Bringing Hope, Building Futures: Tackling child poverty delivery plan 2026-2031 – annex 5: Cumulative Impact Assessment

2. Introduction

In March 2022, the Scottish Government published a Cumulative Impact Assessment (CIA) to accompany the second Tackling Child Poverty Delivery Plan, Best Start, Bright Futures.^[1] The CIA set out projections for relative and absolute child poverty, in addition to the estimated impact of Scottish Government policies, using the latest information available at the time. The modelling was subsequently updated in June 2023, alongside the annual Progress Report,^[2] in February 2024,^[3] and in March 2025.^[4]

The update set out in this report incorporates the economic forecasts published by the Office for Budget Responsibility (OBR) in November 2025; UK and Scottish Government policy announcements, including from the 2025 Spring and Autumn UK Budgets, the Scottish Budget as published on 13 January 2026 as well as the initial suite of policies set out in the Tackling Child Poverty Delivery Plan for 2026-31; and updated household survey information, including an additional year of data (2023-24) from the Family Resources Survey (FRS). We also extend the modelling horizon to 2030-31; and expanding the CIA to present potential impacts of policies which are not included in our main estimates.

As the Tackling Child Poverty Delivery Plan provides a framework for delivery across 2026-31, with concrete action for 2026-27, this modelling does not account for the potential choices and policies of an incoming Scottish Government formed after the May 2026 Scottish Government election. Such policies have the potential to materially impact poverty projections and the cumulative impact of Scottish Government policies on poverty rates. As such, projections beyond 2026-27 should be treated with caution as they only reflect initial action set out in the delivery plan and not the possible actions that the Scottish Government may take in future.

In terms of the input data, we are now able to incorporate FRS data for 2023-24 which, along with 2021-22 and 2022-23 allows us to revert to a three-year pooled sample. The modelling should therefore be more representative of the post-Covid Scotland and more stable over time. In this instance, updating the input data has led to a reduction in our child poverty projections, reflecting the decrease in single-year poverty rates observed in 2023-24. As noted in previous updates, this effect is sensitive to the method chosen for calibrating the outputs of the model to the official child poverty statistics, and fluctuations can occur in both directions as the input data is updated over time. The final section of the report sets out the results from using an alternative calibration method.

This update does not incorporate the 3 March 2026 UK Government Spring forecast or the associated OBR forecasts, nor does it include FRS data for 2024-25 which will include the new data linking methods.^[5] This data linkage may change the historical poverty rates by several percentage points. For example, if previously estimated under-reporting of social security take-up^[6] results in households around the median being thought to have a higher measured income, this could increase relative poverty rates as the poverty line would rise. Conversely if the under-reporting is concentrated on households with low incomes, this could decrease overall poverty rates as their measured incomes increase.

Any changes in historical poverty rates could have consequential impacts on the projected child poverty rates, primarily because the model is calibrated using historical poverty rates as detailed in Section 8. While the data used in the model will also be updated, due to the assumptions applied to the data in the modelling we do not expect there to be a large change in the impact of policy packages. The updated FRS data was not available for this report, and changes to the underlying data are expected to continue through to 2027.

The most significant UK policy changes that have been incorporated in our model since the last update relate to increases to the standard allowance of Universal Credit, increases in the minimum wage, and reforms to the disability and incapacity benefits. As disability and incapacity benefits are now devolved to Scotland, the impacts of this reform are only seen through their impact to the median income and thus the poverty line.

The UK Government will remove the two-child limit from April 2026. In previous years, this policy has had a significant impact on our estimates of child poverty and consequently the Scottish Government’s planned mitigation of the limit was also estimated to have a large impact. The effect of this change on our assessment is to remove the impact of both, which means that the overall impact on child poverty is largely unchanged. However, this does have the effect of reducing the impact of Scottish Government policies in our assessment because the reduction in poverty is now attributable to UK Government welfare reform rather than Scottish Government mitigation.

On the other hand, the Scottish Budget in January 2026 included a commitment to introduce a Scottish Child Payment premium for eligible children under the age of one and an expansion of the eligibility of free school meals to include those in receipt of Pension Credit and those impacted by the increase in the Administrative Earnings Threshold. The Scottish Budget also increased the starter- and basic-rate income tax thresholds by 7.4%, whereas UK income tax and NI thresholds are set to remain frozen until 2030-31.

The macroeconomic outlook remains challenging. Inflation forecasts were upgraded while real GDP forecasts were downgraded following both the Spring forecast and the Autumn budget. Forecasts for real wage growth were also revised upwards in the November forecasts, though the implications for child poverty will ultimately depend on how this growth is distributed as well as the effects of tax policy. Real household disposable income is forecast to effectively stagnate through to 2030, challenging one of the paths to reduce absolute poverty.

The outlook for child poverty could change with future events and policies.