Chamber and committees

We are very keen to learn lessons. That is why we wanted to work more closely with the UK Government on the development of the strategy, because we thought that there might even be things that we could learn from it—who knows? We did not have that opportunity, but we are keen to look at it.

It is important to recognise that we in Scotland have sometimes taken different approaches to policies and that there are also policies available in Scotland that are not available in the UK. I mentioned the fact that, overall, around £3 billion is spent on helping those on low incomes and the cost of living crisis. We have developed the five family payments, including the Scottish child payment, in which we invest more than £0.5 billion, and there are the free prescriptions and free eye tests. There are therefore a number of things that are not in the UK strategy that are in the Scottish Government’s policy.

As we look at where the UK Government has taken a different policy approach, it is also important that we learn lessons. There is a difference in approach to childcare in England, with that approach being available only to working families. The Institute for Fiscal Studies has made it clear that, despite the investment that has been made, the poorest third of families will see almost no direct benefit from the new entitlements. When I was down in London for my most recent round table, I also heard that there are some implementation challenges when a policy is being launched, but there are also challenges with delivery. That is quite normal when such a large policy is undertaken.

Those are the types of lessons that we would like to be able to learn, so we can learn about what has worked well and about the challenges that different Governments, whether in England or Wales, face when they take different approaches.

The aspect that we warmly welcome is the abolition of the two-child limit. We said all along that it would be much better to do that at source rather than have the Scottish Government mitigating the effects of the limit, so that is to be warmly welcomed.

However, I would use that as an example or demonstration of how, because we did not know where the UK Government was going on that, the Scottish Government and Social Security Scotland had to continue our work so that we could be ready to mitigate the two-child limit ourselves. Indeed, the UK Government’s decision is warmly welcomed and will make a difference to children across the UK. The other caveat is that, because the benefit cap remains in place, many children will not fully benefit from the two-child limit being lifted, because they will be hit by the benefit cap. That is not the case in Scotland because the Scottish Government will mitigate the benefit cap, which will be an additional expenditure for us, in order to ensure that everyone will benefit from the two-child limit being scrapped.

Thank you very much, and good morning, convener. Eradicating child poverty is the Scottish Government’s top priority and a national mission for us all, and I am glad to see the UK Government’s renewed focus on that critical issue, albeit later than it had envisaged.

Although there is action to welcome, including the scrapping of the two-child limit following unrelenting pressure from the Scottish Government and many charities, I am clear that more is required to support families.

There was initially very positive engagement with the co-chairs of the UK Government’s child poverty task force in October 2024 and an interest in developing a truly four-nations approach. However, I am sad to say that that did not materialise. There was a lack of meaningful engagement from UK ministers and, despite sharing learning and experience from Scotland, UK ministers unilaterally decided to end four-nations engagement on the strategy earlier this year.

Despite my repeated attempts, no ministerial engagement took place between May and December as the strategy was finalised. It is deeply disappointing that the UK Government failed to foster the consensus and partnership across Governments that was initially agreed and to seize the opportunity available to us all. Instead, a strategy has been developed that sets no statutory targets for poverty reduction, immediately weakening accountability.

A broad range of measures have been outlined in the strategy, but that mostly represents a consolidation of previously announced policies rather than a commitment to further action. As the Poverty and Inequality Commission and others have highlighted, the strategy does not go far enough to support families with no recourse to public funds, it fails to remove the benefit cap and it continues to freeze the local housing allowance rates. Those are all conscious decisions that the UK Government has taken.

The UK Government’s own analysis shows that relative poverty rates are estimated to remain broadly stable across the UK as a whole, despite the measures in the strategy, with 4.3 million children expected to live in poverty by the end of the decade. That is the scale of the UK Government’s ambition—that poverty remains broadly stable.

In contrast, there is already clear evidence of the impact of the Scottish Government’s approach. Child poverty rates have fallen in Scotland only because we have taken bold action, such as the Scottish child payment, which is successfully keeping children out of poverty. Our action is making a difference, with the lowest-income households with children estimated to be £2,600 a year better off this year as a result of Scottish Government policies.

I will continue to urge the UK Government to go further and to match our ambition and action. As it does so, we remain committed to working with and supporting the implementation of the strategy in Scotland.

As the committee knows, the Scottish Government is in the process of developing our third child poverty delivery plan. We have committed to reinvesting the money that is committed to the two-child limit payment to tackle child poverty. We will set out the details of our investments in the Scottish budget, which will be published on 13 January 2026.

In conclusion, we will continue to review the UK Government strategy and the written evidence provided by the secretary of state, which we did not have the opportunity to look at in detail before giving evidence today. We will look at what that means for Scotland and for our next delivery plan, which is due for publication by the end of March 2026. The Scottish Government is committed to doing all that we can to eradicate child poverty and the UK Government must do so too; the strategy must be its crucial first step and not the only step.

I am grateful for the opportunity to be with you today and to answer any questions that the committee may have.

In my opening remarks, I referred to the strategy being more of a consolidation of what was previously announced rather than what is new, with the exception of the two-child limit. I do not know what language the UK ministers have used in their written evidence, but in the discussion that I had before we had the copy of the strategy, it was implied that it was a collation rather than a launch of new things. Therefore, there are no additional consequentials from it, because there does not appear to be anything new that would bring any consequentials to the Scottish Government.

If there is anything in the written evidence to the contrary, I will be happy to look at it, but that is our understanding at present.

I could indeed talk for some time on that. It may be useful to the committee if I provided in writing the details, or at least some of the information, that we sent to the UK Government as we tried to move these various aspects along.

It is also important to recognise that I was not sighted on the written evidence from the UK Government until this morning. Perhaps we can wrap in some of my reflections once I have had an opportunity to read the letter from the Scotland Office in greater detail. That will go through some of the missed opportunities that we were hoping to work with the UK Government on as the strategy was developed.

You raise a very important point about the competing demands within the budget. The First Minister has made it very clear that the money would be used for child poverty, because the purpose of the mitigation of the two-child limit was to tackle child poverty. Clearly, it is not the only aspect of the Government’s actions to deal with the cost of living crisis that many people face—not just families with children. That is exactly why we invest around £3 billion a year in helping those on low incomes and helping to tackle the cost of living crisis.

That goes wider than our work on child poverty, but the money for the two-child limit will be allocated to a child poverty measure.

For me, whether it is a four-nation or bilateral approach, it is about how we get past me saying what I would like, the UK Government giving its position and there being no genuine discussion. We need to find a way through that.

I am conscious of the fact that, on the day that the strategy was launched, Scotland Office ministers suggested that they were disappointed that the Scottish Government was obsessed with process issues, saying that we should get down to the details. However, it is exactly because we wanted to get down to the details that we needed a process—to allow us to do that.

The type of thing that I would like to see next year is a genuine discussion, whether it is about difference in policies, lessons learned, monitoring and evaluation, or whether it is about looking in more detail at the strategy that the UK Government has developed and how it impacts on Scotland. For that to be meaningful, we need to get past the transactional nature of the discussions that we were in at the start of last year and get down to a genuine discussion.

I would very much welcome that, and we are in the middle of drafting our child poverty delivery plan, so there is absolutely the space to do it. I hope that the UK Government can find a way to think that that might also be useful as it looks to implement its policy.

The UK Government’s budget resulted in additional consequentials of £820 million over the UK spending review period—it is important to note that that is over the spending review period.

The amount falls short of the investment that ministers called for. To summarise that with an example, it does not make up for the funding shortfall in the cost of the increased employers’ national insurance contributions that were introduced in last year’s budget. Although there has been an increase in Barnett consequentials, it is important to recognise the time period of that increase and the fact that it does not make up for the hit from last year’s increase in employers’ national insurance contributions.

I have already mentioned how we will deal with the two-child limit funding and what our approach is to using the money that has been freed up from our commitment on that.

We are still assessing that at the moment. It is clear that some aspects of the UK strategy will have an impact across the UK and other aspects are England only, for example.

For example, some aspects concern parents on low incomes who are accessing childcare and need to return to work after parental leave to increase their earned income—and that is welcome. We know that the uptake of the universal credit childcare element remains low, and it appears that much of that is to do with a lack of awareness of support and of the availability of eligible services, as well as the genuine complexity of the system.

There is a lack of clarity as to how support with up-front childcare costs for those returning from parental leave will be delivered in practice, with stakeholders advising that awareness of the Jobcentre Plus-led flexible support fund is very poor. There is therefore work to be done on the implementation of the policy to ensure that the UK Government is working to develop the take-up of some of the schemes that it is providing.

Although any proposed increases in the statutory minimum wage rates are of course welcome, the UK national living wage is still not the real living wage, and that difference needs to be recognised. As I think I said earlier to Claire Baker, we are still modelling the impact that those changes will have on Scotland through the work that is being done in drafting the child poverty delivery plan.