Blog: Budgeting to save a global asset

Ahead of the UK budget Shona McCarthy, Chief Executive of the Edinburgh Festival Fringe Society, reflects on the latest Understanding Scotland economy insights and asks our leaders to lift their heads up from the ongoing crises and take a longer view.

While both UK and Scottish Governments have much to do to address current suffering, the key to sustainable economic growth and wellbeing includes investing in our cultural capital. 

A report by the Lords Communications Committee recently stated that creative industries should sit at the heart of the UK’s economic growth plan and criticised senior politicians for failing to spot its potential.

Investment in culture, which makes up a tiny 0.8 per cent of the Scottish Government budget, has been steadily declining year on year, comparative to other UK nations. This is despite its obvious pre-pandemic economic contribution. The sector has been hit hard by the loss of European funding which has not been replaced at the same level by the new UK Government funds. A rumoured injection of £8.6m for Edinburgh Festivals in today’s budget will be a welcome boost.

In 2019 the creative industries employed over 90,000 people in Scotland with the previous year’s economic contribution measured at £4.6 billion in GVA and £4 billion in exports. But as the sector tries to recover from the debt and ravages of covid, sustaining this contribution and growing the culture and creative sector over the coming years, will require similarly sustained investment, something which does not look likely in the current climate.

Of course governments should be responsive to the electorate’s priorities. It’s no surprise that in the recent Understanding Scotland survey, people in Scotland placed the cost of living and anxieties about NHS performance high on the list when asked to name the issues that most concern them. But we also know from Creative Scotland research across Scotland that 84% believe that it is right that there should be public funding of arts and cultural activities in Scotland. 98% of the Scottish population engaged in cultural activity during lockdown. 93% believes that creative activity is essential for children and young people’s learning and well-being. Alongside addressing immediate concerns is it too much to ask that our political leaders keep their eye on the long game? 

Current challenges and the way governments respond will have long-term economic consequences. In the same Understanding Scotland survey over 60% of Scots said they were cutting down on leisure spending in response to rising costs. In terms of income this could be a knockout blow for those venues and creative practitioners already placed in jeopardy by the impact of the pandemic. As far as the Edinburgh Fringe is concerned I fear there is a sense that it will always be there. The Fringe began as a platform for inclusion and freedom of expression. And it is the very nature of its openness and inclusivity that has caused it to grow organically over 75 years to include more artists, more creatives, more voices from every walk of life and every nation. As we have seen with the plight of the Film Festival this year, we can’t afford to just take it all for granted.

It is astonishing to think the ticket-selling collective of Edinburgh’s Festivals in August are now equivalent in value to a FIFA world cup, and second only to the Olympic Games every single year. 

If cities were bidding now to host what Edinburgh delivers every August, there would be enormous competition.

If the arts were treated like a major sporting event, at least £100m of UK government investment would be on the table to cover the cost and supporting infrastructure. Even comparing, to the much smaller, Eurovision Song contest the UK Government pledged £10m to support the winning city.  

The Edinburgh Festivals are a UK asset, valued world wide which we need to treasure. The arts are a vital part of the UK economy and we need everyone to help us survive. 

ENDS

This article was published in The Scotsman on 15th March 2023

Blog: Celebrate or commiserate for IWD23?

8th March 2023

by Shelagh Young, Engagement Lead, David Hume Institute

Whatever happened to celebrating International Women’s Day?

Back in the day my heart was stirred by inspiring visions of a better future. Today the news is filled with the inescapable truth that far too many women are being left behind by a struggling economy and policies which ignore, and sometimes increase, many of the profound inequalities which first sparked the women’s movement into life. 

Take today’s PMQ session. When asked about action to close the gender pension gap Prime Minister Sunak responded by saying auto-enrolment had helped millions of women. It has but there was no mention of the 1 in 6 women who are currently ineligible to join due to low earnings. Delve a bit deeper and the Government’s own annual review of the scheme makes it clear that reducing the threshold for auto-enrolment was not considered useful for those for whom it  “could make little or no economic sense to save into a pension” stating that it would “divert income away from their day to day needs.”

If people can’t meet their day to day needs now without skimping on pension contributions, who will meet those needs in old age? This isn’t a problem solved easily even for those women who can work more hours or get a better paid job. 

As the consultancy PwC revealed this week, an 18 year old woman entering paid work today will remain permanently poorer than her male peers as she won't see gender pay parity in her working lifetime.

They also reported that childcare costs are so exorbitant that they are driving women out of the paid workforce.

Meanwhile the Joseph Rowntree Foundation pitched in with a cautionary tale about the numbers priced out of home ownership whose income in retirement will also need to cover the rent.

This gives a particularly sharp edge to this week’s advice from Scottish Widows which, as is so often the case, looks to individual women not society in general to solve a problem they did not cause. According to their report, in order to close the average £123,000 difference between men’s and women’s pension savings, young women in their 20s should save really hard before gender discrimination, motherhood and other caring responsibilities take their toll.  

Small wonder then that when we surveyed Scotland’s population for our most recent quarterly Understanding Scotland report, women were far gloomier than men when it came to their personal finances. 

Nearly half of women expected to see their financial position worsen over the next 12 months and 29% had lost sleep due to anxiety over personal finances, compared with only 19% of men. Women were also more likely than men to have skipped meals, reduced portion sizes and used less energy at home to save money. Unfortunately, this probably wasn’t about saving for the future. 45% of women had taken money out of savings and the same proportion had saved less than normal in order to cover current costs. Unsurprisingly, men lagged behind in this depressing race to the bottom by at least 5 to 10 percentage points in almost every domain.

Most shocking of all is that although half of men said they were confident they could cover an unexpected bill of £100 only 37% of women felt they could. This brings us neatly to the gender gap in paid working hours. If your washing machine breaks down there is still more likelihood of the woman in a household being responsible for sorting it out. Being poor keeps you busy but we know what sort of busy leads to better pay and it isn’t the domestic sort.

Which brings us back to needing something to celebrate. When it comes to achieving equal pay and economic growth which respects both planetary limits and the principles of social justice, we clearly have a gender problem and it isn’t just for women to solve.

Ends

Blog: Shan Saba's view from the west

Shan Saba, Director of Scotland’s leading recruitment agency Brightwork Staffline, Founder, Scotland Against Modern Slavery and Board Member of the Refugee Survival Trust reflects on the latest Understanding Scotland Economy insights.

According to the latest Understanding Scotland Economy research people in the west of Scotland are more likely to believe that Scotland is moving in the wrong direction than those in the north and east.

We already know that growing up in Glasgow can be bad for your health so is that why optimism dwindles the further west you live? Or should we be asking if those poorer life chances sharpen people’s wits leading to a less positive but possibly more realistic picture of our future? As a "Weegie", perhaps I am better placed than those who are not from Glasgow to comment.

There is certainly little to celebrate in the fact that eight out of the ten most income-deprived areas in Scotland are all on the west coast (according to the Scottish Government SIMD 2020). Understanding Scotland shows that 46% of people living in Scotland’s most deprived neighbourhoods would not be able to meet an unexpected living expense of £100. This highlights how fragile personal economic situations have become and how people are responding. The research also records a rise in people looking to change jobs or increase their working hours in order to earn more money. 

Is this good news for our fragile labour market which has certainly been affected by difficulties in recruiting across several sectors in recent times?  It is hard to be sure. The dust has not yet settled from the storms caused by Brexit, the Covid pandemic, and the ongoing cost of living issues. The initial labour shortages caused by the departure of European workers translated into higher wages and improved working conditions in manufacturing, agriculture, and hospitality. It has even led to a relaxing of the UK government's stance on immigration. For example, social care workers have been added to the shortage occupation list. 

International students' numbers have had a considerable impact on UK immigration and the world of work. These students have eligibility to work in the UK, although with restricted hours, and they are now much more common in those sectors that were badly affected by the initial labour shortages. It is not uncommon to see African, Indian, and Pakistani nationals being bussed to work in manufacturing and distribution sites across Scotland, which makes me wonder what those Brexiteers who campaigned on an anti-immigration platform think of what has been achieved?

So what about those UK workers that Boris Johnson had proudly said would get up and take on the jobs that needed doing? In certain areas of Scotland, we have seen a slight increase in the availability of "home-grown" workers becoming available due to downsizing or redundancy, and sadly, people who desperately need to top up their income by taking on second or even third jobs to cover their increased household costs.

Overall the news is not great. Firstly because these people alone are not enough to fill the gaps and perhaps more importantly, because labour exploitation has been recorded at its highest level in Scotland since records began in 2002. Desperation can lead people to take on work that is undocumented, and the nature of that work is exploitative at its core.

A quick search on social media for cash-in-hand jobs will bring up plenty of options that can allow you to earn some quick cash with ease. Given the high numbers of people that this survey reveals to be in a seriously precarious economic position, there will undoubtedly be many who are at risk of becoming exploited.

If improved public health Scotland-wide is our goal, then maybe the West Coast pessimists are the modern day equivalent of canaries in coal mines. They might be warning us that there is nothing healthy about a toxic mix of in-work poverty and growing labour exploitation.

Press release: Scots’ pessimism about economic conditions remains

• Almost nine in ten (88%) Scots think that economic conditions are worse than they were a year ago. While two thirds (66%) of Scots say economic conditions will get worse in the next 12 months, this figure has dropped from 81% expressing the same sentiment in November 2022, starting what could be the beginning of an upswing in public opinion on the topic

• A majority (55%) of people believe Scotland is heading in the wrong direction. This is the first time a majority of people have expressed this opinion since Understanding Scotland began

• A quarter (25%) of people are not confident they would be able to pay for an emergency expense of £100 without having to take out a loan or borrowing money, pointing to an alarming level of financial precarity in Scottish households
  

This iteration of the Understanding Scotland Economy series, produced in partnership between the David Hume Institute and the Diffley Partnership, gathered economic attitudes and insights from more than 2,000 members of the Scottish adult population. 

Fieldwork was conducted the week prior to Nicola Sturgeon’s resignation, with results providing a snapshot of public opinion at the outset of ongoing SNP leadership campaign rather than following the announcement of the First Minister’s resignation. 

The new Understanding Scotland polling reveals a mixed picture of public opinion on the economy: while overwhelming pessimism coupled and evidence of harsh financial realities for households persists, people’s predictions for the next year appear less dire than in previous waves of data collection. 

Scotland’s Challenges...

The majority of people (52%) identify healthcare and the NHS as one of the three most important issues facing Scotland today. This is followed closely by the cost-of-living crisis (45%). There has been increased interest in education and schools as a key issue (cited by 15% of respondents compared to 9% in November 2022), correlating with coverage of strike action in the media recently. Interest in other topics covered in the media, such as gender recognition reforms is limited: only 6% of respondents view this as one of the top three issues facing Scotland. 

Scots continue to struggle to make ends meet. Almost six in ten (58%) of people report dissatisfaction with their income covering the cost of living, and 46% are dissatisfied with their ability to meet household bills. Most people continue to report taking action to reduce spending both in and out of home, 60% report not turning the heating on when they otherwise would have done to save money and 61% cutting down on leisure activities in response to rising prices and inflation. One in five (20%) have cut down on meal/portion sizes to save money.

Additionally, labour market activity continues to be shaped in reaction to rising prices: one in five (20%) of people have changed or looked at changing jobs to earn more money, 12% have taken on more hours or paid work, and 7% have tried, unsuccessfully, to take on more hours/paid work. 

Felt unequally...

Financial fragility is not felt equally by the population. While a quarter of Scots are not confident that they could pay an emergency expense of £100 without having to borrow or take out a loan, this rises to over a third (36%) of households with children and 46% of households in the most deprived areas. For an emergency expense of £500 uncertainty in the ability to pay out of pocket rises to 45% of all households, 60% of households with children, and 66% of households in the most deprived areas. 

In response to the cost of living crisis, people are being forced to engage in risky financial behaviours which could lead to increased financial fragility in future: over four in ten (42%) have taken money out of savings to cover higher costs, 41% put less money than usual into savings (with an additional 5% having stopped paying into a pension), all while a similar proportion (43%) reduced their donations to charity. With a quarter (25%) of people using credit cards when they otherwise would not have done and almost a fifth (18%) using ‘buy now pay later’ payment plans, the debt accrued during the cost-of-living crisis could extend its impact on the most financially vulnerable in Scotland. Nonetheless, just over half (52%) of people have hope that their own financial situation will, at the very least, not worsen in the next year.

This wave of Understanding Scotland paints a picture as Scotland gets set to welcome a new First Minister: the cost-of-living crisis continues to impact everyday behaviours, and healthcare and rising prices remain top of the public’s priorities. Nonetheless, amidst widespread disillusionment, a slight glimmer of reduced pessimism for the future in terms of the economy can be found. 

Mark Diffley, Founder and Director of Diffley Partnership, said: “It is clear that the ongoing cost of living crisis is still being felt acutely, and unequally, across Scotland. As we have seen in previous surveys, the impacts of the crisis go beyond immediate financial concerns and continue to have impacts on employment, health and levels of anxiety. A new question on being able to deal with unexpected bills reveals significant unevenness in financial resilience, illustrating that while 4 in 10 of the population would not be confident of meeting an unexpected bill of £500, this rises to two-thirds (64%) of those who live in Scotland’s most deprived communities.”

Susan Murray, Director of the David Hume Institute said: 

“The survey shows a significant number of Scots continue to be unable to cope with the everyday cost of living and are losing sleep over their finances. Even more are unable to cope with an unexpected bill or emergency costs. These results should not be taken lightly. If people are too tired or stressed to concentrate at work, the economy as well as individuals suffer. Living in acute stress affects people’s health and public spending, with the NHS likely to bear the brunt.” 

Understanding Scotland is a quarterly survey tool measuring the most important facets of our lives and decision-making in Scotland: our society, economy, and environment developed by Diffley Partnership and Charlotte Street Partners. Understanding Scotland: Economy is produced in partnership with the David Hume Institute.

We are hosting a free public event to discuss the findings of the report, further details can be found here 

Blog: The lifeblood of our economy is in peril

5th December 2022

Guest blog from Shona McCarthy, Chief Executive of the Edinburgh Festival Fringe Society, reflecting on the latest Understanding Scotland economy insights and what they means for the arts, culture and society.

Shona wants to see more people supporting and advocating for the arts. Here she explains what we stand to lose if the sector is not better protected during these turbulent economic times.

Photo: Edinburgh Festival Fringe Society, Andrew Downie 2018

In hard economic times it often feels as if people think investment in the arts is an unaffordable luxury.  Our sector is almost always the first to experience disinvestment in times of crisis but often the first to be looked to when thoughts turn to rebuilding hope, optimism, prosperity.  The Edinburgh Festivals are a fine example of this belief in the power of the arts to boost the national mood and forge cultural links internationally. They were established, by the British Council amongst others, to heal the human spirit and reconnect people across Europe, after the horrors of the second world war.

A thriving and inclusive creative sector is not a luxury or added extra in the UK, it is an essential part of the best of who and what we are, and is vital economically, socially, internationally, and culturally.

In 2019 the creative industries contributed £115.9bn in Gross Value Added (GVA)  to the UK economy. That’s 6% of the UK’s total GVA, more than the combined contribution of aerospace, automotive, life sciences and oil and gas and equivalent to 70% of the GVA generated by the financial and insurance sector.

Our sector also created jobs at three times the UK average employing two million people across the UK and supporting a further 1.4 million jobs across the supply chain. So the arts and creative industries are a route to opportunity, employment as well as life enhancement.

Our social and cultural contributions are similarly immense. Great strides have been made in recent years to address inequity in the arts and creative sector. We have worked hard to remove barriers to those who have historically found it most difficult to find a foothold or even aspire to a career in this field. There is still much to do in terms of where the arts are positioned in our schools and education system, to fully understand the transferable skills gained from early exposure to the arts that enhance employability, creative thinking and success in any sector.

We are known the world over for our cultural identities and freedom of speech and expression, for the innovation and originality of our voices in the arts. Creativity, whether expressed through music, literature, performance, visual art or other activities, forms our biggest soft power asset.

We cannot afford to lose these assets built over many years. Having just about survived two years of pandemic-related disruption, we have to face the evidence that audiences are not planning to return in sufficient numbers in 2023 to generate the income needed to cover all the costs that are rising so rapidly. There are no cultural recovery funds to draw on. Our sector is teetering on the edge and, therefore, risks becoming increasingly unappealing as a career choice.  Without support, belief, investment and recognition of our value, the arts sector is set to lose vital talent and skills in the short-term, and become the privilege of only those who can afford it as either practitioners or audience members for the longer-term.

We underestimate the value of our creative output and the sophistication of our artistic expression at our peril. The Edinburgh Fringe is located here but this is not an issue just for Edinburgh or even just for Scotland.  The Fringe is a global marketplace for the whole of the UK, bringing some 63 countries to our stages as well as programmers, curators and screen commissioners from around the world to source new talent and work.

The Fringe is not like any other festival. It is to the performing arts what Venice Biennale is to visual arts, Cannes to film, and South by Southwest is to music. It has been going for 75 years, and with our sister summer festivals, our combined ticket sales are on a par with the Fifa world cup or an Olympic Games, but happen every single year, with nothing close to the investment.

So this is a plea for support. The creative and cultural sector is a critical part of our economy, but more importantly says more about who we are as people, than any other sector. If there is anything you can do to advocate, champion or directly invest in our cause, it would be very much appreciated.

 ENDS

 Link for further information on the Edinburgh Festival Fringe Society 

Blog: Last orders for the pub?

By Shelagh Young, Engagement Lead, David Hume Institute

5th September 2022

The claim that thousands of pubs face closure without government support to help with rocketing energy bills ought to have the UK Government worried. In last year’s Hospitality Strategy it championed the British pub as the “hub which unites our communities” and described the hospitality sector as having helped kick-start the economy after the global financial crisis. 

Instead of demonstrating any meaningful concern about these heartwarming sources of “community spirit” going down the drain like last week’s stale beer, the UK Government has gone as quiet as a bunch of after hours drinkers hiding from the police. Or perhaps as quiet as a typical snug now that 80% of people living in Scotland have cut their spending on non-essentials and leisure. 

The truth, as revealed last week in Understanding Scotland: economy survey, produced by the David Hume Institute in collaboration with the Diffley Partnership, is that most of us are anxious about the current and anticipated cost of living increases and the majority are already changing their behaviour as a result. The hospitality industry is threatened by higher costs but also by lower revenues as people without enough money, and the many who fear they soon will be, reduce or stop spending on leisure activities.

Nine in ten people in Scotland think the cost of living crisis will get worse before it gets better and three in ten are losing sleep due to financial stress with many others skipping meals and dipping into savings just to get by. People are also becoming harsh judges of government, both UK and Scottish, with  89% and 73% respectively, saying that they have done too little to help.

Measures such as furlough, tax cuts and other changes helped to protect the hospitality sector when Covid-19 struck. In providing paid jobs, a social place to linger and, perhaps, escape a chilly home, pubs and other hospitality businesses were considered to be helping meet several public policy goals including reducing social isolation and loneliness and making an important economic contribution to communities.

Does that no longer matter? Are so-called “warm spaces”, the rebadging of local libraries, community centres and other accessible, heated community spaces as the last defence against death by hypothermia, going to be the new way of uniting communities? If so, what might emerge from people’s sobering collective realisation that this is all there is?

Will Liz Truss’s expected announcements tomorrow help desperate local businesses? Surely the question should not be “can we afford” to protect pubs and the wider hospitality sector by making sure they can pay their bills and people have enough money to keep using them but “can we afford not to”? 

Blog: The business of sleep

by Susan Murray, Director, David Hume Institute

25th May 2022

One in four people are already losing sleep over their finances and the cost of living crisis hasn’t fully hit yet.

This is bad news for people’s health and the economy.  The long term health implications are well known for individuals living in a state of acute stress, with lack of sleep increasing the risk of health conditions such as obesity, heart disease and depression.  Relationships suffer and the likelihood of family breakdowns increase.

These negative effects cause short and longer-term harm to the economy, as well as increasing public health costs. Lack of sleep affects your ability to make decisions and reduces productivity.

The cost of living crisis is already affecting individual lives and our research shows worrying signs for business too.  

70% of people have already cut back spending on anything that isn’t essential.  With the majority of Scotland’s business being small and medium sized, this reduction in spending will have a big impact.

Business leaders also have Brexit, labour and skills shortages, higher energy costs and supply chain issues to manage. Some have enjoyed unprecedented profits in recent times but others haven’t yet recovered from the pandemic.  There are tough times ahead for many businesses in Scotland and for some, there isn’t any slack in the system. 

It is understandable that many are calling on the UK treasury, bolstered by increased tax receipts, to step in swiftly with a basket of interventions aimed at reducing the length and depth of the recession.  In the long term we need to create more resilience in the system, but with an increasing number of people experiencing hunger and struggling to heat their homes, looking to the long term now feels like a luxury.

Whilst the big actions rest with government, if you have money and are not on the breadline, are you thinking about the impact of your spending or charitable giving?  

Making conscious choices with money - a priority people told us last year as part of the Action Project, is now even more important. 

With so many people in work using foodbanks and skipping meals - work is clearly not a guaranteed way out of poverty.  If you employ people, what support are you offering the lowest paid in the organisation?  Big employers like John Lewis are openly speaking about the range of measures they have put in to help their lowest paid staff.

In small businesses it can be harder to offer holistic support to employees - and we have thousands in Scotland. For small businesses cash flow is often critical for keeping their heads above water.  Although only a drop in the ocean in terms of the issues facing small businesses, paying invoices on time can make a big difference and saves hours of time chasing up payments.

Some rules are making it harder for those that are struggling most, and here regulators have a role to play. For example higher standing charges for prepayment energy customers.  I can understand Martin Lewis’s anger at Ofgem - it seems as though our energy market is in desperate need of an overhaul.  

The Understanding Scotland - Economy research shows the cost of living crisis is already affecting the majority of people in the country - a minority have savings and a cushion for the hard times ahead.  Let’s hope the pending announcement from the Treasury does something rapidly to help or the prospect of a peaceful night’s sleep is a long way off for many people.