Child poverty modelling: update
This report estimates the impacts of Scottish Government policies on child poverty, updating the modelling that was originally undertaken for the second Tackling Child Poverty Delivery Plan. It also analyses the impacts of current and hypothetical UK Government welfare policies.
Footnotes
1 Tackling child poverty delivery plan 2022-2026 - annex 4: cumulative impact assessment - gov.scot
3 Child poverty cumulative impact assessment: update - gov.scot
4 Pathways to Work: Reforming Benefits and Support to Get Britain Working Green Paper - GOV.UK
5 Universal Credit - Hansard - UK Parliament
6 Tackling child poverty delivery plan 2022-2026 - annex 4: cumulative impact assessment - gov.scot
7 Unevenness in the income distribution refers to the fact that a disproportionate number of children are clustered around the poverty line, particularly on the relative measure. The scale of the policy package is also relevant because many recipient households would be in poverty without the package in place regardless of movements in the poverty line. For example, their only income may come from Universal Credit and Child Benefit in the counterfactual scenario, or they may have no income at all.
8 Even this method does not take into account the unevenness of the income distribution, since the poverty lines are set as fixed percentages of the median rather than on a quantile basis. All else equal, larger impacts will tend to be observed if children are clustered around the poverty line in question, which tends to be the case for the relative poverty.
9 Depending on their position relative to the poverty line, some households that benefit from multiple policies may be counted in the impacts of more than one of those policies, but would only be counted once in the cumulative impact. Meanwhile, other households that contribute to the cumulative impact may not contribute to any of the individual impacts. The policies in the package can also interact, with receipt of one policy affecting entitlement to another, but this is less relevant to the specific policies appraised in this section.
10 This figure is calculated by removing SCP from the incomes of households that are counted as receiving it and then recalculating the relative child poverty rate. No adjustment is made for the impact of SCP on the poverty line, but since this is set at the UK level we would expect any such effect to be minor. According to this same method, the impact that was realised in 2022-23, during which the benefit was still transitioning in terms of its eligibility and value, was two percentage points on the relative child poverty rate.
11 This does not necessarily mean that the measured impacts would increase after rounding.
12 There are four categories of exception: 1) additional children in a multiple birth (e.g. twins), where an extra amount will be payable for all children in a multiple birth other than the first child; 2) children who are likely to have been born as a result of non-consensual conception, including rape or where the claimant was in a controlling or coercive relationship with the child’s other biological parent at the time of conception; 3) children who are adopted when they would otherwise be in local authority care; and 4) children who are in non-parental caring arrangements when they would otherwise be at risk of entering the care system, including where a child (under 16) has a child.
13 Poverty and Income Inequality in Scotland 2020-23. Note that these poverty rates are defined at the household level, meaning they could contain multiple families.
14 Turning the tide • Resolution Foundation; Capping ambitions | New Economics Foundation
15 See Benefit cap: Benefits affected by the cap - GOV.UK for a list of benefits that are subject to the cap in addition to the conditions under which households are exempt.
16 Stop the freeze: permanently re-link housing benefits to private rents | Joseph Rowntree Foundation
17 A range of other changes were also made to LHAs around the same time, including the abolition of the £15 excess rule, whereby claimants could receive up to £15 per week of the difference between their rent and their LHA if their rent was lower; the introduction of an upper limit to LHAs for each property size; and the reduction in the maximum number of eligible bedrooms – in place since 2009 – from five to four. On the other hand, additional allowances were made for non-dependents and disabled people requiring overnight care.
19 The 2024-25 Essentials Guarantee amounts are uprated by the Consumer Price Index (CPI) up to December 2024, in line with JRF’s method. In reality the Guarantee may not track the CPI exactly, since it would likely depend on the prices of specific goods and services rather than on the overall price level. The basket of goods and services that make up the Guarantee may also vary over time.
20 Child poverty: trends and policy options | Institute for Fiscal Studies
21 Mitigating the two-child limit and the Scottish Budget | Scottish Fiscal Commission
22 School healthy living survey: school meal uptake statistics 2024 - gov.scot
23 Local government finance statistics - gov.scot
25 The statistics cover all of the UK for CTC but only GB for UC. Housing Benefit (HB) is not included, though most families on HB that are affected by the two-child limit would also be expected to be receiving CTC.
26 Poverty and Income Inequality in Scotland 2020-23
27 4. Results - Child poverty cumulative impact assessment: update - gov.scot.
28 Goedeme, T et al., 2013, Testing the Statistical Significance of Microsimulation Results: A Plea, International Journal of Microsimulation 6(3), 50-77.
Contact
Email: spencer.thompson@gov.scot