The Herald is investigating the scale of child poverty in the country, revealing 80,000 children are now in “very deep poverty”, according to research from the Joseph Rowntree Foundation.

Parents in receipt of benefits like Universal Credit are eligible for the £27.15 a week payment for each child under the age of 16.

Child poverty rates in Scotland decreased to 22% in 2023-24, down from 26% in the previous year.

Scotland’s leading charities pinpoint the progress to the Scottish Child Payment but warn the 2030 target to reduce child poverty to 10% by 2030 will be missed unless the benefit is substantially increase to £40 per week.

Independent analysis by the Institute for Public Policy Research (IPPR) indicates that this increase could list an extra 20,000 children out of poverty.

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Meanwhile, the Fraser of Allander Institute suggests it would lead to a further 2.5 percentage point reduction in poverty – putting the Scottish Government on track to meet its targets.

Mr Swinney told The Herald he was “glad” the Scottish Child Payment had been increased, adding: "I think it is making a real difference to people’s lives.”

But he said: “I’ve discussed this with child poverty campaigners, all of whom I respect, there is a fine balance that you have to strike about the level at which a social security benefit is set in relation to the incentives to enter employment.

“And I think we are at the limits of that just now. I think we reduce the incentive to actually enter the labour market.”

The Herald is investigating child poverty (Image: Damian Shields) More than 320,000 children receive the benefit, but there is no specific data on how many families in receipt of it are in employment.

John Dickie, director of the Child Poverty Action Group in Scotland, highlighted that the Scottish Government’s own analysis showed no evidence of a “negative” impact on the labour market.

Official documents published in July by the Scottish Government found the Scottish Child Payment was “not currently negatively affecting labour market outcomes at any scale in the economy”.

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Mr Dickie said: “The Scottish Government’s own analysis shows that there is no evidence the Scottish Child Payment is negatively affecting labour market participation at any scale, and we are aware of no evidence that increasing it would have any significant impact on work incentives.

“It would certainly have no impact that would come anywhere close to outweighing the well evidenced benefits providing additional cash support to families has for children’s outcomes and for the long term ability to contribute to the Scottish economy.”

Jamie Livingstone, head of Oxfam Scotland, said: “The vast majority of parents on the lowest incomes aren’t weighing up work incentives, they’re weighing up whether they can afford to put food on the table. Quality jobs can help lift families out of hardship, but if the First Minister is serious about ending child poverty, putting more money in parents’ pockets by bolstering currently inadequate social security is a must. 

“He should use next week’s Programme for Government to quickly raise the Scottish Child Payment to £40; no ifs, no buts. We need to invest in the range of actions needed to end child poverty for good using fairer taxes on wealth and income at both UK and Scottish level. Poverty is a political choice; so is whether we fully fund the fight against it." 

In a sit-down interview with The Herald in Bute House, Mr Swinney said: “You have to get the balance right and my judgement – and I’ve been very open about this – is that we are at the limits just now but obviously I will continue to engage on that question.”

Asked if the disincentive comment could be offensive to hard-working families, the First Minister said: “It’s inherently part of the discussion of all social security levels that you have to be mindful of that interaction. I think it is unavoidable.”

At First Minister’s Questions last week, Mr Swinney also said he was “proud” of his government’s efforts to reduce child poverty.

On entering Bute House on May 6 2024, he pledged eradicating child poverty would be his “biggest priority”.

But the Scottish Government has pledged to mitigate the two-child benefit cap from 2026.

Mr Swinney said the UK Government’s failure to scrap the cap, which limits Universal Credit to the first two children in a family, as “bewildering”.

The UK Government has said it does not currently have the means to remove the cap.