New evidence backs case for Scottish child payment Budget boost, say campaigners

  • First cross-nation study finds deprivation and food insecurity would be “between 8 and 9 percentage points higher without Scottish child payment”
  • ‘Cliff edge’ work disincentive fears  “overplayed”, say economists

The Child Poverty Action Group (CPAG) in Scotland says new evidence from economists and social policy experts backs the case for the Scottish Finance Secretary to include an above inflation increase to the Scottish child payment in her Budget statement next month.

A research project bringing together economists and social policy academics from the London School of Economics (LSE) and the universities of York and Glasgow  has found “statistically significant reductions in both child material deprivation and food insecurity relative to England, after the introduction of the SCP (Scottish child payment)” and that  “concerns that the SCP creates work disincentives are overplayed.”

Responding to the publication of the findings John Dickie, Director of Child Poverty Action Group) CPAG in Scotland, said;

"It is vital that the Finance Secretary takes note of these findings in considering her Budget options. She has promised to spend the money freed up in her budget by the abolition of the two-child limit on the most effective measures to further reduce child poverty. The evidence is clear and mounting that increasing the Scottish child payment is the most straight-forward, cost-effective and impactful tool she has.”

By comparing trends north and south of the border the researchers found that the effects of the Scottish child payment (SCP) are “considerable in size” and “that both material deprivation and food insecurity would have been between 8 and 9 percentage points higher in Scotland without the SCP.”

The findings are based on analysis of the DWP’s UK-wide Family Resources Survey. Alongside interviews with low-income families in Scotland and in England they offer the first comparative study across UK nations of the impact that the unique Scottish child payment is having. The payment is already widely credited with lifting at least 40,000 children out of poverty at a time when child poverty across the UK continued to rise (See note below).

CPAG modelling suggests that investing the full £155 million that the Scottish government has set aside to fund two-child limit mitigation payments would raise the Scottish child payment to £37.50, lifting another 10,000 children out of poverty. The mitigation payments are no longer required following the UK government's decision to abolish the policy at source. Campaigners say the money freed up in the Scottish budget would go a long way toward the £40 a week payment they say is needed by the end of this Parliament.

‘Cliff edge’ work disincentive fears “overplayed”

The research team also explored the impact of the ‘cliff edge’, the point where a small increase in earnings could take families above the eligibility threshold for Scottish child payment leading to an overall loss of income.

Ministers and others have expressed concern that this ‘cliff edge’ could act as a disincentive to parents to increase their earnings, and that any boost to the value of the payment would increase the disincentive.

However, the researchers find no evidence to suggest that the Scottish child payment has reduced labour supply. The analysis shows that only a small share of families have incomes that position them close to the cliff-edge.  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 “concerns that the SCP creates work disincentives are overplayed.”

Professor Emma Tominey from the University of York led the research. She said:

“Our study of families’ experiences in England and Scotland is clear in suggesting that the Scottish child payment is having a significant impact in reducing family hardship, child deprivation and food insecurity. Fears that the payment creates a work disincentive are also overplayed. There is no evidence that the SCP creates meaningful work disincentives - partly because for many families the cliff-edge exists at such a high level of hours worked as to make any potential constraint non-binding.”

Professor Kitty Stewart of the LSE was part of the project team. She said: 

“Our results show that things are easier for Scottish families relative to English families as a result of the SCP. But wider pressures mean material deprivation is still rising both north and south of the border - just less quickly in Scotland. To make a bigger difference, the Scottish Government should build on its investment so far and increase the value of the payment.”

ENDS

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

NOTES FOR EDITORS

  1. More details on the Family Finances research project can be found here. Investing in children: Early findings on the difference the Scottish Child Payment makes to child wellbeing can be found  https://sticerd.lse.ac.uk/case/_new/publications/abstract/?index=11919
  2. Does The Scottish Child Payment Weaken Work Incentives? can be found here: https://sticerd.lse.ac.uk/case/_new/publications/abstract/?index=11920.
  3. Modelling from the Scottish Government estimates Scottish child payment to keep 40,000 children out of relative poverty in 2025-26. Scottish Government, Child Poverty Modelling: Update, 2025, https://www.gov.scot/publications/childpoverty-modelling-update/. CPAG’s own analysis suggest the payment lifts around 50,000 children out of poverty, whilst reducing the depth of poverty for many more. CPAG, State of the Nations, 2024, https://cpag.org.uk/sites/default/files/2024-10/State_of_the_nations.pdf. IPPR Scotland modelling in April 2023 estimated 40,000 children to be lifted out of poverty by the £25 payment. IPPR Scotland, Poverty doesn’t have to be inevitable – it needs political will and investment to eradicate, 2023, https://www.ippr.org/articles/povertydoesn-t-have-to-be-inevitable-itneeds-political-will-and-investment-to-eradicate.  Official child poverty statistics https://data.gov.scot/poverty/download.html show a 40,000 children (four percentage point) fall in child poverty in the single year to 2023/24 (40,000 fewer children in poverty).