Child Poverty Measurement Framework - The Wider Evidence Base

2. MAXIMISING FINANCIAL RESOURCES OF FAMILIES ON LOW INCOMES (POCKETS)

Intermediate outcome 1: Maximising financial entitlement of families on low incomes

2.1. The headline indicator included in the measurement framework for this outcome is the percentage of working people who are earning less than the Living Wage. The Living Wage reflects the basic cost of living in the UK, and is higher than the National Minimum Wage. This indicator was chosen in recognition of the crucial role of good quality, paid employment as a route out of poverty, and reflects the SG's commitment to promoting the Living Wage.

2.2. In 2013, 17.4 per cent of employees in Scotland earned less than the Living Wage of £7.45 per hour^[1]. The percentage not earning the Living Wage was substantially higher in the private sector (26.4 per cent) than the public sector (3.5 per cent) and among part time workers (35.2 per cent) than those employed full time (10.2 per cent).

2.3. It should be noted that this indicator draws on hourly wages data, and low pay and poverty may persist for those earning the living wage or above, but who work a low number of hours. This indicator should therefore be read in conjunction with the underemployment indicator (discussed under outcome 4).

2.4. Other data related to this outcome are based on administrative data from particular welfare entitlements to reduce costs for vulnerable families. In March 2014, 122,660 households with dependent children in Scotland were in receipt of Council Tax Reduction, which reduces the Council Tax liability of vulnerable people in Scotland. This included 32,840 couple households and 89,820 single people with children.^[2]

2.5. Administrative data is also available on the Scottish Welfare Fund, which provided grants totalling £7.2 million to 15,932 households with children receiving SWF grants between 1st April 2013 and 31st December 2013.^[3]

Intermediate outcome 2: Reduced household spend of families on low incomes

2.6. The headline indicator included in the measurement framework for this outcome looks at average private nursery costs. High childcare costs are one of the key issues affecting parents on low incomes in particular, and form a major barrier to taking up employment or increasing hours worked for many parents. In 2013, the average weekly cost of 25 hours private nursery care for children over 2 was £102.06. Future reporting will consider any changes in childcare costs in real terms, i.e. taking into account inflation.^[4]

2.7. Relevant administrative data is also available for Scottish Government funding on energy efficiency measures in private homes, which will reduce spending on heating once installed. There are a number of different energy efficiency programmes offering different services. Overall, in 2012/13 there were 287,825 offers of energy advice or assistance made to vulnerable households under SG programmes. A breakdown by household type is available for only one of these programmes: stage 4 of the Energy Assistance Package, which offers grants of up to £6,500 for energy efficiency improvements such as insulation or new central heating systems or boilers. In 2012/2013, 1700 households with children under 16 received support under this programme.^[5]

Intermediate outcome 3: Families on low incomes are managing their finances appropriately and are accessing all financial entitlements

2.8. The measurement framework includes two headline indicators for this outcome. The first looks at general self-perceived ability to manage financially. In 2012, 35 per cent of households with children in the bottom three income deciles reported not managing well financially. This compares to 12 per cent in other households with children.^[6]

2.9. Information is also collected on how families are managing specifically in relation to housing costs. In 2012, 9.5 per cent of households with children had difficulties in paying their mortgage or rent, compared to 4.3 per cent of childless households. 4.6 per cent of households with children were behind on their rent or mortgage payments at the time of the survey, compared to 1.7 per cent of households without children.^[7]

2.10. The second indicator in the framework measures access to essential financial services. In 2011, among low-income households with children, 90 per cent had access to a bank account. Due to changes in sample size for this question in the Scottish Household Survey, future data for this indicator will be based on combined years.^[8]

2.11. Finally, relevant data for this outcome is available on whether families had savings. In 2011, more than twice as many households with children in the three lowest income deciles had no savings (62 per cent) than in the rest of Scotland (28 per cent). Only 15 per cent had savings of more than £1000, compared to 51 per cent in the rest of Scotland.

Intermediate outcome 4: Parents are in good quality, sustained employment in line with skills and ambitions

2.12. The measurement framework contains two indicators of parental employment: the employment rate and the underemployment rate. In 2012, the employment rate of parents was 79.3 per cent in 2012. This is higher than the employment rate for the population in Scotland as a whole (70.6 per cent).^[9]

2.13. However, the high employment rate may mask a situation where individuals are working but are not in employment that meets their needs. In 2012 the underemployment rate (defined as the percentage of working people looking to increase their hours either in their current job, an additional job or a different job) was 8.4 per cent among parents.^[10]

2.14. Related to this, the data is also available on temporary employment. This shows that in 2012 4.2 per cent of working parents were in temporary jobs.^[11]

2.15. The employment rates varies between different types of parents. It is lower at 69.5 per cent among parents with large families with three or more children, and substantially lower among lone parents (56.5 per cent) and parents with disabilities (57.2 per cent).^[12]

2.16. Another way of looking at parental employment is household worklessness. In 2012: 13.9 per cent of households with children were workless (i.e. none of the adult household members were in paid employment); 28.1 per cent of households with children had some working and some non-working adults; and in 58 per cent of households with children all adults were working.^[13]

2.17. The measurement framework includes earnings inequality as a measure of the quality of employment available at the lower skill/pay level. In 2012 the earnings of the top 10 per cent of earners were 16.3 times the earnings of the bottom 10 per cent of earners.^[14]

2.18. Another measure of employment quality is whether the job offers personal development opportunities. In 2012, 16 per cent of parents had undertaken on the job training in the three months prior to being surveyed.^[15]

2.19. The final area under the employment outcome focuses on whether individuals have the required skills to take up good quality employment. The headline indicator is the percentage of parents who had no or low (up to SCQF level 4 - Intermediate 1 or General Standard Grade) qualification. In 2012 this was 9.2 per cent, slightly lower than among the population as a whole (13 per cent).^[16]

2.20. Looking at post-school qualifications (HNC/HND or above), the percentage is 45.2 per cent among parents, and 38.8 per cent among the population as a whole.^[17]