Scottish Child Payment and the labour market

Background and Outlook

14. SCP is a weekly payment to low income parents and carers of eligible children aged under 16 on qualifying benefits^[2] and is one of the Scottish Government’s “Five Family Payments”, alongside Best Start Foods and Best Start Grant (Pregnancy and Baby payment, Early Learning Payment, and School Age Payment).

15. SCP was introduced in Scotland in February 2021 as a measure to tackle child poverty and paid at £10 per week per eligible child aged under 6. It was increased to £20 per week per eligible child in April 2022. Eligibility was extended to include children aged between 6 and under 16 in November 2022 and its value increased to £25 per week per eligible child. As of April 2024, SCP is paid at £26.70 per week per eligible child.

16. At the end of March 2024 the families of 329,055 children across Scotland were in receipt of SCP^[3]. This equates to over one third of the population of children aged under 16 in Scotland. All families in receipt of SCP must be receiving a means tested benefit.

17. The Scottish Fiscal Commission (SFC)^[4] expect the number of children receiving SCP to gradually rise to 332,000 children by 2026-27, before gradually falling in subsequent years. This reflects a forecast steadily declining child population and eligible SCP pool in Scotland combined with a broadly stable take-up rate (the proportion of eligible clients who go on to receive their benefit).

18. In 2024-25, around £460 million is expected to be spent on SCP^[5]. This reflects a significant re-distribution of income from the general taxpayer to low income households with children. Analysis published by the Scottish Government in March 2024 highlighted the economic boost spending on social security payments can provide to the economy^[6].

19. As of April 2024, families in receipt of SCP could expect to receive almost £1,400 per year for each eligible child (£26.70 per week), with no limit on the number of children who can receive the payment in a family. By the time a child reaches 16, SCP could have paid over £22,000 (in current prices) to an eligible family, rising to around £25,000 (current prices) when including the other Five Family Payments.

20. This reflects a significant financial investment in low income families with potentially longer term returns. Positive impacts on health and wellbeing, particularly from interventions when children are at a young age, can result in less public sector expenditure in future^[7].

21. Analysis published annually^[8] by the Scottish Government suggests the vast majority of families entitled to SCP go on to get it. SCP was paid to the families of around 95% of eligible children aged under 6 in 2022-23. Although comparable estimates of take-up for children aged 6 to 15 are not yet available (an estimate for 2023-24 will be published in Autumn 2024) take-up is estimated to be lower for older children and was around 77% in March 2023. However, these take-up rates are expected to converge over time, as set out in assumptions made by the SFC^[9].

22. The impact on families of receiving SCP and its overall impact on poverty in Scotland has been praised widely by stakeholders. In evidence provided to the Scottish Parliament as part of the 16^th meeting of the Social Justice and Social Security Committee in May 2024, Professor Danny Dorling of the University of Oxford said “Given that the money is so well targeted, and because it is not tapered and families do not lose other benefits because of receiving the payment, the effect in taking children above various poverty thresholds should be very great indeed”. Professor Ruth Patrick of the University of York said “I honestly cannot imagine a better use of the funds. It is an excellent resource investment.”^[10]