Annex 2 – Additional information on low income households most affected
Households in Receipt of Income Related Benefits
The Department of Work and Pensions (DWP) means-tested benefit caseload in Scotland includes UC, Housing Benefit, Employment Support Allowance, Income Support, Jobseekers Allowance and Pension Credit. The total caseload (avoiding double-counting benefit units which receive multiple benefits) was around 891,000 in November 2021. The caseload of tax credits (Working Tax Credit and Child Tax credit) was around 108,000 in December 2021.
Households in receipt of income related benefits are likely to be disproportionally negatively affected, due both to the starting point of financial hardship following a sustained period of austerity and a series of benefit reductions since October 2021.
In May 2022, JRF reported that around seven million low income households in the UK were going without at least one essential (such as a warm home, enough food, appropriate clothing or basic toiletries) and almost all (93%) families on means-tested benefits that are being deducted to pay off debt have gone without at least one essential.
A survey commissioned by the Trussell Trustin August 2022 found that nearly 40% of people in receipt of UC said they had gone a whole day with no food or just one meal in the last month because they could not afford to buy enough food.
Households Narrowly Ineligible for Means-tested Benefits
There could be a significant number of households in Scotland who narrowly miss out on qualifying for the £650 Cost of Living payment for low income households. For example, there could be around 10,000 households in Scotland who earn just too much to qualify for Universal Credit who would have been better off earning less, and remaining on UC.
Households with an Unpaid Carer
Definition - anyone who provides care for a friend, neighbour or family member unpaid.
Before the pandemic there were 700-800 thousand unpaid carers in Scotland. In 2020, this figure was estimated to be over 800,000.
Reduced ability to work can push carers into poverty - unpaid carers already have lower financial resilience as caring is often unpredictable and can be difficult to plan for financially, reducing their capacity to work to earn money, with carers working part time, in lower paid jobs or having to give up work entirely in order to care. This situation is likely to be worsened for people with more intensive caring roles. Based on the 2022 UK poverty data, 6 in 10 of those who are caring for 35 hours or more a week are not in paid employment, 3 times the rate of those caring for less than 20 hours a week. In Scotland, 29% of carers in the most deprived areas care for 35 hours a week or more– more than double the level in the least deprived areas. Minority ethnic carers are more likely to suffer financial difficulties as a result of caring, reporting higher rates of struggling to make ends meet, and greater increases in household bills due to the pandemic, than White carers.
Larger Households (3+ children)
11% of all families in Scotland have 3 or more children.
In 2019, there were approximately 130,000 large family households (two adults plus three or more children, or three or more adults plus one or more children) in Scotland.
The risk of relative poverty increases with number of children and overall, larger families require higher levels of income to achieve an adequate standard of living. Cost of childcare and other living costs are higher with more children. However, housing costs for children living in poverty are only marginally higher than the average for all households with children, but this is possibly due to overcrowding. Families from some minority ethnic groups are more likely to havethree or more children.
JRF argue that this it is not surprising that families with three or more children are disproportionately more likely to be in arrears, given the evidence of sharply rising poverty among large families in recent years and the fact that providing for larger families simply costs more.
Lone Parent Households
Lone Parent Households make up 25% of all families.
92% are headed by women. 90,000 children living in relative poverty are in a lone parent family, and 80,000 children are living in absolute poverty.
Lone parent families are the least wealthy household type in Scotland, and also the most financially vulnerable. 64% of lone parent households were financially vulnerable in 2018-2020, meaning that their savings could only replace their income for a month before falling below the poverty line. Lone parent households were also the most likely to have unmanageable debt, compared to other household types.
Children living in lone parent families are more likely to be in relative poverty and or material deprivation. Economic effects are likely to disproportionately affect those on low incomes with limited savings, particularly lone parents who are more exposed to the impacts of earning reductions.
Figures compiled by the Centre for Economic & Business Research (CEBR) indicate that whereas parents as a whole were estimated to spend 28% of their income on bringing up their child each year in 2014, the figure was 54% for single parents. The CEBR research also reports that single parents have been hit the hardest by inflation in recent years, particularly on essential goods and services whose prices have risen disproportionately. Food insecurity is most common among single parent households (31%) and working-age single adults (20%), compared to 9% across all household types..Lone parents face significant barriers to employment, and are more likely to be locked out of work due to childcare responsibilities.
Single Person Households
18% of households are single adult households
JRF estimate that after April 2022, households on low incomes will be spending on average 18% of their income after housing costs on energy bills. For single adult households on low incomes this rises to 54%, an increase of 21 percentage points since 2019/20.
Rural and Island Households
17% of households are in a rural area (11% in an accessible rural area, and 6% in a remote rural area).
Approximately 100,000 off-gas-grid households were considered to be in fuel poverty in 2019, representing a fuel poverty rate of 34%, above the national rate of 24.6%. This is likely to have risen with rising costs.
There is widespread evidence that rural areas, and remote and island communities in particular, experience higher costs of living for some goods and services.
Transport costs - In 2019, rural households in Scotland spent, on average, £135 per month on fuel compared with £107 for urban households (26% more). This is primarily driven by longer journey distances in rural areas (a median journey length of 9.0km in rural compared with 3.8km in urban Scotland) as well as lower availability of public transport (which is likely to exacerbate issues for rural households from high fuel prices in terms of fewer alternatives to car use). In 2019/20, the average urban household spent 13% and rural households spent 16% of their income on transport across the UK.
Households with a Disabled Person
There are 100,000 children living in relative poverty, and 90,000 people in absolute poverty, in families with a disabled person
Over a third of adults (35%) are disabled (defined as having a limiting long-term condition). This equates to approximately 1,590,000 adults (aged 16+), based on the mid- 2020 population estimates.
Households with disabled members were more likely to be financially vulnerable, and more likely to have unmanageable debt. 
Households with disabled people are one of the six priority household types identified as being at highest risk of child poverty. Analysis shows that:
- 29% of children in families with a disabled person are in relative poverty
- overall, disabled families face higher costs of living than non-disabled
- families with long-term conditions find it harder to afford childcare and there are barriers around finding the right childcare to support children's needs
- they are less likely to have savings (among families with long-term conditions)
Hospitalisation can represent another particularly significant source of costs for families with disabled members, (care for children, travel to hospital, overnight stays etc.)
The latest findings from the Citizens Advice (CA) cost of living dashboard (September 2022 and applies only to England and Wales) show that CA are providing more advice and referrals for cost of living issues (such as seeking advice about homelessness, food bank referrals, debt issues etc.) for people with a disability.
A UK survey commissioned by the Financial Fairness Trust conducted in May-June 2022 found that households with a disability had taken greater steps to reduce their energy usage in 2022 with nearly half struggling to keep their home warm (48% compared to 30% of non-disabled households) and 43% reporting that the quality of food they eat has declined (compared to 25% of non-disabled households). The Scottish government did not uprate devolved disability benefits at 6 per cent to avoid inequity with many Scottish residents still being on DWP benefits during the transition to Social Security Scotland benefits.
Households who Rent Their Homes
People who rent their homes privately and/or social renters.
23% of households are social renters, and 14% are private renters.
The rented sectors have a higher proportion of people who are in relative poverty, as well as children in relative poverty.
Combined Scottish Household Survey data from 2017-2019 indicates that households with a minority ethnic highest income householder (HIH) were more likely to be living in the private rented sector (PRS) than white Scottish/British HIH households. However, the proportion of those living in the PRS varies by ethnic group. Householders in the PRS are more likely to be experiencing financial hardship, compared to homeowners. Recent research on low income renters shows Black and minority ethnic families are much more likely to face unaffordable rents than White families (65% compared to 52%) driven by factors like geography, labour market inequalities and elements of the social security system (e.g. the benefit cap), which they argue disproportionately impact Black and minority ethnic groups.
Households on pre-payment meters will be particularly affected by the increase in energy prices, as around 80% of annual household gas consumption falls within the winter months, and these households are unable to spread the costs over a longer period. The share of households on pre-payment meters is much higher in the private rented sector (22%) and social rented sector (43%) than in the owner occupier sector (5%). Furthermore, within each tenure, households on pre-payment meters are more likely to be in fuel poverty than those paying by other means, with around three-fifths of households who live in the rented sectors and who have a pre-payment meter being in fuel poverty.
Levels of poverty are high in the private rented sector, with 34% of people in the private rented sector in 2017-2020 living in relative poverty after housing costs. While the sector is smaller than the owner-occupied sector, this still means that nearly one in four (24%) people in relative poverty were living in the private rented sector.
Local Housing Allowance (LHA) rates, which set the maximum amount of rent which can be claimed for under Housing Benefit or the UC Housing Element and which had been frozen in cash terms for 4 years, were raised to the 30th percentile of market rents by emergency Covid-19 legislation in March 2020. However, rates were then frozen for 2021-22 and again for 2022-23.
Many private renters will lose out due to the policy of freezing LHA rates as if they cannot find a property with a rent within the LHA rate, they will have to pay for the difference between their LHA rate and their rent. Private rental price inflation has increased over recent months. As measured by the ONS's Experimental Index of Private Housing Rental Prices, rental price growth in Scotland, which averaged less than 1% during 2020, is now at 3.6% as at August 2022. If this trend continues or accelerates, the gap between LHA rates and market rents will increase and renters will have to cover the shortfall. Where households on housing benefit or UCHE have rents below the LHA rate, any increases in rents to the LHA rate will also be reflected in increased benefits, although this depends on incomes and taper rates, which may result in additional costs for some households.
Qualitative research by JRF from November 2021 on the challenges of living in Scotland's private rented sector showed that in winter last year; affordability pressures forced 31% of low income renters surveyed to cut spending on other essentials such as food or heating to pay their rent and over half of lower-income renters surveyed (55%) were worried about being able to afford essentials in the future – rising to 62% of those who received support through UC/Housing Benefit. It showed that 88% of PRS renters surveyed reported affordable rent as their most important priority and 30% of private rented sector renters worry about being able to pay their rent – rising to 44% of low income renters and people on UC /LHA, women, people with disabilities and people with children are more likely to report this worry.
Minority ethnic households with children in Scotland are overrepresented in the private renting sector and spend a higher proportion of their income on housing costs than other families.
While social renters are not affected by the freeze in Local Housing Allowance rates in the same way as private renters, there may be some households with additional costs if increases in rents are not fully covered by corresponding increases in housing benefit or UC Housing Element.
Returns to the Scottish Housing Regulator show that following the impact of Covid, social landlords reduced the rent increase they planned to apply from 2.5% on average in 2020-21 to 1.2% in 2021-22. Despite this more moderate increase in rents, rent arrears as a proportion of rental income increased from 5.8% in April 2020 to 6.3% in March 2022. For 2022-23, social landlords planned to increase rents by an average of 3.0%, with increases ranging from 0% to 6%.
In 2018/19, social renters spent 25% of their net (i.e. after tax and national insurance) income on housing costs, and private renters spent 29%. This compares to 8% across all tenures. The recently published Fraser of Allander Institute Commentary finds that in June 2022, inflation for social rented sector tenants was 11.2%, compared to 8.2% and 8.6% for other renters and owner-occupiers respectively. The report states "the most likely driver of this difference in experienced inflation is food costs rather than housing; social rented sector tenants spend 16.3% of expenditures on food and non-alcoholic beverages. The same share is about 10% for other renters and owner-occupiers."
Definition -The term 'Gypsy/Travellers' refers to distinct groups – such as Roma, Romany Gypsies, Scottish and Irish Travellers – who consider the travelling lifestyle part of their ethnic identity.
There are 15,000 - 20,000 Gypsy/Travellers - estimated in Scotland.
Gypsy/Travellers are more likely to be in seasonal work, saving money in the summer to last them through the winter and may find it more difficult to access lending or benefits, depending on their lifestyle; these issues were highlighted during the lockdowns as a result of the COVID-19 pandemic.
How to access background or source data
The data collected for this social research publication:
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