National Islands Plan

Poverty, Cost-of-Living and Social Justice

Poverty carries unique socio-economic impacts, weakening social cohesion and embedding disadvantages in local communities. Distinct island challenges – including geographic isolation, higher cost-of-living, constrained employment opportunities and sometimes challenging access to public services – intersect to shape patterns of inequality.

According to the Scottish Index of Multiple Deprivation (SIMD) 2020, islands are generally less deprived than other parts of the country. However, SIMD’s strength lies in identifying concentrations of poverty and detecting pockets of deprivation in more sparsely populated areas requires a more nuanced approach. Considering island areas separately allows for a fairer assessment of poverty, reflecting their unique cost-of-living pressures and highlighting patterns of hardship that may be obscured in broader regional and national data.

The picture is, indeed, complex. Deprivation on islands is often less visible but can be deeply felt. The percentage of respondents to the Scottish Island Survey 2023 reporting that their household is managing well financially is lower than that of Scotland as a whole, with younger islanders more likely to report financial pressures.

Established in 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.

Island communities have long faced a high-cost economy and the cost-of-living crisis has intensified these pressures further, exposing structural vulnerabilities in island economies and services. Yet island communities have long shown resilience and creativity. With the right support, they can continue to overcome barriers, reduce poverty, and improve wellbeing.

Social Security

Ensuring that every eligible individual in Scotland can access the social security support they are entitled to is both a legal duty and a fundamental priority for the Scottish Government. Our Benefit Take-Up Strategy (2021) remains central to our efforts to reduce barriers to accessing entitlements. Despite significant progress, we know that some people are still missing out. Challenges in accessing support are often compounded in island communities, where geography, connectivity, and concerns around confidentiality can further restrict access to support.

The Seldom Heard Groups Action Plan (2025) sets out a focused 12-month programme to improve engagement and access for those most likely to be excluded. The Plan will also inform the development of the next Benefit Take-Up Strategy, due by October 2026.

By embedding the needs and lived experiences of island communities into policy design and service delivery, we can reduce barriers, increase household incomes, and improve our ability to reach the people that social security is intended to support. This approach aligns with our broader commitment to fairness, inclusion, and human rights.

We will ensure that barriers to take-up that impact island communities are considered as part of the development of the next Benefit Take-Up Strategy, due by October 2026.

Social Security Scotland plans to undertake additional analysis on the experiences of island communities compared to other parts of Scotland, setting out notable differences in social research publications to inform future delivery.

Child Poverty

Child poverty is generally less prevalent on islands compared to the rest of Scotland^[52]. However, islands display a distinct poverty profile: nearly three quarters of low-income families include at least one working person, compared to 6 in 10 in other areas, reflecting the rise of in-work poverty from 2015 to 2023^[53].

Eradicating child poverty is the foremost of the Scottish Government’s four interconnected priorities and we are committed to taking targeted action in island settings, focusing on unique solutions rooted in these communities.

Through the Child Poverty (Scotland) Act 2017, we have set legal targets to significantly reduce the number of children living in poverty by 2030. We have already put in place a range of sustained and joined-up measures that tackle the three main drivers of poverty: income from employment, cost-of-living and income from social security. This includes implementing the Scottish Child Payment, expanding access to childcare and investing in devolved employability services.

While a strong national framework is essential, meaningful progress on tackling child poverty depends on tailoring interventions to the unique circumstances of local communities.

Under the Child Poverty (Scotland) Act 2017, local authorities and relevant Health Boards are required to prepare joint annual reports to set out the actions they have taken, and intend to take, to tackle child poverty within their areas. The Scottish Government works alongside other national partners to support local child poverty leads, including through knowledge-sharing and advice on Local Child Poverty Action Reports. Through the Child Poverty Practice Accelerator Fund, we are also providing financial support to test new local approaches to tackling the root causes of child poverty.

Fairer Futures Partnerships (FFPs) bring local and national partners together to build more integrated, responsive services that support families to move out of poverty. FFPs are operating in 16 local authority areas in Scotland. The 2025-26 Programme for Government included a commitment to establishing a new FFP in Shetland – this has now been initiated, building on the work of their Anchor Early Action Project. We have also added Adopt and Adapt to our FFP approach, funding local authorities such as Highland, Orkney Islands Council and Comhairle nan Eilean Siar to engage with the learning programme and embed its insights in their child poverty work.

Similarly, the Whole Family Support (WFS) approach is being implemented by local authorities across Scotland, with North Ayrshire one of the “early-adopter” areas. Our approach focuses on removing barriers at a national level to enable local partners to have greater flexibility to meet the needs of low-income families.

We are continuing to act on the findings of our Rural and Islands Child Poverty research (2022) and have published a report (2025) to further enhance our understanding of the changing nature and context of poverty in rural and island areas. We will build on this learning to ensure the unique circumstances of island communities are reflected in the third and final Tackling Child Poverty Delivery Plan, due by end of March 2026.

We will ensure the learning and insights from the Shetland Fairer Futures Partnership and the Whole Family Support approach are shared with other island areas, improving our understanding of what measures are effective in tackling child poverty among island communities.

We will review the guidance on the development of Local Child Poverty Action Reports and consider how to best reflect the distinct challenges facing island communities.

Case Study – Shetland’s Anchor Early Action Project

Launched by the Shetland Community Planning Partnership in 2018, the Anchor Early Action Project aimed to tackle child poverty in the context of the islands’ high cost-of-living. The project emphasised family-led problem solving, shifting the focus from crisis response to early intervention. Over its duration, 67 families benefited from personalised and stigma-free support. Evaluation highlighted the importance of authentic engagement and the project’s positive impact on families’ confidence and ability to pursue change. Learning from the project, which concluded in 2023, informed the establishment of the Anchor for Families Team, embedded across Shetland schools and supported through the Scottish Government’s Whole Family Wellbeing Funding.

Fuel Poverty

Since the first National Islands Plan was published in 2019, island households and businesses have faced acute pressure from rising fuel prices. Combined with harsher climates and limited fuel choices, high energy costs are driving fuel poverty rates, with almost half of respondents to the Scottish Islands Survey 2023 reporting that their home sometimes feels uncomfortably cold in winter^[54].

Many island households remain off the gas grid – this includes all dwellings in Orkney and Shetland and 89% of dwellings in Na h-Eileanan Siar^[55]. With electricity considerably more expensive than mains gas per kilowatt-hour, islanders can face higher energy bills than elsewhere in Scotland.

Fuel poverty extends well beyond heating costs. Financial hardship can force many families to spend a disproportionate share of their income on energy, leaving less for essentials such as food, transport, and clothing. This trade-off erodes financial stability, limit local spending power, and weakens island economies.

Following the publication of our Fuel Poverty Strategy (2021), we have continued to take action in pursuit of our statutory targets, as set out in our first fuel poverty periodic report (2025). The independent Scottish Fuel Poverty Advisory Panel subsequently published their statutory response and offered recommendations on future action, which we are now considering as part of our work to review the Fuel Poverty Strategy by December 2026.

While we are proud of the actions and investments that we have delivered to tackle fuel poverty, it is evident that high energy prices must be addressed, and the fundamental fiscal and policy levers to make a real difference lie with the UK Government. The Scottish House Condition Survey (2023) estimated that 34% (or around 861,000) of all households were in fuel poverty. Internal modelling indicates that, had fuel prices remained at 2019 levels, the efforts we are making in Scotland would have seen a decrease of around 389,000 households in fuel poverty.

In their final report, our Social Tariff Working Group recommended that eligibility should be calculated based on a sophisticated set of metrics – including rurality – and that it should be applied to all fuel types. We believe that a social tariff mechanism is the best way to ensure that energy consumers are protected against high costs and that their household energy needs become more affordable and more sustainable in the longer-term, reducing the likelihood of building up energy debt. Our analysis finds that around 660,000 households could see estimated fuel bills cut by an average of £700 under Scottish Government proposals for targeted discounts, with the number of households in fuel poverty reduced by around 135,000. We have repeatedly called on both the previous and current UK Government to introduce this critical policy.

We will engage with the UK Government on energy market reforms, advocating for greater clarity on the implications for bill-payers and encouraging the development of a support package to tackle fuel poverty.

We will explore the possibility of using local authority level data to investigate the impact of an energy social tariff on island communities.

Disability and Accessibility

Our vision for Scotland is one where all disabled people are fully supported to participate in society, exercise their rights and thrive within their communities. The Scottish Government’s Disability Equality Plan (2025) focuses on three priority areas: providing financial support for disabled households, improving mental health and supporting disabled people’s full inclusion and participation in their communities. In 2025-26, £3 million has been allocated to support the Plan.

The Disability Equality Plan is grounded in the social model of disability, which recognises that individuals are not “disabled” by impairments, but rather by the societal, structural, and attitudinal barriers that they face. Among island communities, some of these challenges are magnified by geography – including longer travel distances, more limited access to specialist services, and fewer local opportunities for employment, training and education.

The Disability Equality Plan commits to working inclusively with rural and island communities to ensure local needs and voices inform the design and delivery of services. This will include pursuing community-led opportunities to share learning and influence the development of wider policies for rural and island areas, ensuring they work for disabled people – giving them freedom, dignity and choice over their lives.

We will establish a dedicated working group bringing together Disabled People’s Organisations, island local authorities, and community representatives to gain a comprehensive understanding of the barriers faced by disabled people living on islands.

Island Consumers

Island communities face greater vulnerability to changes in essential services and utilities, with smaller markets and more limited consumer choices compared to other parts of the country. Any reduction in the frequency and availability of these services can have disproportionate socio-economic impacts, undermining community wellbeing and sustainability.

Challenges surrounding the switch-off of the Radio Teleswitch Service (RTS) – which is industry led and wholly reserved to the UK Government – offer an ongoing example of the importance of factoring island realities into the design and delivery of service changes. RTS meters are common in homes that rely on electric heating systems and are more often found in areas off the gas grid, including many of our islands. Without replacement meters in place, households and businesses risk being left without a functioning supply or facing higher bills. Yet, many islanders find it hard to arrange replacements.

The Scottish Government has been working with Ofgem, the UK Government and industry through the RTS Taskforce. There is still a significant number of meters to be replaced in Scotland, and we are calling on renewed effort on the part of the industry.

We will support island-based energy consumers to access help and advice on energy costs, metering and decarbonisation by working with advice bodies to develop services that are tailored to their needs.

Similarly, many island communities rely on post offices as vital hubs for essential services such as parcel delivery, bill payments and banking. We continue to press the UK Government to protect island post offices, recognising that viable alternatives are not readily available. Some islanders are also faced with higher costs for sending parcels than communities on Scotland’s mainland, and may not be able to access the same post and delivery services, limiting access to goods and placing further pressures on household budgets and local businesses.

Despite being included in UK-wide delivery speed targets, Shetland, Orkney, and Na h-Eileanan Siar are not covered by the Postcode Area-level delivery speed standards for First Class mail that Royal Mail is required to meet. Such exclusion leaves these communities without the same level of service protection as the rest of the UK. Research by Consumer Scotland found that 72% of consumers in the Highlands and Islands had been charged additional fees when ordering parcels online^[56].

Informed by Consumer Scotland’s research and recommendations, we will engage with UK Government, Royal Mail, Post Office, Ofcom, and parcel delivery companies to ensure island communities and businesses can access essential services, including banking and equitable postal and delivery services.

Resilience and Preparedness

Living with the realities of geography and harsh weather has fostered a strong culture of preparedness and adaptability within island communities. Yet, in times of prolonged disruption, islands can still face acute challenges. Island supply chains can be fragile and heavily reliant on ferry and aviation links, which can be impacted by weather conditions, mechanical failures and other unforeseen events. Digital connectivity infrastructure is also vulnerable to weather events and damage caused by human activity, requiring rapid responses – in often challenging conditions – to minimise disruption and restore services.

While there are robust resilience arrangements in place across Scotland, there remains scope to strengthen them further and make them even more cognisant of island communities’ circumstances – particularly in relation to food, energy and digital connectivity.

We will work with local authorities and other key stakeholders to capture and apply learning from disruption affecting island communities, helping to strengthen preparedness and response planning, including in relation to digital infrastructure and food resilience.