Examining outcomes associated with Social Security Scotland spending: an evidence synthesis

4. Outcomes associated with social security spending in Scotland

The importance of showing how benefits help address wider outcomes

The Audit Scotland report 'Social security - Progress on implementing the devolved benefits'^[26] assessed progress to the end of February 2022 and recommended that the Scottish Government should:

“detail more clearly the intended impact of the Scottish social security system on outcomes for the people of Scotland, linking directly to the National Performance Framework. This is central to being able to evaluate value for money and inform decisions about future social security interventions”.

This section considers the available evidence on eight different outcomes: Child poverty; household poverty, material deprivation and debt; income inequality; health; wellbeing; education and social participation; economy and employment; and protected characteristics. Key findings are summarised below and the icons indicate how these outcomes link to the National Performance Framework outcomes.

Child poverty

Social security payments have the potential to reduce child poverty through providing low income families with increased regular income (SCP), making healthy foods more affordable (BSF) and providing additional financial support at key transition points such as starting school (Best Start Grant, BSG).

Together SCP, BSF and the three BSG payments are known as the Five Family Payments. The Five Family Payments are key Scottish Government measures contributing towards the national mission to tackle child poverty.

In 2023-24 it is expected that around 370,000 children aged 0 to 15 will be eligible for SCP^[9]. This equates to around 38% of children under 6 and 43% of children aged 6 to 15. Of those eligible, around 327,000 are expected to get the payment (around 9 in 10).

Contributions to addressing child poverty

The generosity and design of benefits can either increase or reduce child poverty. For example, at the UK level, analysis and modelling^[27] have demonstrated the negative impact on child poverty of the two child limit to Universal Credit and Child Tax Credit.

Scottish Government modelling^[28] suggests that the £25 SCP could lift around 50,000 children out of poverty in 2023/24. This would equate to reducing the relative child poverty rate (after housing costs) by an estimated 5 percentage points in 2023-24. This modelling does not, however, consider any behavioural responses to or labour market effects of SCP’s design and is subject to changes in the economic and fiscal environment.

The SCP has been carefully designed to reduce the 'depth of poverty’ and provide support to those who need it most. Early evaluation evidence^[3] suggests that SCP is helping to reduce financial pressure on households. The SCP interim evaluation concluded that the payment is ‘‘likely to have contributed positively to the Scottish Government’s long term aims (e.g. reduced child poverty and inequalities of outcomes for children)’.

There is tentative evidence to suggest that SCP is improving Scotland’s performance on child poverty relative to other UK nations. The 2023 Joseph Rowntree Foundation ‘Destitution in the UK’ report^[29] concluded that “Scotland had improved its position, having experienced by far the lowest increase since 2019. This may be indicative of the growing divergence in welfare benefits policies in Scotland, notably the introduction of the Scottish Child Payment”. Similarly, the Trussell Trust^[30] found that Scotland saw a smaller percentage increase in the number of food parcels for children from November 2022 to March 2023 compared with the same period in 2021/22 than other UK nations. It suggested that this may be related to the extension of eligibility for SCP and the increase to £25 a week introduced in November 2022.

There is early qualitative evaluation evidence that articulates how people receiving BSF^[11], BSG^[12], and Child Winter Heating Payment (CWHP)^[31] perceive these payments are supporting short and medium term outcomes such as reduced pressure on household finances and preventing households from going into debt. This evidence suggests that whilst ‘it is reasonable to assume’ that SCP and the other family payments are reducing child poverty, measuring the impacts of individual payments will be challenging and take time.

Household poverty, material deprivation and debt

Social security payments have the potential to reduce poverty by increasing the income of households in poverty, reducing unmanageable debt, and providing financial support to help mitigate the additional costs associated with being disabled.

Reducing poverty, material deprivation and debt are explicit policy aspirations of BSG, SCP, CWHP and Funeral Support Payments (FSP).

It is estimated that between 2019-22, 21% of Scotland's population were living in relative poverty, after housing costs^[32]. Certain groups including lone parents, children, carers, young carers^[33], and households with a disabled person(s) and ethnic minority groups are more likely to be living in poverty and/or experiencing food insecurity.

Contributions to addressing poverty, material deprivation and debt

There is emerging tentative qualitative evaluation evidence^[34] that recipients believe that the devolved benefits are positively contributing to reducing financial pressure on households, reducing poverty, debt, material deprivation and food insecurity.

The evaluation of BSF^[11] and CWHP^[31] suggested that they had reduced financial pressure on households. Commissioned interviews with recipients of BSG^[12] found that ‘respondents were unanimous in the view that the BSG had made a positive impact on their household finances’.

Commissioned interviews undertaken for the interim evaluations of BSG^[12] and SCP^[3] found that recipients said BSG and SCP prevented them from going into debt or having to cut down on essentials such as food.

Although too early to report on medium term outcomes, the interim evaluation of BSF^[11] found that it is likely that BSF has reduced the incidence of food insecurity. For some parents BSF was a ‘lifesaver’, assuring them their child would always have food. Family Payments can benefit the wider family as well as the child(ren).

The SG commissioned evaluation of Carers Allowance Supplement (CAS)^[35] demonstrates that CAS has gone some way to meeting its overall aim of improved outcomes for carers by providing extra financial support. Stakeholder modelling evidence^[36] concluded that while the Scottish Government’s ambitions are too modest to change overall income inequality, the reforms in targeted policy do make a substantial difference to the lived experience of carers in poverty.

The interim evaluation^[14] of the Young Carer Grant (YCG) did not provide findings on whether the grant helped young carers become ‘better off financially’. The payment rate was rarely mentioned by interviewees, other than to note that it could be higher.

The CWHP evaluation^[31] indicated some perceived progress towards meeting the medium-term goals of mitigating against financial difficulties/insecurities and supporting people with payment costs when they most need it. CWHP helped families to increase household income, heat their homes more often and for longer, and mitigate the additional heating costs associated with having a disabled child.

Income inequality

Social security payments have the potential to reduce income inequality (for a definition see House of Commons briefing^[37]).

Reducing poverty, itself a measure of income inequality, is a key principle set out in the Social Security Charter^[16] and the tax and welfare system plays an important re-distributional role.

In terms of income inequality, official statistics^[32] show that between 2019 and 2022, the top ten percent of the Scottish population had 18% more income (before housing costs) than the bottom forty percent combined.

Contributions to addressing income inequality

Modelling^[7] of the distributional impact of the Scottish Government's (SG) income tax and social security policy choices in May 2023 found that the SG’s tax and social security policies are reducing income inequality and targeting support at those who need it most. The modelling considered the impact of a combined package of income tax and social security policy changes (including SCP, BSG, BSF, Discretionary Housing Payment and Carers Allowance Supplement) on households across the income distribution range to demonstrate the overall distributional impact. SG policies mean that household incomes increase by around 4% for households in the lowest and second lowest deciles. Most of this increase is due to SCP and Income Tax changes. Incomes have been reduced in the richest tenth of households by on average £2,590 (2.1%) and increased in the poorest tenth by £580 (4.6%) per year (with those in the middle broadly unaffected).

Subsequent SG analysis^[8] for the budget in December 2023 showed that SG policies mean that 58% of households are better off under the Scottish system than in rUK, with the majority of these in the bottom half of the income distribution. The SCP is the largest single contributor to the improved financial resources of low-income households relative to the rest of the UK, while the impact on higher income households is driven by the introduction of – as of 2024-25 – a six band Income Tax system in Scotland that levies higher rates of Income Tax on higher incomes, with slightly lower rates on those earning less than £28,850.

Independent modelling by the Institute for Fiscal Studies^[9] in 2023 of recent tax and benefit^[38] reforms by the Scottish Government on Scottish households’ incomes reaches similar conclusions (although noting some differences with the December 2023 SG analysis, due to a different modelling approach around take up of social security). This shows that while the combined impact of these measures is to reduce Scottish households’ incomes, the effects differ markedly across the income distribution range. The reforms reduce the incomes of the richest households and increase the income of the poorest 10%. The poorest 30% of families with children benefit the most, seeing an average increase of £1200 per year whereas the richest 10% see a drop in income of just over 1%. Taken together, reforms to Scotland’s income tax rates and bands and devolved benefits will have reduced the average income of Scottish households by £210 (or 0.5%) per year by 2023–24, compared to what their incomes would be in England and Wales. However, the poorest tenth of households will, on average, have benefited by £580 (4.6%) per year as a result of higher benefit entitlements.

Ongoing and forthcoming SG modelling and evaluation work may provide further evidence of the impact of spending on new and devolved benefits on increasing recipients’ income (e.g. OCEA modelling, evaluations of the AVE scheme, Child Disability Payment, Adult Disability Payment etc.) See section 6.

Health

Social security payments have the potential to improve health outcomes through, for example, supporting households to buy nutritious food and better heat their homes and allowing disabled people to meet their health and care needs. Payments can also alleviate financial worry and improve poverty-related poor mental health. The time during pregnancy and up to the age of five is critical for a child’s development; poor nutrition over this period can have direct, irreversible effects on long term health^[39].

Improving health outcomes is an explicit policy aspiration of several benefits administered by Social Security Scotland including the Five Family Payments, Job Start Payment (JSP), and CWHP.

Health outcomes differ markedly in relation to socio-economic disadvantage; people living in less affluent areas of Scotland have a shorter life expectancy than those living in wealthier areas. Modelling studies demonstrate that UK benefit cuts have been associated with drops in life expectancy^[40],^[41] among the working age population.

Contributions to improving health

There is empirical and theoretical evidence indicating that social security payments can improve long term health outcomes^[42], ^[43]. In turn, this can reduce spending on social security and health^[53], and potentially increase government revenue through increased taxation if it leads to higher productivity and earnings.

Early evaluation evidence of SCP^[3], BSF^[11] and BSG^[12] indicated that the recipients interviewed felt that these benefits are improving health outcomes through, for example, enabling parents to provide more and better quality food for their children. Parents perceived that their own mental health improved due to having fewer money worries. Despite very positive feedback on BSF, health professionals and parents expressed concern that because the payment rate reduces after the child’s first birthday, the amount of healthy food families can buy once their child turns one is also reduced^[11].

There was some evidence that CWHP^[31] and SCP^[3] may indirectly improve health by enabling families to heat their homes for longer and to have a good supply of hot water. This is particularly important for disabled children who are often up during the night and may need bathing more often^[31]. BSGs were often used to buy items such as bottle sterilisers, breast pumps, cots and car seats which may also indirectly improve health.

CAS was very well received but existing evidence suggests that for most recipients had little direct impact on health, mainly due to the relatively modest rate (£541 per year in 2023-24). In a few cases CAS had a positive impact on carers’ mental health^[35].

An NHS Health Scotland briefing paper^[44] using the EUROMOD and Triple I models concluded that, of those considered, the most effective income-based policies for reducing health inequalities are likely to be those that disproportionately increase incomes for people with the lowest incomes, for example increasing benefit rates. Unpublished health inequalities modelling by Public Health Scotland concluded that bolder combinations of devolved tax raising and social security powers will be required to achieve meaningful reductions in inequalities in Scotland^[45].

Wellbeing

Social security payments (and the way in which they are administered) have the potential to improve wellbeing outcomes through providing income that reduces psychological stress brought about as a result of experiencing poverty and inequality.

Improving wellbeing outcomes is an explicit policy aspiration of several benefits administered by Social Security Scotland including the Five Family Payments, JSP, CAS and CWHP.

A key feature of the devolved benefits system is its focus on treating people with dignity and respect^[16]. There is good quality empirical evidence^[46] that the stress of undergoing assessments for UK disability benefits - frequently described as ‘dehumanising‘ and ‘traumatic‘ - negatively effects both recipients’ and carers’ wellbeing.

Contributions to improving wellbeing

The most recent Social Security Scotland client survey^[47] received 34,000 responses. Nearly nine-in-ten of the respondents believed that they had been treated with dignity (88%), fairness (87%) and respect (89%) when they applied for, or received, the new devolved benefits. Only 2% describe their experience as ‘poor’ or ‘very poor’. This may lead to improved wellbeing of clients and contrasts favourably with evidence from Social Security Scotland Experience Panels^[48] that described how people found certain aspects of the UK benefits, process extremely negative.

Early evaluation evidence^[3] indicated that recipients felt the SCP has helped to reduce money-related stress and made progress towards its medium-term outcome of improved wellbeing.

SCP recipients reported that the payment had significant positive impacts on wellbeing. For parents this was primarily by reducing financial worries. Children's emotional wellbeing benefited from having their basic needs met (for example reduced distress caused by being hungry) and also from the enjoyment of having the occasional treat or day out. Some parents spent BSG on items to support their child's emotional wellbeing such as fidget toys or weighted blankets to reduce anxiety^[3].

Early evaluation evidence of BSG^[12] similarly found that the grants had improved recipients’ perceived wellbeing through easing financial strain. Parents felt proud to be able to provide for their child rather than being dependent on others. Their confidence and self-esteem increased. Without the BSG, parents had been unable to provide new items, for example when starting a new school year; BSG and SCP^[3] reduced the guilt parents felt at not being able to afford things for their children.

Evaluation evidence^[11] suggested that in families where parents used their BSF payment cards, these improved parental wellbeing through feeling positive about being able to provide their children with more nutritious food. Parents reported feeling less anxious or self-conscious about using BSF cards in shops compared to using Healthy Start Vouchers.

The CAS evaluation^[35] concluded it had helped improve unpaid carers’ mental health and wellbeing “a little”. Many carers said they spent CAS on short breaks or days out which they felt were very beneficial and offered “a breather” from their isolation and round-the-clock caring responsibilities. The evaluation noted that wider support, such as respite care, was also needed.

Education and social participation

Social security payments have the potential to support people to participate in social and educational opportunities. Improving participation outcomes is an explicit policy aspiration of several benefits administered by Social Security Scotland considered in this review including SCP, BSG, JSP and YCG.

The Poverty in Scotland 2022 survey^[49] found that 58% of people with low financial security had stopped or reduced socialising with friends and family due to cost. Disabled people and those on low incomes are more likely to feel socially isolated^[50].

Contributions to improving education and social participation

Interim evaluations of the SCP^[3] and BSG^[12] suggested that parents believed the payments had enabled children to participate in opportunities which the parents would otherwise not have been able to afford. Examples included attending regular early learning activities like parent and toddler groups and also days out; for example a trip to the beach or museum.

Parents typically said they used their BSG Early Learning and School Age Payments to buy items their children needed to start nursery or school. Parents emphasised the expense of uniforms and of having to buy multiple sets of indoor and outdoor clothing to facilitate nursery play. Some had used BSG to buy clothing or equipment that allowed their children to take part in more physical activity.

The interim evaluation^[14] of the annual YCG concluded that it “appears to be meeting its overall aims” and that the grant is helping young carers improve their own quality of life by taking part in opportunities which are the norm for their non-caring peers. Young carers said they spent the grant as teenagers in general tend to spend their money, for example going out with friends, going to the cinema or a concert, attending dance classes, and taking driving lessons. Young carers generally said that, without YCG, they would have had to miss out on these activities.

Stakeholders and young carers were positive about YCG but felt that the requirement that the cared-for person is in receipt of certain benefits was excluding too many young carers with significant caring responsibilities. They felt this could present a particular barrier to minority ethnic young carers, as people in these communities were less likely to access the qualifying disability benefits.

There is limited evidence available as to whether SCP reduces barriers to education for parents. Most people interviewed as part of the evaluations were full-time carers for young children and therefore were not seeking access to education.

Relatively little time has passed since devolved benefits were introduced, so there is not yet evidence available about how they contribute to progress towards longer term outcomes that can be measured (e.g. reduced inequality of outcomes for children). Nevertheless, the interim evaluation concluded that “SCP has made good progress towards some of its short and medium-term outcomes” [e.g. children are able to participate in social and educational activities’ and ‘reduced barriers to education’] and that “it can be reasonably assumed that the Scottish Child Payment is making some contribution towards the Scottish Government’s long term aims for children and families”.

Economy and employment

Social security payments have the potential to improve economic outcomes. For example, investment today (e.g. SCP) to mitigate the harmful effects of poverty^[51] can lead to longer term benefits to the economy in future through: reduced demand for, and expenditure on, public services (e.g. less health-care spending); improved productivity (e.g. through a healthier, more productive, workforce); and greater and more equal labour market participation (e.g. by reducing some labour market barriers, particularly for disadvantaged groups), stimulating improved tax revenues in future.

Improving economic and employment outcomes is an explicit policy aspiration of several benefits administered by Social Security Scotland considered in this review including SCP, FSP and JSP.

Official statistics^[52] show that SCP payments totalling £458.5 million were paid out since the benefit’s inception up to September 2023. There is strong theoretical and empirical evidence indicating that increased social security expenditure can result in wider future economic benefits, for example though people being more economically self-sufficient in later life^[53].

Contributions to improving economic and educational outcomes

The interim evaluation^[3] of the SCP stated that “[e]vidence of increased spend amongst recipients would suggest that SCP has had positive impacts on the Scottish economy.” Families used SCP to buy essential items, as well as small treats and family outings, that would otherwise often have been unaffordable. There was evidence to show that most families spend, rather than save SCP, thus benefiting the Scottish economy through supporting consumption.

Evidence that BSG had positive impacts on the economy was more mixed. The interim evaluation^[12] found that it was unclear whether BSG led to increased child-related spending. Some parents said that without BSG they would have borrowed to buy the items suggesting this was not additional spending. However, others said BSG allowed them to buy new, rather than second hand items, or to buy better quality items.

The evaluation of JSP^[15] reported that it has largely achieved its short-term outcomes of helping to meet the costs of starting a new job, supporting young people to take-up employment, increasing confidence when starting a new job and thinking about employment prospects. Recipients welcomed the payment and used it for a range of work-related expenses such as clothes, travel, equipment - which some feel they could not have afforded without JSP.

There is limited evidence as to whether SCP helped to reduce barriers to entering the labour market. Most people interviewed for the evaluation^[3] were full-time carers for their young children and therefore were not seeking access to employment. It should be noted that a range of complex and inter-related additional factors impact employment outcomes, including availability and affordability of childcare, and SCP alone is unlikely to fully mitigate these issues.

The evaluation^[54] of the FSP concluded that FSP is likely to be helping to reduce business insecurity for funeral directors through recipients paying bills in good time. As a result, funeral businesses, the majority of whom are small businesses, spent less time chasing payment.

The BSF evaluation^[11] found that retailers thought the BSF card format was easier for them to implement than the UK Healthy Start Vouchers that BSF replaced. However, they wanted to receive data on items being bought with BSF to inform their decisions on stock and in store promotions.

Protected characteristics

The design, delivery and generosity of social security benefits can serve to widen or close equality gaps. UK Government policies have hit women’s income much harder than men’s; Engender estimate that from 2010 to 2020, 86% of net ‘savings’ raised through cuts to social security and tax credits came from women’s incomes^[55]..

Disability benefits delivered by Social Security Scotland are designed to contribute to reducing equality gaps between disabled and non-disabled people through mitigating some of the increased costs incurred by disabled people and people with long term health conditions. Benefits targeted towards low income families may also reduce multiple inequality gaps as households of people with particular protected characteristics are more likely to be living in poverty.

Social security benefits are particularly important for some groups such as disabled people who have higher barriers to employment, lower pay when in work and higher living costs. Women face multiple disadvantages as they are more likely to take on caring responsibilities, head up single parent households and earn less^[56].

Impact on people with protected characteristics

Evidence from SG impact assessments demonstrate that extensive consideration has been given to ways in which the design and delivery of benefits can help to maximise take up and reduce inequalities^[10].

There is some very tentative evidence that social security spending may be helping to narrow some inequalities of outcome for disabled people. For example, the interim evaluation of SCP^[3] identified qualitative examples where parents of disabled children, spent payments on items designed to support development or learning (e.g. sensory toys and books). However, the Equality and Human Rights Commission conclude that ‘It is too early to assess the impact of the Child Disability Payment and the Adult Disability Payments on the living standards of disabled people and their households^[57].

Women are more likely to access the social security system and it is expected that women will benefit disproportionately from policies such as SCP which is intended to be ‘a positive measure to help tackle discrimination’^[10].

A number of low income family benefits have been designed to support younger parents in recognition of the link between deprivation and teenage pregnancy. For example the BSF and BSG are available to parents under the age of 18 without the need to be on a qualifying benefit. By introducing benefits with the explicit long term policy outcome to reduce child poverty it is likely that inequalities between groups will also be reduced. Priority family types at highest risk of child poverty include families with mothers aged 25 or under, minority ethnic families and families with a disabled person.

There is some evaluation evidence to show that people from minority ethnic groups may find it harder to apply for benefits when English is not their first language (evaluation of the FSP^[54] and BSF^[11]). Overall, benefit approval rates were substantially lower for applicants from Asian and African ethnic groups (73%) than White (81%)^[58].

There are also some restrictions on eligibility which may restrict the effectiveness of benefits as a tool for reducing inequalities. For example, reserved immigration policies such as “no recourse to public funds” restrict eligibility for many Scottish benefits. Additionally, multiple Scottish benefits, such as SCP, are linked to UK reserved benefits which means that groups that cannot receive a qualifying, reserved benefit – such as asylum seekers - are therefore not eligible for linked Social Security Scotland benefit^[10].