The Scottish Government call it ‘Social Security’. It is ‘Welfare’ in Westminster. Clear Blue Water: Scotland’s Fight Against UK Fiscal Austerity

It’s rare indeed to be able to match the words of a politician with their actions. The proposed 2025/26 Scottish budget listed eradicating child poverty as one of its four priorities. In a budget speech earlier this month, John Swinney went further,

“Eradicating child poverty is my top priority because I do not wish to condemn any young Scot to a life of disadvantage simply because of where they were born.”

Turning words into action, the Scottish Government will mitigate Westminster’s ‘two-child limit’ from 2026. 

The wider context is important to note. This is not an isolated policy and, therefore, insulates this announcement from any claims of political opportunism. The Scottish Child Payment introduced in 2021 is another child poverty prevention measure designed to support low-income families. Just over £100 a month for each eligible child is paid, and there is no limit to the number of children in a family who receive the payment. The idea that there is an upper limit on removing children from poverty is purely a Westminster idea.  

The UK Government’s two-child limit was introduced at the height of fiscal austerity in April 2017. It applies to families with three or more dependent children. It restricts means-tested state support (via Universal Credit or Child Tax Credit) to a family’s first two children where at least one child was born after 6 April 2017. Initially covering younger children, this Childcatchers Net will include children under nine by April 2026 and children under 13 by March 2030.

But not in Scotland 

We have a much clearer idea of the financial costs of mitigating this and other ‘austerity’ policies like the bedroom tax owing to the work carried out by the Scottish Fiscal Commission (SFC). Slightly miffed, the SFC wrote in their Mitigating the two-child limit and the Scottish Budget report published last week, “We would have liked to include a costing in our forecasts but the Scottish Government did not inform us of the policy until 28 November 2024.” Considering the societal benefit of mitigating the policy, I think they can cope with some extra work.

The Scottish Fiscal Commission calculated that mitigating the two-child limit in 2026 will cost £155 million. The annual payment per child in 2026 would be £3688. It assumes an increase year on year, and by 2029, mitigation would cost 0.3% of total government funding (a tiny amount) while supporting around 50,000 children. 

In Socal Murder?, The Glasgow University Researchers Walsh & McCartney, who we interviewed on the Scotonomics Episode 118, highlight the impact of policies like the two-child limit:

“Policies of austerity have particularly affected families with children, and that child poverty levels in the UK have increased markedly since those policies were introduced.”

Arguably, as poverty has deep and historical structural elements, this policy alone will not remove many of those 50,000 children from poverty. However, it is undeniable that increasing cash transfers to poor families will likely increase children’s wellbeing and improve household financial stability.

Mitigating the two-child cap is one of the most progressive actions the Scottish Government can take, and it is to be commended. 

Oxford University Professor Danny Doling did just that. He wrote,

“The Scottish government has done a great service to people living in the rest of the UK by demonstrating that it is possible and affordable to remove the effects of the two-child limit that was imposed by the Conservative administration and is currently being continued under a Labour government.”

Professor Dorling highlights the Scottish and UK Governments’ different ‘values and ethical standards.’ 

The significant difference between the Scottish and the UK Government position on welfare and social security

The two-child limit is one of the most obvious examples of why I confidently propose that an “austerity paradigm” exists in Westminster, unaffected by whichever party is in power in London. See below:

There is deep institutional support for welfare cuts in Westminster. Within the UK’s unique fiscal framework is a specific cap relating to ‘welfare.’ This ensures that when the axe is swung, it first cleaves off chunks of support for the poorest in society. It is important to note that ‘welfare’ does not include ‘welfare for the wealthy’ in the form of interest on government bonds.

Holyrood’s current ‘policy paradigm’ differs because the Scottish Government takes a more progressive and inclusive view of welfare. For a start they refer to it as ‘Social Security’. The Holyrood version doesn’t include the ‘social value’ of ‘Personal responsibility.’ This different ‘value and ethical standard’ is significant and will enable the Scottish Government to mitigate £1.45 billion of harsh Westminster cuts in 2026. This figure, a large chunk of government funding, is the amount the Scottish Government decides to ‘top up’ over the associated Block Grant Adjustment (BGA).

Scotland’s Fight Against UK Fiscal Austerity

In Westminster, the continued intransigence to remove the cap is an example of a,

“neoliberal ideology still underpinning the Government” writes Academic Joanna Mack

in The Violence of Austerity. Scotland stands apart and will be a wealthier and fairer country when payments are made to families.

The mitigating of the policy by the SNP creates ‘clear blue water’ between the Scottish and UK Governments. The Labour administration in London is content to see more children remain in poverty, while the SNP wants that number to reduce. This inconvenient truth puts the Labour Party in Scotland in a bind.

In her new book, Doppelganger: A Trip into the Mirror World, Naomi Klein might well have included the Strange Case of Scottish Labour and not Dr Jeckle and Mr Hyde as the Scottish example of a doppelganger story. UK Labour certainly delivers its evil twin lines with aplomb. Klein quotes from a Philip Roth novel where the protagonist meets his doppelganger,

“It’s too ridiculous to take seriously and too serious to be ridiculous,” he concludes.

That sentiment could easily serve as the strapline for Labour’s 2026 manifesto.

It is incomprehensible that Scottish Labour can run a Scottish administration mitigating £1.5 billion of measures imposed by the Labour Party in London.

Reducing child poverty will likely prevent illnesses and decrease hospital and dental visits for those children. Poorer children are born with lower body weight and suffer higher levels of malnutrition throughout their childhood. They are often affected by maternal stress during pregnancy, which is often linked to financial worries. Increasing household wealth is linked to improved attendance, concentration, and attainment at school. In short, the government can not spend money any better than reducing child poverty.

As rumors spread that Rachel Reeves is eying up cuts to disability support, more mitigation might be forced onto the Scottish Government. That loch of ‘clear blue water’ has suddenly become an ocean.