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

This report updates estimates, first made for 2021, of specific additional costs that make it more expensive to meet a minimum acceptable living standard in remote areas of Scotland (Davis et al., 2021). The report published in 2021 provided a comprehensive commentary on the differences in costs between urban UK and remote rural mainland and island areas in Scotland. This update does not provide the same level of detail, but rather is intended to provide an annual update of these cost differences. The specific purpose of these estimates is to inform the Scottish Government’s monitoring, from year to year, 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. This involves benchmarks for household spending requirements derived from the Minimum Income Standard (MIS), taking account of additional needs in remote areas, to be updated annually.

The legislation 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.  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 MIS to be considered an acceptable standard of living, with an additional amount added to the MIS for households in remote rural, remote small town and island areas.

The 2021 figures were based on research carried out by the Centre for Research in Social Policy (CRSP), consulting with groups of people living in remote areas of Scotland about what different and/or additional goods and services households in remote communities require, compared to urban UK. These goods and services were then costed, allowing budgets in remote and non-remote areas to be compared. The public consultations are not being repeated annually: in 2022, the figures were updated based on inflation, on updated costings, and on adjustments to take account of new UK-wide MIS research in urban areas, and the new budgets that this produced.

The purpose of this report is to update six numbers derived from the earlier research: the percentage uplift that should be applied to MIS budgets for pensioner households, families with children and working age adults without children in remote rural parts of the Scottish mainland and the Scottish islands, respectively. It does not repeat analysis of the qualitative evidence presented in the earlier report describing what aspects of life and costs in remote Scotland account for higher costs – although where changes in the uplift percentages are reported, it seeks to explain what factors account for these changes.