The looming general election will be about living standards
◆ Nearly 450,000 Scottish households are ‘in serious financial difficulties’ and struggling to meet day-to-day expenses, writes Mubin Haq
As we enter a new year, what is happening to living standards in Scotland and how are Scots weathering the current financial squeeze? Whilst the cost-of-living crisis may not be gaining the same headlines as last year and inflation has fallen significantly, our latest research at the Financial Fairness Trust finds many continue to face difficulties in making ends meet.
Nearly 450,000 households are “in serious financial difficulties”. This means it’s a real struggle for them to meet their day-to-day expenses, with many behind on bills or credit commitments. Although this is proportionally the same as the rest of the UK, fewer Scottish households have savings to help cope; around three in ten have no savings at all. And the gap is greatest for those at the bottom: 55 per cent of the poorest fifth of Scottish households have no savings, compared to 43 per cent in the rest of the UK.
As freezing temperatures hit this week, many will be struggling to keep warm. Fifty-seven per cent are using the heating less and 38 per cent are reducing their use of the cooker. However bleak that picture might look, things were worse a year ago when 80 per cent of households were avoiding turning on the heating, suggesting that some people have been able to absorb high energy costs.
The Scottish Government has said it will “pull all levers available” to alleviate poverty, and there are moves it has already made. The Scottish Child Payment tops up incomes for the poorest children and will rise to £26.70 a week. December’s budget introduced new income tax increases for high earners. But October’s decision to freeze council tax will cost 50 per cent more than the amount that will be raised by the new higher rates of income tax. Freezing council tax disproportionately benefits those with greater property wealth and will make less difference to those on lower incomes, with IPPR Scotland highlighting that it will save just £10 million for households in poverty.
However, it’s not all gloom. Economists are predicting incomes are likely to be a little higher for most by the end of the year, with energy prices and interest rates set to cool off. This should help everyone but, as our research highlights, there are particularly acute problems that those at the bottom face. More importantly, this doesn’t get away from the long-term trend of our social security safety-net being decimated and stagnating wages.
As the Resolution Foundation notes, 15 years of lost wage growth has cost the average worker £10,700 a year.
It’s therefore no surprise that 47 per cent of Scots are “very” or “quite worried” about their overall financial situation over the next year. Will the cost-of-living crisis start to lift by the general election? Probably. Will it have lifted enough to get people feeling the benefit and even sway decisions at the ballot box? That’s almost certainly what the Conservative government is hoping. One thing is for certain, this will be an election focused on how we improve living standards.