Scottish Child Payment – who gets it?

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While Scottish Child Payment (SCP) reaches almost every child in poverty, there are even more children above the poverty line who also receive this benefit. 

Scottish Child Payment is generally presented as an anti-poverty policy. In reality, it would be more accurate to think of it as a payment to families below median income rather than being targeted only on families in poverty.

Almost all children getting SCP are in families with below median income, but only around 41% of them are in families in poverty. (Here, we use a standard definition of relative poverty, which is having a household income after housing costs below 60% of the UK median).

SCP is available to children aged under 16 in Scotland whose parents receive Universal Credit or equivalent benefits. In this blog, we look at children who receive SCP and whether they are in poverty or not. When talking about children’s household income and poverty status we mean what they would be prior to receiving SCP (incomes are net of SCP).

Note that any binary poverty measure draws a somewhat arbitrary line between those in poverty and those out of poverty, but financial circumstances are almost the same just below and just above the poverty line. Similarly, individual circumstances differ and cannot be captured entirely by a measure that only considers income. As such, the analysis below should be seen as giving a perspective on the targeting of SCP, rather than an overall assessment of its value as a measure for tackling child poverty. 

Note also that SCP hasn’t kicked in yet in the latest poverty statistics and that we should see its impact properly for the first time in the 2023/24 statistics, which come out in March 2025. 

Scottish Child Payment reaches children in poverty 

SPICe modelling suggests that well over two thirds of children in poverty in Scotland (71%) receive SCP. This is known as the ‘coverage’ of the benefit. But this could be even higher. If all parents who are eligible for qualifying benefits were to claim these benefits and also claim SCP, up to 95% of children in poverty could receive SCP. This means that SCP could reach almost every child in poverty if uptake by those eligible for benefits was increased. 

[SPICe uses the microsimulation modelling tool UKMOD. We assumed Universal Credit (UC) to be fully rolled out. The model assumes UC uptake of approximately 86%. Take-up rates for SCP are 86% for families where all children are six or older, and 97% for families with children aged under six.] 

But most payments go to children above the poverty line 

SPICe modelling suggests that two out of five children who receive SCP (41%) are in poverty. This is known as the ‘targeting’ of the benefit. Higher take-up of benefits would make little difference to this estimate (43% for full benefit take-up). 

This means that most child payments (59%) go to children who are not in poverty. Since SCP is the same amount for each child, 59% of total SCP expenditure is therefore going to children who are not in poverty. So, while SCP achieves good coverage of children in poverty, this modelling suggests that it is not well targeted. 

Figure 1 shows the household income distributions of children who receive SCP – before and after SCP is paid. 

The chart shows the household incomes of children who receive SCP. The two graphs show incomes before and after the payment of SCP – once SCP is included, the graph shifts to the right to higher incomes. The shaded areas represent the number of children, with children to the left of the marked poverty line being in poverty and children to the right of the poverty line being out of poverty. The area to the right of the poverty line is larger. This means that more children who receive SCP are out of poverty than in poverty. 

Note that the modelled median income and poverty line tend to be higher than reported in the Official Statistics. This is because modelling corrects for benefit underreporting, as well as projecting data from previous years forward to the current year, whereas the Official Statistics do not correct for benefit underreporting and refer to 2022-23. 

Figure 1. 

Figure 1 shows two income distributions for children who receive SCP: one for incomes before SCP is paid, and one for incomes after SCP is paid. The latter distribution is shifted to higher incomes. The figure also contains vertical lines representing the poverty line and median income. Both income distributions sit largely below the median, but are split by the poverty line, with the larger part of each distribution above the poverty line. Before SCP is paid, 130,000 children (41%) are below and 190,000 children (59%) are above the poverty line. After SCP is paid, 80,000 children (25%) are below and 240,000 children (75%) are above the poverty line.

Why this matters 

SCP is the key policy for achieving the Scottish Government’s statutory child poverty targets. There have been various suggestions that it should be increased, in order to bring more children out of poverty and get closer to achieving those targets. This analysis – which shows that SCP benefits many children not in poverty – makes it easier to see why it would cost so much to use it to bring more children out of poverty. Other analysis supports this assessment. 

For example, IPPR modelling suggested that increasing SCP from £25 per child per week to £30 would lift “around 10,000 children out of poverty, at an investment of £87 million” and that “increasing to £40 per week could lift 20,000 children out of poverty at a cost of £261 million.  

As we’ve illustrated – most of that additional spending would be on families who are not in poverty, albeit they are below average income. 

There may well be good policy reasons for the current design of targeting below average income rather than a tighter focus on families in poverty. The choice of poverty line is, to some extent, an arbitrary figure and, as noted earlier, families around the margins of the poverty line may be in very similar situations. Considerations in policy design might include the following: 

  • The calculation of the poverty line takes account of family size and housing costs, but many families will have other additional costs such as childcare or the extra costs of disability. 
  • The SCP is withdrawn in full at a certain level of earnings, leading to a sudden reduction in total household income (the “cliff edge”). Targeting the SCP closer to the poverty line would move the ‘cliff edge’ back to a much lower level of earnings. (See Scottish Government July 2024 paper for discussion). 
  • Administratively, it would be far more complicated to target only those in poverty – the current link to Universal Credit makes the payment much easier to understand and cheaper to administer. 

Balancing against these considerations is the large cost of the SCP, (approaching £0.5 billion a year). Is it possible or desirable to design a payment that is more targeted on families in poverty, and particularly deep poverty, for a similar cost? Alternatively, is it better to keep the broader focus on below average income – recognising that all these families may well be facing financial constraints? For example, a recent report from the Institute of Fiscal Studies showed that the recent increase in material deprivation is largest among individuals in the lower-middle part of the income distribution and is in part related to energy bills. 

Conclusion 

Although it is often discussed in terms of the statutory child poverty targets, SCP in fact has a much broader reach. In times of significant financial constraint, it’s worth being clear about how SCP is currently targeted in order to better inform policy discussions about any proposals for increases in the payment amount or changes to the design of the benefit. 

Related blogs & briefings 

Camilla Kidner & Maike Waldmann, SPICe