Scotland's People Annual report: Results from 2009/2010 Scottish Household Survey

6 Finance

Introduction and Context

The Scottish Government framework to tackle poverty, income inequality and financial exclusion in Scotland is set out in 'Achieving our Potential' which was published in November 2008. It outlines the key actions required by the Scottish Government and its partners such as the strengthening of income maximisation work, launching a campaign to raise awareness of statutory workers' rights and supporting people who find it hardest to get into jobs or use public services. It also calls for the UK government to transfer responsibility for personal taxation and benefits to Scotland, simplify the tax credits scheme and promote the greater availability of childcare vouchers.

Achieving Our Potential is one of three key elements of the Scottish Government's approach to alleviating disadvantage, which also focuses on reducing health inequalities and providing children with the best start in life.

The SHS asks several key questions that are used to measure progress against financial inclusion targets. This chapter begins by providing a picture of how households in Scotland are managing financially and looks at how this has changed recently. Other measures of financial inclusion ^[44] from the SHS examined across time are whether the household uses a bank account or other finance such as a credit union or Post Office Account, whether the household has savings or investments and what types of credit and debt, if any, the household uses.

The analysis of financial inclusion is presented for a number of different groups - those with lower and higher incomes, different types of household and those with different income sources.

Some commentary is provided throughout this chapter based on more in-depth analysis than that actually presented. The actual analysis will be presented as accompanying web tables on the SHS website ^[45].

How households are managing financially

The SHS asks respondents to rate how they feel their households have coped financially over the last year. Trends over time for this questions are presented in Figure 6.1 below.

Between 1999 and 2007 the SHS data suggest that an increasing number of people felt positive about their household finances, rising from around 40% of households rating themselves as managing 'quite well or very well' in 1999 to a peak of 55% in the fourth quarter of 2007. During 2008 this proportion fell by five percentage points while the proportion of people describing themselves as 'getting by alright' conversely increased.

Throughout 2009/2010, the percentage of people who feel positively about their household finances remains fairly consistent. There was also a levelling in the proportion of people answering that they either 'didn't manage very well' or 'had some difficulties', following increases throughout 2008.

The proportion of respondents describing themselves as in 'deep financial trouble' has remained consistently low, around one per cent over the period that this question has been asked.

Figure 6.1: How the household is managing financially this year
1999-2010 data, Households (2010 base: 7,033)

This question was only asked between January and March in 2003.

If we combine the data into three broad categories - those managing well, those getting by and those not managing well, ^[46] we can see that households with lower incomes are much more likely to say they are managing badly, with 22% of those with a household income of less than £10,000 saying this, compared with just 4% of those households with an income in excess of £30,000.

Figure 6.2: How the household is managing financially this year by net annual household income
2009/2010 data, Households (base: 13.496)

From June 2007, this question was asked of half of the sample.

Household income in the SHS is that of the highest income householder and their partner only. Includes all adults for whom household income is known or has been imputed. Excludes refusals/don't know responses.

Just under a third of single parent households say they are not managing well financially (Table 6.1), compared with just over one-in-ten households across all household types. One-in-five single adults also say they are not managing well, while only 3% of older smaller households and 6% of single pensioners say this. The likelihood of saying they are not managing well financially reduces with age - the median of those managing well is 54 while the median age of those not managing well is 43.

Table 6.1: How the household is managing financially this year by household type
Column percentages, 2009/2010 data

Households	Single adult	Small adult	Single parent	Small family	Large family	Large adult	Older smaller	Single pensioner	All
Manages well	40	55	21	47	42	51	62	55	49
Gets by	40	35	51	41	46	40	35	39	39
Does not manage well	20	10	29	12	12	9	3	6	12
All	100	100	100	100	100	100	100	100	100
Base	2,520	2,497	741	1,830	929	1,251	2,154	2,076	13,998

Managing financially for a household can be difficult if housing affordability is a concern. Figure 6.3 shows that those households in social and private rented sectors are less likely to say they are managing well (26% and 37% respectively) as compared to those who live in owner occupied accommodation (59%). Those within the social rented sector appear to have more concerns around not managing very well financially (24%).

Figure 6.3: How the household is managing financially this year by tenure of household
2009/2010 data, Households (base: 13,998)

Those households relying on benefits were far less positive about their finances than those whose income comes mainly from earnings or non-earned sources (Table 6.2). ^[47] Almost one-in-five households relying on benefits say they are not managing well compared with fewer than one-in-ten of those relying mainly on earnings and 4% of those whose income is mainly from 'other sources'.

Table 6.2: How the household is managing financially this year by income sources
Column percentages, 2009/2010 data

Households	Main income from earning	Main income from benefits	Main income from other sources	An equal mix of income sources	All
Manages well	54	36	72	*	49
Gets by	38	45	23	*	39
Does not manage well	8	19	4	*	12
All	100	100	100	*	100
Base	7,492	4,823	1,172	9	13,496

Respondents in households where the Highest Income Householder ( HIH) is male more commonly say they do manage well (53%, compared with 44% of households where the HIH is female). There are also marked differences in how people are managing financially when looking at age, with an increase in those managing well as people get older (36% of those aged 16 to 24 up to 61% of those aged 75 plus), as against decreasing pattern for those not managing well (21% of those aged 16 to 24 down to 2% of those aged 75 plus).

Table 6.3: How the household is managing financially this year by sex and age of highest income householder
Column percentages, 2009/2010 data

Households	Male	Female	16 to 24	25 to 34	35 to 44	45 to 59	60 to 74	75 plus	All
Manages well	53	44	36	41	44	48	57	61	49
Gets by	38	41	43	43	40	38	37	37	39
Does not manage well	10	14	21	16	15	14	6	2	12
All	100	100	100	100	100	100	100	100	100
Base	8,278	5,720	601	1,792	2,560	3,937	3,288	1,820	13,998

There is a concentration of perceived financial difficulty in areas of deprivation (Table 6.4). Twice the proportion of households in the 15% most deprived of data zones (according to the Scottish Index of Multiple Deprivation) say they are not managing well financially, compared with the rest of Scotland (22%, compared with 10%).

Table 6.4: How the household is managing financially this year by Scottish Index of Multiple Deprivation
Column percentages, 2009/2010 data

Households	15% most deprived	Rest of Scotland	Scotland
Manages well	32	52	49
Gets by	46	38	39
Does not manage well	22	10	12
All	100	100	100
Base	2,004	11,983	13,987

From June 2007 this question was asked of half the sample

Savings and Investments

Previously, information on savings or investments was asked via two questions: whether the highest income householder or their spouse or partner had any money saved or invested then a follow up question to ask how much using banded amounts. These were consolidated into a single question from January 2009. As such, analysis from 2009 onwards may not be directly comparable to those from previous years. Those saying they do have savings has increased slightly from previously, which is likely caused by the introduction of the amount of savings ( e.g. less than £1,000) into the question.

Table 6.5: Whether respondent or partner has any savings or investments by year
Column percentages, 1999-2010 data

Households	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
No savings	40	40	40	37	37	40	40	41	41	42	25	29
Has savings	54	53	53	54	54	52	52	51	50	48	61	60
Less than £1,000	10	9	8	9	8	7	7	6	6	5	18	12
£1,000 or more	44	44	45	45	46	45	45	45	44	43	43	48
Don't know	1	1	1	1	1	1	1	1	1	1	2	1
Refused	6	7	7	8	8	7	8	8	7	9	12	9
All	100	100	100	100	100	100	100	100	100	100	100	100
Base	14,653	15,544	15,557	15,072	14,877	15,936	15,388	15,611	11,424	10,363	10,324	10,999

Direct comparisons between 2009 and earlier years is not possible due to a change in questions. As respondents are now asked the amount of savings they hold at the same time as whether they have any savings, there been a move for those who say they have less than £1,000 savings from having previously said they had no savings.

Table 6.5 presents figures about whether SHS respondents had savings or investments between 1999 and 2010. As noted above, it is not possible to make direct comparisons between 2009 and earlier years. Almost three-in-ten households did not having any savings or investments in 2010, while just over one-in-ten households have less than £1,000 savings. Prior to change of questions in the SHS in 2009, there had been an apparent decrease in the amount of savings being less than £1,000.

Figure 6.4 shows that over a quarter of households in Scotland do not have any savings or investments (28%), with the proportion with savings or investments increasing from 48% of those with the lowest incomes to 77% of those with the highest incomes. Just under a third (31%) of single parent households have savings and investments compared with 72% of older smaller households (Figure 6.5).

Figure 6.4: Whether respondent or partner has any savings or investments by net annual household income
2009/2010 data, Households (base: 20,517)

Figure 6.5: Whether respondent or partner has any savings or investments by household type
2009/2010 data, Households (base: 21,323)

There are also differences by tenure, with 71% of owners having savings or investments, compared with just 35% of social renters.

Table 6.6: Whether respondent or partner has any savings or investments by tenure of household
Column percentages, 2009/2010 data

Households	Owner occupied	Social rented	Private rented	Other	All
No savings	15	55	43	31	27
Has savings	71	35	49	54	60
Less than £1,000	13	17	20	16	15
£1,000 or more	58	18	29	38	45
Don't know	1	2	2	4	1
Refused	12	8	7	11	11
All	100	100	100	100	100
Base	14,207	4,712	2,074	330	21,323

Again, there is a relationship between having savings or investments and age and gender. The median age of those with savings is 53 while the median age of those without is 43, reflected in the changing profile of savings within Table 6.7. Respondents from households where the HIH is female are slightly less likely to report having savings (56%, compared with 64% headed by men).

Table 6.7: Whether respondent or partner has any savings or investments by sex and age of highest income householder
Column percentages, 2009/2010 data

Households	Male	Female	16 to 24	25 to 34	35 to 44	45 to 59	60 to 74	75 plus	All
No savings	24	33	57	41	33	26	17	12	27
Has savings	64	56	37	52	58	61	68	68	60
Less than £1,000	14	17	19	19	18	14	12	12	15
£1,000 or more	50	39	18	33	40	47	56	56	45
Don't know	1	1	1	1	1	1	1	3	1
Refused	11	11	5	6	9	11	14	16	11
All	100	100	100	100	100	100	100	100	100
Base	12,603	8,720	893	2,686	3,820	6,067	5,113	2,744	21,323

Use of Credit

The questions on use of credit within the SHS changed in 2009. Previously, respondents were asked whether they used a variety of sources to either purchase goods or to borrow money using credit. These were replaced with questions on whether in the previous month they had any money outstanding on either accounts ( e.g. credit cards, etc) or through loans ( e.g. personal loans, etc). As such, analysis from 2009 may not be directly comparable to those from previous years.

Owing money through credit

A third of households owed money on their credit card from the previous month, with 4% of those with shop or store cards owing money (Table 6.8). Those households with higher income are more likely to owe money on credit cards, with just under half (45%) with an income of over £30,000 owing money to a credit card in the previous month. The proportion of people who have money outstanding on such credit also increases with household income. Almost four-fifths of households with incomes of up to £10,000 do not have any money outstanding, compared to half (50%) with an income exceeding £30,000.

Table 6.8: Whether respondent or partner owe money to the following by gender of the highest income householder and net annual household income
Column percentages, 2009/2010 data

Households	Male	Female	Up to £10,000	£10,001 - £20,000	£20,001 - £30,000	Over £30,000	All
Credit Cards	33	26	17	24	36	45	31
Charge Cards	1	1	1	1	1	1	1
Shop or store cards	4	4	2	3	5	6	4
None of these	61	67	78	71	59	50	64
Refused	5	5	4	3	4	4	4
Base	12,573	8,698	3,609	7,096	4,259	5,510	20,474

Columns may not add to 100% since multiple responses were allowed.

Household income in the SHS is that of the highest income householder and their partner only. Includes all households for whom household income is known or has been imputed.

As illustrated in Table 6.9, single pensioner households were the least likely to owe money via credit in the previous month (79%). Small family households were less likely to owe nothing, with 50% owing money to a credit card.

Table 6.9: Whether respondent or partner owe money to the following by household type
Percentages, 2009/2010 data

Households	Single adult	Small adult	Single parent	Small family	Large family	Large adult	Older smaller	Single pensioner	All
Credit Cards	28	37	24	44	42	33	22	14	30
Charge Cards	1	1	1	1	1	1	1	0	1
Shop or store cards	3	5	6	6	7	4	3	2	4
None of these	66	57	71	50	52	60	71	79	64
Refused	5	5	2	4	4	6	6	6	5
Base	3,784	3,760	1,155	2,774	1,395	1,936	3,281	3,186	21,271

Columns may not add to 100% since multiple responses were allowed.

Figure 6.6 shows that having money outstanding on credit is more commonly associated with affluence rather than financial hardship. Owners, those saying they are managing well financially, those with savings or investments and those whose main income is from earnings are, to some extent, more likely to owe money. Social renters and those whose main income is from benefits are less likely to owe money.

Figure 6.6: Whether respondent or partner owe money to the following by tenure and financial circumstances
2009/2010 data, Households (base: 20,474)

Household income in the SHS is that of the highest income householder and their partner only. Includes all households for whom household income is known or has been imputed.

Use of loans

Credit, as well as being used to make purchases through sources such as credit cards, can be used as a way of borrowing money. Table 6.10 shows the main types of loans people take out. The most common source is through a personal loan (such as through a bank or building society) with 13% of all households having such a loan. There is no apparent difference in the uptake of loans between males and females as highest income householders, though there is in the uptake of personal loans when looking at income. Only 4% of households with income less than £10,000 have a personal loan, compared to just under a quarter (23%) where the income is over £30,000.

Table 6.10: Whether respondent or partner has any loans by gender of highest income householder and net annual household income
Percentages, 2009/2010 data

Households	Male	Female	Up to £10,000	£10,001 - £20,000	£20,001 - £30,000	Over £30,000	All*
Catalogues or mail order schemes	4	6	4	6	5	5	5
Hire or Rental Purchase Agreements	3	2	1	2	3	4	3
Personal loan, e.g. with Bank, Building Society	14	11	4	9	17	23	13
Cash loan from company that comes to your home to collect payments	1	1	1	1	1	0	1
Loan from a pawnbroker/cash converters	0	0	0	0	0	0	0
Loan from a Credit Union	1	1	0	1	1	1	1
Loan from a Social Fund	1	2	2	2	1	0	1
Loan from an Employer	0	0	0	0	0	0	0
Loan from a friend, relative or other private individual	1	1	1	1	1	1	1
Other type of loan	1	1	1	1	1	1	1
Loan from a student loan company	2	2	2	2	2	3	2
Student loan from a bank or building society	1	1	1	1	1	1	1
A loan from a pay day lender	0	0	0	0	0	0	0
None of these	71	71	82	76	68	62	72
Refused	5	5	4	3	4	4	4
Base	12,581	8,704	3,609	7,099	4,265	5,512	20,485

Columns may not add to 100% since multiple responses were allowed.

Household income in the SHS is that of the highest income householder and their partner only. Includes all households for whom household income is known or has been imputed.

Figure 6.7 shows that the use of credit to borrow money differs depending on the tenure or financial circumstances of the household. Those households who are not managing well financially, those who have no savings or investments or those where the main income is from earnings are more likely to take out a loan.

Figure 6.7: Whether respondent or partner has any loans by tenure of household and financial circumstances
2009/2010 data, Households (base: 20,485)

There is some evidence that borrowing using credit is more commonly associated with financial hardship, with 38% of those who say they are not managing well financially having borrowed, compared with 26% who are 'getting by' and 20% of those who are managing well. Those without savings or investments are also more likely to borrow than those with savings (31% and 23% respectively). Similarly, those whose main income is from earnings are more likely to have a loan (31%) than those where income comes from benefits or other sources (less than one in five).

Banking

The SHS has asked about bank or building society accounts annually since 1999, with more details collected on Credit Unions and Post Office accounts since January 2007. The proportion of households with neither the respondent nor their partner having a bank or building society has seen a gradual decrease over the period to 2010. Just 4% of households in 2010 do not have any banking facilities (Table 6.11).

Table 6.11: Whether respondent or partner has a bank or building society account by year
Column percentages, 1999-2010 data

Households	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Yes	86	86	87	88	89	90	91	91	91	91	93	92
No	12	11	11	8	7	6	5	6	5	5	4	4
Refused	2	2	2	4	4	4	4	3	4	5	3	4
Base	14,653	15,545	15,558	15,072	14,877	15,936	15,388	15,611	11,424	10,364	10,289	10,999

From June 2007, this question was asked of three quarters of the sample.
This analysis excludes Credit Unions and Post Office accounts.

There is a clear pattern between not having a bank, building society or other account and levels of income and deprivation (Table 6.12). Those in the lowest income category were more likely to have no accounts, with 3% giving the 'none of these' option compared with less than 1% of those with household incomes above £30,000. Similarly, 3% of households in the 15% most deprived areas did not have an account of any kind compared with only 1% in the rest of Scotland.

Table 6.12: Whether respondent or partner has banking facilities by net annual household income and Scottish Index of Multiple Deprivation
Percentages, 2009/2010 data

Households	Up to £10,000	£10,001 - £20,000	£20,001 - £30,000	Over £30,000	15% most deprived	Rest of Scotland	All*
Bank account	87	90	94	96	82	92	92
Building Society account	12	15	22	32	10	22	21
Credit Union Account	1	2	4	4	4	3	3
Post Office Card Account	11	10	4	2	14	5	7
None of these	3	1	1	0	3	1	1
Refused	2	2	2	2	4	3	2
Base	3,613	7,102	4,266	5,512	3,068	18,204	20,493

Columns may not add to 100% since multiple responses were allowed.