Tackling child poverty delivery plan - annual progress report: annex b - cumulative impact assessment update

2. Conclusions

Our modelling projects that the effect of the Scottish Government policy package on child poverty is of a similar size to the last published modelling, at around 9 percentage points on both relative and absolute poverty measures in 2023-24. However, overall reductions in child poverty since 2019-20 are no longer projected to be as large. The original modelling projected a relative child poverty rate of 17% in 2023-24, and an absolute child poverty rate of 16%. In the updated modelling, these figures are now 19% and 16% respectively.

These revisions reflect the deterioration in the macroeconomic outlook. Policy interventions will help mitigate the impacts, particularly cash support through uprated benefits and additional payments. Nevertheless, compared to our original modelling, macroeconomic factors still predominate, driving up the relative measure of child poverty.

The projections indicate that absolute child poverty will fall by a similar amount, reaching a projected level of around 16% by 2023-24. Despite the large increases in inflation having a more direct impact upon the absolute poverty line a combination of higher wages and policy changes affecting median incomes have resulted in a relative poverty line that is expected to increase at a similar rate.

Recent macroeconomic shocks serve to underline that external factors remain a key source of uncertainty in our results. To project inflation, earnings growth, and other key variables into the future, our modelling relies on forecasts by the Office for Budget Responsibility (OBR). The latest set of OBR forecasts available at the time of writing were produced in March 2023.

Ultimately, all modelling results are estimates, relying on a range of methodological choices and assumptions. We have used the available data and tools to ensure our estimates are as robust and reasonable as possible, but different models will naturally produce different results, all of which should be interpreted with caution. Our projections are sensitive to factors which cannot be modelled with complete precision or predicted with complete certainty.

Because these sources of uncertainty multiply as we project further into the future, we have not modelled child poverty in 2030-31, the year of the final targets. However, it remains clear from this report that meeting the final targets will require an unprecedented reduction in child poverty. According to our projections, relative child poverty will need to fall by an additional 9 percentage points between 2026-27 and 2030-31, while absolute child poverty will need to fall by an additional 11 percentage points. Such a reduction is unlikely to occur without considerable changes to the drivers of poverty.