Publication - Strategy/plan

Tackling child poverty delivery plan 2022-2026 - annex 4: cumulative impact assessment

Published: 24 March 2022
Topic: Children and families, Equality and rights
ISBN: 9781804352632

This report is an annex to Best Start, Bright Futures: the second tackling child poverty delivery plan 2022 to 2026 and assesses the cumulative impact of a package of our policies on child poverty.

Supporting documents

Footnotes

1. We do not model Best Start Foods in 2019/20 as it was launched halfway through the financial year and only £3m was awarded that year.

2. This policy will begin to take effect from 2022/23 and will therefore have some impact in 2023/24, however we only model its accumulated impacts in 2025/26.

3. This policy will begin to take effect from 2022/23 and will therefore have some impact in 2023/24, however we only model its accumulated impacts in 2025/26.

4. https://microsimulation.pub/articles/00088

5. https://www.gov.scot/collections/poverty-and-income-inequality-statistics/

6. Inflationary increases in housing costs will tend to increase relative poverty, but these will be partly offset by corresponding increases in housing-related benefit payments, depending on the household's location, tenure type, composition, and housing costs, among other factors.

7. https://www.gov.scot/collections/poverty-and-income-inequality-statistics/

8. http://repository.essex.ac.uk/14894/1/Brewer_et_al-2017-The_Economic_Journal.pdf.

9. https://www.gov.scot/publications/poverty-and-income-inequality-in-scotland-2017-20/

10. These figures may be less than 100% because Free School Meals are available to 16-18 year olds who claim benefits in their own right and are therefore not counted as children.

11. Even if the 'passporting' benefit decreases with earnings in a gradual manner, as per the Universal Credit taper rate, once the benefit tapers to zero the household will fully lose eligibility for the 'passported' benefit. In addition, the UC taper rate can have perverse effects on work incentives for households close to the cliff edge. A lower taper rate means that households on UC will lose less of their benefit income as they earn more, thus lowering their METRs. However, it will also mean that some households who previously earned too much to be eligible for UC will now be eligible. These households could experience an increase in METRs since they are now subject to the taper rate, even though their income is now higher.

12. These average impacts would likely be higher for both groups if averages were calculated as means instead of medians, since METRs will be especially high for households crossing a cliff edge and in some case will exceed 100%.

13. Note that average METRs among affected parents fall in the counterfactual scenario between 2019/20 and 2023/24, reflecting the reduction in the Universal Credit taper rate and the increase in work allowances, i.e. the amounts that households can earn before the taper is applied. However, this impact appears to be lower for parents in poverty, likely because a larger proportion of their earnings were already covered by the work allowance and were therefore not subject to the taper in the first place.

14. https://obr.uk/efo/economic-and-fiscal-outlook-october-2021/

15. https://www.microsimulation.ac.uk/publications/publication-526325/

16. https://economy2030.resolutionfoundation.org/reports/begin-again/

17. https://obr.uk/wtr/welfare-trends-report-march-2021/

18. https://www.bankofengland.co.uk/monetary-policy-report/2022/february-2022

19. https://data.gov.scot/poverty/uncertainty.html

20. https://www.gov.scot/publications/poverty-and-income-inequality-in-scotland-2017-20/

21. https://www.gov.uk/government/statistics/family-resources-survey-financial-year-2019-to-2020/family-resources-survey-background-information-and-methodology

22. https://www.ifs.org.uk/comms/comm121.pdf

23. https://www.gov.scot/publications/social-security-scotland-act-2018-benefit-take-up-strategy-october-2021/documents/

24. https://www.gov.scot/publications/social-security-scotland-act-2018-benefit-take-up-strategy-october-2021-approach-measuring-take-up-low-income-benefits/

25. https://www.fiscalcommission.scot/publications/scotlands-economic-and-fiscal-forecasts-december-2021/