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insight

Understanding financial hardship in rural areas

Evidence type: Insight i

Context

Na h-Eileanan Siar (the Outer Hebrides) is described as an ‘economically fragile area relatively reliant on primary industries’, including crofting, fishing and agriculture. Over a third (34%) of the population are employed in the public sector (the highest rate in Scotland). The area also has the lowest population density in Scotland, making the delivery and accessibility of services challenging. Because none of the areas are officially among those classed as Scotland’s ‘most deprived’, it can lead to situations where households in rural areas are omitted from national policy interventions.

While Perth and Kinross has relatively low levels of deprivation, there are many people living in poverty. Parts of Perth City and Rattray are among the top 10% most deprived area sin Scotland. In Eastern Perthshire, over a quarter (27%) of households do not have an income that meets the Minimum Income Standard. There is also an ageing population, which is expected to place increasing demand on social care.

Almost half (46%) of Northumberland’s population live in rural areas. Northumberland falls into the top 20% most deprived local authorities in England for those who are either income deprived and/or employment deprived. While it has been an area of high unemployment, at the time of the report it was at a record low, perhaps reflecting the changing demographics of the local population (with the number of people aged over 65 increasing by 22%).

The study

This 2020 working paper from Scotland’s Rural College (SRUC) provides context for case studies contained in an accompanying report (Working Paper One, or WP1). Key indicators are examined to understand employment and income data for the three areas (introduced above), as well as looking at other available information about access to services and housing affordability. The main datasets used in this paper are:

The Scottish Index of Multiple Deprivation (SIMD) and the English Indices of Deprivation (IMD). Both rank small-area output regions based on scores covering seven domains:

  • Income;
  • Employment;
  • Educational attainment;
  • Distance to services;
  • Health deprivation;
  • Crime deprivation;
  • Housing deprivation.

While a similar approach is taken to data collection, there are several differences that mean direct comparisons are not possible. These differences include different aggregation levels, slightly different approaches to the measures and different time periods for data collection.

Annual Survey of Hours and Earnings (ASHE): this data is used to show changes in income and hours worked, including overtime. ASHE is collected annually across the UK. However, response rates can be particularly low in remote and rural parts of the UK.

Other sources are also used, including data from the Office for National Statistics and Scotland’s Centre for Regional Inclusive Growth (SCRIG).

Key findings

  • The Gross Value Added (GVA) is £17,276 in Na h-Eileanan Siar and £25,675 in Perth and Kinross, compared to a Scottish average of £24,876.
  • The GVA in Northumberland is almost half of the English average (£15,564 compared to an average of £29,356).
  • Employment rates in Na h-Eileanan Siar (80%) and Perth and Kinross (81%) were higher than the Scottish average of 77% in 2018.
  • The employment rate in Northumberland (72%) was lower than the English national average (76%) in 2018/19.
  • Employment deprivation is generally lower in the rural areas of each of the local authority regions.
  • In all three local authority areas, the total median weekly earnings are lower than the Scottish/English averages, and particularly low in Na h-Eileanan Siar at £14,735, compared to an average in the rest of the UK of £19,334.
  • Hours and weekly pay were higher in Perth and Kinross than the other two areas, and more comparable to the overall UK average.
  • However, the total number of hours worked has decreased over time in Perth and Kinross and Na h-Eileanan Siar, but not in Northumberland.
  • There has been a significant decline in income deprivation in Na h-Eileanan Siar since 2010, with the level now below the Scottish average.
  • The authors conclude by saying that understanding people’s lived experiences of financial hardship (probably through interviews) will help to understand how the factors introduced in this paper ‘play out’ in a rural context.
  • Housing process in all three areas have increased since 2004, with the most pronounced increase in Perth and Kinross.

Points to consider

  • Methodological strengths/weaknesses: While little information on the methodology is included the analysis appears to be based on comprehensive research, using descriptive statistics from established and reliable sources.
  • Generalisability/ transferability: This report is of significant interest to politicians, policymakers and other stakeholders who are interested in understanding local levels of household deprivation relating to income and employment.
  • Relevance: The findings are situated in three small areas in the UK. Findings are therefore not representative of the UK, though some of the learnings may be transferrable to other areas.

Key info

Year of publication
2020
Country/Countries
England, Scotland
Contact information

Jayne Glass, Elliot Meador

Scotland’s Rural College