Scottish Budget 2019-2020: Equality and Fairer Scotland statement

Chapter 6 Child Poverty Overview

Introduction

The Child Poverty (Scotland) Act 2017 is a landmark piece of legislation, which positions Scotland as leading in the UK on tackling child poverty. In a clear statement of the Scottish Government's commitment to ending child poverty, it set the following ambitious targets that are to be met by 2030:

• Less than 10 per cent of children in Scotland are in relative poverty ('relative poverty' measures whether the incomes of the poorest households are keeping up with growth in average incomes in the current year).
• Less than 5 per cent of children in Scotland are in absolute poverty ('absolute poverty' measures whether the incomes of the poorest households are keeping up with inflation).
• Less than 5 per cent of children in Scotland are in combined low income and material deprivation (children are in 'material deprivation' if their family is unable to afford items that most people think are essential - such as a warm winter coat and money to replace worn-out furniture).
• Less than 5 per cent of children in Scotland are in persistent poverty ('persistent poverty' is defined as being in relative poverty for at least three out of four consecutive years).

The Scottish Government published 'Every Child, Every Chance: the Tackling Child Poverty Delivery Plan 2018-22' in March 2018. It sets out a range of actions, from policy areas across the Scottish Government. These actions aim to impact on the three key drivers of child poverty reduction: increasing income from work and earnings; reducing households costs; and maximising income from social security.

This chapter provides a qualitative assessment of the impact of the Scottish Budget 2019-20 on each of these drivers of child poverty. It addresses a recommendation made by the Poverty and Inequality Commission that the Scottish Government should provide analysis of the likely impact of annual budget decisions on the child poverty targets.

The Tackling Child Poverty Delivery Plan has a strong equality emphasis through its focus on 'priority families' at higher risk of poverty. These include lone parents (the majority of whom are women), mothers aged under 25, minority ethnic families, families with a disabled adult or child, as well as families in which there is a child aged under 1 and larger families (with three or more children). Actions to reduce poverty among these groups are crucial to ensuring we meet the targets. The portfolio chapters of the Equality Budget Statement examine the impacts of the Scottish Budget 2019-20 in relation to protected characteristics.

Work and Earnings

Children whose parents are not in paid work are much more likely to be in poverty, but the majority of children in poverty do have at least one parent in paid work. The two main reasons for this 'in-work poverty' are low hourly pay and parents not having enough hours of paid work to keep the family out of poverty.

People with higher qualification levels and skills are much more likely to be in employment and have higher earnings. But the number and type of jobs available in the labour market is also crucial to ensuring they have good employment opportunities.

The Communities and Local Government portfolio, through the £50 million Child Poverty Fund, is investing in a new, intensive Parent Employment Programme. This will support low income parents already in work to build skills, progress through their careers and earn more. It will also support parents who are unemployed to move into work.

This new initiative is being developed alongside Fair Start Scotland, our national devolved employment support service, funded by the Finance, Economy and Fair Work portfolio. Fair Start Scotland focuses on helping people with particular challenges in finding work to gain sustained employment. Priority groups include disabled people, lone parents, minority ethnic groups and people who live in the 15 per cent most deprived areas. It aims to support at least 38,000 people over three years, with positive impacts on around 7,000 children.

The Finance, Economy and Fair Work portfolio also plays a central role in ensuring that high-quality jobs are available that offer parents decent rates of pay, good training and support, opportunities to progress, a flexible work environment, and enough hours in work to provide a weekly or monthly pay packet that, as a minimum, meets basic family needs. For example, it provides funding to Scottish Enterprise, Highlands and Islands Enterprise and the South of Scotland Economic Partnership to drive inclusive economic growth. It also provides funding to the Poverty Alliance to build a Living Wage Nation, and supports employers to deliver innovative solutions to overcome workforce inequalities faced by women, minority ethnic people and disabled people.

The Education and Skills portfolio invests in a wide range of policies to strengthen the skills of today's children and young people. This should lead to an improvement in work prospects for those who may become parents before 2030 - as well as for the next generation of parents and children beyond 2030.

Increasing the availability of affordable and accessible childcare and transport also plays an important role in increasing opportunities for paid employment. The impacts of the Scottish Budget 2019-20 on childcare and transport affordability are discussed in the next section, Costs of Living.

Costs of Living

The Scottish Budget 2019-20 will continue to invest in the expansion of funded early learning and childcare, with the intention of increasing entitlement by August 2020 to 1,140 hours for all 3 and 4 year olds and eligible 2 year olds (including those on certain income-related benefits). Increased local authority revenue funding in 2019-20 will support 435 additional graduate posts in nurseries located in Scotland's most deprived areas.

The Transport, Infrastructure and Connectivity portfolio will maintain its budget for the Bus Service Operators Grant in 2019-20, subsidising all services. This will make the network more extensive and fares lower than would otherwise be the case. It will continue to fund free bus travel for older people aged 60 or over and disabled people through the National Concessionary Travel Scheme. It will also introduce companion cards for eligible disabled children aged under 5, develop a pilot scheme of free bus travel for young modern apprentices and work with stakeholders to consider the options to provide free bus travel to recipients of the new Young Carers Grant. Funding of the Scotrail franchise will continue to deliver reduced fares for job seekers and the newly employed.

In 2015-16, an extra 170,000 people were below the relative poverty threshold once housing costs were taken into account. The lowest income households spent, on average, 48 per cent of their income on housing compared with 9 per cent for middle income households. Low income households renting privately spend an especially high proportion of their income on housing. In 2019-20, funding in the Communities and Local Government portfolio will be maintained for the delivery 50,000 affordable homes over the five years of this Parliament, 35,000 of which will be for social rent.

The Communities and Local Government portfolio will also continue to fund the Council Tax Reduction Scheme, ensuring that around half-a-million households who would otherwise struggle to pay their full council tax are instead required to pay only what they can afford. Over three-quarters of those who get Council Tax Reduction (CTR) get a 100 per cent reduction and so pay no council tax. On average, CTR recipients save over £685 per year.

Households with the lowest incomes are more likely to experience fuel poverty than others. In 2016, 87 per cent of households with a weekly income of less than £200 were in fuel poverty compared with 26.5 per cent of all households. This can mean that households on lower incomes experience difficulties in paying their bills resulting either in debts or in people living in under-heated homes. In 2019-20, the Communities and Local Government portfolio will continue to tackle fuel poverty and improve the energy efficiency of Scotland's homes by maintaining funding for the Home Energy Efficiency Programmes for Scotland (HEEPS).

There will be additional investment by the Communities and Local Government portfolio in 2019-20 to tackle food insecurity, including specific funding to develop practical support that aims to reduce food insecurity during school holidays. This portfolio will also provide funding to ensure continued access to free sanitary products for those attending schools, colleges and universities, and for those on low incomes.

The Health and Sport portfolio will continue to deliver Scotland's Baby Box, offering essential items for a child's first weeks to the families of all babies born and living in Scotland. From summer 2019, the UK Healthy Start Voucher scheme will be replaced in Scotland by a Best Start Foods smartcard to help reduce the stigma of using paper vouchers, and to provide greater flexibility for retailers and families. Payments will increase from £3.10 to £4.25 a week.

Costs associated with school have also been identified as putting pressure on family finances. The Scottish Budget 2019-20 will continue to ensure that families benefit from a £100 minimum school clothing grant and that free school meals are provided, the latter saving families around £380 per child per year. The introduction of universal free school meals in P1-3 has removed stigma associated with means testing, and led to increased take up among the most disadvantaged pupils, even where they were already entitled to a free meal. The Scottish Budget 2019-20 continues to support pupils from low income families to access free school meals from P4 onwards. School clothing grants and free school meals are funded jointly from budget in the Education and Skills portfolio and the core local government finance settlement.

Families on low incomes often end up paying an unfair 'poverty premium' for essentials - for example, because they have a pre-payment energy meter or are paying over the odds to a rent-to-own scheme to replace broken white goods. The Communities and Local Government portfolio's support to not-for-profit lenders, including Credit Unions and Community Development Finance Institutions, will continue in 2019-20. This includes match funding for the Carnegie UK Trust's Affordable Credit Fund. This will help more parents to access affordable credit when they need it, protecting them from predatory lenders and unmanageable debt, and acting as a buffer against unexpected costs and fluctuations in income.

The Communities and Local Government portfolio will also continue investment in the new Financial Health Check service. This service offers low income families with children personalised advice on money matters to make sure they are not paying more for essential goods and services than they need to. It also helps them to access all of the support they are entitled to, such as free school meals, Council Tax Reduction and the financial assistance covered in the next section, Social Security.

Social Security

Social security has an important role in tackling child poverty. Child poverty rates in the UK fell in the early 2000s, in part because of new benefits that were introduced for families. Recent UK Governments have cut social security very deeply, which has led to rising child poverty across the UK.

'Every Child, Every Chance: the Tackling Child Poverty Delivery Plan 2018-22' commits the Scottish Government to work towards introducing a new income supplement by 2022, thus providing additional financial support to low income families. The income supplement will be developed through close engagement with stakeholders and will aim to target support where it can have the greatest impact. Resources will be considered as it is developed, within the usual approach to the setting of the Scottish Budget.

The Best Start Grant is replacing the UK Sure Start Maternity Grant, supporting low income families during pregnancy and the early years up to school age. From December 2018, payment to the first child will increase from £500 to £600 and £300 birth payments for further children will be introduced. From summer 2019, two new payments of £250 per child will be introduced - the first around the time a child starts nursery and the second when they start school.

The Scottish Budget 2019-20 will continue to ensure that recipients of the UK Carer's Allowance receive the Scottish Carer's Allowance Supplement to bring their payments up to an equivalent level to Jobseeker's Allowance. A Young Carer Grant will also be introduced from autumn 2019 to provide a payment of £300 annually to all 16-17 year olds (and 18 year olds if still at school) who are caring for a person entitled to a qualifying disability benefit for an average of 16 or more hours a week, and who are not in receipt of Carer's Allowance.

To mitigate the effects of the 'benefits cap' and frozen Local Housing Allowances, the Scottish Government has increased investment in Discretionary Housing Payments (DHPs). DHPs provide further assistance with housing costs for those entitled to Housing Benefit or the housing element of Universal Credit. DHPs are also used to compensate local authorities for the cost of fully mitigating the 'bedroom tax' (cuts to housing benefit in the social rented sector introduced by the UK Government in April 2013).

Funding for the Scottish Welfare Fund (SWF) will be maintained in 2019-20 to provide a safety net for vulnerable people on low incomes. The SWF provides Crisis Grants, which help those facing disaster or emergency situations, and Community Care Grants, which provide help to establish or maintain a settled home or support individuals and families facing exceptional pressure. From April 2013 to June 2018, 306,305 households were supported, including 101,270 households with children.

Cross-Cutting

The Communities and Local Government portfolio will continue to contribute to the Innovation Fund that was established in partnership with the Hunter Foundation, with specific funding to trial and scale up innovative approaches to reducing child poverty.

This portfolio will also continue to invest in regeneration activities targeted at Scotland's most disadvantaged areas. The Empowering Communities Fund supports community organisations to deliver locally identified priorities to tackle poverty in a responsive way (including money advice, childcare, training and up-skilling). Match funding of the European Social Fund Programme will be continued in 2019-20 through the Aspiring Communities Fund, Social Economy Growth Fund and Social Innovation Fund. These funds help third sector, community bodies and social economy organisations to deliver long-term local solutions that address local priorities and needs to reduce poverty and enable inclusive growth.

Conclusion

This chapter has provided an overview of the impact of the Scottish Budget 2019-20 on the three key drivers of child poverty reduction: increasing income from work and earnings; reducing households costs; and maximising income from social security. It demonstrates the significant financial investment, from a range of portfolio areas, that support the Scottish Government's commitment to meeting the ambitious targets set by the Child Poverty (Scotland) Act 2017.