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

5 Calculating the uplift

This study identified extra costs in a range of different areas of households' spending. As discussed in Chapter 2, what follows is not a comprehensive account of the additional costs that arise in remote rural Scotland, because (i) it does not include fuel costs and (ii) not all situations of remote rural living have been examined. Nevertheless, it demonstrates that these costs are substantial and provides the basis for the remote rural uplift to the MIS budgets to be used in the Scottish Government's fuel poverty indicators.

Five areas of spending stood out as the source of additional costs in this study: food, clothing, household goods, travel and social and cultural participation. Of these, travel accounted for by far the greatest additional costs.

Food

Paying for food can cost more in remote areas as a result of higher retail prices at different kinds of store. In our earlier study of additional costs in remote rural Scotland (Hirsch et al., 2013), we found that most people in the region lived in places where they would pay slightly higher prices using small-town supermarkets, while a small number paid much higher prices because they would need to use remote small stores. The current study, however, did not find evidence of the first of these phenomena – higher supermarket prices. Detailed pricing of food baskets was carried out in Tesco 'Superstores' in remote towns, which are smaller than and do not have identical pricing to the large Tesco 'Extra' stores in urban areas on which the main MIS budgets are based. While in 2013, baskets were found to be about 10% higher in these remote town supermarkets, pricing in 2020 and 2021 did not find such a difference. Specifically, mainland supermarket budgets priced in both April 2020 and May 2021 were each 5% below, and an island supermarket budget priced in May 2021 was 1% above, the equivalent budget priced in the main urban MIS in April 2020 (adjusted for inflation). Given price fluctuations for individual products, which appear to have been greater than normal during the pandemic, we interpret this as showing no systematic difference at present between small town and large urban supermarket food prices.

In contrast, baskets priced at small local stores, either Co-ops or independent village shops, continued to show much higher prices than supermarkets. For example, at local community stores, the priced food baskets were 44% higher on the mainland and 27% higher on islands than the equivalent in a supermarket. Some local village stores had even higher prices. Our method involves taking some account of these additional costs where a weighted average of different store models by population could make a significant difference to reported food costs. On this basis, we incorporated two assumptions. The first, informed by our focus groups, was that people living in areas accessible to but outside a remote town would do a small amount of top-up shopping each week, buying essential such as eggs and milk, at a local store, and the rest in the supermarket. The second was that people living on islands who were at least two hours' travel time from a town^[1] would do all their shopping at a local store. This second scenario has the most significant effect on the weighted average of food prices; based on ward population figures, we estimate that about one in five island residents is in this situation, facing very high food costs.

A further influence on overall food costs is that in most cases, the small budget for eating out or takeaways in the MIS budget is greater in remote rural Scotland than the main MIS. As reported in Chapter 4, this difference, linked to higher prices and the limited options available, was suggested by groups, and it was verified by pricing by researchers.

Table 1 presents the food costs in remote rural Scotland compared to urban UK, in each case showing weighted averages^[2], driven mainly by prices in towns, but also affected by higher costs in local stores. It shows that differences are very modest on the mainland, but add 10% or more to food budgets for families with children and single pensioners on islands. All these figures are lower than in 2013, because of the apparent convergence of prices in different supermarket types – a trend that will be kept under review in future updates.

Table 1: Weekly food costs in different MIS budgets, 2021

	Urban UK	Remote rural mainland	% difference to urban UK	Island	% difference to urban UK
Couple + 2	£112.43	£117.08	4%	£126.70	13%
Working age single	£49.69	£50.60	2%	£52.06	5%
Working age couple	£83.13	£84.64	2%	£87.06	5%
Pensioner single	£47.10	£48.30	3%	£51.97	10%
Pensioner couple	£75.25	£77.04	2%	£79.57	6%

Clothing

For different households a varying selection of clothing was assumed to be purchased locally, with the proportion of this being higher for pensioner and working age households than for families with children. While some clothing will be purchased by islanders on the mainland during visits, or online, all groups indicated that some clothes shopping would be done locally. Families living on islands were assumed to take their cars on visits to the mainland, and this gave more capacity to buy clothing there than working age and pensioner households who would be able to economise by using coaches or public transport on mainland trips. Local shopping thus added variable costs to the clothing budget through higher prices; other costs were added by additional items related to outdoor life. The latter are particularly significant in the Islands, and altogether these two factors can add up to a third onto the cost of clothing. These differences are shown in Table 2.

Table 2: Weekly clothing costs in different MIS budgets, 2021

	Urban UK	Remote rural mainland	% difference to urban UK	Island	% difference to urban UK
Couple + 2	£44.66	£49.26	10%	£50.20	12%
Working age single	£7.99	£9.07	14%	£10.63	33%
Working age couple	£15.98	£18.14	14%	£21.25	33%
Pensioner single	£6.99	£8.24	18%	£9.34	34%
Pensioner couple	£13.98	£16.47	18%	£18.67	34%

Household goods and services

In mainland remote rural Scotland, most household goods can be bought either at a town supermarket or at larger stores in a city on occasional visits. Here, additional costs arise mainly from the small number of additional items identified in Chapter 4, such as tumble driers and oil heaters. In islands, in addition, there is less chance to shop in a larger city, so a number of household goods are bought in a remote town at higher prices than in urban areas. In addition, people living remotely from towns also have to buy household 'consumables' such as cleaning materials at more expensive local shops. As with food, these additional prices have been factored into the calculations on a population-weighted basis.

Table 3 shows that, for household goods just as for food and clothing, additional costs are significantly higher in islands than on the mainland. The single biggest source of these differences are the higher costs of larger items bought locally.

Table 3: Weekly cost of household goods in different MIS budgets, 2021

	Urban UK	Remote rural mainland	% difference to urban UK	Island	% difference to urban UK
Couple + 2	£27.56	£28.64	4%	£30.34	10%
Working age single	£10.05	£11.07	10%	£12.25	22%
Working age couple	£12.22	£13.46	10%	£14.89	22%
Pensioner single	£15.39	£16.39	7%	£18.04	17%
Pensioner couple	£17.55	£18.69	7%	£20.58	17%

A further, indirect cost of obtaining household goods is delivery charges, particularly in the islands, classified under 'household services'. As shown in the full budget tables later in this chapter, these budgets are also higher in remote rural Scotland than in the rest of the UK, but in most cases this added only very modest amounts to overall budgets. Delivery costs were most significant for island pensioners, for whom they added around £3 a week on average to household budgets.

Travel

Travel is by far the greatest source of additional minimum costs for residents of remote rural Scotland. This is for three main reasons. First, in order to have the opportunities and choices that MIS specifies, people in these locations need to be able to travel much greater distances than in the rest of the UK – especially for work, but also for shopping leisure/holidays and accessing services. Mainland groups associated the cost of travelling to larger towns to buy household goods and clothing with avoiding the extra costs of buying these all locally. Thus, to some degree, higher local prices are reflected in the cost of travel, not just the cost of buying goods locally. Second, this requires having at least one car, which is not required in urban UK MIS for households without children. For non-pensioner couples with children it requires two cars, rather than one in urban UK. Third, some costs, such as petrol, are in most cases somewhat higher in remote rural Scotland than urban UK, although this is not the main driver of additional travel costs.

These influences are reflected in the additional costs of travelling in remote rural Scotland in Table 4. In absolute terms, the biggest addition is for couples of working age, including couple parents, whose need to own two cars and potentially to commute substantial differences can add over £50 a week to a minimum travel budget. However, as a percentage of travel costs, the greatest increases are for pensioners, because in the urban UK MIS budgets these costs are very low: there, pensioners rely mainly on free bus travel, supplemented by the occasional taxi trip. Table 4 also shows greater additional travel costs in mainland remote rural areas than in the islands, associated with greater distances in the former.

Table 4: Weekly travel costs in different MIS budgets, 2021

	Urban UK	Remote rural mainland	% difference to urban UK	Island	% difference to urban UK
Couple + 2	£102.10	£157.01	54%	£130.52	28%
Working age single	£43.30	£74.73	73%	£60.78	40%
Working age couple	£86.65	£144.78	67%	£117.34	35%
Pensioner single	£15.42	£54.10	251%	£43.89	185%
Pensioner couple	£19.16	£53.84	181%	£44.44	132%

Note that the 2013 study identified some island situations where travel costs could be significantly higher than shown because of the need to use inter-island ferries regularly. Most notably, some people living in outlying islands in Shetland and Orkney may need to use ferries as part of a commute. In such a situation, ferry trips could add up to £25 a week to an adult's travel costs. However, we estimate that only about 3% of the islands' population live in this situation, and their travel patterns will differ considerably, so we have not factored this into our overall calculation.

Social and cultural participation

Most social activities, including for example charges for leisure activities, are costed at a similar level in remote rural Scotland as in the rest of the UK. The most important exception is the cost of trips including holidays and visits to friends and families. Much of this additional cost is covered under travel, but it also brings additional expenses such as the cost of overnight stays, as well as the higher cost of coach packages for pensioners than those starting in urban areas of the UK. As shown in Table 5, additional costs are particularly significant for pensioners living in island locations. This is due in large part to their specification of a two week rather than a one week holiday, as discussed in the preceding chapter.

Table 5: Weekly cost of social participation in different MIS budgets, 2021

	Urban UK	Remote rural mainland	% difference to urban UK	Island	% difference to urban UK
Couple + 2	£97.73	£106.56	9%	£115.33	18%
Working age single	£44.82	£45.42	1%	£45.42	1%
Working age couple	£73.63	£74.62	1%	£74.62	1%
Pensioner single	£48.20	£56.59	17%	£69.91	45%
Pensioner couple	£81.56	£95.76	17%	£118.29	45%

Budgets and breakdown of additional costs by household type

Tables 6 to 15 and their accompanying graphs give the budgets for each main household type, showing the breakdown of additional costs and the percentage effect on the overall budget in each case. The following overall observations can be made about these results:

• Overall additional costs are mainly between around 15% and 30% of the urban UK MIS budget. The exception is single pensioners on islands, for whom the extra cost is 37%.
• In most cases the majority of this difference comes from travel.
• One exception to this is a family with children in the islands, where additional costs add 6% to the overall budget, considerably less than elsewhere. This is influenced by the fact that UK urban households with children also need a car, and by the somewhat lower driving distances on islands compared to the mainland.
• Another exception is pensioners living on islands, for whom social participation costs make a large contribution, although as explained above, these are mainly indirect costs associated with travel such as additional overnight stays and higher coach holiday prices.

Table 6: Remote rural Scotland MIS budget (weekly) compared to UK overall: Mainland, couple with two children

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£112.43	£117.08	4%	1%
Alcohol	£10.47	£10.47	0%	0%
Clothing	£44.66	£49.26	10%	1%
Household insurances	£1.46	£1.15	-22%	0%
Other housing costs	£1.92	£1.92	0%	0%
Household goods	27.56	£28.64	4%	0%
Household services excluding childcare	£10.84	£11.52	6%	0%
Personal goods and services	£41.59	£40.23	-3%	0%
Motoring	£69.61	£2.30	-97%
Other travel costs	£32.49	£154.71	376%
Travel costs overall	£102.10	£157.01	54%	12%
Social & cultural participation	£97.73	£106.56	9%	2%
Total	£450.76	£523.84	16%	16%

Table 7: Remote rural Scotland MIS budget (weekly) compared to UK overall: Mainland, single working age without children

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£49.69	£50.60	2%	0%
Alcohol	£6.10	£6.10	0%	0%
Clothing	£7.99	£9.07	14%	1%
Household insurances	£1.76	£0.80	-54%	0%
Other housing costs	£1.44	£1.44	0%	0%
Household goods	10.05	£11.07	10%	1%
Household services excluding childcare	£7.66	£11.34	48%	2%
Personal goods and services	£18.52	£19.09	3%	0%
Motoring	£0.00	£71.77
Other travel costs	£43.30	£2.96
Travel costs overall	£43.30	£74.73	73%	16%
Social & cultural participation	£44.82	£45.42	1%	0%
Total	£191.33	£229.66	20%	20%

Table 8: Remote rural Scotland MIS budget (weekly) compared to UK overall: Mainland, couple working age without children

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£83.13	£84.64	2%	0%
Alcohol	£12.02	£12.02	0%	0%
Clothing	£15.98	£18.14	14%	1%
Household insurances	£1.76	£0.80	-54%	0%
Other housing costs	£1.44	£1.44	0%	0%
Household goods	£12.22	£13.46	10%	0%
Household services excluding childcare	£10.41	£14.09	35%	1%
Personal goods and services	£31.38	£32.35	3%	0%
Motoring	£0.00	£142.48
Other travel costs	£86.65	£2.30
Travel costs overall	£86.65	£144.78	67%	18%
Social & cultural participation	£73.63	£74.62	1%	0%
Total	£328.62	£396.34	21%	21%

Table 9: Remote rural Scotland MIS budget (weekly) compared to UK overall: Mainland, single pensioner

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£47.10	£48.30	3%	1%
Alcohol	£8.05	£8.05	0%	0%
Clothing	£6.99	£8.24	18%	1%
Household insurances	£1.55	£1.01	-35%	0%
Other housing costs	£1.92	£1.92	0%	0%
Household goods	£15.39	£16.39	7%	1%
Household services excluding childcare	£8.84	£11.16	26%	1%
Personal goods and services	£18.52	£18.73	1%	0%
Motoring	£0.00	£48.93
Other travel costs	£15.42	£5.18
Travel costs overall	£15.42	£54.10	251%	22%
Social & cultural participation	£48.20	£56.59	17%	5%
Total	£171.97	£224.48	31%	31%

Table 10: Remote rural Scotland MIS budget (weekly) compared to UK overall: Mainland, couple pensioner

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£75.25	£77.04	2%	1%
Alcohol	£12.30	£12.30	0%	0%
Clothing	£13.98	£16.47	18%	1%
Household insurances	£1.55	£1.01	-35%	0%
Other housing costs	£1.92	£1.92	0%	0%
Household goods	£17.55	£18.69	7%	0%
Household services excluding childcare	£10.77	£13.09	21%	1%
Personal goods and services	£38.67	£39.10	1%	0%
Motoring	£0.00	£49.81
Other travel costs	£19.16	£4.03
Travel costs overall	£19.16	£53.84	181%	13%
Social & cultural participation	£81.56	£95.76	17%	5%
Total	£272.70	£329.21	21%	21%

Table 11: Remote rural Scotland MIS budget (weekly) compared to UK overall: Island, couple with two children

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£112.43	£126.70	13%	3%
Alcohol	£10.47	£10.47	0%	0%
Clothing	£44.66	£50.20	12%	1%
Household insurances	£1.46	£1.19	-19%	0%
Other housing costs	£1.92	£1.92	0%	0%
Household goods	27.56	£30.34	10%	1%
Household services excluding childcare	£10.84	£11.52	6%	0%
Personal goods and services	£41.59	£42.26	2%	0%
Motoring	£69.61	£2.30
Other travel costs	£32.49	£128.22
Travel costs overall	£102.10	£130.52	28%	6%
Social & cultural participation	£97.73	£115.33	18%	4%
Total	£450.76	£520.45	15%	15%

Table 12: Remote rural Scotland MIS budget (weekly) compared to UK overall: Island, single working age without children

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£49.69	£52.06	5%	1%
Alcohol	£6.10	£6.10	0%	0%
Clothing	£7.99	£10.63	33%	1%
Household insurances	£1.76	£0.80	-54%	0%
Other housing costs	£1.44	£1.44	0%	0%
Household goods	£10.05	£12.25	22%	1%
Household services excluding childcare	£7.66	£7.78	2%	0%
Personal goods and services	£18.52	£20.01	8%	1%
Motoring	£0.00	£57.33
Other travel costs	£43.30	£3.45
Travel costs overall	£43.30	£60.78	40%	9%
Social & cultural participation	£44.82	£45.42	1%	0%
Total	£191.33	£217.26	14%	14%

Table 13: Remote rural Scotland MIS budget (weekly) compared to UK overall: Island, couple working age without children

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£83.13	£87.06	5%	1%
Alcohol	£12.02	£12.02	0%	0%
Clothing	£15.98	£21.25	33%	2%
Household insurances	£1.76	£0.80	-54%	0%
Other housing costs	£1.44	£1.44	0%	0%
Household goods	£12.22	£14.89	22%	1%
Household services excluding childcare	£10.41	£10.53	1%	0%
Personal goods and services	£31.38	£33.90	8%	1%
Motoring	£0.00	£114.66
Other travel costs	£86.65	£2.69
Travel costs overall	£86.65	£117.34	35%	9%
Social & cultural participation	£73.63	£74.62	1%	0%
Total	£328.62	£373.86	14%	14%

Table 14: Remote rural Scotland MIS budget (weekly) compared to UK overall: Island, single pensioner

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£47.10	£51.97	10%	3%
Alcohol	£8.05	£8.05	0%	0%
Clothing	£6.99	£9.34	34%	1%
Household insurances	£1.55	£1.01	-35%	0%
Other housing costs	£1.92	£1.92	0%	0%
Household goods	£15.39	£18.04	17%	2%
Household services excluding childcare	£8.84	£11.73	33%	2%
Personal goods and services	£18.52	£19.88	7%	1%
Motoring	£0.00	£41.42
Other travel costs	£15.42	£2.47
Travel costs overall	£15.42	£43.89	185%	17%
Social & cultural participation	£48.20	£69.91	45%	13%
Total	£171.97	£235.73	37%	37%

Table 15: Remote rural Scotland MIS budget (weekly) compared to UK overall: Island, couple pensioner

Category (excluding water, rent, childcare and domestic fuel)	2021 urban UK	2021 RRS	% difference to urban UK, by budget category	Addition as % of MIS budget, all items
Food	£75.25	£79.57	6%	2%
Alcohol	£12.30	£12.30	0%	0%
Clothing	£13.98	£18.67	34%	2%
Household insurances	£1.55	£1.01	-35%	0%
Other housing costs	£1.92	£1.92	0%	0%
Household goods	£17.55	£20.58	17%	1%
Household services excluding childcare	£10.77	£13.66	27%	1%
Personal goods and services	£38.67	£41.50	7%	1%
Motoring	£0.00	£42.52
Other travel costs	£19.16	£1.92
Travel costs overall	£19.16	£44.44	132%	9%
Social & cultural participation	£81.56	£118.29	45%	13%
Total	£272.70	£351.93	29%	29%

Implications for fuel poverty uplift

The remote rural uplift applied to MIS in Scotland's fuel poverty indicator has been specified as requiring a single uplift percentage for each of the following household types, separately for the mainland and island areas: families with children, working age households without children, and pensioner households. In each case, the percentage uplift figure should be applied to the appropriate MIS threshold being used elsewhere in Scotland^[3], namely 90% of UK MIS excluding housing, childcare, council tax and domestic fuel costs. Table 16 shows these percentage uplift figures. For families with children, it takes the couple with two children example as representative. For households without children, it uses unweighted averages of single and couple uplifts. While this does not reflect any differences in population numbers between singles and couples, household data show that there are similar numbers of single person as couple-only households in Scotland (about 800,000 of the former and 700,000 of the latter).

Table 16: Percentage additional MIS costs in remote rural Scotland, 2021

Mainland	Mainland	Island
Couple+2	16.2%	15.5%
Family with children, rounded uplift (based on couple+2 case)	16%	15%
Single working age	20.0%	13.6%
Couple working age	20.6%	13.8%
Working age rounded uplift (based on average of single and couple)	20%	14%
Single pensioner	30.5%	37.1%
Couple pensioner	20.7%	29.1%
Pensioner rounded uplift (based on average of single and couple)	26%	33%