Does The Scottish Child Payment Weaken Work Incentives?

Suzanna Nesom, Kitty Stewart and Emma Tominey

Published 10 December 2025

The Scottish Child Payment (SCP), introduced in 2021, provides cash transfers for families with children receiving Universal Credit (UC) or related benefits. The eligibility link to UC can create a potential cliff-edge at that threshold of eligibility - the decision to work one more hour can potentially result in a large loss of benefits. We study whether in practice the SCP creates disincentives to work. We begin by running simulations to understand where the SCP cliff-edge becomes binding; i.e. where it sits in relation to hypothetical labour market earnings. We find that a lone parent or sole earner in a couple could work at least 39 hours per week at national minimum wage before reaching the cliff-edge, and much more for some family structures, indicating no binding disincentive for these earners. Secondary earners face a more relevant constraint, with the cliff-edge presenting at 9 hours for families not claiming housing support. For secondary earners claiming housing support, again the cliff-edge is located above fulltime earnings for minimum wage earners. We go on to test the causal effect of SCP on labour market participation and hours worked directly, using a difference-in-difference methodology which compares families in Scotland with similar comparison families in England before and after the policy’s roll-out. Results suggest the SCP has not in practice reduced labour supply, including for secondary earners. Taken together, the evidence suggests that concerns that the SCP creates work disincentives are overplayed.