Tag: Children and Families

FRASER OF ALLANDER INSTITUTE ANALYSIS

This week, the Scottish Government released headline child poverty statistics for 2023-24. The big headline is: we’ve missed the interim child poverty targets. But what does that mean? And what comes next (write Fraser of Allander Institute’s HANNAH RANDOLPH, EMMA CONGREVE and CHIRSTY McFADYEN)?

What do the new statistics say?

First, our usual note on the data: poverty rates are usually presented as a three-year average. The pandemic interrupted data collection, so any period including 2020-21 is actually a two-year average omitting that year – although the latest data point is back to a true three-year average. The interim and final child poverty targets set out in legislation are single-year rates, though, so we needed to hit 18% relative poverty in 2023-24 to meet the interim targets.

Without further ado, the new child poverty statistics are compared to the corresponding interim targets in Table 1 below.

Table 1: Child poverty rates and interim targets

	Three-year rate		Single-year rate		Interim target by 2023/24
	2020-23	2021-24	2022/23	2023/24
Relative poverty	24	23	26	22	18
Absolute poverty	21	20	23	17	14
Low income and material deprivation	—	—	12	9	8
Persistent poverty	—	—	17	23	8

Source: Scottish Government
Notes: The questions on material deprivation changed in 2023/24, so single-year rates are not directly comparable and a three-year rate for 2021-24 has not been calculated. Rates of persistent poverty are calculated for 2018-22 and 2019-23; someone is counted as in persistent poverty in 2019-23 if they were in poverty for three or more of the four years in that period.

In sum, three of the four main measures of child poverty have fallen since last year – but not by enough to meet any of the interim targets.

How close were we to meeting the targets?

The measure of combined low income and material deprivation came closest to meeting the interim target, 9% vs. an 8% target. The relative and absolute poverty measures came in 4 and 3 percentage points above the targets, respectively (see Chart 1). It’s fair to note that the confidence intervals around these measures are relatively wide due to data limitations.

Chart 1: Relative and absolute poverty after housing costs, 2015/16 – 2023/24

Source: Scottish Government
Notes: Three-year rates for periods including 2020/21 are two-year averages omitting 2020/21. The single-year rate for 2020/21 is not shown.

It’s promising that these three measures also fell from last year. The fourth measure, persistent poverty, is based on a different survey and can be relatively volatile.

Nevertheless, it’s concerning that persistent poverty, representing the proportion of children who live in relative poverty for three or more of the last four years, has risen from 17% to 23%. The rate is much higher than the interim target of 8%. However, there may be data issues driving at least part of the change – there’s potentially a lot to unpack there.

Have policies like the Scottish Child Payment made a difference?

The new data for 2023/24 represent the first year when all children under 16 in households receiving qualifying benefits got £25 per week for the full year.

As a reminder:

• The Scottish Child Payment (SCP) was introduced for children under 6 in eligible households at £10 per week in February 2021;
• The amount increased to £20 per week, per child in November 2021;
• A system of bridging payments was introduced in 2022 for children under 16; and
• Eligibility was extended to children under 16 and the payment was increased to £25 per week, per child in November 2022.

There has been some discussion of whether or not the Family Resources Survey (the survey Scotland’s child poverty statistics are based on) was accurately capturing receipt of SCP. There have been updates to the data methodology, and we’re confident that SCP is accurately represented in this year’s data. Read more on this issue here.

The new statistics today show a fall in relative and absolute poverty since last year. But it’s difficult to say what would have happened to child poverty rates in the absence of SCP; the most straightforward way to tell is to compare trends in child poverty across Scotland and the rest of the UK, where SCP is not available (see Chart 2).

Chart 2: Relative child poverty trends, Scotland vs. UK

Source: Scottish Government and DWP
Notes: All rates are single-year statistics. The single-year rates for 2020/21 are not shown.

With this year’s data, we see an indication that the trend in child poverty rates since SCP was introduced may have started to diverge – but only time will tell.

The Scottish Government has also released new modelling this morning updating the estimated impact of different policies on child poverty in future years. Previous modelling from last year estimated the impact of measures like the Scottish Child Payment through this year; today’s modelling extends this period to 2029/30.

The new modelling estimates that the SCP will reduce relative child poverty by 4 percentage points in 2025/26 compared to what it would have been without it. This is slightly larger than, but similar to, JRF’s estimate of 3 percentage points.

The modelling also includes estimates of the impact of different welfare reforms at the UK level. The UK Government is due to come out with their plan to tackle child poverty in the coming months, and it will be worth watching to see what they build into their plans and how they will affect Scotland.

We expect to put a blog post out next week talking through recent modelling of potential policies, both with devolved and reserved powers. Stay tuned – and in the meantime, check out our report on a few policy packages that could meet the 2030/31 targets.

What happens next?

It’s not set out in the legislation what happens if the interim targets are not met.

Regardless, we now expect attentions to turn to the 2030/31 targets. The targets are:

• Less than 10% of children in relative poverty;
• Less than 5% of children in absolute poverty;
• Less than 5% of children in combined low income and material deprivation; and
• Less than 5% of children in persistent poverty.

No big policy changes have gone into effect in the last couple of years – so we don’t expect to see a big step change in next year’s statistics (for 2024/25) either.

In December, the Scottish Government announced that they would mitigate the UK-level two-child limit on Universal Credit from 2026/27 (or sooner if possible).

Recent estimates show that mitigation could reduce child poverty by between one and two percentage points.

That leaves a long way to go to the 2030 targets. The Scottish Government has a number of levers available to them, but may be constrained by a tough fiscal environment. They will also have to respond to choices made by the UK Government, such as the recent cuts to disability benefits.

We’ll be looking out for the final child poverty delivery plan, which will be published next spring and will hopefully lay out the Government’s plans to reach the targets. There will also be a lot to dig into as next year’s Holyrood elections approach and different parties set out their plans to meet the targets in their manifestos.

To read more about potential policy packages to meet the 2030 targets, check out our latest modelling report here.