UofG Centre for Public Policy

28 January 2026: With an extra £0.6 billion in the Scottish Budget for social security, Dr Thomas Rochow writes about ensuring the welcomed increase in social security investment is coupled with long-term planning and action to address the structural causes of poverty, such as underemployment and unaffordable housing.

Among all the headlines in the Scottish Government’s proposed spending and tax plans for 2026-27 set out in the Scottish Budget published on 13 January 2026, one stands out above them all for the right reasons, as well as posing a pause for thought.

The Scottish Government is projected to spend an extra £0.6 billion on social security in 2026-27 compared to 2025-26, bringing the total investment to £7.2 billion. The increase is mostly concentrated in cash transfers to families in the form of the Scottish Child Payment (SCP), a weekly payment available to every child whose parents or guardians are in receipt of other qualifying benefits, such as Universal Credit. Hailed as a policy success, with quantitative and qualitative evidence suggesting the SCP has made significant positive material impacts on families and reduced overall deprivation in Scotland. Since it was introduced in 2021, at £10 a week, the payment has lifted many children out of poverty, and life is relatively easier for families living on a low income than for comparable families in England.

The SCP is expected to increase to £28.20 in 2026-27, in line with inflation. There will be a further increase to £40 per week for children under 1. In isolation, these are welcome increases and the investment will hopefully move us closer to the First Minister’s mission of eradicating child poverty. This is an important mission, and I wholeheartedly recognise the need for cash transfers to families living on a low income. However, now that we are in a position of relative strategic fortune in Scotland with regard to having the National Government and Local Governments pulling together around the shared mission of tackling child poverty, we are not in a position of financial fortune. The Scottish Government is forecast to run an underlying deficit of around £659 million, higher than initially predicted due to the projected decrease in tax revenue. We need to ensure that social security investment is protected and sustainable.

More refined analysis will soon follow from the likes of the Fraser of Allander Institute and the Scottish Fiscal Commission, unpicking all the details of the budget. However, it appears as though capital spending has been slashed and time will tell which infrastructure and transport projects will be hit by this reallocation of funds. There is an argument that continuously increasing social security investment will bring collective benefits to overall wellbeing in Scotland, that it can reduce spending in other areas such as health, and that funds can be reallocated from other areas of the budget to pay for it. There is also an argument that an exponential increase in targeted cash transfers for families with young children leaves many other groups who experience poverty excluded from support. There is a risk that other crucial areas of investment required to tackle poverty long-term, such as housing and clean heat, are relatively neglected. Social security investment is vital and should provide a solid safety net for everyone. However, without careful long-term planning, we could end up with statistically fewer children growing up in poverty but an increase in other social ills, such as homelessness.

Since the introduction of the SCP, the number of households assessed as homeless in Scotland has increased from 27,571 to 40,688, with the number of children living in temporary accommodation reaching over 10,000. These are not causally linked. However, whilst the SCP should be praised, child poverty statistics in Scotland have remained relatively stable since the introduction of the SCP, at around 24%. Despite the slight divergence in child poverty rates between Scotland and England during the SCP period, on its own, social security cannot shift the dial on child poverty. It appears more like a sticking plaster covering a weak economic outlook and a crumbling public realm. More should be done to address the structural causes of poverty, such as underemployment and unaffordable housing, alongside social security investment.

Author

Dr Thomas Rochow is a Research Associate at the Centre for Public Policy. He is primarily a qualitative researcher, and his work intersects youth transitions, welfare systems and care policies.

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First published: 28 January 2026