Wealth and Assets in Scotland 2006 - 2012

1. Introduction

This report provides a detailed analysis of Scottish data from the Wealth and Assets Survey (WAS), updating the report "Wealth and Assets in Scotland 2006-10"^[1], published in May 2014. WAS is a key source of information on the economic situation of households in Great Britain and focuses on household assets and debts, borrowing and saving, and plans for retirement.

Previous analysis by the Office for National Statistics (ONS) has only provided headline figures for Scotland, tending to focus on GB-wide trends. This report provides Scottish analysis with a focus on the third wave of data covering 2010/12. It makes comparisons with the earlier waves covering 2006/08 and 2010/12. While the first two waves covered the period before and immediately after the 2008/09 recession, wave three data provides an opportunity to examine its aftermath on the wealth of the wider population.

WAS collates information on the following four types of wealth held by households: property wealth, physical wealth, financial wealth, and private pension wealth. More detail on these components of wealth is provided in the box below.

Definitions

Four main components of wealth in WAS

* Financial wealth: the value of all financial assets minus the value of all non-mortgage borrowing.

* Property wealth: the value of all property wealth minus the value of property debt (e.g. mortgage on property)

* Private pension wealth: the value of wealth held in occupational pension schemes to which individuals contribute. These include Defined Benefit (DB) and Defined Contribution (DC) schemes as well as personal pensions.

* Physical wealth: the value of items such as cars, and household goods like televisions, computers, and jewellery.

WAS also describes the following

Financial assets: the financial value of current accounts, saving accounts, shares, bonds, cash saved at home, etc.

Non-mortgage borrowing: this includes formal and informal loans, including student loans, credit card debt, overdrafts, store card loans, hire purchase debts and mail order debts.

With its broader focus on different wealth types, WAS enables a more rounded analysis of the financial wellbeing of differently-placed households, and makes it possible to move beyond income analysis, which tends to be the focus of poverty analysis.

1.1 WAS Methodology

WAS focuses on households' assets and debts, borrowing and saving, and plans for retirement, allowing analysis of how wealth is distributed across the population. It provides data on household wealth and, as it is a longitudinal survey, allows changes in household wealth to be monitored over time. Wealth is defined here as net wealth: that is, the value of all assets minus any debts and liabilities.

Table 1.1 provides details of the time periods covered by each wave of the survey in Scotland, the number of individuals and households surveyed, and the number of individuals and households in the longitudinal sample.

Table 1.1 Details of survey waves

Survey period	Number of individuals	Number of households	Number of individuals interviewed at previous wave	Number of households interviewed at previous wave
Wave 1
July 2006 - June 2008	6,199 (inc. 1,131 children)	2,833	/	/
Wave 2
July 2008 - June 2010	4,390 (inc. 746 children)	1,995	4,130	1,867
Wave 3
July 2010 to June 2012	4,540 (inc. 733 children)	2,069	3,087	1,417

Individuals over the age of 16 and not in full-time education were separately interviewed to obtain data at individual level. Household level information was collected by interviewing the Household Reference Person (HRP), often the head of household or their partner. In each wave, each household is given a weight in order for the sample to be representative of the whole population. These weights are also assigned to all members of the same household. Estimates represented in this report were computed using these weights.

There are a number of methodology issues that need to be borne in mind when considering this analysis. First, the measure of net wealth in the analysis is based on the personal, private wealth of households. It does not include business assets owned by household members, nor does it include rights to state pensions, which people accrue during their working lives and draw on in retirement.

Second, only those designated as 'private households' were sampled for the survey. Those in residential institutions such as retirement homes, nursing homes, prisons, and barracks or university halls of residence, and also homeless people were not included in the sample and are therefore excluded from this analysis.

Third, the Scottish sample is not fully representative of the geography of Scotland, as WAS does not sample households north of the Caledonian Canal or on the Scottish islands.

Other methodological considerations are:

• Estimates within this analysis have not been equivalised and therefore are not intended to account for differences in household size or composition.
• All estimates within this report are presented as current values (i.e. the value at time of interview) and have not been adjusted for inflation.

It is important to note that a number of changes have been introduced with the publication of wave 3 data. Of the main methodology changes, some are specific to wave 3 (e.g. the weighting strategy), some affect waves 2 and 3 only (e.g. the imputation strategy), and some affect all three waves (e.g. the financial assumptions used in the calculation of pension wealth). All methodology changes were applied retrospectively to waves one and two of the data. For this reason, the analysis in this report differs from that previously published. Any comparison with previously published data is not appropriate.

Further detail on the methodology adopted by ONS for WAS is available in Appendices 1 and 2 of this report and on the ONS website via technical details, Wealth in Great Britain 2010-12.

1.2 Structure of this report

The remainder of this report is structured as follows.

Chapter 2: Household Wealth in Scotland presents aggregate household wealth over the three survey waves and breaks this down by its four components of financial, property, physical and pension wealth.

Chapter 3: The Distribution of Wealth in Scotland is then presented for aggregate wealth, as well as for the four components. This chapter also looks specifically at the distribution of wealth within the wealthiest decile.

Chapter 4: The Distribution of Components of Wealth in Scotland presents an analysis of how the four components of total wealth - financial, pension, property and physical - are distributed in Scotland, by decile.

Chapter 5: The Least Wealthy Households in Scotland analyses the socio-demographic characteristics of the least wealthy 30 per cent of Scotland's households. It presents information about the financial assets and non-mortgage borrowing of this group and compares this to the population as a whole.

Chapter 6: Movement across Deciles and Wealth Bands examines the extent to which households in the survey moved between total wealth deciles and financial, property, and physical wealth bands between 2006/08 and 2008/10 and between 2008/10 and 2010/12.

Chapter 7: Conclusions offers brief reflections on the findings in the report.

There is also an Appendix section at the end of the report. Appendix 1 sets out some limitations of the WAS. Appendix 2 considers changes to the estimates of private pension wealth from those previously published.