Scottish Child Payment must change to end child poverty, think tank says

The Scottish Child Payment should be targeted to make a bigger impact on child poverty targets, according to a new report.

The devolved payment is worth £28.20 for children over 12 months in families on low incomes from this month, and is credited with alleviating hardship.

Relative child poverty in Scotland is lower than that for the UK as a whole. The rate for 2022-23 to 2024-25 was 21 per cent, less than the 28 per cent for the UK and 38 per cent for Greater London.

Scottish Government targets state that this should reduce to below 10 per cent by 2030.

If achieved, the level would break domestic records and make Scotland’s performance amongst the best in Europe, if not the very best.

However, new analysis from the Institute of Fiscal Studies (IFS) says this is not realistic and the goal will be missed “by a considerable margin” without further increasing devolved benefits – something it says the public purse cannot afford without action such as tapering the Scottish Child Payment as income rises to improve the targeting of welfare.

According to the administration’s current projections, child poverty will remain at 18 per cent by the deadline.

Tom Wernham, senior research economist at the think tank, said: “Scotland’s devolved benefit system is reducing income inequality and child poverty. Further increases in devolved benefits are the most direct way to continue to reduce child poverty. But the scale of benefit increases needed to achieve the very stretching 10 per cent child relative poverty target would cost billions of pounds per year and increase disincentives to work.

“Increases to employment and the wages of lower earners could, in principle, reduce poverty and boost Scottish Government revenues at the same time, but to deliver such increases at scale in practice would be very challenging.   

“If the next Scottish Government also prioritises the living standards and life chances of children from lower-income families, a mix of benefit, labour market and public service policies will likely be needed. In the context of a constrained budget, it will also need to be clear-eyed about what its key priorities are. While increasing benefits would have the most direct effects on income poverty, targeted service provision might be more cost-effective at improving longer-term educational, economic and social outcomes, if this provision is designed effectively.”

Under measures in the latest budget, the Scottish Child Payment is expected to grow to £40 per week for eligible children under the age of one by 2027-28.

The latest child poverty figures were published on the day that many of Scotland’s parties – the SNP, Conservatives, Labour, Greens and Lib Dems – launched their election campaigns.

The Scottish Greens have said they want to raise the Scottish Child Payment to £55 by the end of the decade.

Labour said it wants to do more to tackle the underlying causes of poverty, while the Conservatives called the proposal “unaffordable”, a position shared by Reform UK. Meanwhile, the SNP said its package of support including the extension of free childcare would help families.