SNP's rhetoric about ending child poverty does not square with the economic reality – John McLaren

One of the boldest aims of the SNP, as reiterated in the latest Scottish Budget, is its determination to “end child poverty”. But what exactly does that mean and can it be achieved?

How will Scotland abolish child poverty when even relatively high-tax, wealthy countries struggle to do so (Picture: Peter Summers/Getty Images)

So far, the Scottish Government has set four targets around different measures of child poverty, up to 2030, but none of these are to eliminate, just to reduce, the number of children living in poverty. For example, in terms of the commonly used poverty measure “the number of children living in households with less than 60 per cent of median income”, the target for 2030 is ten per cent. Using this definition, latest figures (2017-20) show that around one in four children (24 per cent) are “living in poverty” and we are heading in the wrong direction. Furthermore, the position may have worsened since then, as a result of the pandemic.

What would it take, in financial terms, for the Scottish Government to reach even this goal? These are difficult calculations to make but both the Institute for Public Policy Research (IPPR) Scotland and the Fraser of Allander Institute (FAI) have attempted them.

In 2018 the IPPR estimated that reaching the ten per cent target would cost an extra £3.8 billion, while earlier this year the FAI estimated a range of between £4.6 billion to £5.3 billion, with each estimate being dependent on the policy measures used. There are also complicated behavioural effects to take into account, so the calculations should be seen as ball park figures, but we’re talking about £4 billion plus.

The IPPR also looked at what it would cost to go further and estimated that an extra £10 billion would be needed to reach five per cent, with each extra percentage drop costing disproportionately more. Neither body looked at the potential cost of eliminating child poverty but they imply that it would be considerably more, if it was even feasible.

Presumably it is these prohibitively high costs that are impacting on other countries inability to end child poverty. In terms of international comparisons the best, typically Nordic, still have child poverty rates above ten per cent, for example Iceland (10.4 per cent), Denmark (11 per cent) and Finland (11.1 per cent). If even wealthy and high tax countries like these stick at around ten per cent, what hope for others? Certainly no hope without much higher taxes. As an aside, it is interesting to note that the IPPR Scotland calculates that introducing a universal basic income (UBI) policy is likely to increase child poverty, due to income distribution consequences.

So even if the ten per cent by 2030 target can be reached, a big if, how can the even more difficult task of reaching zero, and eliminating child poverty, ever be achieved?

New Labour faced a similar problem in 1999 when it sought to end child poverty within 20 years. For the first five years things were roughly on track, then they slowed down and then they went into reverse. This about-turn may have been for understandable reasons, global meltdown and all that, but a target is a target and either it is prioritised above other aims or it is not.

The latest Unicef analysis of what policies rich countries should follow to address child poverty highlight a mixed bag of ideas that do not concentrate solely on financial issues. These include: consulting children about their concerns; integrating policies that complement and strengthen one another; and creating strong foundations. These foundations included: affordable and high-quality early years childcare; improving mental health services; expanding family-friendly policies in the workplace; reducing air pollution; immunising against preventable diseases; as well as ensuring children have access to the resources they need. These findings chime with other researchers, where the importance of policies to improve the quality and affordability of childcare often looms large on the to-do list.

All of this begins to raise a question mark over the degree of importance that should be assigned to increasing child benefits as a way of helping children out of poverty. Might some of the money be better spent on early-years initiatives provided to families, rather than household cash boosts?

Furthermore, if, given a fixed budget, increases in child benefits come at the expense of frozen or falling real-terms funding for schools, mental health and other such child-centric budgets, then what will the net effect be on children’s well-being? Little analysis seems to be have been undertaken on this subject and yet that, roughly, is the position such spending areas find themselves in now, as witnessed in the latest Scottish Budget.

We are left facing some tricky questions. First, given the definition of child poverty – as a relative figure compared to a median income level – can it ever realistically be eliminated? If not, what should the effective target be? Is it viable to go any further than the leading Nordic countries? If not, then why do politicians still talk about it being eliminated when they know that this will never happen?

Second, is income-related child poverty the best target measure to be using? Is there a risk that the last ten per cent to be reached may face greater pressures from education, housing, mental health and other non-financial inequalities, which means that other policies and budgets should be given a higher priority?

Tackling child poverty is a very worthy aspiration, and its reduction, in financial terms, is achievable to a greater degree than is seen at present. That is why great care needs to be taken over setting targets and in planning how these are to be achieved. At present, the rhetoric is outstripping the analysis.

John McLaren is a political economist who has worked in the Treasury, the Scottish Office and for a variety of economic think tanks