Memorandum submitted by the Highland Council
EXECUTIVE SUMMARY
It is universally recognised that poverty is
no longer just about no or low incomes. Poverty is multi-dimensional
and this is especially true of the Highland Council area. In addition
to the traditional issues surrounding poverty, the rural dimension
across the Highlands introduces considerable pressures.
The Highland Council have highlighted several
key areas in the following submission to inform the Committee's
inquiry into Poverty in Scotland.
— The difficulties posed through the
low wage rural economy.
— The higher costs of living,
transport and housing placed on people living within rural areas.
— Lack of access to essential services
such as banking, post offices, cash machines and financial advice.
— Households within Highland spending
proportionately higher amounts on heating their homes leading
to fuel poverty.
— The national focus upon spatial
concentrations of deprivation whereas in rural areas deprivation
is spatially dispersed.
— The disadvantage placed on rural
communities through the use of the Scottish Index of Multiple
Deprivation as a proxy for need in resource allocation
and in national policy interventions.
1.1 The area served by the Highland Council
is considerable. Covering 26,484 square kilometres, it spans an
area nearly 25% larger than the whole of Wales. It is an area
of extremes with rapidly developing urban centres around the inner
Moray Firth yet a vast rural hinterland. The overall population
density for the Highlands sits at 8 people per square kilometre,
in comparison with 66 across Scotland as a whole. Half of the
region's population is found in the inner Moray Firth area. Only
25% of the population live in settlements of over 10,000 people
and 40% in settlements of over 1,000 people. The nature of rural
living in Highland is also characterised by the extent of remoteness
experienced by a significant proportion of the population:
— 37% live in Remote Rural data zones,
defined as settlements of less than 3,000 people and with a drive
time of over 30 minutes to a settlement of 10,000 people or more;[2]
— 26% live in Super Sparse areas, defined
as anywhere which is more than 40km (25 miles) by road from any
settlement with a population of 7,000 and over.
1.2 It is universally recognised that poverty
is no longer just about no or low incomes. Poverty is multi-dimensional
and this is especially true of the Highland Council area. Whilst
Highland has many of the expected causes and consequences of poverty
associated with urban settings, the rural dimension introduces
further pressures. Poverty in rural areas can be a consequence
of the lack of access to resources, lack of access to suitable
housing, fuel poverty and rural isolation. The costs of living
are generally higher within rural areas, whereas wages and incomes
are on the whole lower. People are often restricted to these areas
and are tied to these higher costs of living due to an inability
to access adequate transport to reach cheaper market sources.
Poverty within rural areas though is often invisible. The geographical
mix within rural areas can result in individuals experiencing
extreme poverty living alongside households of considerable affluence.
These pressures, although less conspicuous than areas of concentrated
multiple deprivation, have considerable effects on the population
but yet there is little recognition given to spatially dispersed
deprivation and poverty while the current focus is on concentrated
and therefore urban deprivation and poverty.
2. HIGHLAND'S
ECONOMIC PICTURE
2.1 Wage and income levels
Employment and unemployment have a considerable
impact upon poverty levels. Although unemployment within the Highland's
is relatively low, in comparison with the national average (2.2%
Highland and 2.8% Scotland), wage levels and income are also low
and impact upon poverty levels across the area.
2.2 Table 1 below notes the differences
in the Gross Annual Pay of individuals employed both full and
part time across Highland, Scotland and the UK. This highlights
the lower level of wages in Highland in comparison with the Scottish
and UK averages.[3]
Table 1
|
| Gross Annual Pay—Mean
| Gross Annual Pay—Median
|
|
| Highland | £18,880
| £15,960 |
| Scotland | £20,592
| £17,370 |
| UK | £22,000
| £18,200 |
|
| Source: Annual Survey of Hours and Earnings 2005.
|
— Mean pay in Highland is 91% of the Scotland mean
and 86% of the UK mean.
— Median pay in Highland is 92% of the Scotland
median and 88% of the UK median.
— Only six local authorities have lower average
earnings than people living within the Highland Council area.
2.3 The survey also highlighted that our lowest paid
workers are generally paid less than their counterparts in the
rest of Scotland.
Table 2
|
| Gross Annual Pay—10%ile
| Gross Annual Pay—20%ile
|
|
| Highland | £5,250
| £8,010 |
| Scotland | £5,510
| £9,260 |
|
| Source: Annual Survey of hours and Earnings 2005.
|
2.4 Highland has a relatively high proportion of part
time workers. The Annual Population Survey 2005[4]
showed that 74.4% of employed people in Highland worked full time
(and 25.6% worked part time) compared with a national rate of
76.1%: 22 other Authorities had a higher percentage of full time
workers. Therefore this impacts upon the overall earnings of the
Highland population and results in a higher proportion of individuals
on lower average incomes.
2.5 Seasonal unemployment
Highland experiences greater seasonal fluctuations in unemployment
than the rest of the country due to the nature of the dominant
service sector economy. Longitudinal data on people moving in
and out of employment is not available but analysis of monthly
figures between May 2005 and April 2006[5]
shows that during this period:
— the highest unemployment figure was 3,393 (February
2006).
— the lowest unemployment figure was 2,602 (September
2005).
— simple analysis at data zone level shows that
up to 2,300 people in Highland could have suffered from seasonality
of employment/unemployment.
2.6 Analysis for all data zones in Scotland over the
same period shows that out of the 292 data zones in Highland,
52 were in the 10% of data zones in Scotland with the highest
seasonal fluctuation in employment rate, and 88 were in the top
20%. Highland has two data zones, Glengarry and Portree West &
Rural, with the joint highest seasonality rate in Scotland. Seasonal
unemployment impacts in particular on some of Highland's most
vulnerable rural areas. The lack of employment opportunities within
rural areas dictates the dependence of individuals on the tourism
and service sector who tend only to require staff for the peak
summer period.
2.7 The societal as well as individual consequences of
seasonal employment are considerable. The lack of permanent employment
for the individual can result in an inability to qualify for credit
facilities or mortgages and be forced to undertake multiple employment
in order to survive. One household may need at least four or five
part time posts in order to survive. For these families it is
then very difficult to leave that community or seek new employment
opportunities as they are tied to a number of positions. Seasonal
employment also impacts upon society and rural communities as
a whole. The lack of permanent positions can lead to an inability
to attract people into the area which in turn leads to the demographic
decline experienced in many rural areas. This, and the lack of
graduate level jobs, can result in the forced out migration of
a community's young people who find they cannot access suitable
employment.
3. POVERTY IN
RURAL AREAS
3.1 The Highland community is diverse. Over recent years
there has been considerable growth within urban areas around the
Inner Moray Firth, a housing boom across the area and unemployment
is at its lowest level. However this growth masks the difficulties
and problems faced by rural communities. Centralisation of services
in urban centres poses difficulties for rural communities in terms
of accessibility, increasing dependence and can lead to the decline
of local services. It can also compound issues of isolation for
vulnerable members of rural communities.
3.2 Rural deprivation is often difficult to identify
and define. Many rural communities appear affluent and thriving,
yet pockets of poverty are often hidden behind these successful
exteriors and spread throughout the area. Poverty in rural areas
is not clustered but spread often over considerable distances.
This has considerable implications when trying to quantify deprivation.
(Please see section 4) A study using the British Household
Panel Survey showed that between 1991 and 1996, one in three people
in rural areas are poor at some time.[6]
3.3 Poverty and deprivation are often associated with
urban situations, with less recognition of rural experiences.
Many families in rural areas will run a car at the expense of
other essential requirements in order to access education, employment
and essential services. In addition, food and fuel are often more
expensive within rural areas. Issues such as increased travel
costs to access employment and services, low pay—often linked
to seasonal employment as documented in section 2—and the
historical low take up of benefits in rural areas all compound
the issues of poverty within rural areas across Highland. There
is also little doubt that the general problems associated with
poverty are compounded when combined with the issue of isolation.
3.4 The financial inclusion agenda within Highland has
highlighted a number of challenges facing residents, especially
within rural areas. Accessing essential services such as post
offices, banks and cash machines can prove complex and restrictive.
Individuals facing financial difficulties can also struggle when
trying to access money and welfare advice and support.
3.5 The development of credit unions to provide local
financial support have met with only limited success within Highland.
The need for such organisations to work only within a defined
geographical area inhibits their use across more dispersed communities.
The sparse and dispersed nature of many rural communities does
make the provision of services more expensive and difficult to
provide.
3.6 The difficulty of individuals to access money advice
and credit can lead to the operation of high interest money lenders.
This is still essentially a hidden problem across the Highland
area but has considerable social and personal implications. An
increase in the level of resources is required to identify and
tackle this issue effectively.
3.7 The advent of greater computer technology into banking
systems and personal usage of computers is changing the way that
many individuals access banking services which in turn is affecting
the number of local banks in Highland. This also has implications
for people who do not have access to IT or are not computer literate.
3.8 The majority of people now use Automatic teller machines
(ATMs) to access their money but the introduction of ATMs is not
always a sufficient substitute banking services. Additionally
the number of ATMs which charge a fee to access money has grown
to around 40% of the total UK case machines.[7]
In rural areas in particular people often have no choice to use
these machines where banking services have closed. This is targeting
individuals with among the lowest incomes, for which a charge
of £1.50 can have a considerable impact on an already limited
income.
3.9 The threat of closure on rural post offices across
the Highland also raises concerns about the ability of people
to access their money and advice free of charge. With the closure
of a number of rural banks, the Post Office has become the only
option through which people can access their benefits and money.
An investigation by Postwatch Scotland[8]
estimated that 86% of elderly rural residents would lose their
independence should their local post office close. There are also
more general implications for rural communities. 75% of rural
post offices are attached to another business, generally a shop.
The study estimated that 77% of these businesses would be unable
to survive should the post office be forced to close. Over a third,
38%, were the only shop in that area.
3.10 Despite government intentions to encourage benefit
payments direct into bank accounts, security and fraud now require
considerably more personal identification checks when opening
accounts and reduced accessibility to accounts. Awareness of this
needs to be promoted and work undertaken with organisations to
overcome any possible obstacles for customers.
3.11 Recent research also indicates a clear geographical
dimension to income status in old age.[9]
Older people in remote and rural areas are found to be worst off.
Remote rural areas are typically low wage economies. Low incomes
during retirement are likely to reflect earlier employment and
income patterns. The research highlighted the importance of benefit
income to the overall income of older people but also the lower
than average uptake of state benefit within these areas. This
will have considerable implications for the future. In common
with the rest of Scotland and Western Europe, Highland has an
ageing population, but the ageing population in Highland is growing
at a faster rate with projections suggesting that the proportion
of those over 65 is likely to increase by 65% by 2024.[10]
3.12 There has been an increasing demand on social rented
housing in the Highlands over recent years. The lack of available
housing has led to a considerable increase in the number of people
presenting as homeless within the Highland area. The increase
in number of homelessness applications has been at a rate far
higher than the national average. The increase between 2002-03
and 2003-04 was the highest in Scotland. Between 2001-02 and 2005-06
there has been a 148% increase in the number of homeless applications
in Highland. Although the majority of homeless applications came
from the Inverness area, homelessness is a problem across all
areas of the Highlands.
4. MEASURING DEPRIVATION
4.1 The Scottish Index of Multiple Deprivation (SIMD)
2004 allows a comparison of relative deprivation at small area
level (data zones) across Scotland and pockets of deprivation
to be identified. Of the 6,505 data zones within Scotland, 292
are in Highland with an average population of 800 people per data
zone.
There are 17 data zones within the Highland Council area
that fall within the 20% most deprived areas in Scotland. Of these,
three data zones fall within the 5% most deprived in Scotland.
4.2 When examining population, 6.2% of Highland's population
fall within the 20% most deprived wards in Scotland. This appears
relatively low in comparison with Glasgow City where half the
population live in the most deprived data zones. However, although
the SIMD has allowed examination of deprivation at a lower level
than previous, concerns exist regarding its ability to capture
deprivation within rural areas. The SIMD concentrates on identifying
spatial concentrations of deprivation whereas in rural
areas deprivation is spatially dispersed. As a result,
the Council feels that the SIMD does not capture or reflect the
scale of the problem within rural areas. The index itself shows
that in Highland 90% of income and employment deprived people
live outwith the areas where deprivation is concentrated.
4.3 There are considerable implications in relying on
the SIMD to identify deprivation within Scotland. SIMD has compounded
the view that poverty is a predominantly urban issue and as a
result, policies are focused upon tackling the causes of urban
deprivation. (Please see section 6) In addition, there
is evidence that the SIMD has been used as a proxy for need generally
in resource allocation and in national policy interventions. The
Council, along with other rural Councils and partnerships has
campaigned against such inappropriate use of the SIMD.
5. FUEL POVERTY
5.1 Within Highland one of the main challenges is that
households need to spend a higher proportion of their income on
heating their homes than most other areas of Scotland. A household
that needs to spend more than 10% of its income on household fuel
is said to be in fuel poverty. Extreme fuel poverty is when households
need to spend more than 20% of their income on fuel. This level
of spending is disproportionately high and can force people to
make difficult decisions about whether to keep their homes warm
or spend their money on food and other essentials.
5.2 Those most affected tend to be among our most vulnerable
in society, often on low incomes: older people, lone parents,
disabled people and those with a long term limiting illness. They
are all people who are often at home more than most households
and use heat for more of the day. However, fuel poverty is common
among all housing tenures and is also common amongst those households
that do not receive any benefits.
5.3 A number of factors can lead to fuel poverty including
poor energy efficiency, low incomes and high fuel costs. Fuel
choice is often limited within many parts of Highland. Mains gas,
which has tended to be the cheapest of energy sources, is only
available in a small number of areas. The way fuel systems are
operated can also lead to fuel poverty. Fuel suppliers develop
attractive deals for customers paying by direct debit. Those on
low incomes who choose certain methods, such as expensive pre-payment
meters, are often penalised as a result.
5.4 The age and type of houses within Highland also contribute
to fuel poverty. Properties with thick stone walls are often difficult
to heat and the harsh climate also results in a greater need for
heating. 16% of households in Highland are energy inefficient.[11]
This is double the Scottish average and of the five authorities
with higher energy inefficiency, all are predominantly rural areas.
5.5 It is difficult to know exactly how many people are
in fuel poverty because households can move in and out of fuel
poverty as their circumstances change. The Scottish House Condition
Survey is one of the best sources of data on fuel poverty.[12]
Highland has a considerably higher proportion of households in
fuel poverty than the Scottish average. 21% of Highland Council
households were experiencing fuel poverty in comparison with the
Scottish average of 13%. 7% of these households were in extreme
fuel poverty. Highland had the fifth highest proportion of fuel
poor households in Scotland. All areas with higher proportions
of fuel poor were also predominantly rural areas.
5.6 The effects of fuel poverty impact on society as
a whole with both health and social consequences. Cold homes can
lead to ill health, aggravating illnesses such as heart disease,
strokes and respiratory diseases. Fuel poverty can also have wider
social effects increasing social isolation. Older people may not
wish to go out because they will return to a cold home but may
not want to invite people to their home if it is cold. 35% of
pensioner households within Highland were in fuel poverty, with
15% experiencing extreme fuel poverty.[13]
5.7 Survey results tell us that people living within
rural areas are more likely to experience fuel poverty which explains
the higher proportion within Highland experiencing fuel poverty.
It is worth noting that the SIMD does not include fuel poverty
as an indicator of deprivation.
6. IMPACT OF
GOVERNMENT POLICY
ON POVERTY
6.1 The Scottish Executive's Financial Inclusion Action
Plan,[14] is a key document
in the fight to tackle poverty and deprivation in Scotland. It
has brought to the fore many of the challenges faced within Scotland
and sets out a series of priorities for public and private sector
organisations to address over the coming years. However, the new
resources made available across Scotland to address some of these
priorities have been targeted at those areas that the Scottish
Executive categorises as having the "greatest current problems".
None of this new money has come to Highland, although the issues
here, as highlighted above, are considerable.
6.2 Scottish Executive policy has come to rely on the
use of the SIMD to quantify deprivation and poverty within Scotland.
In recent years the Executive has utilised the SIMD to allocate
funding and this has considerable implications for the Highland
area. When used to target resources at the 15% most income deprived
areas in Scotland, few areas within Highland are included. As
has already been noted, 90% of the income and employment deprived
people in Highland fall out with this bracket and are therefore
excluded from assistance.
6.3 However the Scottish Executive are not only using
the SIMD to direct resources at the most disadvantaged but are
using it to direct a range of funding from Supporting People allocations
to new teacher allocations. This has considerable implications
for the Highland Council area. Rather than tackling the issue
of rural deprivation, this policy is in turn compounding many
of the factors causing deprivation within rural areas.
6.4 Academics involved in the construction of the SIMD
have stressed that measuring deprivation at the small area level
does not imply that this is the most appropriate scale at which
to intervene to tackle deprivation. A single index for both urban
and rural deprivation does not work. Urban deprivation is spatially
concentrated while rural deprivation is spatially dispersed. A
complementary approach is needed for rural areas.
6.5 The Scottish Executive has recently announced the
creation of Rural Service Priority areas. However, the funding
to support these areas is limited to one year and this will not
make any changes sustainable. There is an overall feeling that
this does not go far enough for rural communities. There is a
need for the Scottish Executive to develop a strong evidence base
for rural deprivation, built upon methodologically sound processes.
This as of yet has not happened.
6.6 In England there is a Commission for Rural Communities
which is an expert body in watching out for the interests of rural
communities and people, especially those suffering disadvantage.
The Commission is currently undertaking work on a major study
about rural disadvantage to address gaps in the evidence base.
The study was due to conclude in 2006. The Commission has a role
in rural proofing all government policy and assessing the extent
to which rural service entitlements are met. There is no equivalent
body at present in Scotland to protect the interests of rural
communities although the situation in Scotland is more prevalent.
7. PRIORITY AREAS
7.1 The Highland Council welcomes the opportunity to
submit evidence to the Scottish Affairs Select Committee on the
issue of Poverty in Scotland. The following are priority
areas and actions which the Council feels are crucial to addressing
the challenge of poverty within Scotland and specifically the
Highland area.
— The Council seeks support for the development
of an evidence base for rural deprivation and exclusion, linked
to an agreed national Rural Development Strategy. This is currently
being undertaken in England, whose rural exclusion is far less
extreme that it is in Scotland.
— There is a Commission for Rural Communities in
England which is an expert body watching out for the interests
of rural communities and people, especially those suffering disadvantage.
The Council seeks support for the consideration of such a body
or remit within Scotland given the extent of peripherality and
super sparsity.
— The Council seeks agreement that the Scottish
Index of Multiple Deprivation should be used only for issues around
concentrated deprivation and not to be seen as a proxy for need
or deprivation more widely.
— The Council views with real concern the large
energy price increases which have already been imposed in the
current financial year. The increases are disproportionately affecting
low income consumers and fuel-poor households in the Highlands
and driving more people into poverty. The Council therefore supports
the initiative taken by Energywatch who have launched a campaign
to stop penalising the poor.
— The Council supports the call on all energy suppliers
to reduce the prepayment meter tariffs and bring them into line
with prices paid by quarterly bill payers.
— The Council shares Energywatch's fears that increasing
numbers of consumers will disconnect themselves or severely ration
out energy use because they will not have enough money to feed
their meters.
— The Council is concerned that the widespread practice
of energy suppliers installing prepayment meter system to recover
energy debt is both unfair and counterproductive.
— The Council calls on the UK government and specifically
the Chancellor of the Exchequer to ensure that the large energy
price increases are seriously taken account of when the government
begins its benefit uprating process later in the year.
Alison Clark
The Highland Council
October 2006
2
Scottish Executive's "Urban Rural Classification"-the
most rural classification is "Remote Rural". http://www.scotland.gov.uk/library5/rural/seurc-00.asp Back
3
National Statistics, 2005 Annual Survey of Hours and Earnings,
Office for National Statistics, 2005. Back
4
The Scottish Executive,Annual Population Survey in Scotland
2005, Scottish Executive 2006. Back
5
National Statistics, NOMIS-Official Labour Market Statistics,
Office for National Statistics 2006. Back
6
Institute for Social and Economic Research, British Household
Panel Survey, University of Essex. Back
7
CAB Evidence Briefing, Out of Pocket-CAB Evidence on the Impact
of Fee-charging Cash Machines, Social Policy Department Citizens
Advice, July 2005. Back
8
Postwatch Scotland, The Importance of Rural Post Offices,
Postwatch 2006. Back
9
L Philip et al, Income in Old Age: Rural/Non-rural Perspectives
on an Ageing population in Great Britain, RGS-IBG Annual Conference,
September 2005. Back
10
Highland Council Planning and Development Service, Policy
and Information Briefing Note 12-Council Area Population Projections
2004-24, The Highland Council 2006. Back
11
House Condition Surveys Team Communities Scotland, Fuel Poverty
in Scotland-Further Analysis of the Scottish House Condition Survey
2002, Scottish Executive/Communities Scotland, 2002. Back
12
Scottish House Condition Survey 2002. Back
13
Scottish House Condition Survey 2002. Back
14
Scottish Executive, Financial Inclusion Action Plan, Crown,
Edinburgh 2005. Back
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