Income and Poverty

Scotland must tackle poverty among workless families after referendum

  • Published: Feb 03, 2014
  • Author: Hannah Aldridge
  • Category: Income and Poverty

This week we launch the first in a series of three “referendum briefings”. They aim to identify the poverty challenges in Scotland that both sides of the argument need a response to. This report looks at Scotland’s relatively successful record on child poverty over the last ten years. It concludes that further reductions hinge upon offering workless families a route out of poverty.

The analysis compares the child poverty rate in two three year periods, to 2001/02 and to 2011/12, in England and in Scotland. This ten-year snapshot does not reflect changes within the period, most notably income and employment fluctuations resulting from the recession. It shows that in Scotland child poverty has fallen by 10 percentage points over the decade, around double the fall seen in England. What can explain this relative success?

Around two thirds of the fall in child poverty in Scotland can be attributed to improvements in poverty among lone parents. In the last ten years there has been an increase in the proportion of lone parents in work. In addition, the poverty rate for lone parents both in and out of work fell as well. These changes can also be seen in England, but to a lesser extent.

Much of the additional fall in child poverty in Scotland compared with England is due to a drop in the poverty rate among working couple parents. No such drop has been seen in England. Part of the reason for this fall has been that in Scotland there has been a shift among couple households towards both adults being in work with at least one of them working full-time. In England the shift among working couples has been in the other direction.

But despite this relative improvement to the child poverty rate in Scotland, improvements in poverty among children in workless families have been underwhelming. In such families poverty levels remain high at 54% compared to 10% for children in working families. At 70%, the poverty rate among children in workless couple families is especially high and has not come down at all over the past decade.

This high rate of out-of-work poverty poses both a short and long term challenge for any Scottish government. In the short term there is a need to mitigate the effects of recent and continuing reductions in the value of out-of-work benefits. The Scottish Government can only play a limited role here but it has absorbed the cut to Council Tax Benefit, replaced the abolished components of the social fund and provided compensation to some families affected by the bedroom tax. This will perhaps prevent Scotland’s workless poverty rates from worsening as quickly as would otherwise be the case.

But in the longer-term, better support is needed for workless families. A certain level of worklessness among families with children is inevitable even in the most robust labour market. Capacity and opportunity to work (for those with disabilities or long-term health conditions) or availability to work (for lone parents with young children) are just two examples of why a household might lack work. It is the challenge for Scotland’s future, either with independence or shared powers within the UK, to ensure that members of such households are equally provided with a sustainable route out of poverty.

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