Is Scotland Going To Meet Its Child Poverty Targets?

16th April 2024

The Child Poverty (Scotland) Act 2017 includes four targets for child poverty in Scotland in 2030 and interim targets for 2023. The targets require that, of all children living in Scotland:

less than 18% are in relative poverty by 2023-24 and less than 10% by 2030-31.

less than 14% are in absolute poverty by 2023-24 and less than 5% by 2030-31.

less than 8% are in combined low income and material deprivation by 2023-24 and less than 5% by 2030-31.

less than 8% are in persistent poverty by 2023-24 and less than 5% by 2030-31

The period for the interim targets has now passed, but the statistics for 2023-24 won't be available until March 2025.

At 26% in 2022-23, the year before the interim targets are due to be met, relative poverty for children sits well above the target of 18%. Similarly, the other three measures are currently 9, 4 and 6 percentage points higher than the targets.

Latest statistics
The latest child poverty statistics were published on 21 March 2024 and relate to the financial year 2022-23. The chart below shows the single-year relative poverty estimates as well as a smoothed trendline based on rolling three-year averages. The chart also includes the targets, and the Scottish Government's projections. Note that the projections were published before the latest statistics were available.

Impact of devolved policies - Scottish Government's projections
How is the Scottish Government tackling child poverty and is it working?

The key policy areas from the Scottish Government's 2nd Tackling Child Poverty Delivery Plan (2022) are benefits and parental employability support. The Scottish Government produced economic modelling to understand the cumulative impact of a range of Scottish Government policies on child poverty, comparing the actual scenario with the policies in place to a hypothetical scenario where the policies are not in place. Modelling was done using UKMOD, a microsimulation model developed and maintained by the University of Essex Institute for Economic and Social Research, which looks at the effect of tax and benefit policies on household incomes.

The policies included were Free School Meals, School Clothing Grant, Council Tax Reduction, Discretionary Housing Payments (bedroom tax and benefit cap mitigation), Carers Allowance Supplement, Best Start Grant, Best Start Foods, Scottish Child Payment, and employability services. Note that not all of these policies are targeted exclusively at children. Many of these policies exist in some form in the rest of the UK, except for Carer's Allowance Supplement and Scottish Child Payment.

The latest update to the modelling showed that the combined impact of these policies was a 10 percentage point reduction in relative child poverty in 2023-24 compared to a scenario with none of these policies in place. The modelling also projected relative child poverty to fall by 7 percentage points from 23% in 2021-22 to 16% in 2023-24, meeting the 18% interim target.

These results were published in February 2024, before the latest poverty statistics came out. The modelling projected child poverty to fall between 2021-22 and 2023-24, but with the latest data showing an increase in child poverty to 26% in 2022-23, it looks less likely that the Scottish Government will meet the interim target.

Modelling limitations and uncertainty
There are differences between official poverty statistics and modelled poverty estimates, with modelled estimates usually being lower. This is because the model simulates benefit receipt, whereas the official statistics are known to suffer from benefit underreporting. The Scottish Government also notes that:

"... all modelling is subject to a degree of uncertainty, relying on a range of assumptions and simplifications. This uncertainty is highlighted by an update to our input data, which leads to a revision in our projections for reasons that do not necessarily reflect real-world changes in policy or the wider economy. The results presented in this report, particularly projections of outturn poverty rates, should therefore be treated with caution."
[url=https://www.gov.scot/binaries/content/documents/govscot/publications/research-and-analysis/2024/02/child-poverty-cumulative-impact-assessment-update/documents/child-poverty-cumulative-impact-assessment-update/child-poverty-cumulative-impact-assessment-update/govscot%3Adocument/child-poverty-cumulative-impact-assessment-update.pdf]page 2 in latest modelling update[/url]

Some of the measurement uncertainty in the official statistics is shown in the Scottish Government's child poverty charts. For example, the relative child poverty estimate for 2022-23 (26%) sits within an uncertainty range of 15%-37%.

Will these policies be enough?
Scottish Child Payment is the key policy for reducing child poverty. The latest statistics do not yet fully capture its impact, since it was only increased to £25 and extended to 0-15 year-olds (from 0-5 years previously) in November 2022, more than halfway into the data collection period for the 2022-23 statistics. Going forward, the Scottish Fiscal Commission expects the government to double its spend on Scottish Child Payment in 2023-24 compared to 2022-23. The impact of this increase is reflected in SPICe modelling (using UKMOD) which suggests that Scottish Child Payment may have reduced relative child poverty in 2022-23 by 1 percentage point and could reduce it by 5 percentage points in 2023-24 compared to a Scotland without this benefit.

For the other benefits included in the Scottish Government's modelling (Discretionary Housing Payments, Carers Allowance Supplement, Best Start Grant and Best Start Foods), the Scottish Fiscal Commission forecasts much smaller increases on spend. This means that, overall, they will have a smaller impact on families' incomes compared to Scottish Child Payment.

The Scottish Government budget for 2024-25 shows employability funding increased considerably in 2023-24, but falls again in 2024-25 (see table A2.17, sum of budget lines for "No One Left Behind - Long-Term Unemployed", "No One Left Behind (incl. Parental Employability)", "Parental Employability Support Funding", and "Young Persons Guarantee - Local Employability Partnerships"). Note that not all of this funding is targeted at parents, and that its impact on household income is indirect and may take longer to take effect.

Considering both, the latest statistics and the modelled impact of existing policies, it seems unlikely that the scale of the Scottish Government's policies will have been sufficient to reduce child poverty to the 2023-24 interim target levels. To achieve the final 2030-31 targets, more action is likely to be required than what current funding plans suggest.

Reporting timeline
The interim targets relate to the financial year 2023-24, which has just ended. We won't find out if the targets have been met until Official Statistics for this year are published in a year's time in March 2025. In summer 2025, the Scottish Government is required to make a statement about the interim targets.

The Fraser of Allander Institute also commented on the latest child poverty statistics in their blog, which, too, is worth a read.

Maike Waldmann, Statistician

Note
This article was published at Spice spotlight on 16 April 2024. To read it with links and more graphs go HERE