Scottish Government

Social Focus on Urban Rural Scotland 2003

chapter eight: Income and Financial Services

Differences in earnings and the cost of living across the geographies of Scotland have been seen as one of the more obvious forms of exclusion of groups of people, or indeed whole communities. Urban and rural communities can experience poverty and exclusion in different ways. In rural areas some of the symptoms of poverty are less visible. This chapter contains analyses of financial information collected in the Scottish Household Survey (SHS), along with data from other sources, to determine similarities and differences in access to banks and building societies, how households are managing financially, levels of household savings, net annual household income, and receipt of certain benefits based on whether a house-hold lives in an urban or rural community.

In general, the results show that a higher proportion of households in rural areas tended to be at the higher ends of measures included within the chapter. For example, households in rural areas are:

• more likely to have access to a bank account;
• more likely to have savings; and
• less likely to be in receipt of benefits.

Ownership of a bank account

Some 86 per cent of households in Scotland have a bank account or building society account. This varies depending where in Scotland the household is located. Households in accessible and remote rural communities are significantly more likely to have a bank or building society account than those in large urban areas. Indeed, ownership of a bank or building society account increases as we move from large urban areas through to remote rural communities.

Although geographic location has an effect on the ownership of a bank or building account, we would not expect this to be the most important factor. Analysis has shown that there are more significant factors. These include economic activity of the highest income householder and net annual household income.

Managing financially

In 2001, Citizen's Advice Scotland dealt with 160,000 debt enquiries involving around 70 million of debt. During 2000 and 2001, some 13 per cent of all households were not managing very well or were having financial difficulties.

The proportion of households not managing very well or having financial difficulties does vary by area, particularly between those households in large urban areas (16 per cent) and accessible rural areas (10 per cent).

Analysis also shows a relationship between households having a bank account and households facing financial difficulties. As already stated some 13 per cent of all households were not managing very well or were having financial difficulties, this rises to some 30 per cent of households with no bank account (no table).

Savings and investments

When asked if, at the moment you or your partner have any money saved or invested, 53 per cent of households responded that they did. Again, there are significant differences in whether a household has any savings based on location. Table 8.3 shows the percentage of households reporting to have savings or investments by geographic location of the household.

Those in large urban areas and other urban areas are less likely to have any savings than households in small towns and rural communities. When the classification is aggregated to urban areas, small towns, and rural areas, the likelihood of having any savings or investments is significantly different between the three general types of location. Again, those in urban areas are less likely to have any savings, and households in rural areas are the most likely to have savings or investments.

For those households with savings and investments, some 65 per cent of households that responded had investments of up to 5000. There were no significant differences by geographic area in the value of savings held. It should be noted that a significant proportion (some 30 per cent) of households declined to answer questions about the amount of savings held.

The report Availability of Services in Rural Scotland investigated the current service provision in rural Scotland, providing information on the availability of 20 key services. This analysis only provides a picture of where services are based geographically, and so does not take account of the quality of service provision. In addition, it does not include any mobile, outreach or peripatetic services. Access to banks and building societies and access to cashpoints were two of the services looked at. With the closure of some banks and building societies in rural areas, the availability of cashpoints is becoming increasingly important for people to obtain cash and other banking services. Banks and building societies in rural areas are important for financial transactions that can not be conducted by an ATM.

The report shows that 34 per cent of households in rural Scotland are within a 5 minute drive of a bank or building society, compared to 89 per cent in urban areas and 86 per cent in small towns. Turning to cashpoints, some 50 per cent of households in rural areas live within 5 minutes drive of a cashpoint, compared with nearly 100 per cent of people in urban areas and small towns. These figures do not take account of the growth in services such as Internet and telephone banking, which do not require the presence of a bank in your locality to provide a full range of services.

Net annual household income

The SHS collects information on net annual household income. This refers to income from employment, benefits and other sources (after taxation and other deductions) which is brought into the household by the highest income householder and their spouse or partner. The SHS does not collect income information about other household members. It is important to note that this income data is self-reported, and is not checked against payslips or other documentary evidence. Therefore, the income data presented below is not a true measure of household income, and these estimates may be less reliable than other data collected in the SHS. For this reason, income data are presented in bands rather than as mean or median estimates.

Source: Scottish Household Survey

The results indicate that there are more households in rural areas with net annual household income of 20,000 and over, than there are in urban areas or small towns.

The UK Government and the Scottish Executive have adopted the Statistical Program Committee (SPC) of the European Union's 1998 recommendation that for international comparisons of low income the 60% median threshold should be used as a headline indicator. The official measure of income used in Department for Work and Pensions DWP's Households Below Average Income (HBAI) analysis, and the Scottish Executive's Social Justice Annual Report, is weekly net (disposable) household income, and includes the income of all members of the household, including dependants. Two measures of household income are used, before housing costs (BHC) and after housing costs (AHC). Within the HBAI data, to allow a fair comparison between households, incomes are adjusted to take account of household size and composition.

Analysis of the official HBAI analysis is not available below the Scotland level, and there is little evidence available on household income to confirm these results from the SHS. The Scottish rural life update: A revised socio-economic profile of Scotland, reported that roughly 60 per cent of all rural households have incomes below the Low Pay Unit's poverty threshold of 200 per week, a slightly higher proportion than in urban Scotland. Again, this measure is not the officially accepted measure of low income. It should also be noted that rural Scotland, in the report mentioned above, is defined as parishes with a population density below 1 person per hectare. The SHS defines rural Scotland as settlements of less than 3,000 people.

Receipt of benefits or tax credits

For a specified number of benefits, the SHS gathers information on the number of house-holds in receipt of a benefit or tax credit. This is defined as either the respondent and/or their spouse/partner being in receipt of a benefit or tax credit. The results for selected benefits or tax credits are presented in Chart 8.5.

Source: Scottish Household Survey

The SHS data for 2000 shows that a greater percentage of households in large urban areas (22 per cent) are in receipt of income support, with the lowest receipt of income support for households in remote rural areas (9 per cent). A similar pattern holds for households in receipt of housing benefit, with 34 per cent of households in large urban areas receiving housing benefit, compared with 12 per cent of households in remote rural areas. Households in receipt of council tax benefit record the same pattern, with the highest receipt in large urban areas (41 per cent of households) and the lowest receipt in remote rural areas (with 17 per cent of households).

It should be noted that the level of non-response for this question was some 30 per cent, and this non-response was fairly uniform across urban, rural and remote areas. Taking this into account and comparisons with other sources of statistics on the receipt of benefits at the Scotland level, it is believed that the SHS over-estimates the level of receipt of some of these benefits, but the pattern of receipt across the areas should still hold.

Benefit take-up

Many of the problems surrounding access to benefits are encountered throughout Scotland. However, as with so many issues of rural poverty and exclusion, there is a perception that the particular characteristics of rural life exacerbate the problems in a way that does not happen in larger town and cities. In particular, the report Poverty and Social Exclusion in Rural Scotland found that low benefit take-up is linked to visibility and distances from services.

There is a belief that the take-up of benefits in rural areas is lower than in towns and cities. This may be due to difficulties in accessing information and advice on benefits because of a lack of local service provision or affordable transport. Visibility and culture also play a role. For example there may be a stigma attached to claiming benefits. While this may also be true in urban communities, the higher visibility of accessing benefits services in a small rural community may heighten the stigma, with the result that some people may not claim.

One of the services mapped for the Availability of Services in Rural Scotland report is Jobcentre Plus, which integrates the former Job Centres and Benefits Agency. This service provides help and advice to those seeking employment or seeking to claim a benefit - and although advice is available through other media (telephone, internet) most customers are required to meet in person with an advisor. The report found that just under a quarter of all households in rural Scotland live outwith a 30 minutes drive time of a Jobcentre Plus. Almost all households in urban areas live within 30 minutes drivetime of a Jobcentre Plus.

References

Availability of Services in Rural Scotland, Scottish Executive October 2002 http://www.scotland.gov.uk/library5/rural/asrs-pt1.pdf and http://www.scotland.gov.uk/library5/rural/asrs-pt2.pdf

Scottish rural life update: A revised socio-economic profile of rural Scotland, Rural Affairs and Natural Heritage Research Findings No. 4, published by the Scottish Office, 1998.

The Low Pay Unit (Registered Charity)http://www.lowpayunit.org.uk

Poverty and Social Exclusion in Rural Scotland, Report by the Rural Poverty and Inclusion Working Group http://www.scotland.gov.uk/library3/society/pser-04.asp

Households Below Average Income (HBAI) Analysis 2001/02http://www.scotland.gov.uk/library4/FCSD/OCEA/00016688.aspx

Scoping Study of Older People in Rural Scotlandhttp://www.scotland.gov.uk/library5/rural/oprs-00.asp

Benefits and Tax Credits in Scotland, Report for August 2002http://www.scotland.gov.uk/stats/publist.aspx?theme=42&pillar=people

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