I’ve lost track of the number of times I’ve mentioned the Scottish Child Payment to colleagues and friends based elsewhere in the UK (even some involved in public policy work) and been told they’ve never heard of it. The next reaction when I describe the level and scale of this initiative is, “Wow! That’s big!”. It is indeed.

How it works

For those unfamiliar with this new payment to low income families in Scotland (broadly those in receipt of Universal Credit or similar), here are some headlines and a brief timeline:

• First payments began in February 2021 at the rate of £10 a week for each child under 6.
• Doubling of the payment to £20 a week per child was announced in November 2021 with payments at that level starting from April 2022. (In advance of the expected extension of the eligibility to under 16s, a system of bridging payments was put in place for children between 6 and 16 – in effect advancing the formal roll out)
• Payment increased to £25 a week per child and eligibility was formally extended to under 16s in November 2022.

Why it matters beyond Scotland

What makes the Scottish Child Payment remarkable and worthy of more debate inside and outside Scotland? And why does it matter beyond Scotland?

1. Financial Impact for families

The numbers above bear repeating. If you are a low income family in Scotland, on top of UK child benefit and any other benefit you can receive £25 per week for each child under 16. There are no limits to the number of children an eligible family can claim for.

To get a sense of impact for a typical family, a family with three children will receive £3,900 a year. That’s a significant addition to a low income household. And it’s each year and every year, not a one-off boost. At a societal level, modelling puts the impact on child poverty rates at a reduction of around 5%.

2. Coverage for more children

When the payment began in 2021, Social Security Scotland estimated it was being paid for 106,000 children. With the extension to under 16s, around four times more children could be covered.

The Scottish Fiscal Commission (SFC) produced costings estimates when the extension to the scheme was proposed, calculating that around 41% of under 6s and 48% of over 6s would be eligible. This translates roughly into an estimated 400,000 children being eligible (with actual coverage dependent on uptake).

The latest statistics just published by Social Security Scotland show payments are being made in respect of just over 316,000 children.

3. Anti-poverty action at scale

This is a fiscal anti-poverty intervention at scale, not a small tweak at the margins. Earlier this year, the Institute of Fiscal Studies produced some budget analysis for the Scottish Parliament during budget deliberations showing that tax and benefit changes are in effect a significant transfer from richer households to poorer households with children. Graphics in their published paper, Analysis of Scottish tax and benefit reforms, are well worth a look.

4. Cost

The SFC costed the Scottish Child Payment for 2023/24 at £405m. The recent actual figures for Q1 23/24 published by the Scottish Government confirm this scale with £104.1m spent in the quarter. To help put these figures into context for readers elsewhere in the UK, a very rough guide is to multiply by 10 to get an idea of an equivalent whole of UK scale – so such an initiative covering all the UK might be in the order of £4.2bn.

5. Consensus on cash transfers

Both the introduction of the Scottish Child Payment and its increase to £25 per week per child has been marked by a pretty strong level of political and cross-party consensus.

Indeed, some of the challenge that the Scottish Government received (and still receives) in debates was along the lines of why not go further, faster, why not increase the rate beyond £25?

That there is consensus around the idea that child poverty is a bad thing is not surprising; that there is agreement that direct cash transfers to families are an important part of the answer, and affordable, is more remarkable.

6. Tone of the debate

coverage and discussion around the payment have been mercifully free of language around “handouts” or whether people are “deserving” or not.

When cash transfers first began to be adopted in an international aid setting, concerns about whether poor people could be trusted to do sensible things with cash were never far away. The evidence since has shown pretty consistently that given cash, people in poverty use it well. (The Overseas Development Institute (ODI) has published a great review of the evidence around cash transfers, Cash transfers: what does the evidence say? | ODI: Think change.

The impact of Scottish Child Payment

What do we know so far about the impact of the Scottish Child Payment? Does the evidence suggest that it is going to have the impacts the Scottish Government expects?

Interim evaluation

The only published evaluation I’ve seen so far (please send links to any others if you know of them) is from March 2022: the interim evaluation published by the Scottish Government. It was conducted early in the life of the Scottish Child Payment and therefore necessarily focused on the immediate and short-term outcomes, and critically, refers to the period when the payment level was at £10. Nevertheless, it provides some interesting glimpses and areas for deeper exploration.

There was broadly positive evidence supporting some of the short-term outcomes: reduced money-related stress, increased child-related spend, children able to participate in social and educational opportunities and reduced pressure on household finances, with less clear evidence for an improved position of main carers within households.

The findings on children’s opportunities and stress are really interesting. Finding out whether and how cash transfers can support better learning outcomes for children rather than just having a direct impact on material poverty is one of the big questions for cash transfers policies. And we know that persistent stress can have a pervasive impact on long-term health.

Recipients' experiences

These two quotes in the interim evaluation are compelling and provide a glimpse as to how this might be impacting:

“[Scottish Child Payment] did lessen my worries quite a lot to be honest. Money's the one thing I'm always stressing about, always thinking about, always worrying about. It was a relief to have that extra boost. (Parent 22, age 18-24, care-experienced, 3+ children)

[Scottish Child Payment helps with] not having to stress out because you know it’s coming. When I get stressed, I don’t sleep. I don’t deal well with stress. I don’t want the kids to see me stressed. (Parent 18, age 25-34, single parent)”

Will these findings still hold at the higher level of £25, under the changed economic context and even sharper cost of living challenges?

Interaction with tax & benefits system

The interim evaluation includes lots of detail around the application process and uptake. As a “passported” benefit (that is one that you’re entitled to because you already receive another benefit), applications should be more straightforward and administratively less costly than standalone benefits.

However, this also brings with it often complex interactions with other parts of the tax and benefit system and a particular challenge for policy makers when different parts of the tax and benefits system are owned and delivered by different governments; understanding the implications of these interactions – the potential for cliff edges or disincentives to employment for example – will be important.

Invest in evaluation

Currently, Scotland is the only part of the UK with this system. For policy makers, differentiation of policy creates a precious opportunity to find out what works, to learn from the experience of implementation and to better understand how best to create the changes we want. There are other ways to learn of course as well. Randomised Controlled Trials (RCT) are often seen as the gold standard.

Nesta is considering the value of RCTs in this area and we are also keen to look at what we can learn from Scotland.

We only learn if we invest explicitly in learning – putting in place the impact evaluations, gathering the data, quantitative and qualitative, listening to the stories, testing out our assumptions, doing high quality research. Few policies work in practice exactly as we intended at the design stage – and sometimes they don’t work at all to produce the change expected. They can evolve and improve based on experience.

At a recent event in Edinburgh, Professor Danny Dorling described the Scottish Child Payment as the single policy intervention that has created the largest fall in child poverty anywhere in Europe for at least 40 years.

Impartiality runs deep in the soul of a longtime civil servant so I am not writing this paper as an advocate of the Scottish Child Payment, important though it will be to the many thousands who receive it, but as a call for us all to invest in learning about what works in tackling child poverty and inequality and to debate these issues throughout the UK with evidence, humility and an open mind.

This blog was originally published by the David Hume Institute and republished with kind permission.