NHS Health Scotland response to consultation on the Living Wage (Scotland) Bill

NHS Health Scotland Elphinstone House 65 West Regent Street GLASGOW G2 2AF Scotland. Tel: +44 0141 354 2900 Fax: +44 0141 354 2901 Correspondence to: martintaulbut@nhs.net

Introduction NHS Health Scotland is a national health board and the national agency for health improvement.Our aim is to improve Scotlands overall health record by focusing on the persistent inequalities that prevent health being improved for all. As an organisation working to improve health and reduce health inequalities we welcome the opportunity to respond to the consultation. This consultation is being launched in connection with a draft proposal which has been lodged as the first stage in the process of introducing a Members Bill. We note that the process is governed by Chapter 9, Rule 9.14, of the Parliaments Standing Orders and can be found on the Parliaments website at: http://www.scottish.parliament.uk/parliamentarybusiness/17797.aspx We commend the decision to consult on a proposal for a Bill to: (a) require private sector employees working on public sector contracts to be paid the Living Wage; and/or (b) require Scottish Ministers to prepare and report to the Parliament on a strategic plan to promote the Living Wage. We have responded to those questions of most relevance to our areas of experience and which may improve health and reduce health inequalities in Scotland.

QUESTION 1: Do you support the general aims of the proposed Bill? (as outlined in paragraphs 32 to 39 above). Please indicate yes/no/undecided and explain the reasons for your response. Yes. NHS Health Scotland would support the central objective of the Bill to increase the number of workers in Scotland who are paid the Living Wage. We believe this would contribute to reducing in-work poverty (especially in low-income and lone parent households) and thus have a beneficial impact on maternal and child health. This is especially relevant given the welfare-to-work agenda: the majority of current benefit claimants have work experience in low-paid occupations, so that even if they are successful in finding work, they are still likely to be at risk of low pay. The Bill is consistent with the NHS Health Scotland mission to reduce health inequalities and improve health1. Evidence for our position is presented below. General impact of in-work poverty on child and adult health The detrimental impact of living in a low-income household on child and adult health are well documented. There is a link between socio-economic disadvantage and health inequalities during the early years, in particular an increased risk of experiencing unintentional injuries and social, emotional and cognitive difficulties during the first five years of life2, 3. In 2001, mortality rates for males aged 20-59 in routine and semi-routine occupations were 3.7 times those in professional and managerial occupations4. The Whitehall II study found that greater levels of imbalance between perceived reward and effort at work (including salary) amongst civil servants of different grades were associated with increased risk of alcohol dependence, psychiatric disorder, long spells of sickness absence and poor health functioning5. There is also some evidence that reducing this imbalance may be beneficial for heart health among men6. Of the 2.3m children living in the UK in relative poverty in 2010/11, 1.4m lived in households where at least one working-age adult was in employment (Source: DWP HBAI 2010/11). Part-time workers (particularly women and lone parents) are especially vulnerable to in-work poverty. This is likely to have a detrimental impact not only on their health, but also on the health of

http://www.healthscotland.com/uploads/documents/18922-CorporateStrategy.pdf http://www.endchildpoverty.org.uk/files/Childhood_Poverty_and_Adult_Health.pdf NHS Health Scotland briefing on child poverty and health [in draft], 2012. http://www.sphsu.mrc.ac.uk/files/File/OP016.pdf http://www.hse.gov.uk/research/crr_pdf/2000/crr00266.pdf http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1740994/ 3

their children, not least given the association between maternal mental health and children's social, emotional and behavioural development7. Welfare to work, in work poverty and health The package of benefits reforms introduced by the UK Government is likely to intensify the pressure on benefit claimants to find work, while the financial pressure on those on low incomes in and out of work is likely to intensify due to changes to the tax credits system. There is emerging evidence that moving from welfare to low paid work has little impact on the incomes of lone parents, no impact on lone parents health, and a mixed impact on childrens health8. In 2011, 13% of former Job Seekers, 19% of former Income Support Claimants and 14% of former Employment Support Allowance claimants who had left benefits for full-time paid employment (30 hours a week), were earning less than 10,000 per annum9. A Living Wage would contribute to ensuring that the objective of making work pay (shared by the Scottish and UK Governments) is meaningful.

QUESTION 2: Do you envisage any issues for public sector bodies when including the Living Wage as a contract performance condition of a contract? Please explain the reasons for your answer. It would be useful to consider the comments made on the www.poverty.org.uk website: Current arrangements mean that it would be quite expensive for local public sector employers (but much less so for the public sector as a whole) to do something about the low pay of their employees. This is because, for every extra pound that the employee gains, the extra cost to the employer is around 3. This, in turn, is because the other 2 goes to HM Treasury via increased income tax and national insurance plus reduced tax credits.10 Although the tax and benefit system is a reserved matter, the Scottish Government could consider what measures it might introduce to help local public sector employers deliver on a Living Wage. QUESTION 3: What do you consider will be the advantages or disadvantages for employers and employees if public sector performance clauses stipulate the payment of the Living Wage?
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http://www.scotland.gov.uk/Publications/2010/04/26102536/5 http://www.cso.scot.nhs.uk/Publications/ExecSumms/JuneJuly11/GibsonPH.pdf http://research.dwp.gov.uk/asd/asd5/rports2011-2012/rrep791.pdf http://poverty.org.uk/s52/index.shtml?2 4

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NHS Health Scotland is not qualified to comment on the economic impacts on employers as a whole (commissioned research from others see Q9 might answer this question). One advantage to employers who sell goods and services is the positive impact on consumer demand, since low income households are more likely to spend rather than save this additional income. The state of the domestic economy and weak consumer demand currently remain the top two concerns among small businesses to achieving growth ambitions11. It is however useful to note the comments on the www.poverty.org.uk website on the industrial distribution of low pay in Scotland: Only a minority of low-paid employees are in sectors that face international competition and the consequent threat that the job could move abroad. The jobs that are likely to be at risk in this way includes manufacturing and some private sector services: perhaps a quarter of all low-paid jobs in total. Most low-paid jobs, therefore, are low paid for domestic, rather than international, reasons.12

QUESTION 4: Which public sector bodies should use contract performance clauses to deliver the Living Wage? Please include the reasons for your choice. The list of public bodies identified in paragraph 62 and 64 of the consultation document should be included. The inclusion of local authorities and arms-length bodies is very important, given the low pay in certain occupations (e.g. cleaning, catering, personal and leisure services). Consideration should also be given to including housing associations and other bodies commissioned or contracted by local or central government to provide services.

QUESTION 5: Which bodies should be mandatory consultees? Please include the reasons for your choice. We would suggest COSLA and major private sector employers who deliver public sector contracts should be included in the consultation process. QUESTION 6: What information must be included in the Scottish Ministers report to the Scottish Parliament? Please explain the reasons for your answer. We would support the proposals for information to be included in any report to Parliament outlined in paragraph 77. It would be helpful to include (as the poverty
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http://www.fsb.org.uk/policy/assets/q3%20vosb%20index.pdf http://poverty.org.uk/s52/index.shtml?2 5

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site does) mapping of low pay by geography13 and inequalities (within the low paid)14. The report might also estimate how many children and adults would be expected to be lifted out of poverty as a result of these changes. It would be helpful to produce a detailed baseline report, to allow changes as a result of the implementation of the Living Wage to be monitored (see Q9).

QUESTION 7: What is your assessment of the likely financial implications of the proposed Bill to you or your organisation; if possible please provide evidence to support your view? What (if any) other significant financial implications are likely to arise? The direct financial implications of the Bill to this organisation are likely to be negligible. In any case, we would support the Bill since its anticipated outcomes can help contribute to reduced health inequalities in Scotland.

QUESTION 8: Is the proposed Bill likely to have any substantial positive or negative implications for equality? If it is likely to have a substantial negative implication, how might this be minimised or avoided? The Bill is likely to have positive impact on equality, especially for gender. Women are at particular risk of earning less than the Living Wage. Detailed baseline information would help quantify these impacts more precisely.

QUESTION 9: Do you have any other comments on or suggestions relevant to the proposal? Suggested areas for research to inform the Bill It would be helpful to produce two pieces of background research on the Living Wage in Scotland: (1) A baseline, building on the work of the Scottish Parliaments Local Government and Regeneration Committees Report on the Living Wage, providing a more detailed breakdown of those currently paid below the Living Wage in Scotland by occupation, gender, geography etc. This could combine more precise estimates from the Annual Survey of Hours and Earnings with estimates of employment levels from the Annual Population Survey. (2) An estimate of the likely net costs/benefits of this policy move, written by an impartial third party. This could include not only fiscal benefits/costs but also the expected impact on people living in poverty.

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http://poverty.org.uk/s53/index.shtml?2 http://poverty.org.uk/s56/index.shtml?2 6

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The value of including a focus on personal service occupations In addition to the occupations identified in paragraph 35, it would be useful to include a focus on those working in personal services occupations (expanding on the discussion in paragraph 58). This should be considered in the context of the role of local authorities (and the Scottish Government) in funding the delivery of personal and social care. In Scotland in 2011, at least 20% of those working in caring personal service occupations in Scotland were paid less than a Living Wage of 7.20 an hour (Source: Annual Survey of Hours and Earnings 2011). This is an area where the public sector has the potential to make a clear, direct contribution to reducing in-work poverty.