One in five Scottish households (21%) are currently living in serious financial difficulty – equivalent to 1.2 million people.
In the rest of the UK, the figure is 17% of households.
The figures are from the latest Financial Fairness Tracker, commissioned by the abrdn Financial Fairness Trust and analysed by a team at the University of Bristol. This has been monitoring the personal finances of UK households since the start of the pandemic, with a sample around 6,000 UK households, 552 of which are in Scotland.
Researchers found that working-age households in Scotland feel worse about their finances than those in the rest of the UK.
They are more likely to strongly agree that it as a ‘constant struggle’ to meet their bills and main financial commitments (24% vs 20%); to say that thinking about their finances makes them feel anxious (34% vs 30%); and to feel like they have no control over their financial situation (23% vs 16%).
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 vs 45% in rest of UK);
- eating lower quality food (46% vs 37% rest of UK);
- feeling less able to participate in social activities or family gatherings (38% vs 35%); and
- at some point cut back on the number of meals they eat (24% vs 19%).
The report argued that 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.
Households in Scotland are taking measures to counteract the rising cost of living, with 80% reporting avoiding turning on the heating at some point, while 51% reduced use of the cooker.
People also reported saving less than usual (64% doing so in 2022) and using money from savings for daily living expenses (47%).
As well as cutting back on expenditure and dipping into savings, a substantial proportion of households had also tried to earn more income. A third reported working more hours during 2022, while 9% had taken on a second job.
On a more positive note, the data suggests that additional Scottish Government support for families with children - the increased Scottish Child Payment - could be making a difference to their financial wellbeing.
The analysis suggests that although working-age households in Scotland without children fare significantly worse than their counterparts in England in terms of financial wellbeing, there appears to be no real difference between the two nations for those with children.
While there is nearly a six-point gap between Scottish and English financial wellbeing scores for those without children (and of working age), the gap is under two points for households with children.
Mubin Haq, chief executive of the abrdn Financial Fairness Trust, said: “It is encouraging to see early indications that Scottish Government support for families with children may be improving their financial wellbeing compared to households in England.
“But the government needs to go further - its support for a Minimum Income Guarantee could deliver improved living standards in Scotland, and it is vital this is progressed to reduce the financial anxieties too many face.”
John Dickie, director of Child Poverty Action Group in Scotland, said: “It’s hugely concerning to see increasing numbers of households in Scotland facing severe financial difficulty, but the indication that the Scottish Child Payment is already making a difference for families with children is a beam of light in an otherwise gloomy picture.
“It is vital now that the Scottish government increases the new Child Payment in line with inflation from April, so that it maintains its real terms value, and at the same time works with employers to improve the earnings of those most at risk of poverty.
“We also need to see the UK government act to restore the value of UK social security and introduce a social tariff for those struggling most with energy costs.”
By the end of March 2023, the Scottish Government intends to allocate almost £3bn in additional measures to mitigate the impact of the cost of living crisis on households. 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.
The abrdn Financial Fairness Trust was known as Standard Life Foundation until December 2021.
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
