Social Justice and Social Security Committee [Draft]

Meeting date: Thursday, May 23, 2024

Official Report 679KB pdf

---

Scottish Child Payment

Our next item of business is the first evidence session as part of the committee’s short inquiry into the effectiveness of the Scottish child payment in reducing child poverty.

We will hear today from academics from a number of universities and from a representative of the Institute for Fiscal Studies. I welcome Ruth Patrick, who is a professor of social policy, and Emma Tominey, who is a professor of economics, both from the University of York, and I thank them for attending. We are joined online by Danny Dorling, who is the Halford Mackinder professor of geography at the University of Oxford; Tom Wernham, who is a research economist at the Institute for Fiscal Studies; and Dr Juliet Stone, who is a research fellow at the centre for research in social policy at Loughborough University. I thank them all for accepting our invitation.

I will make a few points about the format of the meeting before we begin. Please wait until I, or the member who is asking a question, say your name before you speak, and do not feel that you have to answer every question. If you have nothing new to add to what has been said by others, that is okay. I ask witnesses who are joining us online to allow our broadcasting colleagues a few seconds to turn on your microphone before you speak. You can put an R in the Zoom chat box to indicate that you wish to come in on a question. I ask everyone to keep their questions and answers as concise as possible.

We now move to questions. The first theme is on the impact that the Scottish child payment has had on poverty. I will direct my question to Danny Dorling in the first instance, but if anyone else wishes to come in, please do so. What do we know so far about the effectiveness of the Scottish child payment in lifting children out of poverty?

We are still waiting for definitive answers. Those will depend on official surveys such as the family resources survey, which is used to produce the households below average income data set, which is released every March and covers the financial year that ended in the previous March. The effectiveness of the payment will therefore become clear during spring next year.

However, we know already that uptake of the extra benefits is pretty high and that the payment is incredibly well targeted. It is easy to produce a simple model by looking at the distribution of families with children in Scotland and the income that they have, as recorded in surveys from previous years, and then applying the uplift to work out what the effect should be. 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.

I echo Professor Dorling’s comments about waiting for the quantitative evidence base, but I encourage the committee and all of us to recognise that we can also look at the qualitative evidence base. We can talk directly to parents and carers in Scotland and ask them, “What impact is the payment having? What difference is it making? How are you living? How is this extra money changing how you make decisions about what you can and cannot do for you and your family?” That can be done in real time, so I encourage that level of inquiry. There is an inevitable time lag with a statistical data set, but we can speak directly to parents right now to find out the impact that the payment is having.

That is very helpful.

To follow up on what Dr Dorling said about the quantitative monitoring of the effect of the Scottish child payment, we probably need to find alternative ways of doing that, because, as members might be aware, there were some issues with the data in the family resources survey. There is a very large undercount of universal credit claimants in the FRS, which is not explained by people underreporting having universal credit. Obviously, because that is linked to eligibility for the Scottish child payment, it affects how we monitor the situation, so I would argue that we should look for alternative ways of monitoring. For example, that could be done through the children in low-income families data, which is currently calibrated with the households below average income data. I have had some conversations with the Department for Work and Pensions about that. That would take on those same issues, but in a slightly different way.

I just want to flag up that there might be other, better ways of monitoring the success of the policy.

You have touched on my next question, which is on the extent of the limitations of the poverty statistics and the impact of that. How might such issues be resolved?

I hope that the children in low-income families data set that I mentioned will provide a more robust way of monitoring child poverty. I argue that the DWP should focus on trying to improve those statistics, because there are particular issues with the regional estimates, which, obviously, is a big issue for Scotland. Trying to improve the representativeness of those data is key, but linking administrative data will be important in the future. HM Revenue and Customs and the DWP already link some of their records, but more could be done on that.

I echo the concerns about the limitations of the official poverty statistics and the family resources survey—the FRS. The plans that are in place to link that survey to administrative data in future years might mitigate the issue to some extent. That will deal with the underreporting element, because we have to observe universal credit claimants.

I do not know whether there are plans for the DWP to receive data from Scotland on whether the Scottish child payment has been applied for, but it seems very important to make sure that that happens. Those plans will not help with representativeness per se, but they will look at weighting the survey better once the link to administrative data has been made, which might help.

I add that it will be valuable to have better regional information. Bringing in more data sets will be useful.

I want to make another conceptual point. With the Scottish child payment, it is not just about focusing on the binary measure of whether people are in poverty. The Scottish child payment will have significantly increased the incomes of people who are well below the poverty line, so even if it does not bring them past the poverty line, alleviating the depth of poverty will still be an achievement of the payment. That needs to be taken into consideration.

A fuller look at the impact across the income distribution can sometimes be more valuable than simply looking at whether somebody is in poverty. Poverty is a useful summary measure and it is helpful to have those targets, but the poverty line is drawn fairly arbitrarily, so it is useful to have a fuller picture of how much income people have and how that is changing as a result of the payment.

I agree with everything that everybody has said. I will add two points.

First, on the arbitrariness of the poverty line, when a very large number of children were tipped over that line at the start of this century and things were said to improve, the tipping was such a small thing that we did not see, for instance, the physical condition of children improve. They began to become stunted and grow shorter even as they supposedly came out of poverty, because people were not looking at the overall distribution—they were concerned only about that one line.

That looks increasingly like a grave error, because it was around 2005 when the stunting of children across the United Kingdom began to increase. That is a graphic reason why you should not concentrate only on the poverty line—if you do not want your children to become physically shorter, you need to think a bit more widely than the poverty line.

On the problems with the FRS, the Department for Work and Pensions reduced its funding for the survey, so the Government made it worse deliberately. That needs to be said. Furthermore—this is less the Government’s fault—the pandemic made it difficult to collect the data, which means that we often go back to 2018 or 2019 to make comparisons.

Secondly, you have to be careful that improving the quality of the surveys, which I hope will happen in the future, does not mean that you think that things have got worse, because you are including people in the surveys who were not included previously. You have to consider not so much the biases in the survey but whether the biases are changing. If the surveys exclude the same proportion of people over time but show an improvement, there might well really have been an improvement even though the quality of the survey was not good.

None of that is too difficult to be done, as long as those who are in charge of doing it, and in charge of the secure data, genuinely want to know what has really happened. In the country—by which I mean the UK—with the biggest rise in child poverty among all countries in Europe, according to UNICEF, that should be our absolute priority.

From the point of view of social scientists, looking at the differences in what is occurring in Scotland in comparison with what is occurring in the rest of the UK is a stunning social experiment—although I should not refer to it in that way, because we are talking about people’s lives, and it is terrible. Nonetheless, the attention of social scientists from across Europe should be on what is happening in the UK and on what policy can do and has done. That is not least because UNICEF, in its Innocenti report in December at the end of last year, showed how much the UK stands out like a sore thumb for having not only high levels of child poverty and deprivation but the biggest increase in poverty out of every country that was surveyed around the world.

That is really interesting.

I want to push a bit more for the link to administrative data. In Scandinavian countries, if they want to measure the impact of policies or measure poverty, they have a link to administrative data. In Scotland, it feels that the infrastructure is there, because a lot of administrative data have been linked, but there is not that final link to social security data.

If we had that link, we could, for example, look at the population of Scotland and the same families across time. We would see the impact that the introduction of the Scottish child payment has had on households. That is in huge contrast to the FRS, which takes a cross-section approach with a different set of households. Whether it is to understand the proportion of children who are living in poverty or whether it is to dig deep to understand the consequences for the labour supply or for education, the link to administrative data would allow us to explore in depth the effect of the Scottish child payment.

09:15  

Thank you. Before I move on to the next theme, there is something I want to touch on, and I do not know whether any other member wants to come in on this. I do not know whether you are aware of the recent modelling that was carried out, through funding from the Trussell Trust, on the impact of the Scottish child payment on the uptake on food parcels. There has been a significant reduction for some age groups, which is a good thing. While we are touching on data, does anybody want to comment on that and any further modelling that could be done to see the impact on—ultimately, a reduction in—the uptake of food parcels?

That is good to see. It is not surprising. As we have touched on, the Scottish child payment is a significant investment in children and in the lives of families with children, so the fact that it has a consequence for food bank use is not surprising.

On the second part of your question, about what more we need to do and what more data we need to generate, I and Emma Tominey and colleagues at the London School of Economics and Political Science and the University of York desperately hope to get off the ground some research that looks at the impact of the Scottish child payment from a comparative perspective. To follow on from what Danny Dorling said, this is a very rare opportunity within social security policy and social policy to say what difference the payment is making. We can ask what the difference is between the experiences of families with children in England who do not receive the payment and the experiences of families in Scotland who do.

That is important for loads of reasons and not just because I really want to do the work. It is especially important because the policy has been rolled out against a difficult and particular socioeconomic context. We are all completely aware of the cost of living crisis and of UK policy decisions such as the two-child limit. Presumably, those interact with the Scottish child payment policy in interesting and difficult ways. If we are to understand what difference the policy is making, we need to dig deeper. Doing so from a comparative perspective will be helpful.

Danny Dorling would like to come back in.

I have no vested interest, but it is worth getting it on the record that the key potential funders for such research work—which I would not be involved in—are the Economic and Social Research Council, the Nuffield Trust, the Wellcome Trust and, possibly, the Joseph Rowntree Foundation. If they do not think about this now, and step forward now, it will be too late to do such studies, which are in the direct interests of families and young people in the UK and could help to tell people worldwide what can be done with a relatively small amount of money for a potentially very large impact.

If those bodies, which are deciding their research priorities over the next 12 or 24 months—in particular, Wellcome, given that child mortality is now rising in the UK—do not decide to fund very serious studies that deal with the complexity of the situation and help to show the answers, social science will lose the ability to monitor the effects of the policy for wider interest in Europe and around the world. The UK’s terrible situation allows others to see what can be done. Other parts of Europe are almost as poor as the UK, as are many other parts of the world.

There is a wider reason for wanting to do the work, which does not have to be just quantitative. It would be such a shame for it not to be done now and for us, years later, to look at the records of children’s heights and say, “Oh! Something dramatic happened at that point: children in Scotland began to grow taller again,” which would be lovely. However, it is frustrating that, as far as I know, the major funders of research have not stepped forward as far as they could have done to look at that. We are in a period of purdah, so they cannot say anything at the moment but they could be thinking about it and they could act very quickly after the general election.

I want to pick up on something that Danny Dorling said. If it would be a very lengthy answer, maybe he could write to the committee instead. He referred to 2005 and the stunting of children’s growth at that time. Given that that was when tax credits were being brought in and a lot of money was being targeted to some of the poorest families—particularly working families—and there were very significant reductions in child poverty, it would be helpful to have a better understanding of the point that you were making, Danny.

I would be very happy to write to the committee. The key thing is that that stunting of children’s growth only just began around 2005. It was obvious by 2010 that, across the UK, unlike in the rest of Europe, children were not growing. The Government, between about 2005 and 2010, did a lot of saying how great its success was on child poverty, but it was concentrating on that one action of tipping children from just below to just over a line. Children and their families would hardly feel the effects of that and, sadly, we saw the truth of that in the decline in the heights of children, which began then and has got much worse since. It is a kind of political headline figure of, “Look—we’ve done this.” This is unfair to China, but it was always referred to as the Chinese technique of saying, “You’ve moved so many people just over a line—haven’t you done well?”

What really matters is to take families who are in deep poverty out of the deep poverty. They will still be poor, but their situation will be much better. That was not included in the target for the new Labour Government at the time. It also really matters to improve the lives of families who are just above the poverty line so that they do better as well, and that was not in the new Labour target.

In hindsight, we have not examined that period and looked at the ways in which that approach failed, not least in that the economic inequality between families did not alter one iota in the years from 1997 to 2010. That really matters because, if you do not improve things, it is much easier for Governments that come in afterwards to cause greater damage.

The UK child poverty story is utterly appalling in comparison with every other country in Europe, and all political parties and policies are partly to blame. We have to step back and say that that really is a monumental failure. When we look at the Innocenti report of December of last year, we can see that we need to step back and say that it happened over so many years with so many different regimes in charge and that, although they differed—some people’s hearts were more in the right place than others—the overall effect on our children, which will be for the rest of their lives, was terrible, and that that was a failure.

Tinkering around and slight point scoring by political parties is not going to be enough. We should learn that from what has happened to date, rather than say that the record was so great at a time when we know that the physical effects on children, of the situation they were in, has resulted, unlike in other countries in Europe, in the stunting of our children at a time when we were celebrating supposedly taking them out of poverty.

There was a similar occurrence in the United States. We were behaving more and more like the United States and not like other countries in mainland Europe.

I will echo what others have said about how we monitor both the effects of the Scottish child payment and children’s wellbeing more generally.

It is called a child poverty strategy, but focusing just on that arbitrary line is not really enough. We definitely need a more holistic approach that looks at things such as educational and health outcomes for children, or we will be taking a very narrow view of the effects that the Scottish child payment could have.

I will leave it there. I just wanted to echo what others have said.

The next theme is monitoring and evaluation. I invite Paul O’Kane to come in.

Good morning, panel. Following on from the earlier theme, I am interested in monitoring and evaluation. We have covered quite a lot of that already, but I would be particularly interested to hear the panel’s views on the Scottish Government’s modelling of the impact of the child payment.

The Government uses a model that looks at a counterfactual scenario, in which certain policies do not exist, and then makes a comparison. On that basis, the Government concludes that the Scottish child payment is keeping 60,000 children out of poverty. The figure of 100,000 children is also mentioned and there seems to be an interchangeability between the ideas of keeping children out of poverty and lifting them out of poverty. Given what was just said about the need for more quantitative data, it might be useful to allow more time to elapse so that we can understand that better. What is your view of the Scottish Government’s modelling and of the figures that it has arrived at?

As Ruth Patrick said, the comparison is really important. We need to think about the aim of the Scottish payment. If you look at families in Scotland during the cost of living crisis, it could be that the Scottish child payment enabled households to cope with rising living costs but that families in England and the other UK nations were less able to cope with rising costs. It is important to make that comparison because, without it, we will underestimate the effect of the Scottish child payment. It might look as if there is not that much effect and as if not much is happening in Scottish households, when you are actually really helping households to stay out of poverty.

You asked about monitoring. The international evidence shows that cash transfers have profound effects on a range of outcomes for low-income families. As Juliet Stone said, the effect is felt not only on poverty. There have been studies of children growing up in United States households where a cash transfer was received through earned income tax credits. When they become adults, those children earn more money and there is a change in social mobility.

I emphasise again that we should focus not only on poverty statistics. We should try to understand what is happening in the short term, when we would expect to see financial situations slowly improving and things slowly easing. Across time, households can use that money and we might see a benefit for children, but the real impact on those children will last into adulthood.

We read the Scottish Government’s interim report, which is really interesting, but it is important also to have independent and academically rigorous evidence to complement that. I am sure that a lot of economists and social scientists across the UK will be keen to analyse the data. We can do that by looking at surveys, but there can be problems. For example, the family resources survey from two waves ago showed that 200 households were potentially eligible for the Scottish payment, so that was a really small sample. We need to see improved data across time. I do not want to repeat myself, but the linked administrative data sets exist, and we can analyse that data to understand the full consequence and benefit of the Scottish child payment.

Paul, do you want to come back in?

Does anyone else want to comment more broadly on the Scottish Government’s model?

09:30  

I have been looking at it. It is rigorous, fair and good-quality work; it tends to be careful. One thing to think about is that researchers from other countries in Europe might want to look at it, because it is such an outlier.

When you are studying the place in which you live, you tend to emphasise the complexities of what is going on. If you live in a place, you do not tend to notice successes as much, or you find it hard to talk about them. The Scandinavian Nordic countries, which I think were mentioned earlier, have such good data and results—some of the lowest rates of child poverty and deprivation on the planet—but the research that is done there often talks about the problems, because that is what you have to concentrate on if you want to make things better.

If we were open to allowing researchers from other countries to look at some of our records, it would be interesting to see what they would find and say from a view that was dispassionate in a different way. I was recently at a conference in Paris of people who study England, and it was shocking to hear the place in which I live being discussed as a kind of experiment, without the emotions. It was quite chilling in one way, but also quite instructive to be told, “This is what’s happening,” and to hear it from the point of view of somebody who was much more interested in the facts than the politics.

There is so much to be done. However, let us not think that it will all be done just by people in the UK or in Scotland. The UK is such an outlier now internationally and Scotland is doing such interesting and different things, so there will be people from outside who will want to look at that model.

It is not just that we need to compare with England to see whether the payment has meant that people are able to at least stand still rather than sink, as they have done in England; we also need to compare with families right around the periphery of Europe. The UK is now a peripheral European country in terms of its economy, levels of child poverty and infant mortality—those are the comparisons that we make—but it is possible that part of the UK may have one of the best records on policy in the periphery of Europe, and that matters for people around the continent of Europe.

I am reflecting on Professor Dorling’s answer to Katy Clark on the modelling that looks at a counterfactual scenario and then at how many children are kept out of poverty, and on the point that you have made about the poverty line and the temptation, I suppose, for Governments of all colours to engage only at the level of having kept children above that line. Could that temptation happen in this context as well?

It is complicated. It is not just about being kept out of poverty and that being such an advantage. If a state does well—Finland is a great example—then you encourage people in. In Finland, the second city is celebrating a population of more than 200,000 and growing. You encourage people into the country whose children do well. You also do not lose families, because you do not have families who are poor and leave in desperation. Migration matters. Who decides to come? How well do they do? Who decides not to leave? Do your cities manage to do well rather than suffer huge population losses, which were on a great scale internationally in Scotland in the 1970s and 1980s?

With migration, it is counterfactual after counterfactual. Who decides that they can have a child? If people are so poor that they decide that they cannot have a child, you do not have a child born into poverty, but that is not necessarily a success. I am sorry to do the standard social science thing of saying that it is a bit complicated, because it is not that complicated—we can understand the situation of people who feel that they are too poor to have children. Teachers in Oxford, which is the city that I live in, cannot afford to have children. That really matters. Although they will not show up in a poverty statistic, you have to think about those issues as well.

What you are trying to get, in my view, is a society where people can have children and where those children are not suffering terribly. Those kinds of societies exist across this continent: 15 countries, including France and Germany, are now as equal as the five Nordic countries in terms of income inequality. We can look at what is possible, but it has wider effects than just the counterfactuals.

The last example that I will give you is the success of Germany. Germany now includes a large number of children who were born abroad, who are war refugees. For a few years, the average height of children in Germany fell ever so slightly as those war refugees were allowed in; now, it is rising. The UK looks like a country that accepted huge numbers of war refugees. Although we did not do so, from what has happened to the heights of our children, we look as if we did.

With counterfactuals, you need to consider many things, one of which is out-migration and in-migration, with questions such as who decides to live in, or leave, our cities, who is able to have children and, when they choose to do so, what the circumstances are in which they can have them.

Ruth Patrick would like to come in, and then Tom Wernham. Could you make your answers as brief as possible? I am conscious of the time and we still have quite a lot of questions to get through. Thank you.

I will try to be super-brief.

Obviously, it is complex; it is a difficult picture. Although we do not want to fixate on the poverty line, it is still valuable to keep track of that. It is important to recognise that the Scottish Government is the only Government in the UK that has those poverty targets and is working in that way. I would just caution against throwing out the baby with the bath water. Things are, indeed, happening alongside it, but keeping an eye on what is happening with poverty is important.

I work with Kitty Stewart and some colleagues on examining what happened to poverty rates across the new Labour period and post-2010. Almost all the changes in the poverty rates were driven by changes in social security, so social security is an important lever here. What is also very important—it kind of follows on from something that Danny Dorling has said—is that the changes in child poverty are happening around larger families in particular. We are talking an awful lot about what happens, and what different social security transfers do and do not do, for families with three or more children. That really matters.

That is why the Scottish child payment is, again, a really well-targeted policy. It is saying, “Let’s look at families’ needs.” We know—as a mother of four children, I know—that, if you have four children in the house, they have a lot of needs. At the UK Government level especially, we have seen the divorcing of the relationship between need and entitlement. The Scottish child payment is a way of correcting that, as it is saying, “We know absolutely that, when there’s a child in this household, that child has needs, and we’re going to help you meet those needs.” That is important materially and symbolically, because what you are saying is that those children matter, that they count and that you want to do something about them. That is a welcome and vital element of the policy.

I will be very quick. I reinforce everything that everyone has said about the importance of administrative data and of making those comparisons, and about the complexities of the issue, in that it is not as straightforward as just looking at income, because there are other effects.

I want to highlight a couple of easy improvements that could be made to how the modelling is presented. We have talked about poverty being an arbitrary line and so on. It would be better if the Scottish Government published how incomes are changing across the distribution—this many pounds to the poorest 10 per cent, then to the next 10 per cent, and so on—to get a fuller picture. Those are the sort of things that we put out at the IFS previously; it helps not to get fixated on the binary measure, which is easy to do.

Even within the survey data that we already have and not relying on new data, there are other outcomes that can be considered, such as measures of whether families are keeping up with their bills and whether they are feeling that they are suffering food insecurity and so on. It would be valuable to see whether we can observe trends in those things over time for families with children—in particular, for those families that are not captured by the Scottish child payment but in which children nonetheless still live in a household that suffers deprivation—along with other measures. Easy wins could be had by making fuller use of the data that is already going into the modelling.

That is very useful. Thanks very much.

Bob Doris would like to ask a supplementary question, after which I will bring in John Mason.

I will be brief. First, I thought that Professor Patrick gave an eloquent narrative on the two-child cap without actually mentioning it. It was a more eloquent one than any politician has given, and I thank her for putting that on the record.

My question is on the relationship between targets and monitoring. The Scottish Government modelling work that Mr O’Kane mentioned showed a fall in relative child poverty levels in Scotland from roughly 26 per cent to 19 per cent. However, the discourse on that was about the target being 18 per cent. The benefit of the progress that had been made seemed to dissipate and be lost among the discussion of lived experience.

Professor Patrick spoke about monitoring and comparing evaluations between Scotland and the rest of the UK. I represent Maryhill, but I am also interested to know what is happening in Merseyside and which factors make a difference there. It would be helpful if Professor Patrick could say a little more about how we could do that.

Professor Dorling mentioned how significant comparisons could be made by considering those issues across Europe, too. I hate alliteration, but I have already mentioned Maryhill and Merseyside, so I might want to know what is happening on child poverty in Marseille, for example. What are European nations doing, and how could we learn from each other? I ask Professor Dorling to say who could commission such work. If the Scottish Government were to do so, it could be accused of not being impartial in that process. If the issue is so significant that learning about it could benefit public policy, we would want to see robust independently led academic study not just in the UK but beyond it. I am sorry; I hope that that is brief enough.

It is hard to be brief in response, because lots could be said.

First, your point on the response to missing the target reflects our earlier discussion about people pushing for more and better in the places where they live. That is the right kind of push. It is very positive to talk about an ambition to eradicate child poverty in Scotland and to put children at the centre of a policy agenda. Therefore I would encourage people not to be disheartened by that push. I know that the anti-poverty sector in Scotland has made good and sound calls to increase the Scottish child payment.

As for what we do, and how we understand it, again, it is hard to be brief, but I will try. It is worth saying that I am not a statistician. I understand statistics, but my evidence base is qualitative, so it is more about speaking directly to parents and carers. A funding application for our next piece of work is currently being considered, and we hope to have good news on that before too long. We propose to talk directly to parents and carers in Scotland and England to understand what is happening on the surface: what people’s day-to-day lives are like; what difference the money is or is not making; and how the policy intersects with others. In relation to your constituents in Maryhill, the issue is recognising the difficult interplay between policies and decisions that are made at UK level and thosethat are made by the Scottish Government.

One of my recent pieces of work explored the impact of the benefit cap and the two-child limit on families with three or more children. In Scotland, you are now mitigating the benefit cap but, unfortunately, people here have been affected by the two-child limit. The interplay between those policies means that, in some cases, the support that is provided by the Scottish child payment just helps to cover the losses that have been created by the two-child limit, which is an unfortunate state of play.

It is also worth mentioning the methodology for our work on the two-child limit and the benefit cap. We carry out what is called qualitative longitudinal research, in which we follow families over time. We often follow quite a small number of families, but we return to them to get a dynamic picture of what is happening in their households and how their lives are being lived against a policy context that is also changing. Doing that work is so important.

I have said this already, but I will say it again briefly. We need to speak directly to parents and carers. One of my other policy agendas is about trying to emphasise whose expertise counts. I love being invited to speak to this committee, as do my colleagues, but many people in Scotland have direct expertise of the Scottish child payment because they are in receipt of it. I work with people through a project called Changing Realities. You could invite them to the committee and ask them what difference the payment is making to their lives. Testimony and the kind of expertise that comes from experience is important, and it would help with policy decisions.

09:45  

I am going to ask about targets. I think that 26 per cent of children are living in poverty at the moment, in Scotland, but we are meant to be hitting a target of 18 per cent by 2023-24 and 10 per cent by 2030-31. You have all said that the picture is much more complicated than that, but in politics that is the only number that matters, because it is the only one that politicians talk about. Based on that statistic, it appears that the Scottish child payment has not had a huge impact. Dr Stone, you talked about not having a narrow view, but politicians do have a narrow view. How can we tackle that?

It is difficult to know how we can change that view, because it is so ingrained. As somebody who works with statistics, I am quite comfortable with uncertainty, to an extent. Twenty-six per cent is an estimate. The number of children in poverty has not been counted, and that percentage is an estimate that is based on survey data. However we do it, and whatever the target is, there will always be uncertainty about the number. That message is difficult to get across because, as you said, people want a fixed number. We come across that issue all the time when we try to communicate and disseminate research of this kind—people want an exact number. As a researcher, I am often reluctant to give a number. However, I am not quite sure how we can change that view.

If we want a number, we should possibly not rely on only one source. We talked about the issues with the FRS statistics, and I will reiterate what I said before: we should not rely only on them. Yes, we want to reach the target, but let us not base the target only on that one data set—which has some problems—when there are other data sources, such as the linked administrative data, from which we could probably get a more robust estimate of the number of children living in relative poverty. It would still be an estimate, but it would be robust.

Professor Tominey, should we be setting targets at all? Would it be better if we did not, and instead just did good work?

It is important to set targets and it is important to have a political agenda. Within the UK, Scotland is distinct in doing that. However, the success of the Scottish child payment cannot be judged on whether the poverty reduction targets have been hit, because the proportion of children living in poverty is determined in part by the social security system and the environment that can be influenced, and it is also determined in part by factors that are out of our control.

We have had a Russian war, the pandemic and a cost of living crisis. Therefore, if the proportion of children living in poverty stays the same, the Scottish child payment may have been very successful, but if the proportion goes up, the Scottish child payment could still have been really successful, because the counterfactual is what would have happened if the policy was not in place. There are political reasons why it is a nice idea to have the target.

Tom Werham suggested taking a fuller look at the impact across the income distribution. It is also possible to produce statistics that are quite easy for the public to engage in and which make it easy to judge the success of the policy, but there has to be a comparison with what would have happened if the Scottish child payment was not introduced. Some analysis is needed to get that comparison, and it is not a simple statistic. If we work hard with the Scottish Government to produce those comparable numbers, politicians could use the data and the public could understand it.

There are ways of presenting the very basic statistic to tell us something different. I started looking at the statistics in the late 1980s, when Scotland had some of the worst rates of child poverty in the UK. Now, according to the simple poverty line proportion, every region in England is worse than Scotland. I am talking about the south-east of England, which does not include London. Even the leafiest, richest part of England has a higher child poverty rate than Scotland does, and England does not have a target. There is a point to having some targets and focus, and to thinking about the issue.

Earlier, there was a question about who would do the work across Europe. Eurostat includes non-UK and non-European Union countries in its work, so considering that would be worth while. It matters, because after Germany reunified, the UK had the biggest geographical inequalities in all of Europe. There are many parts of Europe where people worry about geographical inequalities within the state, and the UK may be the state in Europe that has had the biggest change in geographical inequality in terms of child poverty. Therefore, if there is worry about the peripheral, poorer parts of Italy or Spain, Europe might have something to learn from what has happened in the UK.

We should not say to people elsewhere in Europe that we are the experts and we do not want them looking at the situation because it is all very complicated. Instead, we should welcome the interest, which we are very likely to get, in how that has happened, given that it appeared that Scotland would always have higher rates of child poverty—at least than the affluent parts of England—but now it has been shown that Scotland has lower child poverty rates than all parts of England. That happened before we began to see the impact of this particular policy, on top of what is, in hindsight, an incredible achievement.

Good morning, panel. Thanks for your time this morning. Dr Stone, will you tell the committee your views on what the ways are to help to ensure that all children who are living in poverty are eligible for the Scottish child payment?

Particular groups of children are excluded from receiving the Scottish child payment. I am thinking, in particular, of families with no recourse to public funds. The eligibility criteria for the Scottish child payment are linked to receiving universal credit or child benefit, and families with no recourse to public funds often do not meet the eligibility criteria. They are some of the most vulnerable children in the country, so there needs to be a way to increase the range of eligibility criteria to capture those families.

Of course, there are other families who are probably eligible for universal credit but who are not applying for it. Because of managed migration, we know that the number of families who were on tax credits is much higher than the number of families that have moved on to universal credit. That means that there are families who do not take up universal credit when they move off tax credits. Different groups need to be targeted.

I have had some conversations with people about how they are trying to include such hidden populations within the minimum income guarantee and whether it is to do with providing more access to services. By that I mean that, if a child is referred to particular health services or educational services, that could flag them up as being eligible for the Scottish child payment. That could be one way forward.

I am interested in your written submission, in which you say:

“The Scottish Child Payment ... is for many families simply acting to offset the consequences of UK-level policies that restrict their incomes—most importantly, the two-child limit and the benefit cap. Fully addressing child poverty in Scotland therefore requires action at a UK level as well as at a national level.”

Are you aware of many families who are receiving the Scottish child payment and are also impacted by the two-child policy and the benefit cap?

Yes, many families are in that situation. Echoing what Professor Patrick said earlier, we know that the two-child limit has a devastating effect on the risk of children being in poverty, and that is no different in Scotland. I echo what she said about the fact that the Scottish child payment is going some way to recognising that those children count, but it is probably not going far enough. For example, my colleagues at the Child Poverty Action Group are calling for the Scottish child payment to be increased to £40, and other organisations have also called for cash increases to it, but there needs to be more push to address the issues that are caused by the punitive policies in Westminster. That needs to be part of any child poverty strategy, to try and mitigate those policies in a more profound way than giving cash transfers.

Finally, you will be aware that, in Scotland, we are trying to mitigate the benefit cap through discretionary housing payments. Have you taken an interest in that intervention and its impact alongside the Scottish child payment?

It is a good policy. The only issue with it is the uptake, which is not as high as it should be. The situation has improved, and local authorities are getting better at identifying families that are eligible, but uptake is still reliant on people applying for it, so that could improve.

Increased uptake of all the relevant benefits would be beneficial. Some families are not receiving the Scottish child payment because they are not receiving universal credit, even though they are eligible for it, and there are people who are probably eligible for the discretionary housing payments who are not receiving them. Making sure that everybody who is eligible is receiving what they are entitled to needs to be part of it, too.

Following on from your question about the two-child limit and the benefit cap, along with colleagues at the University of Oxford and London School of Economics and Political Science, I led a mixed-method study looking at the impact of the two-child limit and the benefit cap. We are talking about evidence, and one of the key things that you guys are trying to think through is how to get the evidence on the impact of the Scottish child payment. Asking what the impact of the two-child limit and the benefit cap is asking a counterfactual question. What is the impact when you literally take money away from families with children, and you divorce needs from entitlement?

To people who are interested in engaging with the evidence base, I would say that we have the evidence on the impact of the two-child limit and the benefit cap. Unfortunately, those policies have been with us for some time, and we can see the range and multiplicity of harms that they are doing. As Marie McNair and Dr Stone have alluded to, there will be people in Scotland who are being impacted by the policies, albeit now with the mitigation of the benefit cap.

One of the most difficult things in engaging with that evidence as a researcher who works in the poverty field is that, as I am sure you are all aware, when we talk to families in poverty it is common to hear parents talking about trying to protect their children from the impact of poverty. They will say, “I’ll skip a meal because I don’t want my children to go without,” but what we find with the impact of the two-child limit is that parents are reporting that their children are trying to protect them from the impact of the poverty. They report examples where children are not telling their parents that they need a new pair of school shoes because they know that the money is not there. We have evidence of people being in supermarkets with children telling their siblings, “Don’t ask mummy for that, she doesn’t have the money.” We have to think about the harm that is being done to children by these policies.

With regard to monitoring the impact of the Scottish child payment, again, it is important that we look at the long-term impacts—hopefully beneficial ones—on children. It is also important that we consider the value of childhood. I am Scottish, and I think that we should be a country that wants our children to have good childhoods, and we should be making sure that those families have money in their pockets to pay for essentials and perhaps for that after-school football club. That would help ensure that children have good childhoods, which is absolutely the bread and butter of policy making, I would say.

I am interested to hear more about that. If you have anything else on that, could you send it in to the committee? I am sure that other members would be interested, too.

I will explore the other side of Marie McNair’s question. Seeing as Professor Patrick was speaking about that, perhaps she could start.

We are talking about something like 54,000 low-income children who are not getting universal credit. However, the other angle is that some who are not in low-income households—we have been given a figure of 241,000—are in receipt of universal credit and the Scottish child payment. It is obviously nice to give people money, but is that a good use of funding?

10:00  

My colleague Emma Tominey might be better qualified on that.

It is about working through the question of how to maximise eligibility and ensure that the payment reaches the right people. I think that, as part of that, trying to make it a stand-alone benefit is the right direction to go in, for a lot of reasons, but definitely to broaden the take-up. However, I defer to Emma Tominey on the question of whom it should target.

So, the worry is that individuals who are not in poverty are receiving the Scottish child payment.

Well, is it a worry or not? I do not know.

It is not a worry of mine. I would think about the Scottish child payment as cash transfers to children who are living in low-income families. If we imagine—this point has been made before—that there are two families on either side of the poverty threshold, the family that is just above the threshold will be living the same life as the family just below it. Those children will have the same level of food insecurity and their families will feel the same amount of stress in trying to balance their budgets. The payment is targeting low-income families who are living in deprivation, and who can use a cash transfer.

What is important is to gather empirical evidence. For example, what is the effect of the Scottish child payment on individuals who are out of work, and on individuals who are close to the universal credit threshold? That is what we would need to understand in order to answer your question. It is an empirical question: where is the impact greatest?

I will leave it at that, because I think that Bob Doris will go into that space, too.

Before I bring in Bob Doris, I believe that Tom Wernham would like to come in. Sorry, Tom, but can you make it brief, please?

In response to that question, I am not too concerned about the Scottish child payment going to children in the middle of the income distribution. Income is not the same as need, and in some ways, the benefit system is more responsive to need.

For example, people who are disabled or carers get extra benefits. Often, as a result of that, they are more in the middle of the income distribution, rather than at the bottom. A lot of disabled people are not technically in poverty, but they have more income only because they have more needs and more expenses to achieve a given standard of living. Those sorts of people are being captured by the benefits system, and that is not a bad thing if we are trying to raise the living standards of people on low incomes.

In so far as that is true, and if the Scottish child payment is going to people like that who have additional needs, in order to look after their children, I think that that is fine.

I am not concerned about that happening either, for the reasons that have been set out. To follow up on the idea of need, that aspect is important. We are talking about incomes, but that does not reflect need. We know that there is a cost of living crisis, and a lot of costs have increased—that is not reflected when we are measuring poverty, because that measure does not reflect how people’s needs have changed.

There has also been a benefits freeze, so benefits were not uprated for years; they have just been uprated recently, but that has not militated against the fact that, before that, they had not been uprated since 2016. In fact, therefore, the level of universal credit does not necessarily reflect people’s actual needs. People who are eligible for universal credit, even if their incomes are ostensibly higher, are not necessarily going to be living the high life. I reiterate what has been said on that.

I now invite Bob Doris to ask his questions.

My question is on whether we have universality or targeting. The current approach is not universal, because universal credit is not universal; it is about blanket coverage for those who are in receipt of universal credit.

The Scottish child payment is straightforward to administer and impactful—I think that that is clear. Maybe my numbers are a little bit wrong but, if we increase it by another £5 a week, that would cost another £90 million a year. If we had £90 million a year, should we put it all into the Scottish child payment or increase the best start grant and best start foods, pay a clothing grant twice a year or provide a Scottish child payment summer supplement rather than spreading it across the year? There is a debate about whether to target the money more or whether to make it as universal as possible and about how Government and Parliament look at that.

That is always a big question. When you asked for our views on that earlier, there were questions about the simplicity of something that is close to universality versus universal credit versus more targeting. Another factor that you should keep in your mind when you are thinking about that is the stigma of benefit receipts. When we start to target things and move away from cash-based transfer, we embed and increase stigma. That is just another thing to think about when you are making those decisions.

On how the money is best spent, pound for pound, I cannot imagine a better use of funds than putting the money into the Scottish child payment, especially in recognising and valuing parents’ own expertise, and I ask you to consider that. For example, it might seem like a good idea to give people an extra supplement in the summer because we know that that is a difficult time, but do we actually know that that is the case for any given household? We need to recognise that different households might have different needs at different times of the year.

We could fill the chamber with the evidence base on this: we know that people who live on low incomes and in poverty are experts at budgeting. They know how to manage their money incredibly well, so we should give them the money and the ability to make the decision to work out how best to budget. It might be that their children’s birthdays are clustered around February so that is their particular financial pressure point. Recognising families’ expertise in budget management and giving them the resource—definitely in cash, not in vouchers—is definitely the way to go.

That is really helpful. We are short of time but I think that Professor Tominey wants to come in before I move on to my next question.

On my reading of the international evidence, we have a lot of evidence about the effects of cash transfers. There is no policy that is exactly the same as the Scottish child payment but, if we combine all the evidence, we can see that cash transfers make a difference when they are expected and when they are expected to continue in the long run. One-off payments often do not change that much in the household. Again, the Scottish child payment is set up and my reading of the evidence is that, rather than making one-off payments here and there, the money should be put into the Scottish child payment.

The only other thing to say is that, on whether the money should be targeted or not targeted, it is the targeted policies that have the biggest effect.

That is helpful. As ever, it is never straightforward.

An unintended consequence of the success, I suppose, of the Scottish child payment is that, as universal credit tapers, the Scottish child payment does not. Everyone in this Parliament and on this committee wants to see mums, dads and families get into not just work but well-paid work with hours that allow them to sustain their quality of life without relying on benefits. However, a cliff edge is created by the fact that, when universal credit stops completely, so does the Scottish child payment.

Do the witnesses have any comments on, or solutions to, that? I will roll the two aspects into one question: first, on tapering, should that happen along with tapering of universal credit—I am wary of taking money off people when they are still on universal credit—or should the Scottish child payment be maintained and then tapered once someone stops receiving universal credit?

It is a really important question. In the research that we hope to conduct, if we are funded, that is one of the main points that we will try to analyse. That is an empirical question, so we do not know the answer yet. However, you are right that, at the point at which households lose universal credit, there is a big change to their income. We would analyse that situation to see whether it changes work incentives.

The second thing to point out is that, because it is not tapered, there are actually quite strong incentives to enter work. Let us consider the situation of someone who is out of work who is thinking, “Shall I take a job and earn some money?”: the universal credit would drop but the Scottish child payment would not. Therefore, there are potentially quite strong incentives at that margin.

We plan to analyse that qualitatively and quantitatively, but that is quite demanding of data, as we want to understand the effect on labour market decisions across the income distribution. Linked administrative data would allow us to home in on the specific margins.

For now, that is an empirical question, rather than a matter of giving advice about how to taper.

Just to follow up on that, I note that the idea of tapering within universal credit rather than expanding eligibility will necessarily increase the effective marginal tax rate that people face if they have even more benefit withdrawn. That will create a different kind of disincentive to work. Tapering off the end after people leave universal credit will come with additional cost.

There is some trading off in all such cases. Introducing more tapering means that more people will face a little bit of disincentive at the margin: if they work an extra hour they are not going to keep quite so much of their money, but the disincentive will be spread out. At the moment, the effect is concentrated on people just on the edge of eligibility, who are facing a huge drop-off. I worked out that someone on the minimum wage with two kids who is just on that drop-off would have to work 6.5 extra hours per week before they see even an extra pound from work. That is a huge cliff edge.

Even if, in aggregate, we do not see huge effects on work incentives, and if only a small number of people might be affected, it is a really awkward situation for those people to be in, and it is quite stressful, especially for those who have volatile earnings or shifts, who will have to keep track of that to ensure that they do not accidentally lose quite a lot of money. That will create significant inconvenience and stress for people in that sort of situation, and it could potentially disincentivise them from seeking a promotion or extra hours or progressing in their careers.

That is very helpful. Perhaps Mr Werhnam could add a little bit to that response. Once universal credit is fully withdrawn, would there still be a negative impact if there was a tapered benefit run-on? There would obviously be a cost to that. Could there be an opportunity for the DWP and the Scottish Government to talk about that being an in-work incentive to get someone off universal credit? Could there be a co-produced plan for a benefit run-on that is financed by both the Scottish and UK Governments?

Essentially, there will be an increase in the number of people who are facing that disincentive. Instead of just having people at the cliff edge facing an extreme disincentive, there will be a slightly larger number of people facing a slight disincentive. It seems that that will probably be better, although it would be useful to have qualitative evidence.

It will be challenging, and it will require co-operation with the DWP, instead of essentially piggybacking on the UC system. There will be people who are not eligible for UC but are eligible for the Scottish child payment. There will have to be co-operation, and you will have to ensure that you have the income data that you need to identify the relevant people.

There is always a trade-off, and any means-tested benefit involves creating disincentives. Tapering off will probably be milder than having a cliff edge, which is an extreme form of disincentive for a small subset of people.

You will be pleased to know that we are now on to our last theme, which is cost and value for money.

I indeed have the joy of asking about cost and value for money. I think that I already know the answer to this question, but I will go for it anyway. The Scottish child payment is forecast to cost £457 million this year, rising to £492 million by 2028-29. All the written submissions have said that that is money well spent, and I understand that.

Given the evidence that we have taken today, especially in the first section of our questioning, when we discussed the arbitrary line of poverty and it was suggested that we should look in more depth at how the Scottish child payment will change the lives of children—for example, in relation to health or other outcomes—is that spend justified? I am happy to open that question out to anybody who wants to answer it.

10:15  

Spoiler alert: the answer is yes. I honestly cannot imagine a better use of the funds. It is an excellent resource investment. As we have covered at length in this session, there is still a need to understand the evidence about what is going on, but getting cash to families who are on a low income, to support them with the needs of their children, is a brilliant use of money. It is to be commended.

I do not know whether anyone else wants to come in, but I imagine that the answer will be exactly the same.

It is completely justified, not least because of the long-term effects over many decades on those children’s lives. However, it is important to remember that the payment was introduced in response to two emergencies. The first of those was in having the greatest inequality in Europe, give or take Bulgaria, and some of the worst rates of child deprivation. The second was the cost of living crisis, which has resulted in a huge increase in people’s expenditure—which we pretend not to realise, or do not realise, because inflation has gone down. None of that cost of living crisis has been taken away by that decrease.

The payment was introduced in an emergency and is an emergency response. In the long term, you do not want any society in Europe having to depend on such things. You want a long-term way out, in which you do not have to worry about tapers, about whether people can afford shoes or about whether to have a joint birthday party for children—or to have one at all. Large numbers of those children have no holiday.

There is a danger of too much congratulation because something dramatic has been done and far fewer children are going cold and hungry in Scotland, and of not thinking about the society that we used to have in the 1960s and 1970s, when our children grew up in far more equal houses, or of the societies that other European countries currently have, in which their children are doing so much better than ours.

That is a different answer. The expenditure is completely justified, but it is an emergency response to an emergency.

That is interesting. Thank you.

In addition to the human cost of child poverty, which is very difficult to measure—we have talked a bit about that—we have also done work looking at the cost to society of child poverty. That includes longer-term thinking, as Danny Dorling said, about things such as future tax lost to the Government, loss of earnings and targeted public spending for some children because of the additional health effects of being in poverty. The estimate for that was £39 billion a year for the UK. In that context, the cost of the Scottish child payment is a drop in the ocean. It is having such immeasurable effect on improving children’s lives that it is a no-brainer.

That leads me on to the next part of the question. In effect, the Scottish child payment is a cash payment that takes people over that arbitrary line, as we have all agreed. Are there alternative policies that might have a similar or greater impact for similar or even reduced costs? Are there other ways in which we could do this?

In my view—my colleagues will probably agree—it is the best policy that could be put forward. As Ruth Patrick said, the infrastructure for the Scottish child payment is in place. There can be modifications to it—increasing eligibility through tapers, for example—but, given that the infrastructure is there, in addition to and in combination with other policies such as the best start grants and the free school meals, I cannot think of a better way of giving vulnerable families such an increase in cash.

I agree with and echo what Juliet Stone said. In addition to that, it might be worth comparing the child payment that you have in Scotland, over which there is some certainty of continuation—although that may be for political comment—which allows people to plan for the future on that basis, with the emergency response from Westminster on social security, which has involved one-off and, often, flat-rate payments. Those cost of living grants and the temporary uplift of universal credit by £20 per week were less well targeted, because a family of five would get the same as a single person.

However, importantly, the policies also embedded insecurity. Those policies provided a cost of living payment in an emergency, but there was uncertainty over whether that would continue the following year. People are therefore not able to plan. Often, when people live on a low income, financial insecurity is baked into their everyday lives. Putting some security back in echoes what Emma Tominey said about cash transfers making a difference. It is about having some certainty that the infrastructure exists and that it will continue to do so.

We seem to have lost the Zoom link to our panel members online. I apologise for that. Before we end the session, if any witness has any further comment, we would be more than happy to have that in a written submission.

Thank you so much to all our witnesses. Next week, we will hear from a panel of stakeholders, in our second and final evidence session of our short inquiry.

That concludes our public business, and we move into private session to consider the remaining items on the agenda.

10:22 Meeting continued in private until 10:45.