Scotland's People Annual Report: Results from 2012 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^[51] 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^[52].

Main Findings

• Throughout 2012, the percentage of people who feel positively about their household finances has remained fairly stable at around 47%, following a dip to 44% at the end of 2011.
• One-fifth (20%) of single parent households say they are managing well financially. Those households in social and private rented sectors are less likely to say they are managing well (24% and 36% respectively) as compared to those who live in owner occupied accommodation (58%).
• Just over one-quarter of households (26%) did not have any savings or investments in 2012, with 15% having less than £1,000 savings.
• Just over a third (36%) of single parent households and over half (55%) of single adult have savings and investments. Around half (53%) of households in the social rented sector have no savings.

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.

Figure 6.1: How the household is managing financially this year

1999-2012 data, Households (2012 base minimum: 2,290)

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

Between 1999 and 2007 the SHS data suggested 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 2012, the percentage of people who feel positively about their household finances has remained fairly stable at around 47%, following a dip to 44% at the end of 2011.

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. However it had increased to 2% between January and June 2012.

If we combine the data into three broad categories - those managing well, those getting by and those not managing well,^[53] we can see that households with lower incomes are much more likely to say they are not managing well, with 27% 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

2012 data, Households (base: 10,210; minimum: 1,450)

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 less than one-third of single parent households (31%) say they are not managing well financially (Table 6.1). One-in-four single adults also say they are not managing well, while only 4% 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 55 while the median age of those not managing well is 44.

Table 6.1: How the household is managing financially this year by household type

Column percentages, 2012 data

Households	Single adult	Small adult	Single parent	Small family	Large family	Large adult	Older smaller	Single pensioner	All
Manages well	36	50	20	43	39	53	62	55	47
Gets by	39	39	49	44	43	38	34	40	40
Does not manage well	25	11	31	13	18	10	4	6	13
Total	100	100	100	100	100	100	100	100	100
Base	1,880	1,720	610	1,240	610	950	1,790	1,790	10,570

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 (24% and 36% respectively) as compared to those who live in owner occupied accommodation (58%). Those within the social rented sector appear to have more concerns around not managing very well financially (28%), an increase of four percentage points from 2011.

Figure 6.3: How the household is managing financially this year by tenure of household

2012 data, Households (base: 1,310; minimum: 150)

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).^[54] Almost one-in-five households relying on benefits say they are not managing well (21%) compared with one-in-ten of those relying mainly on earnings (10%) 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, 2012 data

Households	Main income from earning	Main income from benefits	Main income from other sources	An equal mix of income sources	All
Manages well	51	35	69	43	47
Gets by	39	44	28	42	40
Does not manage well	10	21	4	15	13
Total	100	100	100	100	100
Base	5,490	3,680	1,030	370	10,570

Respondents in households where the Highest Income Householder (HIH) is male more commonly say they do manage well (52%, compared with 40% 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 the HIH get older (31% of those aged 16 to 24 increasing to 58% of those aged 75 plus), as against decreasing pattern for those not managing well (24% of those aged 16 to 24 down to 4% 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, 2012 data

Households	Male	Female	16 to 24	25 to 34	35 to 44	45 to 59	60 to 74	75 plus	All
Manages well	52	40	31	42	38	46	57	58	47
Gets by	36	44	45	42	42	38	37	38	40
Does not manage well	11	16	24	16	20	16	6	4	13
Total	100	100	100	100	100	100	100	100	100
Base	6,210	4,370	410	1,360	1,720	3,070	2,610	1,400	10,570

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 data zones (according to the Scottish Index of Multiple Deprivation) say they are not managing well financially, compared with the rest of Scotland (24%, compared with 11%).

Table 6.4: How the household is managing financially this year by Scottish Index of Multiple Deprivation

Column percentages, 2012 data

Households	15% most deprived	Rest of Scotland	Scotland
Manages well	27	51	47
Gets by	49	38	40
Does not manage well	24	11	13
Total	100	100	100
Base	1,500	9,070	10,570

From June 2007 this question was asked of half the sample

Savings and Investments

Prior to 2009, 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. From January 2012, the question was also reduced in scope to only be asked of one-third of the sample.

Table 6.5 presents figures about whether SHS respondents had savings or investments. Just over one-quarter of households did not having any savings or investments in 2012 (26%), while 15% of 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.

Table 6.5: Whether respondent or partner has any savings or investments by year

Column percentages, 1999-2012 data

Households	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
No savings	40	40	40	37	37	40	40	41	41	42	25	29	27	26
Has savings	54	53	53	54	54	52	52	51	50	48	61	60	63	65
Less than £1,000	10	9	8	9	8	7	7	6	6	5	18	12	12	15
£1,000 or more	44	44	45	45	46	45	45	45	44	43	43	48	51	50
Don't know	1	1	1	1	1	1	1	1	1	1	2	1	1	1
Refused	6	7	7	8	8	7	8	8	7	9	12	9	9	9
Total	100	100	100	100	100	100	100	100	100	100	100	100	100	100
Base	14,650	15,540	15,560	15,070	14,880	15,940	15,390	15,610	11,420	10,360	10,320	11,000	10,790	3,460

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. Note also that question reduced to being asked of 1/3 of the sample in 2012.

Figure 6.4 shows that over a quarter of households in Scotland do not have any savings or investments (26%), with the proportion with savings or investments increasing from 49% of those with the lowest incomes to 82% of those with the highest incomes. A third (36%) of single parent households have savings and investments compared with 80% of older smaller households (Figure 6.5). Less than two-fifths of single adult households (37%) say they have no savings or investments, a decrease of four percentage points from 2011.

Figure 6.4: Whether respondent or partner has any savings or investments by net annual household income

2012 data, Households (base: 3,330; minimum: 500)

Figure 6.5: Whether respondent or partner has any savings or investments by household type

2012 data, Households (base: 3,460; minimum: 190)

There are also differences by tenure, with 77% of owners having savings or investments, compared with just 38% of social renters. Around one third of those in the private rented sector (19%) have savings of at least £1,000 compared to just 16% of those in the social rented sector.

Table 6.6: Whether respondent or partner has any savings or investments by tenure of household

Column percentages, 2012 data

Households	Owner occupied	Social rented	Private rented	Other	All
No savings	12	53	40	*	26
Has savings	77	38	54	*	65
Less than £1,000	10	21	25	*	15
£1,000 or more	67	16	29	*	50
Don't know	1	2	1	*	1
Refused	10	8	5	*	9
Total	100	100	100	*	100
Base	2,240	770	410	50	3,460

Again, there is a relationship between having savings or investments and age and gender of the HIH. The median age of those with savings is 54 while the median age of those without is 45, reflected in the changing profile of savings within Table 6.7. Households headed by females are less likely to report having savings (59%, compared with 69% 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, 2012 data

Households	Male	Female	16 to 24	25 to 34	35 to 44	45 to 59	60 to 74	75 plus	All
No savings	22	31	53	38	32	25	16	12	26
Has savings	69	59	41	56	60	66	74	73	65
Less than £1,000	13	18	19	22	17	15	11	9	15
£1,000 or more	56	42	22	34	42	51	63	64	50
Don't know	1	1	1	1	1	1	1	2	1
Refused	9	8	5	5	7	9	10	14	9
All	100	100	100	100	100	100	100	100	100
Base	2,040	1,420	130	440	560	990	890	460	3,460

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. From January 2012 these questions were reduced to be asked of one-third of the sample.

Owing money through credit

One in four (25%) households owed money on a credit card and 3% owed money on shop or store cards (Table 6.8). Those households with higher income are more likely to owe money on credit cards, with around two-fifths (38%) 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. Over four-fifths of households with incomes of up to £10,000 do not have any money outstanding (84%), compared to over half (58%) 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

Percentages, 2012 data

Households	Male	Female	Up to £10,000	£10,001 - £20,000	£20,001 - £30,000	Over £30,000	All
Credit Cards	26	23	11	18	30	38	25
Charge Cards	0	0	-	0	1	0	0
Shop or store cards	3	3	1	2	4	4	3
None of these	69	71	84	77	65	58	69
Refused	5	5	4	3	3	4	5
Base	2,040	1,420	500	1,150	800	890	3,460

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, with 81% not owing money via credit. Small family households were less likely to owe nothing (55%), with 40% owing money to a credit card.

Table 6.9: Whether respondent or partner owe money to the following by household type

Percentages, 2012 data

Households	Single adult	Small adult	Single parent	Small family	Large family	Large adult	Older smaller	Single pensioner	All
Credit Cards	21	33	27	40	33	26	16	12	25
Charge Cards	0	1	-	-	1	0	-	0	0
Shop or store cards	1	3	6	6	5	3	2	1	3
None of these	74	60	70	55	60	67	77	81	69
Refused	3	6	1	4	6	5	6	6	5
Base	630	540	200	370	190	330	620	580	3,460

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 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 (15% and 12% respectively).

Figure 6.6: Whether respondent or partner owe money to the following by tenure and financial circumstances

2012 data, Households (base: 3,460; minimum: 340)

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 11% of all households having such a loan. There is very little difference in the uptake of loans between males and females as highest income householders (11% and 10% respectively), though there is in the uptake of personal loans when looking at income which is more pronounced. Only 2% of households with income less than £10,000 have a personal loan, compared to just over one-fifth (22%) 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, 2012 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	3	5	6	4	5
Hire or Rental Purchase Agreements	3	3	1	2	2	6	3
Personal loan, e.g. with Bank, Building Society	11	10	2	6	11	22	11
Cash loan from company that comes to your home to collect payments	0	1	1	1	0	0	1
Loan from a pawnbroker/cash converters	-	0	0	0	-	0	0
Loan from a Credit Union	0	1	0	1	1	1	1
Loan from a Social Fund	1	1	3	1	0	-	1
Loan from an Employer	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	0	1	1	1	1
Loan from a student loan company	2	2	2	1	3	2	2
Student loan from a bank or building society	2	0	0	1	2	1	1
A loan from a pay day lender	0	0	0	0	0	-	0
None of these	75	73	85	80	74	63	75
Refused	4	4	4	2	2	4	3
Base	2,040	1,420	500	1,150	800	890	3,330

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 in the private rented sector, are not managing well financially, 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

2012 data, Households (base: 3,460; minimum: 340)

There is some evidence that borrowing using credit is more commonly associated with financial hardship, with 34% of those who say they are not managing well financially having borrowed, compared with 22% who are 'getting by' and 19% of those who are managing well. Those without savings or investments are also more likely to borrow than those with savings (31% and 21% respectively). Similarly, those whose main income is from earnings are more likely to have a loan (29%) than those where income comes from benefits or other sources (around one in eight).

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. These questions were reduced in scope to be asked one-third of the sample in 2012.

Table 6.11: Whether respondent or partner has a bank or building society account by year

Column percentages, 1999-2012 data

Households	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
Yes	86	86	87	88	89	90	91	91	91	91	93	92	93	93
No	12	11	11	8	7	6	5	6	5	5	4	4	4	6
Refused	2	2	2	4	4	4	4	3	4	5	3	4	3	1
Base	14,650	15,550	15,560	15,070	14,880	15,940	15,390	15,610	11,420	10,360	10,290	11,000	10,790	3,460

From June 2007, this question was asked of three quarters of the sample.
From January 2012, this question was asked of one third of the sample.
This analysis excludes Credit Unions and Post Office accounts.

The proportion of households with neither the respondent nor their spouse or partner having a bank or building society had seen a gradual decrease over the period to 2011, though this increased from just 4% of households in 2011 not having any banking facilities to 6% in 2012 (Table 6.11).

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 1% giving the 'none of these' option compared with less than 1% of those with household incomes above £20,000. Similarly, 2% 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. Those households with a smaller income are more likely to say they make use of banking facilities through the Post Office (9% of those with an income of between £10,001 and £20,000).

Table 6.12: Whether respondent or partner has banking facilities by net annual household income and Scottish Index of Multiple Deprivation

Percentages, 2012 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	89	90	94	96	81	93	91
Building Society account	8	12	19	25	8	18	16
Credit Union Account	3	3	3	6	7	3	4
Post Office Card Account	8	9	4	2	12	4	6
None of these	1	1	0	0	2	1	1
Refused	3	2	2	2	5	3	2
Base	500	1,150	800	890	490	2,970	3,460

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