REMOTE communities in Scotland are being hit hardest by food inflation and fuel poverty while housing costs are adding most pressure on people's budgets in cities, an economic think tank has discovered.
New research by the Centre for Progressive Policy (CPP) has outlined the significantly different impacts of the cost of living crisis in different areas of Scotland, with the organisation now calling for the Scottish Government to allow more flexibility in how councils target funding to support residents.
It is also calling on the UK Government to conduct geographic analysis to measure the impact of crisis policy interventions to ensure they provide adequate support that meets the needs of different communities.
Ross Mudie, research analyst at CPP and report author, said: “Rising living costs are adding pressure to virtually all households in Scotland, but our analysis reveals significantly different pressures in different parts of the country.
“For remote rural and island communities, already faced with steeper food costs pre-crisis, persistently high food and fuel inflation are adding yet more pressure.
“Households in Edinburgh that have recently taken out a mortgage are disproportionately likely to be feeling the squeeze from rising interest rates, with almost a third of all mortgages recently taken out in the capital being four times the size of homeowners’ incomes – meaning higher rates could add significant costs to their repayments.
“Local authorities know their communities best and the UK and Scottish Governments alike must give them the funding and flexibility to target future support where it is most needed.
“Both governments must also commit to evaluating the impact of crisis support in different places so that it can ensure support is reaching those who need it.”
Remote areas hit by food inflation and fuel poverty
The study has found that remote communities in the likes of Argyll and Bute and Na h-Eileanan Siar are particularly exposed to higher food prices, which are compounded by the additional costs of transporting food.
A previous study revealed that pre-crisis, weekly food costs in remote rural areas on the Scottish mainland were already 2 to 4% higher than in urban UK areas, depending on household size.
Those on Scottish islands face an even greater burden, with food costs soaring between 5 to 13% above the urban average, and UK food inflation is now at 18.4% year on year.
The think-tank has also said there is an acute issue with fuel poverty in remote areas, Na h-Eileanan Siar (39.8%), Highland (32.9%), and Argyll and Bute (32.2%) having the highest rates.
The Scottish gas grid does not reach significant parts of remote communities and the Scottish Government estimates that around 65% of remote rural dwellings are not connected to the grid.
This leaves many dependent on electric storage heating and home heating oil, which can often be significantly more expensive than energy provided through the grid.
City residents feeling housing costs
Over in Scotland’s biggest cities though, it is housing costs that are inflicting the biggest pressure on household budgets, with private rents well over a third of median take-home pay in Glasgow and the wider Edinburgh area.
Private rents are equivalent to 39.7% of median take-home pay in Midlothian and 34.5% in Glasgow.
In East Lothian and the City of Edinburgh private rents are equivalent to 34.0% and 31.3% respectively of median take-home pay.
Large numbers of households in these areas have high mortgage burdens, which is a concern as interest rates continue to rocket.
This will particularly affect households with high loan-to-income ratios with recent analysis showing Edinburgh is most susceptible to this financial strain, with 32.7% (or 4423 households) of mortgages between 2018 and 2021 having ratios four times their income.
Inverness and Perth follow with 19.3% (513 households) and 19.2% (376 households) of mortgages respectively in this category.
In Glasgow and Aberdeen, while the proportion of households in this position is lower, there are significant numbers of households in each city: 2905 households (18.4%) and 1232 households (18.3%) respectively.
Social Justice Secretary Shirley-Anne Somerville said: “We recognise the pressure on household budgets driven by over a decade of austerity and economic mismanagement from the UK Government and compounded further by a hard Brexit.
“The Scottish Government has repeatedly asked the UK Government to do more to support those most impacted by high inflation, interest rates and living costs.
“We have provided almost £3 billion, both last year and this, for policies which tackle poverty and to protect people as far as possible during the cost of living crisis and we introduced emergency legislation to protect tenants during the crisis, including increased protection for private tenants facing eviction and the introduction of a temporary rent cap.
“In 2022-23 this included an extra £1.8 million for food groups and an extra £2.5 million for the Scottish Welfare Fund as well as increasing the Scottish Child Payment to £25 a week per eligible child.
“Other support includes access to free childcare, baby boxes, prescriptions and free bus travel. We are continuing to work with key delivery partners on our free school meal expansion programme.”
The UK Government has been approached for comment.
