The Covid-19 crisis is like nothing we’ve seen for over 100 years. What started as a health crisis has now turned into an economic crisis. This blog is part of a series of outputs through our Rethinking Social Security in Scotland programme, as we attempt to look at what Covid-19 means for financial security in Scotland.

The Covid-19 crisis has ushered in levels of state intervention into the economy and our lives not seen even in wartime. Over two short months the UK and Scottish governments have been forced to move quickly to protect businesses and workers’ incomes through significant new investment. This has included the creation of two new ‘furlough schemes’ which aim to protect up to 80 per cent of workers’ earnings through this part the crisis, and prevent mass redundancies, while big parts of the economy are in lockdown. In addition to the furlough schemes we have seen huge increases in applications for Universal Credit, in Scotland and across the UK, either because people have lost income or lost their jobs altogether.

Despite government support, families across Scotland are facing a significant reduction in their income. Many went into the crisis already struggling financially and without savings to cushion the blow, meaning a 20 per cent reduction in earnings, never mind a potentially drastic drop in income to the levels of support offered by Universal Credit, would be impossible to absorb. We wanted to understand how the finances of families with children in Scotland were faring so far through the Covid-19 crisis.

For the analysis in this blog we worked with the Standard Life Foundation, who have created a new Covid-19 Financial Impact Tracker. The Tracker will undertake regular polling across the UK, including in Scotland, to understand in real-time, how the crisis is impacting on the financial security of families. We worked with the Foundation to look at findings for Scotland and provide some of the first analysis to quantify the financial impact of the crisis on families so far.

Looking at households in Scotland with dependent children we see a very worrying picture.

We find that nearly half (49 per cent) of households with dependent children in Scotland find themselves in the two most serious categories of financial stress – ‘in serious financial difficulty’ or ‘struggling to make ends meet’. This amounts to 300,000 households in Scotland. This compares to just under one in three (30 per cent) of all households in Scotland reporting the same levels of financial stress, itself a shocking figure. One in five (20 per cent) of households with dependent children in Scotland (100,000 households) were in the most worrying financial circumstances - ‘in serious financial difficulty’ - compared to 12 per cent of all households in Scotland. This is the group most likely to be struggling to pay for food or essential items.

Just fifteen percent of families with dependent children were financially secure, compared to 30 per cent of all families across Scotland. It is also worth noting that the picture in Scotland is not significantly different to the situation facing families in the rest of the UK.

Table – percentage of all households and households with dependent children in Scotland by level of financial stress

Reported level of financial stress

Percentage of all families in Scotland

Percentage of families with dependent children in Scotland

Estimated number of families (figures are rounded)

In serious financial difficulty




Struggling to make ends meet




Potentially exposed financially




Financially secure




Total number of families struggling (in serious financial difficulty or struggling to make ends meet)




Total number of families with children in Scotland


Our analysis shows that without question, hundreds of thousands of families with children in Scotland are struggling to make ends meet right now and we must look at what the UK and Scottish governments can do to help them with urgent support immediately.

The UK government has taken some steps to at least temporarily improve the Universal Credit system. However, there has been little to no support specifically for families with children.

Here in Scotland, the Covid-19 crisis has unfortunately forced the delay of one of the crucial measures that could have been used to help low income families in Scotland – the new Scottish Child Payment. The Payment will see £10 per week paid to low income families with children and was due to begin to be paid in late 2020, starting with low income families with children under-6 before rolling out to all children under-16 by 2022. This has now been delayed at least by months, while the crisis unfolds and limited administrative capacity becomes even more constrained.

However, in the absence of the Scottish Child Payment there are other ways to get help to families who need it. A recent blog by the Fraser of Allander Institute outlines a number of the options available, ranging from topping up UK-wide benefits in Scotland through to using some of the existing payments at the Scotland-level paid through the new Social Security Scotland agency, or at the local level through local authorities. Indeed, IPPR Scotland’s previous research with JRF outlines the options possible.

A recent open letter to the First Minister signed by a large number of anti-poverty groups and campaigners has called on the Scottish Government to act. The Scottish Government cannot shield low income families from the full financial hit many will face. Using the powers it has, the Scottish Government has moved to provide welcome additional funding to carers and to people in crisis through increased Welfare Funds, although more is needed. While the Scottish Government cannot do it all, it can do more.

At the same time, and arguably to a greater extent, we must see action from the UK government to protect families with children in Scotland and across the UK. Most of the social security system is still reserved to Westminster, and the financial stress experienced by families in Scotland is being felt across the UK. So the UK government must act quickly to provide additional support to families with children.

That’s why we’re calling on the Scottish and UK governments to do two things as quickly as possible:

  1. The Scottish Government should urgently provide lump-sum payments of £250 per child to low-income families this summer.

This would get support equivalent to £10 per week for the next six months to families now. It could be paid to families in receipt of Best Start Grant (for under 5s) and through local authorities to those in receipt of the School Clothing Grant (for over 5s) using existing application, administration and payment routes to ensure payment is quick and the calls on administrative capacity are low.

  1. The UK government should urgently increase the child supplements paid through Universal Credit by £10 per week and provide a £5 uplift in Child Benefit for the duration of the crisis. They should also end the two-child limit and Benefit Cap.

We need to see the UK government act to support families with children. To date this has been a key gap in its financial response to the crisis. By boosting child supplements paid through Universal Credit, by ending the two-child limit and Benefit Cap, and by providing an uplift in Child Benefit we could see at least some help provided to families at this point of crisis.

As necessary as this action is, even this would unlikely be enough to prevent families’ levels of financial stress increasing. However, it would certainly help those facing the worst of the crisis so far. Governments across the UK have shown willingness to protect businesses and the wider economy through unprecedented levels of support. We must ensure we act to support families facing serious financial stress through higher levels of support, to ease some of the pressure on families now and to avoid some of the worst damage to children and families’ prospects in the future.

Russell Gunson is Director of IPPR Scotland and tweets @russellgunson

Rachel Statham is a Senior Research Fellow at IPPR Scotland and tweets @rachelstatham_


We are grateful to the Standard Life Foundation for their support in funding IPPR Scotland’s Rethinking Social Security in Scotland programme. The Standard Life Foundation are an independent charitable foundation whose mission is to contribute towards strategic change which improves financial well-being in Scotland and across the UK. Their aim to work to see everyone to have a decent standard of living and have more control over their finances.