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

A National Statistics publication for Scotland, providing reliable and up-to-date information on the composition, characteristics, behaviour and attitudes of Scottish households and adults


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)

SHS 2009/2010 Figure 6.1: How the household is managing financially this year

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)

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

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)

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

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

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

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

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)

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

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)

Figure 6.7: Whether respondent or partner has any loans by tenure of household and financial circumstances

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.

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