Scotland's People Annual Report: Results from 2013 Scottish Household Survey: Revised October 2015

6 Finance

INTRODUCTION AND CONTEXT

The Scottish Government’s approach to tackling poverty, reducing income inequality and increasing financial inclusion is set out in the Child Poverty Strategy for Scotland Our Approach 2014-2017 which focuses on three key outcomes.

Maximising household resources – With an aim to reduce income poverty and material deprivation by maximising financial entitlements and reducing pressure on household budgets among low income families, as well as by maximising the potential for parents to increase family incomes through good quality, sustained employment, and promoting greater financial inclusion and capability (Pockets).

Improving children’s wellbeing and life chances – With an aim to break inter-generational cycles of poverty, inequality and deprivation. This requires a focus on tackling the underlying social and economic determinants of poverty and improving the circumstances in which children grow up – recognising the particular importance of improving children’s outcomes in the early years (Prospects).

Children from low income households live in well-designed, sustainable places – With an aim to address area-based factors which currently exacerbate the effects of individual poverty for many families by continuing to improve the physical, social and economic environments in local areas, particularly in those areas of multiple deprivation in which child poverty is more prevalent (Places).

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.

Main Findings

• In 2013, around half (48 per cent) of people reported that they felt positive about their household finances. This figure has remained relatively stable since 2010 after falling from the 2007 peak of 53 per cent.
• Single parent households were most likely to report that they do not manage well financially with three in ten (30 per cent) saying this compared to around one in ten of all households (12 per cent). Those households in the social and private rented sectors were less likely to say they are managing well (24 per cent and 39 per cent, respectively) when compared to those who live in owner occupied accommodation (59 per cent).
• Around one quarter of households (24 per cent) did not have any savings or investments in 2013, with 16 per cent having less than £1,000 savings.
• Single parent households were the most likely not to have savings (55 per cent), followed by single adult households (36 per cent) while only 24 per cent of all households had no savings. Around half (52 per cent) of households in the social rented sector reported have no savings.

HOW HOUSEHOLDS ARE MANAGING FINANCIALLY

The Scottish Household Survey (SHS) asks respondents to rate how they feel their households have coped financially over the last year. The trend since 1999 (when the survey started) is shown in Figure 6.1 below.

Between 1999 and 2007 an increasing number of households felt positive about their finances, rising from 42 per cent of households saying they were managing quite or very well in 1999 to a peak of 53 per cent in 2007. Between 2007 and 2010, the proportion of households that felt they are managing quite or very well fell 4 percentage points (to 49 per cent) and has remained stable to 2013. This fall in the proportion of households reporting that they manage very or quite well is seen against an increase in the proportion of households which report that they get by alright and don’t manage very well and have some financial difficulties. The proportion of households that felt they are in deep financial trouble has remained low, at around 1 per cent of households since 1999.

Figure 6.1: How the household is managing financially this year

1999-2013 data, Households (2013 base minimum: 10,590)

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

Combining the question on how households are managing financially into three broad categories - those managing well, those getting by and those not managing well allows us to see how this varies by net annual household income^[61] (household income), household type, household tenure more easily^[62].

Figure 6.2 shows the household perceptions of how they manage financially varies by household income. There is a clear relationship between household income and the proportion of households that reported that they do not manage well. One in four (25 per cent) households with a household income of up to £10,000 said they are not managing well financially - double the figure for all households in 2013 (12 per cent). This falls to one in twenty (4 per cent) households with a household income over £30,000.

There is also a large gap between households with incomes over £30,000 and those with £30,000 and below. Two-thirds (66 per cent) of households with income over £30,000 reported that they manage well financially which is 18 percentage points above the national figure of 48 per cent.

Figure 6.2: How the household is managing financially this year by net annual household income

2013 data, Households (base: 10,280; minimum: 1,370)

Table 6.1 shows how perceptions of financial management vary by household type. Single parent and single adult households were the most likely to report that they are not managing well financially with around one in three (30 per cent) and one in four (23 per cent) saying they are not managing well financially, respectively. Only one in ten (12 per cent) of all households reported that they do not manage well financially.

Only a small proportion of older households (older smaller and single pensioner) said they do not manage well (each with 4 per cent). The likelihood of a highest income householder reporting that 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, 2013 data

Households	Single adult	Small adult	Single parent	Small family	Large family	Large adult	Older smaller	Single pensioner	All
Manages well	37	52	20	44	38	50	63	56	48
Gets by	39	37	49	45	44	40	33	41	40
Does not manage well	23	11	30	11	18	10	4	4	12
Total	100	100	100	100	100	100	100	100	100
Base	1,840	1,680	590	1,340	620	960	1,760	1,800	10,590

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 were less likely to say they are managing well in 2013 (24 per cent and 39 per cent, respectively) which is significantly lower than the proportion of owner occupied households (59 per cent) that said this. Those within the social rented sector also reported higher levels of having concerns around managing financially than all other household tenures (27 per cent compared to 12 per cent overall).

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

2013 data, Households (base: 10,590; minimum: 210)

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)^[63]. Around one in five households relying on benefits say they are not managing well (19 per cent) compared with one in ten of those relying mainly on earnings (10 per cent).

Table 6.2: How the household is managing financially this year by income sources

Column percentages, 2013 data^[64]

Households	Main income from earnings	Main income from benefits	Main income from other sources	All
Manages well	51	36	73	48
Gets by	39	45	24	40
Does not manage well	10	19	2	12
Total	100	100	100	100
Base	5,650	3,600	1,020	10,280

Respondents in households where the Highest Income Householder (HIH) is male more commonly said they do manage well (53 per cent, compared with 41 per cent of households where the HIH is female). There are also differences in how people were managing financially when looking at age. As the age of the HIH increased so does the proportion of those households which reported they are managing well (around 62 per cent of households where the HIH is aged 75 and over compared 48 per cent of all households).

Table 6.3: How the household is managing financially this year by sex and age of highest income householder

Column percentages, 2013 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	41	38	42	40	45	56	62	48
Gets by	37	43	46	42	42	39	38	36	40
Does not manage well	10	15	16	17	18	16	6	2	12
Total	100	100	100	100	100	100	100	100	100
Base	6,200	4,390	410	1,350	1,660	3,190	2,550	1,410	10,590

There is a concentration of perceived financial difficulty in areas of deprivation (Table 6.4). Around twice the proportion of households in the 15 per cent most deprived data zones said they are not managing well financially (24 per cent), compared with households in the rest of Scotland (10 per cent).

Table 6.4: How the household is managing financially this year by Scottish Index of Multiple Deprivation^[65]

Column percentages, 2012 data

Households	15% Most Deprived	Rest of Scotland	All
Manages well	29	52	48
Gets by	47	38	40
Does not manage well	24	10	12
Total	100	100	100
Base	1,530	9,060	10,590

SAVINGS AND INVESTMENTS

Prior to 2009, information on savings or investments was asked via two questions which means that the data prior to 2009 is not comparable to later data. From 1999-2008, the highest income householder was asked whether they or their spouse or partner had any money saved or invested and this is then followed up by asking how much is saved or invested, using banded amounts. From January 2009 questions on savings were consolidated into a single question which asked whether the highest income householder and their spouse or partner had savings of £1,000 or more, less than £1,000 or no savings or investments.

This new, single, question resulted in a higher proportion of people reporting that they had savings and investments (when compared to the old question). This apparent change is more likely to be the result of respondents perceptions of what constituted savings and investments before. For example, under the old question, a respondent may have had savings of less than £1,000 but answered ‘no’ to the question on whether they had and savings and investments if they perceived this amount to be too low.

Table 6.5 presents figures about whether SHS respondents had savings or investments from 2009 (when the new, consolidated question was introduced). Around a quarter of households reported not having any savings or investments in 2013 (24 per cent), while 16 per cent of households have less than £1,000 savings.

Table 6.5: Whether respondent or partner has any savings or investments by year^[66]

Column percentages, 2009-2013 data

Households	2009	2010	2011	2012	2013
No savings	25	29	27	26	24
Has savings	61	60	63	65	67
Less than £1,000	18	12	12	15	16
£1,000 or more	43	48	51	50	51
Don't know	2	1	1	1	1
Refused	12	9	9	9	7
Total	100	100	100	100	100
Base	10,320	11,000	10,790	3,460	3,510

* Note: Question asked only of a 1/3 sample in 2012 and 2013

Figure 6.4 shows how the level of savings households varies by net annual household income. Households with net annual income of up to £10,000 are more likely not to have any savings (39 per cent) compared to households with incomes over £20,000. Households with net annual incomes of £30,000 or more are much more likely to have savings (85 per cent) than all households (68 per cent).

Household type also shows some variation on whether a household has savings, as shown in Figure 6.5. Single parent and single adult households are more likely to report having no savings (55 per cent and 36 per cent, respectively) when compared to all households (24 per cent).

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

2013 data, Households (base: 3,400; minimum: 480)

‘Don’t know’ and ‘Refused’ responses not shown

Please note that overall figures may differ slightly from Table 6.5 due to missing income information.

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

2013 data, Households (base: 3,510; minimum: 220)

‘Don’t know’ and ‘Refused’ responses not shown

Table 6.6 shows how levels of savings and investments varies by the tenure of households. Owner occupiers are much more likely to report having savings (80 per cent) when compared to other types of household tenures (all households 67 per cent). Conversely, social renters report higher levels of not having savings (52 per cent) when compared to all households, in which around half that proportion report having no savings (24 per cent).

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

Column percentages, 2013 data

Households	Owned	Social Rented	Private Rented	Other	All
No savings	11	52	35	43	24
Yes, savings	80	41	59	50	67
Less than £1,000	13	22	21	14	16
£1,000 or more	67	19	38	36	51
Dont know	1	2	0	2	1
Refused	8	5	6	6	7
Total	100	100	100	100	100
Base	2,220	800	420	70	3,510

Table 6.7 shows how levels of having savings or investments varies by age and gender of the highest income householder. Households with older highest income householders were more likely to report having savings (74 per cent aged 60 to 74 compared to 67 per cent of all households). There is a relationship between having savings or investments and gender – households where the highest income householder is female were less likely to report having savings (63 per cent) when compared to males (71 per cent).

Table 6.7: Whether respondent or partner has any savings or investments by sex and age of highest income householder

Column percentages, 2013 data

Households	Male	Female	16 to 24	25 to 34	35 to 44	45 to 59	60 to 74	75 plus	All
No savings	21	29	45	38	32	24	14	9	24
Has savings	71	63	50	55	62	69	74	81	67
Less than £1,000	14	19	22	20	22	15	12	12	16
£1,000 or more	57	44	28	35	40	54	62	69	51
Don't know	1	2	-	1	1	1	1	5	1
Refused	7	6	5	5	5	7	10	6	7
All	100	100	100	100	100	100	100	100	100
Base	2,060	1,450	120	460	540	1,090	850	450	3,510

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 of one-third of the sample in 2012.

Table 6.8 shows how the proportion of households with a bank or building society account has changed between 1999 and between 2009 to 2013. The proportion of households where neither the respondent nor their spouse or partner had a bank or building society had fallen from 12 per cent in 1999 to 4 per cent in 2009. The proportion of households with neither a bank or building society account has remained around 4 per cent since 2009 though currently at 3 per cent in 2013.

Table 6.8: Whether respondent or partner has a bank or building society account by year^[67]

Column percentages, 1999, 2009-2013 data

Households	1999	2009	2010	2011	2012	2013
Yes	86	93	92	93	93	95
No	12	4	4	4	4	3
Refused	2	3	4	3	3	3
Base	14,650	10,290	11,000	10,790	3,460	3,510

From June 2007 and January 2012, this question was asked of three quarters and one third of the sample, respectively.

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 6.9). Households living in the 15 per cent most deprived areas of Scotland were less likely to have a bank account than the rest of Scotland (88 per cent compared to 94 per cent) and a building society account (7 per cent compared to 18 per cent). Households with a smaller income were also more likely to say they make use of banking facilities through the Post Office (10 per cent of those with an income up to £10,000 compared to 2 per cent with an income over £30,000).

Table 6.9: Whether respondent or partner has banking facilities by net annual household income and Scottish Index of Multiple Deprivation

Percentages, 2013 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	91	91	95	96	88	94	93
Building Society account	9	13	14	24	7	18	16
Credit Union Account	1	2	5	5	6	3	4
Post Office Card Account	10	6	4	2	10	4	5
None of these	1	1	0	0	2	0	1
Refused	3	2	2	2	3	3	3
Base	480	1,180	750	1,000	510	3,000	3,510

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