Key findings

One-in-five households (21%) in Scotland are currently living in serious financial difficulty – equivalent to more than half a million of the country’s 2.5 million households – up from 13% or around 300,000 households 12 months ago but unchanged when compared with June 2022. 
Scottish working-age households tend to feel worse about their finances – they are more likely to describe it as a ‘constant struggle’ to meet their bills and main financial commitments.
Nearly a quarter of Scottish households (24%) have at some point cut back on the number of meals they eat, while 14% had been less able to take part in some form of physical activity.
Our data suggests that additional Scottish Government support for families with children could be making a difference to their financial wellbeing, but further analysis with a bigger sample would provide greater insight.

Introduction

A year into the cost of living crisis, in its Autumn Statement in November 2022 the UK government announced additional financial help for households including an Energy Price Guarantee, targeted cost of living payments and benefits uprating for households in England, Scotland and Wales; and an increased National Living Wage for workers across the UK.  

Scotland has gone further by providing extra support to households. By the end of March 2023, the Scottish Government intends to allocate almost £3 billion in measures to mitigate the impact of the cost of living crisis on households.1 This package spans a range of support for energy bills, childcare, health and travel, as well as social security payments that are either not available anywhere else in the UK or are more generous. Specific measures to support low-income families in Scotland include: 

- An increased Scottish Child Payment of £25 per week per eligible child from low-income families in receipt of certain benefits (up from £20 per week and extended from children aged under six to children under 16).

- A doubling of the Fuel Insecurity Fund to £20 million to help households at risk of self disconnection or self-rationing of energy use and to provide local authorities with additional Discretionary Housing Payment funding.

- Emergency legislation to protect tenants by capping rent increases and imposing a moratorium on the majority of evictions until the end of September 2023.  

Our findings show that the Scottish Government’s additional support measures are sorely needed, with households in Scotland experiencing lower financial wellbeing and higher levels of serious financial difficulty compared with households elsewhere in the UK. The cost of living is also badly impacting quality of life among Scottish households, with 53% of working age households finding it harder to keep their home warm and comfortable. The Scottish Government’s own modelling estimates that around 35% of households (860,000) in Scotland were spending more than 10% of their net income (after housing costs) on fuel in October 2022, of which 24% (600,000) were spending more than 20%.

Overview

Tracker data collected in October-November 2022 shows that households in Scotland typically have lower levels of financial wellbeing than households in the rest of the UK. One-in-five households (21%) in Scotland are currently living in serious financial difficulty – equivalent to more than half a million of the country’s 2.5 million households – up from 13% or around 300,000 households 12 months ago but unchanged when compared with June 2022. In the rest of the UK, the proportion of households in such circumstances is 17% (up from 10% a year prior). 

Scottish working-age households tend to feel worse about their finances – they are more likely to describe it as a ‘constant struggle’ to meet their bills and main financial commitments (24%); to say that thinking about their finances makes them feel anxious (34%); and to feel like they have no control over their financial situation (23%).  

Added to this, the rising cost of living is having material impacts on the quality of life for many households in Scotland, such as finding it harder to keep their home warm and comfortable (reported by 53% of working-age households); eating lower quality food (46%); feeling less able to participate in either hobbies or pastimes (40%) or in social activities (38%). Nearly a quarter of Scottish households (24%) have at some point cut back on the number of meals they eat, while 14% had been less able to take part in some form of physical activity. These impacts are particularly worrying given that Scotland already has the lowest life expectancy at birth of all UK countries and the gap in life expectancy between the most and least deprived areas of Scotland has widened. 

More positively, our data suggests that additional Scottish Government support for families with children could be making a difference to their financial wellbeing, but further analysis with a bigger sample would provide greater insight. 

About the research

abrdn Financial Fairness Trust has commissioned a periodic cross-sectional survey to track the financial situation of UK households since early 2020. The latest wave of this survey – conducted in late October 2022 – gives insight into the nation’s finances during a cost of living crisis. The findings are based on responses from 6,108 UK households (including 552 from Scotland) about their income, payment of bills, borrowing, debt, savings and ability to pay for other essentials such as food. A team from the Personal Finance Research Centre at the University of Bristol analysed the respondent data collected from YouGov’s panel and produced these findings.