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

1 Introduction

This report presents estimates of certain additional costs that make it more expensive to meet a minimum acceptable living standard in remote areas of Scotland. These estimates have been made in order to inform the Scottish Government's monitoring of the number of households in fuel poverty, for which targets have been set by the Fuel Poverty (Targets, Definitions and Strategy) (Scotland Act) 2019. The Act defines a household as being in fuel poverty if:

1. in order to maintain a satisfactory heating regime, total fuel costs necessary for the home are more than 10% of the household's adjusted (i.e., after housing costs) net income; and

2. (ii) after deducting those fuel costs, benefits received for a care need or disability and childcare costs, the household's remaining adjusted net income is insufficient to maintain an acceptable standard of living. This remaining adjusted net income must be at least 90% of the UK Minimum Income Standard (MIS) to be considered an acceptable standard of living, with an additional amount added for households in remote rural, remote small town and island areas.

Research carried out by the Centre for Research in Social Policy at Loughborough University between April 2020 and May 2021 has investigated these additional costs in order to calculate the uplift required in remote rural Scotland. The research team included two research consultants, Amanda Bryan and Jo Ellen, based in the Highlands, who recruited participants, supported focus groups and priced goods and services, drawing on local knowledge. The study involved detailed consultations with people living in remote rural areas of the Scottish mainland and islands. It followed the MIS method to ask groups of members of the public to agree on what goods and services are needed to reach a minimum, using the UK MIS as a starting point and asking what is different in those areas. Informed by the specifications from groups about where goods and services are purchased, the research involved detailed costing in budget areas where prices vary as a result of living in remote rural Scotland.

The core purpose of this exercise was to produce six numbers – the percentage uplift that should be applied to MIS budgets for households with pensioners, families with children and working age adults without children in remote rural parts of the Scottish mainland and the Scottish islands, respectively. However, as well as describing how these percentages were calculated, this report describes some of the features that contribute to additional costs, and how these relate to the experience of living in these areas. This qualitative evidence contributes to understanding of the aspects of life in remote rural Scotland driving extra costs, which would need to be addressed in any measures seeking to bring these costs down. The study builds on earlier research for a consortium led by Highlands and Islands Enterprise considering the cost of a Minimum Income Standard for remote rural areas of Scotland (Hirsch et al., 2013). However, unlike that study, whose central purpose was to illustrate additional costs in certain settlement types in remote Scotland, the design of the present research focused on contributing to a more accurate overall fuel poverty estimate for Scotland that takes such costs into account. As set out in the next chapter, this design has determined what can be drawn from the present report about additional costs. In particular, it reports on fewer area types than the previous study, and excludes an account of the cost of fuel itself across remote rural areas, since these costs are assessed for individual households in the fuel poverty measure.

Chapter 2 of the report describes the overall approach taken, using the Minimum Income Standard research method and applying it to costs in remote rural Scotland; and sets out the scope of the study.

Chapter 3 describes the specific methodology used to carry out the research, centred around deliberative focus groups held between November 2020 and March 2021.

Chapter 4 describes the findings of these groups, in terms of what is different about the goods and services required for a minimum in remote rural Scotland, and specifications about where they would be purchased.

Chapter 5 sets out the calculations, and the resulting percentage 'uplift' to be applied to the MIS benchmark when calculating fuel poverty.

Chapter 6 gives a conclusion and describes how these results will be updated over time.