The cost of remoteness: reflecting higher living costs in remote rural Scotland when measuring fuel poverty

Many of the budget uplifts for 2022 are similar to those calculated in 2021, but in some cases they have risen or fallen, both because of changes in UK budgets and because of some cost changes noted in remote rural Scotland.

Households with children

The uplifts for families with children, shown in Table 1, remain very similar to those in 2021. For remote mainland areas, the uplift figure is 15% in 2022, compared to 16% in 2021, and for islands it is 14% compared to 15%.  These results are largely determined by the method which assumes that for families with children, each budget sub-category in remote Scotland has risen in proportion to the increase in UK MIS.

However, the results are also influenced by the extent to which budget areas that contribute most to the remote rural uplift have high inflation rates. In the case of families with children, additional transport costs account for about three quarters of the difference, influenced mainly by motoring budgets over twice as high as for UK urban areas. Motoring costs rose by about 14% in the year to April 2022, on which these figures are based. In normal times, this would have caused a significant increase in the remote rural uplift. However, this did not occur in 2022 because so many other things were also rising by similar or greater amounts in urban UK, including a 15% increase in the cost of social participation, a 20% increase in personal goods and services and an overall increase in the budget shown here by 13.5%. This explains why total costs in remote rural Scotland rose in proportion to overall UK costs, creating uplifts for families with children that are little changed in percentage terms.

Working-age households without children

For working-age households without children, the budget uplifts have been more volatile, as shown in Table 2. They have risen in three cases: from 20% to 27% for singles on the mainland, from 21% to 28% for couples on the mainland and from 14% to 31% for singles on islands. For couples on islands, they have fallen, from 39% to 33%.

These fluctuations can be attributed mainly to three factors.

The most important is that there was a sharp reduction in public transport costs between 2021 and 2022, associated with the urban UK MIS 2022 rebase. This is principally because previous inflation-based uprating of these costs had been overestimates, as bus season tickets, on which the MIS costs are mainly based, did not rise in line with overall public transport inflation. In remote rural MIS, almost all transport costs are for motoring, and the absence of public transport costs produces a saving relative to urban MIS, to some extent offsetting high motoring costs. As UK public transport costs have fallen, so too has the ‘saving’, which has the ultimate effect of increasing the overall rural uplift. The effect of this was particularly substantial for singles, for whom transport costs are most significant. This phenomenon of reductions in UK public transport costs, triggering a higher remote rural uplift, does not in itself raise the total remote rural budget benchmark (since the higher uplift is being added to a lower base). However, an additional factor on islands is that budget second hand cars, suitable for working-age adults, were found to be more expensive, in a market where it had become harder to find good second hand car deals. This does push the overall MIS benchmark up for the islands.

A second factor, pushing in the opposite direction, is that there were some large increases in costs in the MIS 2022 rebase, in areas not associated with a significant remote rural uplift. In particular, changes in specifications and prices for personal goods and services and for social and cultural participation caused increases in these budgets by between a third and over a half. This pushed up the total urban UK budgets for households without children (excluding fuel) by a quarter, reducing uplifts as a percentage of those totals. This explains why the couple’s island percentage uplift went down, although as this is being applied to a higher couple budget, it does represent a greater uplift in cash terms – rising from £122 to £135 a week. In other words, higher overall MIS budgets mean that uplifts can increase in cash terms but fall as a proportion of the MIS budget.

 A third factor has been an increase in the premiums charged by local food stores, which has most substantial effect on the islands, where there is greater reliance on these. For a single person in particular, this has contributed significantly to the uplift required on an island. Along with the greater cost of second hand cars, this represents a real increase in the overall cost of living for island residents.

Pensioner households

Finally, as shown in Table 3, pensioner households have in all cases seen a reduction in the percentage uplift, typically by five percentage points, between 2021 and 2022 (but by only two percentage points for couples on the mainland). These reductions have been driven by lower costings for certain leisure and motoring items in remote areas, including a reduced cost of the car specified for pensioners on islands, which requires only modest usage. (While taking all motoring items into account, the motoring budgets rose slightly, they did so by much less, proportionately, than overall UK budgets, reducing their impact on uplift percentages.) These results differ markedly from those for working-age households. Such variations appear to reflect considerable volatility from one year to the next in the price of items such as holiday packages and used cars, particularly on islands where competition among suppliers is limited. Such volatility creates an additional difficulty for island residents, making it difficult for them to plan budgets, not least in today’s present period of high inflation.