Budget must boost Scottish child payment, say child poverty campaigners

  • £155 million  no longer needed for two child limit mitigation payments "must remain in social security"
  • Above inflation increase to Scottish child payment "best evidenced, most impactful and cost effective way" to further reduce child poverty

Speaking ahead of tomorrow's Scottish Budget announcement John Dickie, Director of the Child Poverty Action Group (CPAG) in Scotland, said;

"Tomorrow's Scottish Budget is a critical opportunity to build on recent progress and lay a credible path to meet the First Minister's number one stated goal to eradicate child poverty. At the very least the £155 million no longer needed to deliver two-child limit payments following UK wide abolition of the policy must remain within social security support for families. It must add to and not replace the investment also needed in childcare, housing and employment support.  The evidence is clear that an above-inflation increase to the Scottish child payment would be the single most impactful and cost-effective way to further reduce child poverty and immediately improve living standards."

The Finance Secretary is required by law to increase the Scottish child payment in line with inflation, but the Child Poverty Action Group (CPAG) say this is not enough to make further progress to reduce child poverty. They estimate that the full £155 million previously earmarked for two-child limit mitigation could provide an above inflation boost to the payment to £37.50,  enough to lift a further 10 000 children out of poverty.   In separate analysis the independent Fraser of Allander Institute suggests a £35 Scottish child payment would cost around £121 million and reduce child poverty by one percentage point. A £40 per week Scottish child payment, as called for by members of the End Child Poverty coalition in Scotland, would reduce the number of children in poverty by 15,000 at a cost of £190m.

Mr. Dickie continued;

"If Holyrood is serious about meeting the child poverty targets that it unanimously enshrined in law then it must ensure a ratcheting up investment in the social security, childcare, housing and employment support families need to protect their children from poverty. There is no better way to secure Scotland's long term economic future than investing in children."

In a pre-Budget briefing sent to all MSPs Child Poverty Action Group (CPAG) point to recent research by economists and social policy academics from the London School of Economics (LSE) and the University of York that found concerns about Scottish child payment creating work disincentives are ‘overplayed.’ A comparison of labour market participation and hours worked among families on both sides of the border finds no labour supply impact in practice, including among second earners. They conclude that "the Scottish government should build on its investment so far and increase the value of the payment".

Cost of a child analysis published by CPAG in Scotland last month found that the gaps between incomes and costs for families, whilst narrower in Scotland than the rest of the UK, are still huge. An out-of-work couple with two children has less than half the income the general public believes is needed for a minimum socially acceptable standard of living, and a lone parent working full time on the national minimum wage has less than 80 per cent of what they need. 

Ends

For further details or interviews contact John Dickie, Director of CPAG in Scotland on 07795 340 618

Notes

  1. £155m based on Scottish Fiscal Commission forecasts . Offsetting the £155m cost of two child limit mitigation payments Fraser of Allander analysis suggests £34 million will be required to fund discretionary housing payments for the additional families who are hit by the benefit cap as a result of a two child limit abolition (unless it is also abolished), and the widened Scottish child payment eligibility as more families become eligible for universal credit (the main passport to Scottish child payment).
  2. CPAG modelling suggests a £40 per week per child Scottish child payment would reduce the number of children in poverty by 15,000 (one to two percentage points) at a cost of £190m. £155m, as currently earmarked for two child mitigation, would enable the payment to be increased to £37.50, in itself lifting 10 000 children out of poverty. ( The calculations come from  UKMOD version B1.11 UKMOD is maintained, developed and managed by the Centre for Microsimulation and Policy Analysis (CeMPA) at the University of Essex. The results and their interpretation are the author’s sole responsibility. The cost has been given in 2025/26 prices.)
  3. Fraser of Allander modelling suggest a £35 Scottish child payment would cost around £121 million and reduce child poverty by one percentage point. Also see End Child Poverty coalition Programme for Government briefing calling for a £40 payment.
  4. Research by economists and social policy academics from the London School of Economics (LSE) and the universities of York, published by the IFS,   recently found concerns about Scottish child payment creating work disincentives are ‘overplayed.’ A comparison of labour market participation and hours worked among families on both sides of the border finds no labour supply impact in practice, including among second earners. The researchers conclude that "the Scottish government should build on its investment so far and increase the value of the payment".
  5. Along with other members of the End Child Poverty coalition CPAG signed an open letter to the Finance Secretary following the UK government's abolition of the two child limit calling for her to "specifically use the resources freed up to further boost Scottish social security for families, for example by increasing the Scottish Child Payment toward the £40 a week that we have long argued is needed by the end of this Parliament."