Bringing Hope, Building Futures: Tackling child poverty delivery plan 2026-2031 – annex 10: Islands Communities Impact Assessment (ICIA)

Step two – gather your data and identify your stakeholders

Poverty & Child Poverty

Although poverty rates have consistently been lower in rural areas than urban areas of Scotland, rural poverty rates rose from 13% in 2012-2015 to 18% in 2018-2021.^[1] Child poverty rates were lower in accessible rural areas than in the rest of Scotland between 2010-13 and 2020-23.

However, a small but steady increase in child poverty was noted in accessible rural areas from one in seven children in 2014-17 to one in five children in 2018-21, narrowing the gap between child poverty rates in these areas and in the rest of Scotland over this period.

Whilst available statistical data shows lower baseline rates of children living in poverty in rural and island communities, stakeholders have raised concerns that this data does not suitably capture the reality of/experiences of rural poverty, and existing measures may make it difficult to understand the scale and depth of rural poverty in Scotland.^[2]

It is also recognised that poverty in rural and island areas can often be hidden in comparison to urban areas, as individuals and families may experience financial hardship due to higher living costs for essentials such as food, fuel, housing and transport. This inequality is often masked and less visible, as statistical measures do not account for higher costs of living or service shortages in rural and island areas.

Though rural poverty areas are lower on average than urban areas, significant disparities in rates of poverty exist between rural, remote and island communities.

For example, remote rural areas (including most Scottish islands) and remote small towns experienced a marked and consistent, although temporary, increase in relative poverty after housing costs between 2012 and 2017, while rates in urban areas have remained broadly stable.

In remote areas, the poverty rate increased from one in eight individuals to one in five individuals during this period, resulting in poverty rates more closely aligned with those seen in urban areas. The increase in relative poverty between 2012 and 2017 primarily affected working-age individuals in remote areas.

Since 2018, relative poverty rates in remote areas have broadly returned to the lower levels seen previously.

Accessible rural areas saw a consistent, small increase in relative poverty between 2015 and 2019 from one in seven individuals to one in six individuals.

Relative poverty rates among pensioners showed a consistent, slightly rising trend across Scotland, with rates remaining geographically comparable across areas.

In-work poverty increased in both remote and accessible rural areas, with rates now approaching those seen in the rest of Scotland.

Children in low-income families

Data shows that island and remote communities display a distinctive poverty profile with nearly three‑quarters of children in relative low‑income families living in households where at least one adult is in work, compared with around six in ten in other parts of Scotland.^[3] This pattern highlights the particular prevalence of in‑work poverty in more geographically isolated areas.

Since 2015, relative low income families in rural, islands and remote areas have shown a steady increase in the proportion of children in lone parent families, and they now represent a majority. The opposite pattern is seen in larger cities.

Child poverty rates by island community

Statistical data show that child poverty rates are lower in rural areas, but stakeholders have raised concerns that this data does not suitably capture the reality of/experiences of rural poverty. Whilst poverty rates vary between islands, we recognise that this can hide higher costs that also may vary between islands, and that these may be more difficult to shift given structural differences.

In general poverty rates are lower in both island local authorities and local authorities with islands. Estimates of children living in relative poverty after housing costs by Scottish local authority show all island local authorities with lower rates than the Scottish average and one local authority with an island above average. The one local authority containing island communities that is above the Scottish average of 23% is North Ayrshire, with a relative child poverty rate of 24.3%, but it is important to note that the majority of the population there are not island communities.

Other relevant local authorities with islands are slightly below the national rate (Highland 22.1%, Argyll and Bute, 21.2%), though similarly the majority of the population are not an island community. The three island local authorities are all at least 3 percentage points below the Scottish average (Na h-Eileanan Siar 19.7%, Orkney 18.6% and Shetland 14.5%).

Strategic themes of the Tackling Child Poverty Delivery Plan

The delivery plan will follow four strategic themes which we know are key to driving child poverty reduction. Existing research and data is key in understanding how each of the themes are particularly important for island communities.

Increasing earned incomes

The increase in relative poverty in remote small towns and remote rural areas between 2012 and 2017 coincided with a temporary decline in employment rates. Accessible rural areas maintained the lowest unemployment rates while large urban areas consistently showed the highest.

Rural employment showed significant sectoral variation between 2015 and 2023, with land-based industries experiencing substantial growth while the energy supply sector declined markedly.

We know that employment in sectors prevalent in rural areas can be volatile, with more unpredictable incomes. Jobs in agriculture; forestry and fishing; manufacturing; construction; and accommodation and food services are all more common in rural areas, with the adoption of the real living wage in some of these key rural sectors remaining low. Many of these roles are also characterised by seasonality; for example, agriculture and forestry tend to provide precarious, low-paid and seasonal employment.^[4] In more recent years, the focus in rural economies has changed, becoming more service orientated, including through increased tourism, however low pay, seasonality and precarity remain common.

The Connected Nations Scotland highlights a pronounced disparity in access to fast and full fibre broadband between Scotland’s Islands authorities compared to other parts of Scotland. Evidence has shown significantly lower reported full-fibre internet connection in the Orkney Islands (14%), Shetland Islands (11%), and Na h-Eileanan Siar (6%), in comparison to other parts of Scotland such as Aberdeen City (90%) and Glasgow City (89%).^[5] This can act as an additional barrier to island communities in terms of accessing online learning and employment opportunities.

Accessibility of affordable and reliable public transport remains a key barrier for island and rural communities. An evidence review form Highlands and Islands Enterprise in 2022 found that remote and rural areas, including island communities, face more pressing issues with transport poverty (where people don’t have access to essential services or work because of a lack of affordable transport options), with the review highlighting this as an issue for the local authority areas of Highland, Comhairle nan Eilean Siar, Moray and Orkney. Across this area, 58% of data zones were classified as being at high risk of transport poverty compared to 38% across Scotland overall.^[6]

Furthermore, island and rural communities in Scotland face additional challenges accessing flexible and affordable childcare. Research notes that the significant difficulties that rural parents face in accessing, or affording, childcare can create sources of stress and distress for families experiencing poverty.^[7] We know that inadequate access to childcare acts as a barrier for parents, particularly for lone parents, to entering and accessing employment or training opportunities.

Reducing the costs of living

Evidence highlights that those living in rural, remote and island communities face higher overall costs, including food, clothing, travel and household goods and services. It is estimated that these additional costs typically add 15-30% to a household budget, compared to urban areas across the UK.^[8]

Whilst the cost of food is not significantly higher in rural and island supermarkets, in local convenience and community stores costs were 44% higher than in the mainland, and 27% higher on the Islands compared with equivalent products in the supermarket.^[9]

Evidence suggests that lack of quality and affordable housing is a specific issue for rural, remote and island communities. Data available from the Scottish Island Communities Data Dashboard (2025) reveals that on average, 53% of islanders disagree that there is affordable housing in their local area (views differ by island group).^[10]

In addition, those living in island communities are also more likely to face fuel poverty than the average Scottish resident. Rates of fuel poverty are generally higher in the island local authorities, with around a third of residents experiencing fuel poverty in Argyll and Bute (32%), Highland (33%), Orkney Islands (31%) and Shetland Islands (31%) councils, and as many as 40% in Na h-Eileanan Siar, while the average for Scotland is 24% on average between 2017-2019.^[11]

The cost-of-living crisis has been an area of major concern for island communities, with island households less likely to report managing well financially and more likely to express worry about paying for essentials such as heating and hot water compared to the wider population.^[12] The Poverty Alliance refers to these additional costs as the ‘rural poverty premium’.^[13]

The Scottish Government has commissioned research into the ‘cost of remoteness’, presenting estimates of certain additional costs that make it more expensive to meet a minimum acceptable living standard in remote areas of Scotland.^[14] Higher living costs and higher fuel costs in rural and island communities impact the minimum income needed for an acceptable standard of living in these communities. The National Islands Plan provides a framework for action to meaningfully improve outcomes for island communities, and many of the key areas of work related to the plan support our island communities to address the cost of living.^[15]

Maximising incomes from social security

Existing research and recent consultation with stakeholders representing island communities have demonstrated there are issues with lower take-up of welfare support due to factors including stigma, lack of awareness/support and challenges with the welfare system.

Supporting children and families to thrive

We know that rural and island communities are experiencing issues due to shifting demographics from residents, and particularly young people, moving to urban areas. Between 2011 and 2021, accessible rural areas experienced the strongest population and working-age growth, while remote small towns saw population decline, an 8.2% drop in working-age residents, and a shift toward single-person, childless, and older households. Working-age populations grew only in accessible rural areas and large urban areas.

Research shows that island communities faced additional challenges when accessing services. This is exacerbated when ferry services are disrupted by bad weather, preventing islanders from travelling to access education, employment, or healthcare with no alternative transport options.

Data limitations continue to hamper rural and island poverty evidence, with cross-sectional surveys producing volatile estimates due to small sample sizes and declining response rates. Research has suggested that addressing these gaps requires strategic use of administrative data to improve sample efficiency and continued investment in the Scottish Island Survey.^[16] It also suggests that enhanced data collection mechanisms for remote areas should be developed to enable reliable analysis of compound poverty challenges across all geographical contexts.

Stakeholders

Our key stakeholders include island local authorities, and health boards, third sector organisations working in and with island communities, the Scottish Rural Network and the Rural Child Poverty Network, which is supported by the Improvement Service.

As outlined in more detail below, the Scottish Government undertook an extensive consultation process with various stakeholders ahead of the plan, including several of these key stakeholders.

The delivery plan will contain a broad range of policies and actions and, where relevant, these may be taken forward by Scottish Government policy teams with a specific focus on islands. Where necessary, individual policy teams will undertake their own Island Communities Impact Assessments.