Why has the Scottish Child Payment been brought forward a year for under-sixes?

Following the announcement on the Scottish Child Payment, Andrew Wenham explores the rationale for the decision to bring the payment in for the under-sixes a year earlier than for all children. 

We understand that part of the reasoning for this staged roll-out is to do with capacity. But are there other reasons why younger children need this lifeline more urgently than others?

We know that the early formative years are incredibly important for a child’s development and we know that, worryingly, children under six are at high risk of poverty. In Scotland, families with a child under six have a poverty rate of 27%. Compare this to the significantly lower poverty rate for families with children aged six or over (20%) and it is obvious that there are distinct pressures being forced upon families with younger children.

A key source of this pressure stems from the requirement of providing care for children under school age (children in Scotland usually start school aged between four-and-a-half and five-and-a half depending on month of birth). For families unable to meet either the cost of full-time care or make informal care arrangements, the only option available is to reduce their working hours. This is seen in the data: 57% of all lone parents with a child under six are not in paid work and 31% of couples with a child in that same age group have at least one adult not in paid work. The equivalent stats for lone parents and couple parents with children aged six or over are 29% and 21%; differences of 27 and 11 percentage points respectively. For parents of pre-school age children, childcare is the key reason given when asked why they are not looking for paid work.

Many low-income families have greatly reduced options when it comes to formal childcare. Their low earnings mean less capacity to pay for good quality care (even after state provision and subsidies are considered) that covers all the hours they want to work. On the other hand, providing some, or all, of their child’s care at home reduces their earnings (and potential future earnings) further and can make poverty more inevitable.

With these constraints facing parents, both in Scotland and across the UK, the question was whether anything would be done via the social security system to improve the life chances of children pulled into poverty due to these factors outside their parent’s control? Excitingly, Scotland is answering this question with a definite ‘yes’.

The ‘yes’ (the Scottish Child Payment) of £10 a week will be available from early 2021 for eligible under-sixes. The Scottish Government estimate that some 170,000 under six-year-olds will receive this lifeline, and it is part of the Government's goal to reduce relative child poverty in Scotland to 10% by 2030/31 with an interim goal of 18% by 2023/24. With the current child poverty rate sitting at 24%, the Payment won’t meet the target by itself, but it will help provide some buoyancy that many families in our society need to keep their heads above water.

Whilst bringing the payment in early for under-sixes has a clear rationale due to the constraints that we know parents are under, we must be mindful of unintended consequences of targeting this age group.

The Scottish Government does not believe that this payment will have a significant impact on work incentives due to its scale, but we should not lose sight of this possibility. The Resolution Foundation’s finding that for those at the cliff-edge of eligibility, a £1 pay rise would mean a £1,600 loss for a parent with three kids may not actually be the scenario that many find themselves in, but it may loom for some. The primary carer is most likely to be the mother, and any incentive to forego earnings in order to qualify for the payment could serve to entrench inequalities in income between men and women. Even in better-off households, these inequalities and the impact on women’s earnings can easily lead to poverty if parents separate and the mother’s earnings become the main source of income for children

The Scottish Government must do all it can to build an infrastructure around this payment so that paid work becomes an easy choice – not an impossible decision. The expansion of childcare entitlements is another opportunity that the Scottish Government has to lift the restrictions faced by parents with young children. Even with 30 hours free provision, the lack of flexibility of this provision has raised concerns that it won’t fit in with the realities of low-paid work that is often shift-based with hours outside standard nursery times, so this must be rigorously tested and evaluated. Finding a way to improve the quality of work available to those who are under financial pressure is also a route out of poverty that the Scottish Government could do more to uncover.

The Scottish Government should also look at how the under-sixes can receive extra support once the full system is rolled out to eligible children of all ages. The same arguments presented here for supporting early roll out also hold for supporting premiums for younger children in the future to ensure appropriate support is directed to them.

As a society we have a responsibility to ensure that children get the best start in life. Faced with financial pressures and spiralling childcare costs, many families are being stretched beyond their means and need help. The Scottish Child Payment will provide a helping hand, and early roll out for under-sixes makes sense but is not the whole solution. To achieve the impact that our children desperately need, coordinated policy across the whole of Scottish Government – spanning employment, housing and transport for example – will be needed.