Scottish Child Payment: Business and Regulatory Impact Assessment

Options

The TCPDP sets out the range of actions being undertaken to reach the child poverty reduction targets set out in the Child Poverty (Scotland) Act 2017. If no actions were taken, it is estimated that one in three children in Scotland would grow up in poverty by 2030, damaging society and the economy^[16].

The Analysis of Options for the Income Supplement^[17] report considered the best means to meet the objectives set for the SCP (see above). This led to the development of five policy options:

1. Child Benefit based entitlement (£10 a week per child)
2. Universal Credit based entitlement (£10 a week per child)
3. Universal Credit based entitlement, with higher payments for targeted groups (£10 a week per child)
4. Entitlement through a means-test unrelated to any existing benefit (£10 a week per child)
5. Council Tax Reduction based entitlement (£45 a week per child)

Detailed policy modelling was undertaken to analyse the potential policy costs and impact on poverty, and thorough consideration was given to the simplicity, consistency, potential take-up and the impact on employment and earnings related to each option.

Several policy options were found to have similar impacts and costs – these included the Universal Credit based options and setting up a payment with its own means test based on income (options 2-4). These options were also found to strike a balance between 'coverage' (i.e. reaches the greatest number of children) and 'targeting' (i.e. reaches the greatest proportion of those in poverty). The two remaining policy options either offered better coverage but substantially reduced targeting (Child Benefit based entitlement) or vice versa (Council Tax Reduction based entitlement). This ruled out Options 1 and 5.

Options 2-4 were considered, with the timeliness of delivery now a key factor given the urgent need to tackle child poverty. Option 4 (building a means-tested benefit) would have taken 2-3 years to develop and would have been highly resource intensive and complex to introduce alongside the existing programme of devolved benefits. Option 4 was therefore ruled out. Option 2 was determined the best option as it allowed for the SCP to be built using the existing infrastructure in place for the Best Start Grant including eligibility, data feeds and functionality.

For more detail regarding the options analysis see the Analysis of Options for the Income Supplement and the first Scottish Child Payment Position Paper.

Policy Benefits

The SCP is being delivered early for families with children under 6– recognising that, of all children in poverty, almost 60% live in a household where the youngest child is aged under 6^[18]. The early years are key to improving long term outcomes with socioeconomic differences having implications in later decades^[19]. The options analysis and policy development have demonstrated that the SCP is the best option to tackle child poverty quickly. The additional income will benefit the priority groups identified in the TCPDP: lone parents; disabled people; large families; minority ethnic groups; children under 1; and mothers under 25. The suite of impact assessments accompany the SCP and go into further detail regarding the policy benefits.

Sectors and groups affected

The SCP was created to reduce child poverty levels across Scotland. The benefit is targeted at low income families and families living in poverty, this includes marginalised and seldom heard groups. It is envisioned by giving families additional funds, which can be spent on any number of essential or non-essential items such as food, childcare, travel etc., that there will be a positive effect on wellbeing within deprived communities. This could further extend to money being spent in local economies thereby creating a more stable environment for businesses. The expected expenditure on the SCP will be set out in the SFC forecasts which can be found here.

A further positive economic impact will be the creation of employment opportunities with Social Security Scotland as a result of the SCP. To date, nearly 200 members of staff have been recruited.

Eligibility

The early introduction of the SCP will be available to all families in receipt of a qualifying benefit with a child under the age of 6. Once fully rolled out eligibility will widen to those with a child under 16. Given that we are delivering the SCP before UC migration will have completed, eligibility has been extended to families in receipt of other benefits. The qualifying benefits will be:

• Child Tax Credit
• Universal Credit
• Income Support
• Pension Credit
• Working Tax Credit
• Income-based Jobseeker's Allowance (JSA)
• Income-related Employment and Support Allowance (ESA)

There is a 12 week period during which people would stay on Social Security Scotland's systems and would not have to reapply for the SCP, instead they can notify Social Security Scotland if they subsequently came back into a qualifying benefit or child responsibility benefit entitlement.

Payments

Payments will be made to clients in receipt of a qualifying benefit, at a rate of £10 per week, paid every 4 weeks in arrears. There will be no cap on the number of children that can be claimed for.

Application process

We have committed to a multi-channel approach for SCP as with the other devolved benefits with applications taken online, over the phone or on a paper form. In addition, local delivery is the face to face channel of Social Security Scotland, providing pre-claim support to clients accessing the Scottish benefits system.

Entitlement to other Social Security support

It has been agreed with the UK Government through the Fiscal Framework that any new benefits or discretionary payments introduced by the Scottish Government, which provide additional income for a recipient, will not affect their entitlement elsewhere in the UK benefit system.