6 Finance

Main Findings

On the whole, the proportion of households reporting they were managing well financially has increased, from 42 per cent in 1999 to 56 per cent in 2017. The recent levels suggest a period of recovery following the dip between 2007 and 2012, which may be explained in part by the economic downturn during that period.

As in previous years, single parent and single adult households were the most likely to report that they were not managing well financially (21 and 16 per cent respectively), both figures being above the Scotland average of nine per cent.

Owner occupiers were most likely to report they were managing well (69 per cent compared to 30 per cent for households in the social rented sector).

Households relying mainly on benefits (including the state pension) were the most likely to say they were not managing well (15 per cent), which is more than double the rate for households relying on earnings (six per cent). Only three per cent of households relying on other sources of income (including occupational pension and other investments) reported that they were not managing well.

Levels of perceived financial difficulty were higher in areas of deprivation as measured by the Scottish Index of Multiple Deprivation. The proportion of households reporting not managing well was 18 per cent for households in the 10 per cent most deprived areas, falling consistently with levels of deprivation to three per cent for households in the 10 per cent least deprived areas.

There has been an overall increase in the proportion of households reporting having savings of £1,000 or more, from 43 per cent in 2009 to 55 per cent in 2017.

Households with lower income levels were more likely to report having no savings than those with higher incomes.

The proportion of households where neither the respondent nor their spouse or partner had a bank or building society account has fallen from 12 per cent in 1999 to two per cent in 2017.

6.1 Introduction and Context

The Scottish Government’s overall approach to tackling poverty and inequality is set out in the Fairer Scotland Action Plan, published in October 2016. The Plan sets out 50 concrete actions that the Scottish Government will take during this Parliamentary term, many of these have now been introduced or are in train. For example, a new Fairer Scotland Duty on socio-economic disadvantage is now in force, a national Poverty and Inequality Commission was launched in July 2017, and the Child Poverty (Scotland) Act 2017 was unanimously voted for by the Scottish Parliament at the end of last year.

Since then, the Scottish Government has published its first ‘Tackling Child Poverty Delivery Plan’ (March 2018), which sets out how progress will be made on reducing child poverty in the period 2018-22, underpinned by a new £50 million Tackling Child Poverty Fund, amongst other investments. The Plan sets out a range of help on incomes from work and social security, and assistance with costs of living.

That child poverty is the priority is not surprising bearing in mind recent national statistics which show that more than 1 in 5 children in Scotland live in poverty after their family’s housing costs have been accounted for.

6.2 How Households are Managing Financially

Respondents are asked how they feel the household has coped financially over the last year. Figure 6.1 shows the trend since 1999.

On the whole, the proportion of households reporting they were managing well financially increased, from 42 per cent in 1999 to 56 per cent in 2017. The recent levels suggest a period of recovery following the dip between 2007 and 2012, which may be explained in part by the economic downturn during that period. The proportion of households reporting that they got by alright shows a mirror trend, with an overall decrease from 44 to 35 per cent between 1999 and 2017.

The proportion of households who reported they didn’t manage well/had some financial difficulties showed a flatter trend, with some small peaks and troughs in response to the economic downturn.

Figure 6.1: How households are managing financially by year
1999-2017 data, Households dataset (minimum base: 3,660)

Figure 6.1: How households are managing financially by year

*This question was only asked between January and March in 2003.

Household perceptions of how they managed financially varied by household income (Figure 6.2). While the majority of households on incomes up to £10,000 said that they managed well or got by (39 and 43 per cent respectively), almost one in five (18 per cent) said they did not manage well - higher than the overall average of eight per cent.

Households with incomes over £30,000 were most likely to report they were managing well – around seven in ten (71 per cent) reported managing well, compared to 55 per cent for households in the next highest income band, and 39 per cent for households in the lowest income category.

Figure 6.2: How the household is managing financially by net annual household income
2017 data, Households (minimum base: 1,140)

Figure 6.2: How the household is managing financially by net annual household income

Perceptions of managing household finances varied by household type[41] (Figure 6.3). Single parent households and single adult households were the most likely to report that they were not managing well financially: around one in five (21 per cent) and one in six (16 per cent) respectively, compared to nine per cent overall.

Figure 6.3: How the household is managing financially by household type
Column percentages, 2017 data

Figure 6.3: How the household is managing financially by household type

Perceptions of managing financially also varied with household tenure (Figure 6.4). Owner occupiers were most likely to report they were managing well (69 per cent compared to 30 per cent for households in the social rented sector) and least likely to say they were not managing well (four per cent compared to a fifth of households in the social rented sector). A more detailed breakdown by tenure can be found in Chapter 3.3.

Figure 6.4: How the household is managing financially by tenure of household
2017 data, Households (minimum base: 150)

Figure 6.4: How the household is managing financially by tenure of household

Table 6.1 shows how households were managing financially by their main income source. Households relying mainly on benefits (including state pensions) were the most likely to say they were not managing well with around one in six (15 per cent) reporting that they were not managing well, nearly double the overall rate of eight per cent. Only three per cent of households relying on other sources[42] reported that they were not managing well.

Table 6.1: How the household is managing financially by income sources
Column percentages, 2017 data

Households Main income from earnings Main income from benefits Main income from other sources All
Manages well 60 44 74 56
Gets by 34 42 22 35
Does not manage well 6 15 3 8
Total 100 100 100 100
Base 5,610 3,420 1,190 10,240

Households where the highest income householder (HIH) was male were more likely to say they managed well (Table 6.2), with three fifths saying so compared to a half of households where the highest income householder was female (60 per cent, compared with 51 per cent). The proportion of households reporting that they were managing well was higher for older highest income householders.

Table 6.2: How the household is managing financially by gender and age of highest income householder
Column percentages, 2017 data

Households Male Female 16 to 24 25 to 34 35 to 44 45 to 59 60 to 74 75 plus All
Manages well 60 51 42 52 47 54 63 69 56
Gets by 33 39 44 38 41 35 31 30 35
Does not manage well 7 10 13 10 12 11 5 2 9
Total 100 100 100 100 100 100 100 100 100
Base 6,320 4,280 370 1,250 1,580 3,020 2,790 1,590 10,590

Levels of perceived financial difficulty were higher in areas of deprivation as measured by the Scottish Index of Multiple Deprivation (SIMD)[43] (Figure 6.5). The proportion of households reporting not managing well was 18 percent for households in the 10 per cent most deprived areas, falling consistently with levels of deprivation to three per cent for households in the 10 per cent least deprived areas.

Figure 6.5: How households are managing financially by the Scottish Index of Multiple Deprivation
2017 data, Households (minimum base: 970)

Figure 6.5: How households are managing financially by the Scottish Index of Multiple Deprivation

Figure 6.6 shows changes over time for the proportion of households managing well financially in the 20 per cent most and least deprived areas. While the observed trends are similar for both groups as described in relation to Figure 6.1, there has consistently been a substantial gap between those in the 20 per cent most and least deprived areas, with households in the more deprived areas being less likely to say they are managing well financially.

Figure 6.6: Households who manage well financially by year
2006 - 2017 data, Households (minimum base: 6,800)

Figure 6.6: Households who manage well financially by year

* Based on the most recent available SIMD measure for each year: SIMD06, SIMD09, SIMD12 and SIMD16.

6.3 Savings and Investments

Since 2009, the SHS has asked the highest income householder in a single, consolidated question whether they had any savings or investments.

Figure 6.7 shows the proportion of households that had savings or investments from 2009. There has been an overall increase in the proportion of households reporting having savings of £1,000 or more, from 43 per cent in 2009 to 55 per cent in 2017.

Figure 6.7: Proportion of households who have any savings or investments by year, in % 2009-2017, Households data

Figure 6.7: Proportion of households who have any savings or investments by year, in % 2009-2017, Households data

Note: Question asked only of a 1/3 sample from 2012, the questions wasn’t asked in 2016.

Households with lower income levels were more likely to report having no savings than those with higher incomes (Figure 6.8). Only one in ten households with incomes over £30,000 reported having no savings, compared to nearly two fifths (39 per cent) of households with incomes up to £10,000.

Figure 6.8: Whether respondent or partner has any savings or investments by net annual household income
2017 data, Households (minimum base: 410)

Figure 6.8: Whether respondent or partner has any savings or investments by net annual household income

The ‘All’ figures differs slightly from Figure 6. due to missing income information.

Access to savings also varied by household type (Figure 6.9). Single parent households were most likely to report having no savings (52 per cent), followed by single adult households (33 per cent). Of all household types, the older smaller households were most likely to have savings (82 per cent).

Figure 6.9: Whether respondent or partner has any savings or investments by household type
2017 data, Households (minimum base: 170)

Figure 6.9: Whether respondent or partner has any savings or investments by household type

Access to savings and investments varied by the tenure of households (Figure 6.10). Owner occupiers were least likely to report having no savings (nine per cent, compared to 22 per cent overall), while nearly half of social rented households reported having no savings (49 per cent).

Figure 6.10: Whether respondent or partner has any savings or investments by tenure of household
Column percentages, 2017 data

Figure 6.10: Whether respondent or partner has any savings or investments by tenure of household

Access to savings increased with the age of the highest income householder (75 per cent aged 60 to 74, compared to 69 per cent overall) (Table 6.3). Households where the highest income householder is female were more likely to report not having any savings (26 per cent, compared to 19 per cent for males).

Table 6.3: Whether respondent or partner has any savings or investments by sex and age of highest income householder
Column percentages, 2015 data

Households Male Female 16 to 24 25 to 34 35 to 44 45 to 59 60 to 74 75 plus All
No savings 19 26 40 30 28 24 13 9 22
Has savings 73 63 53 61 63 70 75 77 69
Less than £1,000 13 16 20 18 19 13 9 12 14
£1,000 or more 60 47 33 43 44 57 66 65 55
Don't know 1 1 0 1 1 1 1 3 1
Refused 7 9 7 8 8 6 10 11 8
All 100 100 100 100 100 100 100 100 100
Base 2,080 1,400 120 390 490 1,030 900 530 3,470

6.4 Banking

The proportion of households where neither the respondent nor their spouse or partner had a bank or building society account fell from 12 to four per cent between 1999 and 2009 (Table 6.4). In 2017, only two per cent of households reported not having a bank or building society account.

Table 6.4: Whether respondent or partner has a bank or building society account by year
Column percentages, 2009-2017 data

Households Male Female 16 to 24 25 to 34 35 to 44 45 to 59 60 to 74 75 plus All
No savings 19 26 40 30 28 24 13 9 22
Has savings 73 63 53 61 63 70 75 77 69
Less than £1,000 13 16 20 18 19 13 9 12 14
£1,000 or more 60 47 33 43 44 57 66 65 55
Don't know 1 1 0 1 1 1 1 3 1
Refused 7 9 7 8 8 6 10 11 8
All 100 100 100 100 100 100 100 100 100
Base 2,080 1,400 120 390 490 1,030 900 530 3,470

From January 2012, this question was asked of three quarters and one third of the sample, respectively.

This analysis excludes Credit Unions and Post Office accounts, as these were not included in the questionnaire until 2007.

Access to a bank, building society or other account varied by levels of income and deprivation (Table 6.5). Households on lower incomes were more likely to say they made use of banking facilities through the Post Office (six per cent of those with an income up to £10,000, compared to two per cent with an income over £20,000). A similar pattern was observed for households living in the more deprived areas, with six percent of these saying they used a Post Office account, compared to one percent of households living in the 20 per cent least deprived areas.

Table 6.5: Whether respondent or partner has banking facilities by net annual household income and Scottish Index of Multiple Deprivation
Percentages, 2015 data

Households Up to £10,000 £10,001-£20,000 £20,001-£30,000 Over £30,000 20% Most Deprived 20% Least deprived All
Bank Account 88 92 96 97 88 94 93
Building Society Account 12 8 13 16 5 19 12
Credit Union Account 1 2 3 5 2 2 3
Post Office card Account 6 5 2 2 6 1 3
None of these 3 1 0 0 2 0 1
Refused 3 4 3 2 6 5 4
Base (minimum) 370 1,070 730 1,160 660 650 3,470

Columns may not add to 100 per cent since multiple responses were allowed.


Contact

Emma McCallum