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Scotland's ambitious 10% child poverty target by 2030 looks highly unlikely to be met despite significant devolved spending.

Scotland’s relative child poverty rate over the period 2022–23 to 2024–25 was 21%, compared with 28% in the UK as a whole and 38% in Greater London. In part, this reflects lower housing costs – due both to lower rents and house prices and to a larger social rented sector than in the rest of the UK. But Scotland’s devolved tax and benefit policy has also played an increasingly important role in recent years.

• The Scottish child payment – a £28.20-per-child-per-week top-up for families receiving universal credit – is projected by the Scottish Government to reduce child poverty by around 50,000 children in 2026–27, compared with a scenario in which it did not exist. That is equivalent to about 5 percentage points.
• Taking account of other devolved policies – including council tax reduction, mitigation of the benefits cap and the so-called bedroom tax, and assumed employment gains from employment support – the Scottish Government estimates that devolved policy will have reduced child poverty by around 100,000 children in 2026–27, rising to 110,000 in 2030–31, relative to a scenario in which these policies were not in place. This is equivalent to about 10 percentage points in 2026–27. Most (but not all) spending on these policies is additional to what would be provided in the rest of the UK.
• Even so, the Scottish Government’s latest projections – which incorporate benefit policy and uncertain wider economic conditions – still put the relative child poverty rate at 18% in 2030–31. These projections do not reflect recent or planned methodological changes to poverty measurement, which add further uncertainty. But they still imply that Scotland is on course to miss its target of reducing relative child poverty to below 10% by 2030–31 by a considerable margin.

The UK has never had a relative child poverty rate as low as 10% – even in the 1960s and 1970s, prior to the big rise in income inequality of the 1980s, the relative child poverty rate averaged around 15%. A relative poverty rate below 10% would also be among the lowest if not the lowest of any country in Europe. So this is a stretching target. 

The most direct way to further reduce child poverty would be to further increase devolved benefit rates. But the increases needed to get close to the child poverty target would be large – around £2 billion a year according to research published last year. Finding significant extra money in a Scottish budget already likely to be under strain would require either substantial further tax increases or cutbacks to public services. And significant increases in benefits – particularly given the current ‘cliff-edge’ structure of the Scottish child payment – would also weaken work incentives.

If the next Scottish Government decides to further increase devolved benefits to continue to reduce child poverty, it will be even more important to reform the design of Scotland’s devolved benefits – working with the UK to taper the Scottish child payment more smoothly as income rises, for example. This would ensure that the increased benefit spending is targeted as efficiently and fairly as possible.

These are among the key findings of IFS’s fourth Scottish election briefing, funded by the Nuffield Foundation and Robertson Trust. 

The report analyses the patterns and trends in employment, earnings, household incomes and poverty in Scotland. It also assesses the Scottish Government’s child poverty strategy. 

Tom Wernham, Senior Research Economist at IFS and co-author of the report, said: 

‘Scotland’s devolved benefit system is reducing income inequality and child poverty. Further increases in devolved benefits are the most direct way to continue to reduce child poverty. But the scale of benefit increases needed to achieve the very stretching 10% child relative poverty target would cost billions of pounds per year and increase disincentives to work. Increases to employment and the wages of lower earners could, in principle, reduce poverty and boost Scottish Government revenues at the same time, but to deliver such increases at scale in practice would be very challenging.    

‘If the next Scottish Government also prioritises the living standards and life chances of children from lower-income families, a mix of benefit, labour market and public service policies will likely be needed. In the context of a constrained budget, it will also need to be clear eyed about what its key priorities are. While increasing benefits would have the most direct effects on income poverty, targeted service provision might be more cost-effective at improving longer-term educational, economic and social outcomes, if this provision is designed effectively.’

Further information on poverty in Scotland:

• Just over 17% of people of all ages in Scotland were in relative poverty after accounting for housing costs in the latest data (covering 2022–23 to 2024–25), below the UK average of just under 20%. The difference in poverty rates was in fact slightly larger 15 years ago: relative poverty increased gradually over the 2010s in Scotland while remaining steady in the rest of the UK. However, there are signs that the Scottish poverty rate may have fallen back again in the last few years.
• The biggest difference between Scotland and the rest of the UK is for the child poverty rate. Poverty rates for working-age adults and pensioners are also somewhat lower in Scotland than in the UK as a whole, but the differences are not as large (around a percentage point). Rates of material deprivation, which measure the proportion unable to afford a range of basic goods and services, have typically been slightly lower in Scotland than in the rest of the UK in recent years, with the biggest differences once again being for children.

Further information on the Scottish Government’s child poverty strategy:

• The Scottish Parliament unanimously adopted child poverty targets requiring child poverty and deprivation to fall to very low levels by 2030. The Scottish Government has set out a wide-ranging strategy focused on child poverty and on improving the life chances of children in poverty. This includes its package of devolved benefits, alongside measures to cut living costs and raise earnings. It also includes improvements to public services intended to boost children’s longer-term outcomes.
• Children in poverty tend to have worse health, education and labour market outcomes in later life, compared with their peers in higher-income families. But if the Scottish Government wants to close these inequalities, simply reducing child poverty and deprivation might not be sufficient. Other factors, separate from but correlated with low income, may be driving some these inequalities to some extent. This is why increased public service provision – for example, through schools or early years services – may be needed in addition to measures to boost income if the Scottish Government is to achieve all its objectives. That sets up a challenge for the Scottish Government, which must decide how to allocate its resources between benefits and public services to support children, as well as other priorities – all in the context of strained public finances.

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