Best Start, Bright Futures - tackling child poverty: progress report 2023 to 2024

Introduction

This is the second statutory annual progress report for Best Start, Bright Futures, the Scottish Government’s Tackling Child Poverty Delivery Plan for the period 2022-26. While levels of inflation fell considerably across 2023-24, the price of key items has continued to rise, with essential goods costing far more than they did before the cost of living crisis. Low income households have continued to be disproportionately affected, spending a greater proportion of their income on the likes of food and energy or having to cut back on these essentials. The Scottish Budget has also been significantly impacted, with the block grant worth 4.8% less in real terms than it was in 2021-22, at the time the budget was set in December 2022.

Despite these extremely challenging conditions, we have prioritised limited resources on tackling poverty in Scotland and supporting people impacted by the cost of living crisis. In 2023-24, we invested nearly £2.9 billion in support targeted to low income households, with spend benefitting children rising to almost £1.4 billion. This includes ongoing investment in the Scottish Child Payment, which was increased in value by 25% from November 2022 when it was expanded to children under the age of 16, and tripling investment in the Fuel Insecurity Fund to £30 million. We have also continued to mitigate the impacts of UK Government welfare policies on low income households, with £83.7 million made available to Local Authorities to mitigate the likes of the Benefit Cap and ‘bedroom tax’ through Discretionary Housing Payments.

However, the challenging budget position, compounded by the mitigations required to minimise the impact of UK Government welfare policies, has meant tough decisions across government, and that some policies set out in Best Start, Bright Futures have not been delivered at the pace and scale originally envisaged. Despite this, modelling published in February 2024 demonstrates the significant impact that our policies are estimated to have in 2024-25, with the effect of keeping 100,000 children out of relative poverty and 70,000 children out of absolute poverty.

Our approach to eradicating child poverty has continued to be informed by stakeholders and people with lived experience. The cross-sector anti-poverty summit, convened in May 2023, reinforced the need for immediate action to support people impacted by the cost of living crisis and for longer-term action to break the cycle of poverty. We continued this engagement across the remainder of 2023 to inform future action and spending plans across all portfolio areas.

Across the year, the Best Start, Bright Futures Programme has continued to oversee performance of key policies, ensuring that we hold ourselves to account and know the impact of our actions. This is complemented by the independent scrutiny provided by the Poverty and Inequality Commission, whose observations, along with our responses, are included in this report. We further strengthened our governance arrangements by establishing a new Ministerial Oversight Group in October 2023, ensuring that the Ministerial portfolios with the potential to make the most significant contributions to eradicating child poverty are maximising those opportunities.

Eradicating child poverty has been cemented as a priority across all of government, with action to eradicate child poverty supporting our commitment to ‘Keep the Promise’ to care experienced young people, and commitments in our National Strategy for Economic Transformation supporting the realisation of our vision for a wellbeing economy that enables parents to thrive in the labour market. This builds upon our collective action to date and is underpinned by ‘Getting it right for every child’ (GIRFEC), providing the core foundation through the GIRFEC National Practice Model for a holistic, whole-family approach to eradicating child poverty.

Our commitment on child poverty is shared with Local Authorities, and forms one of three strategic priorities within the Verity House Agreement. Detail of action taken in each Local Authority area can be found within each respective Local Child Poverty Action Report, which is prepared and published jointly by Local Authorities and Health Boards. Published reports can be accessed through the Improvement Service website.

We remain ambitious in looking at innovative ways to eradicate child poverty and recognise the potential that a Minimum Income Guarantee has to deliver transformational change, by ensuring that everyone has enough money to live a decent, dignified, healthy and financially secure life. We look forward to the Expert Group’s full report in 2024 and will closely consider its recommendations as we work to achieve the flightpath to the 2030 targets.

The first section of this report details key progress in implementing the actions set out in Best Start, Bright Futures during the reporting year, as well as updates on any additional or new actions that form part of our efforts to eradicate child poverty.

These are organised by thematic area, with a focus on the impact of actions taken over the reporting period. Updates on actions within the Plan which have not been incorporated within this section can be found within the ‘at a glance’ table later in Section three of this report.

The second section provides the latest assessment of overall progress toward the targets set in the Child Poverty (Scotland) Act 2017. It also provides updated data for each of the six priority family types at greatest risk of poverty^[1] and provides summary analysis of trends in the drivers of child poverty reduction.

This analysis shows that child poverty rates are broadly stable. Whereas the rest of this report covers actions taken across 2023-24, this section draws upon survey data up to March 2023. As such, it should be understood in the context of the economic pressures prevalent in this time, including the cost of living crisis and worldwide economic impacts by which Scotland was impacted, such as the war in Ukraine. Importantly, this data does not yet fully reflect the expansion of the Scottish Child Payment to 6-15 year olds, which will be captured in data available in March 2025.

Our analysis shows that trends in the drivers of child poverty are mixed. Despite rising employment, there is evidence that earnings growth has not kept pace with inflation, raising the prospect of increasing in-work poverty as household budgets are put under pressure. These pressures are compounded by high inflation which peaked at 11.1% (annual rate of CPI) in October 2022, with the impacts continuing into 2023 and beyond, even as inflation levels have declined. An increase in fuel poverty was also seen, as well as increasing levels of debt.

Looking forward, we expect to see the impact of our policies increasingly reflected in the data in future years. Modelling published by the Scottish Government in February 2024 estimates that, in 2024-25, levels of relative and absolute poverty will be 10 percentage points and 7 percentage points lower respectively than they would have otherwise been in the absence of our policies.

The third section of this report provides a series of ‘at a glance summaries’ which are intended as a quick reference to key information about the actions we have taken.

This includes the status of each action committed in Best Start, Bright Futures; an update on additional actions not included within section 1 of this report; an overview of Tackling Child Poverty Fund investment; the latest estimates of spend targeted toward low income households and children; and information of how this report meets requirements set out in the Child Poverty (Scotland) Act 2017. This section also details the comments and recommendations of the Poverty and Inequality Commission and our responses.

The following annexes are published alongside this report to provide additional information:

Annex A provides the latest data and trends in relation to the Child Poverty Measurement Framework.

Annex B details an evidence review focused on the challenges and barriers a number of other disadvantaged groups face in relation to poverty. This builds upon the established evidence base for priority families and focuses on additional family types, including families facing homelessness, survivors of domestic abuse, and people who are care experienced.