Summary of evidence
UK-wide, in the three years to 2016/17 the number of people living in poverty in working families has risen by over one million.
In Scotland, 24% of children are affected by relative poverty (after housing costs, 2014-17) compared to 19% of working-age adults.
Of the 230,000 children affected by relative poverty:
- 90,000 (two in five) are in families where there is a disability or ill-health in the family, with 50% of these in families where no adult worked
- 30,000 live with both parents, one of whom works full time (in the majority of cases the mother did not work)
- 30,000 live with a lone parent who was out of work
- 15,000 live with a lone parent working part-time
- 15,000 had one parent working full-time and the other part-time
Independent projections commissioned by the Scottish Government ahead of the publication of the Tackling Child Poverty Delivery Plan forecast that relative child poverty rates (after housing costs) would rise sharply between 2015/16 and 2020/21 (from 26.5% to 34.5%) with a key driver identified as the reduction in real-terms generosity of the social security system as a result of planned reforms by the UK Government.
These rates were forecast to increase particularly sharply for lone parents, families with three or more children and families with no parents in full-time employment.
The Benefit Cap disproportionately affects lone parents and families with children (especially those whom the cap is applied through Housing Benefit). Of those claiming Housing Benefit and affected by the Benefit Cap:
- 89% have children
- 77% have three or more children
- 64% are lone parents
- 86% are female
The Two Child Limit (which restricts the child element of UC and Child Tax Credits to two children) affects the household income of families with more than two children. HM Revenue and Customs research suggested that:
- In 2018/19 families with three children will lose up to £2,780 each year per child who does not qualify.
Although BSG is not a regular payment it does affect household incomes directly and could result in a small improvement in poverty indicators. This may not be necessarily visible in the child poverty statistics. It could have an impact on material deprivation by providing more income for parents and carers to buy some of the items that are on the list that determines material deprivation, so the indicator may show some improvement.
BSG Eligibility Criteria
To make it easier for people experiencing or at risk of in-work poverty to apply for and get the BSG, we have opened eligibility to people on tax credits before the baby is born and have also extended the application window, giving people longer to apply for a qualifying benefit after their baby has been born, when their income may have dropped due to changes in patterns of work.
Concerns were also raised in consultation regarding the perceived unfairness about the level of help given to those on out of work benefits compared to those in work. For example, free school meals, school clothing grant and healthy start vouchers, are all only available to those on out of work benefits or have very low universal credit thresholds. This means that some parents once they have incurred the cost of having to buy meals, school clothing etc. are left struggling financially with no access to benefits. Adjusting the eligibility criteria of BSG to include all recipients of working tax credits and Universal Credit will mean it will reach those families who are in work and struggling financially. This could help soften the transition between in and out of work benefits for families.
Our assessment highlighted evidence that BSG will have particular impact on the following groups:
Mothers aged <25
Parental age has a significant impact on child poverty rates: 50% of children whose mother is aged 25 or younger are in relative poverty, compared with 22% of children whose mother is over 25.
Responses from the Social Security, a New Future consultation highlighted under 18s as a group which would benefit from simpler provision. To do this, and to align with eligibility for Best Start Foods (BSF), we decided to invest additional resource to introduce automatic entitlement for under 18s and 18 or 19 year olds in full time education or training who are still dependent on their parents. These young parents will not need to be on a qualifying benefit in order to qualify for a BSG payment.
Lone parent households tend to experience higher poverty rates: 41% of children in single parent households were in poverty in 2016/17 compared with 19% of couples with dependent children.
Lone parents are also disproportionately affected by welfare reforms. The extended eligibility criteria for the BSG are likely to reach more than 90% of lone parent households.
Larger Families (3+ children)
We found that ethnicity impacts on family size, with Black and Asian ethnic groups having larger families than white and Chinese ones. At the UK level, 51% of Black African, 65% of Pakistani and 64% of Bangladeshi children live in large families (3 or more children), compared to 30% of those in White British families.
Families of certain religions or beliefs are also more likely to have larger families. 22% of Muslim households contained 3 or more dependent children, compared with 12% of Sikh, 3% of Hindu and 3% of Church of Scotland households
Larger families are also disproportionately affected by welfare reforms. In particular, the decision to restrict the SSMG to the first child born has had an impact at the time that a child is born. The BSG re-instates payments to second and subsequent children in the family, helping to meet costs every time a family grows.
The qualifying benefits for the BSG will capture more than half of families with 3 or more children.
Research tells us that children in kinship care and their careers are disproportionately more likely to be living in poverty.
We have extended the responsibility test for BSG to ensure that kinship carers will be able to qualify for a payment where there are in receipt of a DWP benefit or a court order for the child they are looking after.
Email: Alison Melville