the greatest barriers to progress towards, into and to sustain work.’

 UK Welfare Reform

2010-2024

The previous UK Government embarked on a welfare reform programme 2010-24, arguing this would improve health outcomes and reduce poverty. The centrepiece of this was  the replacement of working-age benefits with a single payment, Universal Credit (Universal Credit: welfare that works, 2010). 

The National Institute for Health Research has funded a research project evaluating the mental health impacts of Universal Credit, which is expected to be complete by 2026.

2024-

The new UK Government, elected in 2024, announced a number of new policies or consultations related to Welfare Reform:

• Pathways to Work: Reforming Benefits and Support to Get Britain Working Green Paper: this proposes cuts to the value of incapacity and disability benefits, small increases in the standard allowance of UC, the abolition of the Work Capability Assessment and investment in employment support for people with health problems.
• Winter Fuel Payment: (as of June 2025) in England and Wales, Fuel Payments will be paid to pensioner households with an annual income of £35,000 or less. In Scotland, pensioners in receipt of Pension Credit will get the full payment, will remaining pensioners will get £100. 

Devolved Social Security

Under the Scotland Act 2016, the Scottish Parliament was given new powers over Social Security (mainly those related to disability, caring, pregnancy and children).  It also devolved delivery of employment support programmes to Scotland (SPICe, New Social Security Powers, 2016)

A new agency, Social Security Scotland, was established in 2018.  It has a range of responsibility for administering disability benefits; family payments (including Best Start Payments and the Scottish Child Payment); Carer’s benefits; and some other payments e.g. Funeral Support Payment.

In 2025, the Scottish Government consulted on mitigating the two-child benefit cap in Scotland.

Child Poverty

In 2016, the then UK Government replaced a statutory obligation to report on trends in child poverty with a requirement to report on worklessness and educational attainment. The new UK Government, elected in 2024, set up a Child Poverty Taskforce in August 2024. It published a UK-wide Child Poverty Strategy in Spring 2025.

In Scotland, the Scottish Government introduced the Child Poverty (Scotland) Act 2017 instead.  This requires Scottish Ministers to ensure that four targets are met in 2030/31 (latest figures in brackets):

• Less than 10% of children are in relative poverty (23%, 2021-24)
• Less than 5% of children are in absolute poverty (20%, 2021-24)
• Less than 5% of children are in combined material deprivation and low income (9%, 2023-24)
• Less than 5% of children are in persistent poverty (23%, 2019-23)

The Bill requires Scottish Ministers to publish regular child poverty delivery plans, interim targets, and annual reports to measure progress; and a duty on local authorities and health boards to report annually their contribution to reducing child poverty. 

In March 2022, the Scottish Government published Best Start, Bright Futures: tackling child poverty delivery plan 2022 to 2026. Modelling suggests the plan will reduce child poverty in Scotland to 17% by 2023/24, with the Scottish Child Payment reducing child poverty by 5 percentage points.     

All of this is underpinned by Poverty and income inequality statistics and analysis, including a Local Child Poverty Dashboard.

Cost of living

In May 2022, as part of a package of responses to the cost of living crisis, the UK Government announced it would provide extra funding to low-income households dependent on state benefits (including the state pension).

Richardson et al. (2023) found that the UK Government intervention mitigated against the impact of the cost of living but were insufficient to offset anticipated increased population mortality or increased inequalities in mortality.

The final cost of living payments, intended to help those households most likely to be affected by rising costs, were made in February 2024, with no announcements of further support being planned.