Tackling child poverty delivery plan 2022-2026 - annex 9: fairer Scotland duty impact assessment

Best Start, Bright Futures Tackling Child Poverty Delivery Plan 2022-2026: Annex 9

Fairer Scotland Duty - Summary Template

Title of Policy, Strategy, Programme etc:

Best Start, Bright Futures Tackling Child Poverty Delivery Plan 2022-2026

Summary of aims and expected outcomes of strategy, proposal, programme or policy

The aim of the Best Start, Bright Futures, the second Tackling Child Poverty Delivery Plan (the Plan) is to set out a package of policies to deliver on the Scottish Government's, and Scotland's, national mission to tackle child poverty. Specifically, it aims to:

• Reduce child poverty in Scotland and meet the four statutory child poverty targets - relative, absolute and persistent poverty and combined low income and material deprivation, set out in the Child Poverty (Scotland) Act 2017^[1]
• Set out the combination of policy interventions to be implemented during 2022-2026 to deliver the interim targets and contribute to the final targets
• Whilst individual policies have specific aims and outcomes, in combination the desired outcome will be to impact on the three drivers of tackling child poverty - increasing income from work and earnings, reducing household costs and maximising incomes from social security and benefits in kind

The Plan will be specifically focused on addressing socio-economic disadvantage, targeting families on low incomes, in deprived areas and with no/low wealth or in debt. Through the actions in the Plan significant steps in achieving the child poverty targets are expected to be delivered.

It will build on the foundations of the work already undertaken over the last four years, since the publication of 'Every Child, Every Chance'^[2] and the available evidence of what works. This includes continuing to focus on the six priority family types identified as being at highest risk of child poverty.

Actions will also continue to be focused and designed to influence the three key drivers of child poverty reduction. These are increasing income from work and earnings, reducing household costs and maximising incomes from social security and benefits in kind.

The Plan will also seek to address and deliver outcomes on some key inequalities associated with socio-economic disadvantage. This includes what action can be taken to help tackle the poverty related attainment gap and improve the wellbeing and outcomes for families and enable them to move out of poverty.

It is recognised that tackling child poverty is complex with impacts in many areas, having repercussions throughout the system. Therefore significant cross government and society wide effort will be required to deliver the change needed. As a result each policy or plan included in the Plan has, or will, as it is developed in detail, complete its own Fairer Scotland Duty Assessment to ensure that it considers what more can be done to reduce inequalities of outcomes caused by socio-economic disadvantage.

Summary of evidence

Overview of Child Poverty in Scotland

Poverty and Income Inequality in Scotland 2017-20 data, produced by Scottish Government National Statistics in March 2021^[3], provides a picture of child poverty rates in Scotland.

It reports that after a long fall between the late nineties and 2010-13, which slowed briefly just before the recession, relative child poverty rates have been gradually rising. It is estimated that 24% of children (240,000 children each year) were living in relative poverty after housing costs in 2017-20. Before housing costs, it is estimated that 21% of children (210,000 children each year) were in relative poverty.

The absolute poverty rate for children has remained largely stable. Absolute child poverty after housing costs affected 22% of children (210,000 children each year). Before housing costs, absolute child poverty was at 17% (170,000 children each year).

Children in combined material deprivation and low income is broadly stable. It is estimated that 13% of children (120,000 children each year) were living in combined low income and material deprivation after housing costs in 2017-20. Before housing costs, this was 11% of children (110,000 children). Additionally in 2019, 60% of single parent households had no savings at all.^[4]

Children in poverty often live in households that lack food security. Evidence reports that children in poverty were less likely to have high food security: just 48% of those in relative poverty, and 49% of those in absolute poverty lived in high food security households.

Children living in the most deprived communities are less likely to enter higher or further education than those in the least deprived areas^[5]. The Annual Participation Measure (2021) for 16-19 year olds shows that 87.1% of young people living in the most deprived Scottish Index of Multiple Deprivation (SIMD) quintile participated in education, employment or training compared to 96.4% of those in the least deprived quintile.^[6] Additionally, children from lower socioeconomic groups are less likely to have access to parental networks in terms of employment opportunities.^[7]

Child poverty in Scotland is significantly affected by policies which are reserved to the UK Government, including minimum wages and working-age benefits. Child poverty will also be shaped by the impacts of Covid-19 and the nature of the economic recovery.

With the above statistics based on the period between April 2017 and March 2020, before the first UK-wide lockdown due to Covid-19, they do not yet tell us anything about the impact of the pandemic on poverty and income inequality. However, as reported in the Scottish Government and COSLA report on Scotland's Wellbeing: The Impact of Covid-19^[8], published in December 2020, we know that the impacts of the pandemic have not been felt equally. In fact, Covid-19 has worsened many of the pre-existing structural inequalities. This is covered in more detail in the section on Covid-19.

Impact of Covid-19 on Child Poverty^[9]

As mentioned earlier the report on Scotland's Wellbeing: The Impact of Covid-19, highlights that people and communities who were already struggling were hit hard by the pandemic. This was driven by reduced income as a result of job loss, reduced working hours and the inequalities arising from furlough.

With regards to specific impact on children, evidence reports that children in single-adult households have experienced poorer emotional wellbeing.^[10] The impact of school closures on education was felt unequally across income groups, with children from poorer backgrounds engaging less actively with teachers and school services and having less space to work in. Two thirds of disadvantaged pupils were unable to work during the first lockdown. In January 2021, 40% of children in middle class homes were reported to be doing over 5 hours a day, compared to 26% of those in working class households. The financial impact of remote learning has been particularly challenging for low-income families, particularly with regard to access to digital technology.^{[11] [12]}

While labour market impacts of the pandemic are continuing to emerge, evidence suggests that there are unequal impacts, with effects being felt disproportionately for a number of groups, including those in precarious employment and lone parents.^[13]

Scotland saw a 108% rise in the number of emergency food parcels distributed in July 2020 compared with July 2019^[14], and one in five households in Scotland with dependent children reported that they were "in serious financial difficulty". However, Scotland is the only area of the UK to see a marked reduction in the number of emergency food parcels between April and September 2021, compared to 2019, according to the Trussell Trust. They reported a drop of 25% in emergency food parcels delivered in Scotland, compared to an increase of 18% across the UK.^[15]

In an October 2020 survey of young people and families in Scotland who were reliant on social security, two thirds said they were in a worse financial position than they were pre-pandemic, and half said their debt was greater.^[16] One in five households in Scotland with dependent children has also reported that they were "in serious financial difficulty".^[17]

In summary, from the evidence held key impacts of the pandemic on the pattern of socio-economic disadvantage in Scotland are:

• Covid-19 has had greater impacts on the learning and attainment of children from poorer backgrounds, and low-income families have been more challenged by financial and other demands of home schooling.
• There have been greater negative impacts on incomes and employment for low earners and those in unstable employment.
• Low-income households have experienced more negative impacts on their financial security, and are more likely to have seen their debts increase, than higher income households.

Drivers of Child Poverty Reduction

As identified in Every child, every chance: tackling child poverty delivery plan 2018-2022^[18] there are three main drives of child poverty. The Plan will remain firmly focused on these through increasing household incomes and reducing household costs to improve families' standard of living and increasing income from social security and benefits in kind. It will also draw on the need to improve the lives and experiences of children and young people, to prevent them becoming the next generation of parents with children in poverty.

Evidence underpinning this approach is summarised below.

Increasing Household Incomes^[19]

The costs of poverty, to our society and economy, are significant. Analysis from Loughborough University suggests that £3.06 billion^[20] was lost from the Scottish economy in 2021 as a result of child poverty. Roughly half of this cost is attributed to the lower productivity and higher unemployment levels of those who have grown up in poverty, and the remainder represented the impact on public expenditure in areas such as health, crime and education. Tackling child poverty is key to delivering fairer prosperity now and in the future.

According to the Joseph Rowntree Foundation's (JRF) report "Poverty in Scotland 2021"^[21], the biggest risk factor for pulling a child into poverty is to live in a household where no one works, with over half (54%) of those in workless families being in relative poverty. The same report also suggests that these households are at higher risk of deep poverty, meaning they are even further below the poverty line.

Some areas of Scotland are more likely to have deeper concentration of workless families.^[22] In 2019, 11% of children in Scotland were in workless households compared with almost one in four children in Glasgow (Office of National Statistics, 2020). West Dunbartonshire, Dundee City and Inverclyde also show much higher proportions of children in working-age households where no-one works.^[23]

While the poverty risk is much lower for children in working households, compared to those in non-working households, not all work pays enough to lift the households above the poverty threshold. Therefore, having a job may not be enough if that work is paid poorly or someone is unable to work enough hours due to inflexible working or caring responsibilities, as is often the case for families facing disadvantage. For example, research shows that across 2017-20, more than half of people living in poverty in Scotland lived in a working household.^[24]

Data also shows that the average hourly earnings, in 2019/20 prices, of low income households with children was £8.52, compared to £12.80 for all households with children. Additionally over the period 2017-20 the average number of hours of paid employment per working-age adult, in low income households with children where at least one adult is in employment, was 24 hours compared with 32 hours for all households with children. In 2019, 6% of parents who were in work would prefer to work more hours for the same rate of pay and 9% of parents had no or low qualifications.^[25]

It is also important to note that in areas where low pay is predominant the rates of child poverty are higher. For example, in urban areas, with underemployment being higher in some cities, such as Glasgow, and in parts of the Highlands and Islands. Although, while cities like Glasgow have a relatively low proportion of low paid jobs, many of their residents are on low pay. This indicates that many of the higher paid jobs located in the city are likely to be done by in-commuters. Residents in parts of the Highlands and Islands are more likely to be underemployed than other parts of Scotland, and there are fewer high paid jobs in these areas.^[26]

Reducing Household Costs

Housing^[27]

Living in poverty, or on a low income, restricts housing choices as housing costs are often the largest single cost a household will face. This can present affordability challenges, and increase the likelihood of experiencing fuel poverty and the risk of homelessness.

It is estimated that 13% of children (120,000 children each year) were living in combined low income and material deprivation after housing costs in 2017-20.^[28] In 2017-20, low income households with children spent 21% of their income on housing, compared with 10% for all households with children^[29]. With a higher proportion of income being used for housing costs this can result in some households being unable to buy items such as warm clothing or sufficient food. Also a lack of access to IT equipment and broadband services for young people, coupled with a lack of space in the home, may make homework more challenging. This can then impact on the attainment gap as children living in the most deprived communities are less likely to enter higher or further education than those in the least deprived areas^[30], and children from lower socioeconomic groups are less likely to have access to parental networks in terms of employment opportunities^[31].

Safe and warm homes in good neighbourhoods can also help to improve people's physical and mental health, helping to tackle health inequalities we know are caused by socio-economic disadvantage. These can also contribute to children's wellbeing and happiness, helping to provide a healthy start to life and contributing to social and physical development. Homes with room, or space, for children to play, learn and study can contribute to education attainment^{[32] [33]} and help to close the poverty-related attainment gap.

Additionally housing creates and supports jobs and drives inclusive economic growth and social benefits. Housing's unique place at the heart of thriving communities means that investment in housing, and all the indirect effects that flow from that, can contribute to community wealth and social renewal.

Childcare^[34]

Childcare can be another significant cost for households with children and a lack of affordable childcare can limit opportunities for paid employment. The 2019 Scottish Household Survey shows that 25% of households paying for childcare for a child aged between 0 and 11 say that they find it difficult or very difficult to afford childcare.^[35] Therefore funded Early Learning and Childcare (ELC) provides a cornerstone for ensuring that every child has the best start in life and that parents are able to access work, training and other opportunities to secure a better future for their children.

Our tackling child poverty evidence review found that the best-practice examples in improving childcare affordability were offering a legal entitlement to a childcare place at a highly affordable price with highly subsidised costs. Often, this included capped and/or reduced fees for children in low income families and/or subsequent children. In successful examples, this affordable childcare was also provided directly after maternity/paternity leave.

Statistics published in December 2021^[36] show that 97% of eligible three- and four-year olds were registered for funded ELC. The statistics collected in September 2021 on the two-year old offer (for parents in receipt of certain low or no income benefits; children in care and; children of parents with care experience), show an improvement from both 2020 and 2019. The proportion of total (rather than eligible) two-year olds registered for funded ELC increased from 9% in 2020 to 13% in 2021.

The Phase 3 report of the Scottish Study of Early Learning and Childcare^[37] showed that there were some small changes in employment prospects for parents and carers of eligible two-year olds after receiving a year of 600 hours of funded ELC (when the child was aged three). Between 2018 and 2019, the proportion of respondents in either part-time or full-time paid employment had increased from 35% to 40%, and there were also increases in the proportion of parents who said that because their child was in nursery they had been able to study or improve work-related skills.

Transport

Low income households are much less likely to have access to a car than high income households. Along with affordability, other aspects of public transport, such as limited frequency and timetable constraints, can make it difficult for people without access to a car to co-ordinate work, childcare and other activities, potentially limiting opportunities for paid employment.

In 2019 73% of low income households with children were very or fairly satisfied with the quality of public transport.^[38] Research by the Poverty Alliance highlighted particular challenges faced by the six priority family types, including issues relating to affordability and accessibility, with some families finding public transport costs unmanageable, and others struggling with issues such as poor availability. Transport barriers become more acute when managing multiple tasks, or trip chaining, such as managing childcare and school drop off and collection times with employment patterns. Challenges with transport were cited as adding to the complexity of everyday life for families living on a low income.

Other costs of living

Additional evidence^[39] suggests that low income households with children spend higher proportions of their income on food and fuel costs compared to all households with children. They are also less likely to have savings, and slightly less likely to have home internet access.

Increasing Income from Social Security and Benefits in Kind

Social security payments have a direct impact on poverty by providing or supplementing household income. Social security and benefits in kind in Scotland is delivered between the UK Government's Department for Work and Pensions (DWP), Social Security Scotland, and Scottish Local Authorities (LAs).

On average, social security accounts for just over 40% of income for families in poverty in Scotland^[40]. However, this varies significantly for the different priority family types. Households in poverty with single parents and young mothers are the most reliant on social security, representing 70% and 63% of their income respectively, followed by households with disabled household members (55%), and those with three or more children (52%). For these family types, social security payments are, on average, their largest income source.

In 2017-20 income from social security went to 53% of low income households with children. In 2020 reserved social security benefits (of Job Seeker's Allowance, Child Tax Credits and Child Benefit) entitlement of £270.80 per week, in real terms value (at 2019 prices), was paid to out-of-work couple households with two children. The real term value (in 2019 prices) of reserved social security benefits (Working Tax Credits and Child Tax Credits) for a lone parent working full-time/couple with one working full-time and one not in paid employment, on minimum wage, with two children was £193.56 in 2020.

Additionally the real terms value of school clothing grant, averaged across Scottish local authorities, was £110.80 in 2019-20. In 2020 70% of children registered for Free School Meals (including all primary 1 to primary 3 pupils registered under the universal provision) took a free school meal on the day of the survey.

Around three quarters of respondents to the Social Security Scotland Client Survey 2018-21 who had at least one child in their household indicated strong agreement with the statement that 'benefit payment(s) help you to pay for what you needed', although we heard from consultation that issues of stigma and discrimination still prevent some families accessing the benefits that they are entitled to. Consultation responses indicate that this may be more of an issue for DWP administered benefits, although the number of respondents was very small.

Evidence from people with direct experience of poverty and disadvantage.

From the initial evidence review gaps in relation to evidence of what works and does not, specifically for the priority family types, was identified. This evidence gap was addressed through focus group discussions and consultation meetings with organisations representing protected characteristics and priority family groups. These were organised to collect further evidence in relation to families with a disabled adult or child and minority ethnic families, and to understand the gendered aspects to child poverty.

The discussions took place in December 2021 and January 2022, and their findings were further complemented through a partnership with the Poverty Alliance's Get Heard Scotland programme, gathering views and experience from a wide range of community based organisations and people with lived experience, and through advice from the Poverty and Inequality Commission^[41], informed by their Experts by Experience panel. Participants shared their thoughts on what progress has been made, and their frustration where this has not been enough, their concerns about the barriers faced by too many families in Scotland, and, crucially, their ideas for what can make a difference. The issues identified have been reflected and will continue to be reflected as policy is refined.

Evidence Review

The evidence outlined above and review conducted by the Scottish Government Communities Analysis Division suggests that there is inequality of outcomes caused by socio-economic disadvantage for children experiencing poverty. This can lead to further negative outcomes, including health inequalities, poor mental health, hold back children's attainment in schools, limit their life chances and cause stigma^[42]. This evidence and inequalities will be considered carefully in developing the second Tackling Child Poverty Delivery Plan.

Summary of assessment findings

The development of the Plan has been shaped by considering the data available and the evidence review conducted by the Scottish Government Communities Analysis Division. This has reinforced the planned approach of ensuring the Plan has clear targets supported by policies that directly impact on poverty rates, tackles poverty across all three drivers (income from employment, cost of living and income from social security and benefits in kind), and contains a combination of various policies that support families most in need. It has influenced our approach by recognising that there is no single way to experience poverty, but a wide range of unique experiences, and the need to tailor policy to a given place and to rest new approaches to make existing policies and systems deliver better outcomes for the priority family types.

Specifically on the three drivers of poverty, the assessment found support for actions including enabling and supporting parents to increase their earnings from paid work and social security, and increasing access to good quality, affordable childcare. These identified a range of improvements that were incorporated in the Plan. For example, it found that, while current employment policies are a step in the right direction, more is needed – with evidence suggesting that services that recognise the complexity of parents' lives and are individually tailored to their needs are more likely to be successful. It also found that more work is needed to address in-work poverty, addressing structural barriers, undervaluation and the quality and flexibility of employment.

The assessment, drawing on the evidence review, also found that whilst the current social security system in Scotland is valued, many families do not access all the benefits that they are entitled to, and for some families to current value of those benefits is not always sufficient on its own to keep families out of poverty. The review highlighted that more action is needed on increasing take up and maximising eligibility.

The evidence review has helped to inform policy modification and new policy proposals for the Plan – including focusing on helping parents to navigate the system, further embedding advice and support around social security and seeking to make employment an option for more parents through increasing access to affordable childcare and supporting more employers to offer flexible work.

There were some issues raised in the evidence review that were not able to be incorporated into the Plan. For example, the review highlighted the importance of reforms to child maintenance – a reserved matter. The review also found mixed evidence around universal versus targeted policies, this requires wider consideration of other policy aims, available budget, deliverability and issues of stigma.

More detailed evidence is available for specific policies contained within the Plan, and each policy under development will be accompanied by its own Fairer Scotland Duty assessment, identifying policy specific delivery options and modifications to enhance impact on equalities of opportunities.

Summary of changes to be made as a result of the assessment

The overall policy intention of the Child Poverty Delivery Plan is to reduce inequalities of opportunity, with a particular focus on support to low income families. As such, the proposed changes are focused on monitoring delivering rather than amending policy at this stage.

Specifically, as a result of the Fairer Scotland Duty assessment it is recommended to:

• Embed mechanisms for engaging with the intended beneficiaries of the Plan, particularly representatives of relevant priority family groups, at the individual policy level, within the phased approach delivered through pathfinders, and within the overall child poverty governance structures. This will enable greater monitoring of how policies are contributing to reducing inequalities for these groups
• Consider options to continue engagement with the groups that have helped to inform the Plan, particularly how these groups could be considered as part of the governance arrangements to oversee implementation of the Plan
• Factor in inequalities of opportunity in the selection criteria for future pathfinders, recognising the strengths and weaknesses of different data sets, and the need for engaging with partners in this process
• Consider options to strengthen data collection, analysis and use across policy areas, specifically to better understand how policies within the Tackling Child Poverty Plan are a) reaching and b) impacting on priority families

Sign off

Name: Julie Humphreys

Job title: Deputy Director, Social Justice and Regeneration