Fairer Futures Partnerships: islands communities impact assessment (ICIA)

2. Step two – gather your data and identify your stakeholders

Islands Evidence Base

This section provides an overview of relevant issues and the known evidence base for Scottish Island communities, including a specific section on Shetland as one of our key partners.

Poverty

Rural Scotland has generally reported lower poverty levels than urban areas since 2010; however, notable and widening inequalities persist between rural, remote, and island communities. Latest data reveals that remote rural areas (encompassing most of Scotland’s islands) as well as remote small towns experienced a pronounced and sustained, though temporary, rise in relative poverty after housing costs between 2012 and 2017^[2].

Child Poverty

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 ^[3].

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 ^[4].

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

Children in low-income families

Data reveals 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 ^[5]. This pattern highlights the particular prevalence of in‑work poverty in more geographically isolated areas.

Since 2015, rural and island communities have also seen a steady rise in the proportion of low‑income families with a lone parent, now representing a majority of households, contrasting with other parts of Scotland ^[6].

Higher cost 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 ^[7].

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 ^[8] compared with equivalent products in the supermarket.

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) ^[9]. In addition to this, 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-Eilena Siar, while the average for Scotland is 24% on average between 2017-2019 ^[10].

The recent 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^[11]. The Poverty Alliance refers to these additional costs as the ‘rural poverty premium’ ^[12].

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^[13]. 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^[14].

In recognition of the higher costs of living faced by people living on island communities, the Scottish Government’s Islands Cost Crisis Emergency Fund was set up in December 2022 to help mitigate against some of the unique cost of living challenges faced by those living on Scotland’s islands. Since December 2022, the Islands Cost Crisis Emergency Fund has provided £4.4 million to the six island local authorities to support vulnerable households exposed to cost-of-living pressures. The Fund has offered flexibility for authorities to tailor support to local needs, helping islanders manage difficult choices between heating, eating, and other essentials. Local Authority decisions on where funding was to be directed were based on their local knowledge and understanding of the impacts of the cost crisis in their area^[15].

Transport Poverty and Access to Services

Evidence shows that transport costs are much higher in rural areas, particularly for working-age households, with findings indicating that greater travel distances (especially for work, but also for shopping, leisure/holidays and accessing services), the greater need to own at least one car, and higher fuel costs can add over £50 a week to costs for rural households ^[16].

An evidence review prepared by 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 ^[17].

In 2026/27, the Scottish Government announced investment of £1.8 million to remove peak fares for Northern Isles Ferry services between Orkney, Shetland and mainland Scotland, to help ease transport costs and provide low season ferry fares for Northern Isles residents ^[18].

Employment and Income

In terms of employment, jobs in agriculture; forestry and fishing; manufacturing; construction; and accommodation and food services are all more common in rural areas than urban. The adoption of the real living wage in some of these key rural sectors is low and many of these roles are also characterised by seasonality; for example, agriculture and forestry tend to provide precarious, low-paid and seasonal employment.^[19]. 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^[20].

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. There is 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%) ^[21]. This can act as an additional barrier to island communities in terms of accessing online learning and employment opportunities.

Childcare

Island and rural communities in Scotland face additional challenges accessing 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^[22]. It is also recognised that poor access to childcare acts as a barrier for parents, particularly for lone parents, to entering and accessing employment or training opportunities ^[23].

The Scottish Women’s Budget Group (SWBG) conducted a survey into childcare in 2023, aiming to highlight the challenges faced by women who have childcare responsibilities during the cost-of-living crisis. The survey findings revealed that along with issues of availability, accessibility, and affordability of childcare, these challenges can be amplified by poor transport options, and in this way childcare provision has a detrimental impact on many women and their children in poverty ^[24].

Local Place Based Approaches

In terms of considerations for the development and delivery of FFP activity, we recognise the importance of developing a local-level understanding of island communities, and recognition of the different contexts across rural and island communities, such as access to services and amenities. Access to amenities and services varies widely across Scotland’s rural islands. Some islands have high levels of access to services, such as Arran, Bute, Mainland Shetland and connected isles, and Mainland Orkney and connected isles, whereas other small isles have lower access^[25].

Similarly, sparsely populated areas are also associated with high and increasing dependency ratios which can have an impact on community sustainability and growth. Almost a third (31%) of the Highlands and Islands population is projected to be aged 65 years or older by 2043, ranging from 35% in Argyll and Bute, to 28% in Shetland. The all-of-Scotland (25%) and all-of-UK (24%) projections are considerably lower ^[26].

A range of work is being undertaken by the Scottish Government to address the challenges that people in island communities face. The National Islands Plan^[27] recognises the critical importance of addressing data gaps and gathering robust island-level data to inform targeted interventions and measure impact. For example, the Scottish Islands Surveys conducted in 2020 and 2023 have generated rich insights into the socio-economic circumstances of islanders and their perceptions of island life^[28]. The development of the latest National Islands Plan has also involved proactive engagement with local authorities to ensure the Plan complements local strategies, supports place-based solutions and empowers communities to shape their own futures.

Shetland FFP

Poverty and Cost of Living Data

Data reveals that child poverty rates are lower in Shetland than across Scotland as a whole - with 12.3% of children living in low-income families in Shetland in 2022/23 (a rise of 0.5 percentage point from the previous year), compared to the Scottish average of 24%. While Shetland had the third lowest level of children living in low-income families among local authorities in Scotland in 2022/23, this is higher than pre-pandemic levels and is increasing ^[29].

Local evidence from Shetland’s Child Poverty Action Plan reveals that almost half of people in Shetland live in households with an income less than the Minimum Income Standard (MIS) benchmark. In working households, 42% of people in Shetland lived below the benchmark, compared to 29% in Scotland as a whole ^[30]. Foodbank use in Shetland remains considerably higher than a decade ago, although in 2024-25 it fell compared to the previous year. In 2024–25, the Shetland Foodbank distributed an average of 92 food parcels per month, down from 137 parcels per month in the previous year. Over the course of the year, 1,541 individuals received support, with approximately 17% of those assisted being under the age of 16.^[31].

It is important to note that whilst Shetland may not have the highest levels of poverty, poverty remains a reality for many and it is vital that we do not lose sight of those living in “hidden poverty”. The work of the Shetland Anchor project began to tackle this and the Shetland FFP, building on the foundations of this earlier work, is now seeking to embed learning more systematically in Shetland. Our aim is to continue working closely with partners in Shetland to monitor progress at a local level and to share learning from this work with other island locations ^[32].