Press release: Global expert calls for urgent change to prevent escalating crises in the UK

Professor Danny Dorling, the Halford Mackinder Professor at the University of Oxford, joined a sell-out crowd in Edinburgh to preview his latest book Shattered Nation. Inequality and the Geography of a Failing State' hosted by the David Hume Institute.

Professor Dorling argued, Britain needs change on a scale not seen since the Second World War to prevent the escalating economic and social costs of avoidable crises:

““The enormity of the challenges we now face, mean we need a scale of intervention not seen since the second world war - we can choose to step up to the challenges ahead, we can choose to create a thriving economy and society that does not leave people on the scrap heap, or we can blunder on fooling ourselves that if we just get economic growth to increase all the other crises will be sorted.””

— Professor Danny Dorling

The discussion addressed the key theme of his forthcoming book - that the failure to tackle rising inequality and to invest in ways of meeting the basic needs of people living in the UK puts Britain at risk of becoming a failed state.

Dorling named Scotland as a source of hope citing  policies such as the Scottish Child Payment and the announcement by the Scottish Government’s intention to move to a “Cash First” approach to reducing dependence on food banks.

““People need to know how much they stand to lose if we do not plan for ambitious change.  After housing costs are paid, the average household in Britain is already less prosperous than the median in every other large European country. We have been moving down the ranks for decades, and the fall has accelerated recently. This is not inevitable. We can plan to end the huge inequalities that are a key feature of this decline.”

“What is happening in Scotland shows it is possible to avoid a poverty of ambition where you hope for so little and ask for even less.””

— Professor Danny Dorling

Reflecting on the ambitions of the 1942 Beveridge Report, Professor Dorling identifies the five giants of twenty-first-century poverty that now need to be conquered: Hunger, Precarity, Waste, Exploitation, and Fear. 

Susan Murray, Director of the David Hume Institute, said:

“We were delighted to host Professor Dorling whose analysis of the data shows what can be changed, not just what has gone wrong.  We know from our quarterly Understanding Scotland Economy Tracker that significant numbers of the Scottish population are losing sleep over their finances and cutting back on the basics such as healthy food and heating. Our ability to achieve many goals, including increased productivity, is placed in jeopardy when the people who power our economy are struggling to afford the basics needed for life today.” 

ENDS

View the full David Hume Institute event recording with Professor Dorling

Notes to editors:

Shattered Nation: Inequality and the Geography of a Failing State by Professor Danny Dorling will be published by Verso Books and formally launched on 19 September 2023.

Press Release: the cost of living is driving difficult choices

Tuesday 23rd May 2023

New research reveals in order to meet increased costs, many Scots are running down their savings, turning to credit and stopping paying into pensions:

• 4 in 10 Scots (42%) report having taken money out of their savings to cover higher costs

• 1 in 4 have used a credit card to make for purchases that they wouldn’t usually

• 1 in 5 have used ‘buy now pay later’ schemes to cover everyday spending

• A small but increasing number of Scots have stopped contributing to a pension (7%).

The research also found

• 7 in 10 (68%) report that they have cut their energy use through methods like switching off lights and not using the oven to cope with rising prices and inflation, and two-thirds (66)% report reducing spending on non-essential purchases such as clothing

• turning to high-cost borrowing options for everyday essentials can cause the accumulation of substantial debt which will affect their lives for many years to come 

• the economic outlook from Scots remains bleak with 62% thinking that general economic conditions will be worse in a years’ time (although this is down very slightly from 66% in February) and 45% think their personal financial situation will be worse in a years’ time (down from 48% in February)

• however, while we have seen a reduction in the number of people thinking that things will get worse, optimism is not rising. Rather, many Scots think that the economic outlook will remain the same over the next 12 months suggesting they think that the costs and challenges they face are here to stay.

This wave of the Understanding Scotland: Economy tracker survey was produced in partnership between the David Hume Institute and the Diffley Partnership. The survey gathers economic attitudes and insights from more than 2,000 members of the Scottish adult population every 3 months to track changes over time. 

Mark Diffley, Founder and Director of Diffley Partnership, said: 

“Despite some economic indicators showing signs of stabilising over recent times and some commentators predicting that the worst of the crisis maybe easing, it is clear that Scots are still feeling pessimistic about the prospects for both their own finances and the wider economy. Our survey once again highlights the financial and wider impacts being caused by the crisis and that the most significant impacts are being felt by the most financially vulnerable.”

Susan Murray, Director of the David Hume Institute said: 

“Sadly this research continues to show a stark picture for the Scottish economy. Two-thirds of people continue to cut down on non-essential purchases and almost half the population are reducing their donation to charity.  1 in 5 people, with nothing left to cut back, are turning to high cost borrowing in order to survive. Others are telling us they have stopped contributing to their pension in order to make ends meet. These actions today, are likely to impact personal finances and the Scottish economy for many years to come.” 

Understanding Scotland is a quarterly tracker survey 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.

Read the full report

Notes to editors:

• The survey received 2,184 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 2nd and 8th May 2023. Results are weighted to the Scottish population (2020 estimates) by age and sex.

• About Understanding Scotland: Understanding Scotland is a high-quality quarterly survey that delivers insights into Scottish behaviours and attitudes towards society, the economy and the environment. The survey fills a vital gap in research, providing the socioeconomic insights and indicators needed for effective decision-making, with regularity and timeliness.

• About the Diffley Partnership: The Diffley Partnership is an Edinburgh-based consultancy and research company working with organisations across the public, private and third sectors to deliver high quality research and insight on a range of issues using all qualitative and quantitative techniques.

• About the David Hume Institute: The David Hume Institute is an independent think tank with a mission to improve understanding of the economy in Scotland. We carry out research and host public events on a range of issues related to the Scottish economy and society.

• About Charlotte Street Partners: Charlotte Street Partners is a strategic communications agency based in Edinburgh. Our team of advisers offer considerable experience, expertise, and insight across all aspects of communication.

Press release: Is trust a must for a brighter economic future?

“Trust plays a crucial role in a successful economy.”  says Charlie Woods, the author of the latest David Hume Institute Discussion Paper launched today ahead of an on-line event on Thursday 23 May at 1.30pm. Is this being overlooked by business and political leaders who are seeking solutions to weaker than desired economic performance?

DHI Director, Susan Murray, will be joined in this webinar conversation from New York by Dr David M. Bersoff, from the Edelman Trust Institute, Charlie Woods, the paper’s author, and leading mediator John Sturrock , who works to build trust in negotiations.

David will share the global context on trust from the 2023 Annual Trust Barometer to help explore the relevance of trust to the economy and the labour market.

At a time when the majority of Scots are concerned about household finances, think Scotland is heading in the wrong direction economically and are pessimistic about our economic future, are we paying sufficient attention to the potential of increasing trust to boost economic performance?

David Hume Institute Director Susan Murray says:

“Research shows a strong relationship between levels of trust in society and economic performance with more trusting societies generating more income per person than others. Thinking differently about what helps boost economic performance might reveal we have been looking for too long in the wrong places to find the Holy Grail of a more productive Scottish workforce.”

The webinar is free to watch here.

ENDS

Notes to Editors

• For media enquiries contact Shelagh Young, David Hume Institute, shelaghyoung@davidhumeinstitute.org

• The Discussion Paper: Is Trust an undervalued ingredient for a thriving economy? Is available here

• The 2023 Annual Trust Barometer can be found here

• The David Hume Institute is an independent think tank based in Scotland. The charity was established in 1985 to increase diversity of thought on the economy and related public policy. Find out more on our website

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

Press release: Siloed land information is holding back Scotland

A new report published today by the David Hume Institute and Built Environment Forum Scotland, written by land reform expert Andy Wightman, says the lack of a fully functioning land and building information system is holding Scotland back.

Although Scotland has a considerable amount of information on land and buildings, a Scottish Government commitment in 2015 to deliver a comprehensive Scotland Land Information Service (SCOTLIS) has still not been met.

Information about land and buildings is used everyday by businesses, policy-makers, academics and ordinary people. This information includes who owns land, how much land is worth, building types and energy efficiency ratings, vegetation cover and flood risks areas. 

All of this information exists in some form, however much of it is not easily available and virtually none of it is made available in an integrated form. 

A fully functioning land and building Information system in Scotland would enable users to quickly and easily access information about any piece of land or property in Scotland through a single online source. This will allow for simplified property transfers, better policy and decision making, improved accountability and transparency, and more innovative use of data for wider social and economic benefit. 

There are challenges to overcome but failing to rise to the challenges means Scotland is not reaping the benefits other countries are seeing from similar work. 

Andy Wightman, author of the report said: “A new, fully functioning version of Scotland’s land information system could be in place by 2025 if there was the political will to make it happen. In the past, lack of political leadership failed to establish the governance framework necessary to deliver the ambition for Scotland so the land and building information system remains a vital missing link. ”

Susan Murray, Director of the David Hume Institute said: 

“This report shines a light on the potential of a land and building information system for Scotland. This is essential infrastructure to support the modern economy and transition to NetZero.  The David Hume Institute is delighted to have worked with BEFS, Andy Wightman and others like Professor Stewart Brymer to produce the paper. The ground work has already been done, it just needs everyone to roll up their sleeves and make it happen for everyone’s benefit.”

Ailsa Macfarlane, Director of Built Environment Forum (BEFS) said:

“Obtaining information about buildings can be extremely time consuming.  By bringing together information from different sources, it will be quicker for everyone to access land and building information.  We need a concerted effort to ensure Scotland does not get left behind internationally as other countries are already benefiting from advances in data processing and mapping technologies. As the impacts of climate change intensify, there is even greater need for more timely, more comprehensive and more accessible information about land and buildings in Scotland. A fully functioning ScotLIS will support progress towards achieving Scotland’s net zero goals by 2045.”

The David Hume Institute is hosting a free online event to discuss the paper on Wednesday 8th March. Further details can be found here 

Ends

Notes to editors:

1. About the report: This paper was jointly commissioned by the David Hume Institute and Built Environment Forum Scotland and written by Andy Wightman. It originated from a conversation as part of DHI’s Action Project and it’s development has been supported by a number of individuals, organisations and roundtable discussions.

2. About the author Andy Wightman is a writer and researcher focussing on land governance, land ownership and community land rights. He is the author of publications including Who Owns Scotland (1996), Scotland: Land and Power (1999), Community Land Rights: A Citizen’s Guide (2009) and The Poor Had No Lawyers (2010). He runs the Who Owns Scotland project. From 2016 to 2021, Andy was a Member of the Scottish Parliament.

3. About the David Hume Institute: The David Hume Institute is an independent think tank based in Scotland. We carry out research and host public events on a range of issues related to the economy and society in Scotland.

4. About Built Environment Forum Scotland: Built Environment Forum Scotland (BEFS) is an umbrella body for organisations working in the built environment in Scotland. We focus on the strategic issues, opportunities and challenges facing our historic and contemporary built environment.

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 

Consultation response: Scottish Parliament Charities Bill

Response to the Scottish Parliament Social Justice and Social Security Committee Call for views on the Charities (Regulation and Administration) (Scotland) Bill

February 2023

We strongly support updating Scottish charity law to enable OSCR to create an open, publicly searchable register of charity trustees.

Why do we support the update?

The David Hume Institute regularly measures the diversity of Scotland’s top leaders. For the first time in 2022 our analysis included the leaders of the top 300 charities by income, as they are major influencers and lobbyists who impact on all parts of our society.

Increasing diversity of thought is in everyone’s interests as it helps avoid the pitfalls of group think (where similar people think or make decisions as a group, resulting in unchallenged decision-making) and improves risk management and productivity. More equal societies have higher productivity and high productivity allows more investment to create more equal societies. 

The top 300 charities by income represent just 1% of the total charities in Scotland and control over £10 billion each year - 73% of the sector's total annual income

As a micro organisation we do not have capacity to respond to every question in the call for views. However, the points below are relevant to the call for views and draw on our research from 2022, Scotland’s top charity leaders - how diverse are they?

We’re talking big money

• The charity sector in Scotland has an annual income of over £13.17 billion and 208,977 staff.  This means the Scottish charity sector is of a similar size to the NHS in Scotland.

The requirement for transparency has declined since the advent of SCIOs

• Since the introduction of SCIO’s in 2011, there has been a rapid growth in SCIO registrations. Companies House requires a higher level of public transparency for directors of companies with charitable status than OSCR currently requires for trustees.

Image from of OSCR data from Scotland’s top charity leaders - how diverse are they?

Transparency should go hand in hand with the benefits of charitable status

• Along with charitable status comes a legal duty to deliver public benefit.  Many charities receive public funding and tax benefits relating to their legal status.  Strengthening legislation to increase transparency and accountability would help maintain and build on high levels of public trust in the charity sector. 

• Increased transparency will enable diversity monitoring of charity trustees and help highlight risks related to limited diversity of thought. 

Update Scottish charity law to stop lagging behind Charity Commission and Companies House

• The Charity Commission and Companies House already require annual declaration of trustees and directors 

• The Charity Commission’s research into the experience of charities in England and Wales, finds that eight out of ten of charity trustees agree that ‘the rules and regulations trustees have to comply with are important, and are not too much of a burden’.   

• OSCR’s digital annual return means reconfirming those in control of the organisation could be quick and easy as part of this process. Every registered charity in Scotland should already have a record of their trustees and prepare an annual report and accounts. The choice of what information is in the public domain should not depend on the charity's commitment to openness and transparency.

The bill needs to go further

• It is important that the proposed bill enables OSCR to collect and correlate details of other trustee or director positions (those with significant control) held by individuals within charities on the updated Scottish charity register. This information should be publicly available and searchable via the charity register.

• Ensuring it is possible to search for individual trustees in the Scottish Charity Register in a similar way to Companies House, would aid public understanding of individuals’ with potential conflicts of interest.

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 

Press release: Scots continue to cut spending

22nd November 2022

New research published today by the David Hume Institute and the Diffley Partnership on economic attitudes and behaviours has revealed widespread pessimism about Scotland’s economic outlook.

• 9 in 10 Scots (93%) believe general economic conditions are worse now than they were this

  time last year and 77% believe the situation will deteriorate further over the coming year. 

• 6 in 10 people (62%) are planning to spend less on restaurants and hotels and 58% are

  planning to cut down on leisure and culture spending over the next 12 months.

• Almost 1 in 2 (48%) plan to spend less on clothing and footwear.

• 7 in 10 (68%) already report not turning the heating on when they otherwise would have

  and nearly 1 in 5 (17%) of people have skipped meals to save money

• Intentions to cut spending have increased for every good and service listed in the survey

  since Understanding Scotland began, posing a big challenge for the Scottish economy and

  particularly the hospitality sector.

The new Understanding Scotland polling has found that 8 in 10 (79%) of people view the economy as it is currently organised as working primarily in the interests of the wealthy, while 65% of people feel their financial situation has worsened over the past year.

Wrong direction?

Just under half of people (49%) believe that things in Scotland are heading in the wrong direction, the highest percentage providing this answer since Understanding Scotland was launched last year. Dissatisfaction with income levels remains high, with almost 1 in 2 (46%) of people dissatisfied with their income level and a further 55% dissatisfied with their income’s ability to cover the cost of living.

People from the most deprived areas are also being increasingly pushed into financial precarity. One in five (20%) have had to borrow money from family or friends and 19% have used a buy-now-pay-later scheme when they otherwise wouldn’t have. This is despite 22% of this group having changed or looked at changing jobs to earn more and 15% trying, unsuccessfully, to take on more hours/paid work.  

During these tough times, 2 in 5 (40%) of people have reduced their donations to charity, while rising prices and inflation are pushing 1 in 5 (22%) of people to cut down on portion sizes to save money.

People from the most deprived areas plan to reduce spending on essentials further this next year: almost 2 in 5 (37%) plan to spend less on eating out and household goods and services (38%).

Parents feel the pinch

Parents, in particular, are feeling the pressure of current economic turmoil: almost 2 in 3 (64%) are dissatisfied with the ability of their income to cover the cost of living and nearly 3 in 10 (28%) reflect that their current financial situation is much worse than it was 12 months ago. This pressure has resulted in more than 1 in 3 (35%) of parents losing sleep due to stress or anxiety about personal finances and higher percentages of parents reporting borrowing money from family or friends and using credit cards or buy now pay later schemes than people without children.

Amidst predictions of further tough times to come following the Autumn Statement, these statistics raise questions of how much worse things can get and how current economic conditions will impact other issues of rising concern among survey respondents, such as poverty and inequality and healthcare and the NHS.

Reflecting on the findings, Mark Diffley, founder and director of Diffley Partnership who conducted the research, said:

“The public in Scotland continue to have widespread concerns about both the of the state of the economy and their ability to cope with the ongoing cost of living crisis.

Although concern and anxiety are widespread, we continue to see those in the most precarious situations feeling most vulnerable and ill prepared, particularly those who live in the most deprived parts of Scotland.

Despite a modest fall in pessimism about the economy over the next year, policymakers and business will be concerned with the finding that spending on non-essential items, like leisure, eating out and holidays, is likely to fall significantly over the coming year.”

Susan Murray, Director of the David Hume Institute, who helped to develop the survey, added:

“The cost-of-living is continuing to have prolonged effects in the ways in which people are choosing to spend their money. Hospitality and culture industries are being hit hardest as people cut back spending due to rising food and heating costs.

Although Scots are less pessimistic about the state of the economy next year, we are still witnessing significant financial stress among families with more than one third of parents losing sleep due to financial stress.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,191 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 3rd - 8th November. Results are weighted to the Scottish population (2020 estimates) by age and sex.

2. About Understanding Scotland: Understanding Scotland is a high-quality quarterly survey that delivers insights into Scottish behaviours and attitudes towards society, the economy and the environment. The survey fills a vital gap in research, providing the socioeconomic insights and indicators needed for effective decision-making, with regularity and timeliness.

Press release: New research finds risk overload

28th September 2022

Risk overload and a deep lack of trust are storing up future financial problems, new research finds:

We have become a nation of overburdened sceptics when it comes to managing our financial wellbeing, which is storing up massive issues for the future, according to a new study by the David Hume Institute. 

As few as one in ten (11%) “entirely trust” the UK Government when it comes to getting advice or guidance on financial matters – with levels of trust in the Scottish Government faring no better.  Only two in ten (21%) trusted “companies which provide financial products such as pensions” as a source of information.

Through a series of one-to-one online interviews, group discussions and a commissioned survey of over 1000 people living in Scotland, the research also found that 36% of people surveyed said they did not know who they could trust for advice or guidance. Of particular concern were those immediately affected by recent pension reforms, with 28% of over 65s and 32% of those aged 55 to 64 stating they did not know who to trust. 

Following a clear shift in responsibility for financial security from government and institutions to the individual, another 32% did not know what advice or guidance could help them.

Sources of advice which were praised in one-to-one interviews for their quality, trustworthiness and independence included Martin Lewis and Citizens Advice Bureau, while over half (52%) in the survey identified family and friends as their source of reliable information.

However, the study, The Great Risk Transfer, also found that stress, fear, stigma and embarrassment were holding back many people from seeking guidance and undermining their ability to absorb relevant information about the matters that affect their wellbeing, be that pensions, insurance, future health provision, housing or employment.

Consequently, the report concludes that financial risks are intensifying, creating an unfair and increasing burden on the individual. Government policy built on the premise that more choice is always good now needs to be reviewed: many people do not have more choice, just much more risk and less of a safety net should things go wrong in their lives.

Commenting on the study’s findings, Susan Murray, Director of the David Hume Institute, said:

“Trust is clearly a barrier to seeking advice but there are also other cultural and emotional factors at play, including stress and embarrassment and lack of knowledge that stop people from dealing with the financial risks that impact their lives. 

“The research highlights how governments and employers have shifted the burden of financial risk increasingly to the individual who is expected to understand and manage the many choices they face when it comes to pensions, health, housing and employment. Yet in reality, circumstances can not only limit choice but can also mean that many do not know the myriad of decisions they have to make. Indeed, a good choice today could easily be a bad choice tomorrow and without government safety nets, a huge problem awaits us all in the not-so-distant future unless we begin now to talk more openly about money and re-evaluate where the burden of risk is falling.”

“Many of the participants in the research described the barriers but most expressed a strong desire for improved access to relevant information and guidance. Trust in non-profit sector providers, especially Citizens Advice Bureau, was significantly higher than the most trusted financial services providers. So, while the answer is not simply more information, long-term stable funding for the most trusted providers must clearly be a strategic priority if the goal is to better equip people to manage financial risk.”

The research was commissioned by the Institute and Faculty of Actuaries (IFoA). Nicholas Chadha, who is part of the Scottish Board of the IFoA, said:

“This is a powerful independent report from the David Hume Institute based on rich research and compelling individual testimony. While primarily based on evidence from Scotland, the challenging recommendations clearly have wider application and resonance.  As part of our public interest commitment, we look forward to a vigorous debate on the findings at a time when the challenge to individuals and communities to understand and calibrate risk is so vital to their financial wellbeing.”

ENDS

Watch the recording of the research launch event:

Notes to Editors:

• The Great Risk Transfer: have we got the balance right? was part-funded by the Institute and Faculty of Actuaries Scottish Board Endowment Fund.

Press coverage: Unlucky generation face risk of poor retirement

David Hume Institute in The Times

26th September 2022

Successive policy decisions by Government and employers have created an “unlucky generation” of workers in the UK labour market, who face far greater financial risks in retirement than their predecessors and are less well-equipped to deal with negative consequences.

Less than half (45%) of 1,000 people surveyed across Scotland recognised or understood the increased complexity of the choices about how to invest and when to access their pension pots, nor how this could affect their lives. 

The survey also suggests that younger workers and those from lower socio-economic backgrounds are potentially most at risk from investments underperforming. Just three in ten (31%) 16-34 year-olds were aware of the amount of financial risk people have to manage in their lives as a result of fewer employers offering final salary (defined benefit) pensions. This is compared to 60% awareness in the 55-64 age group. 

There was also a split between social groups, with only 37% of C2DE workers saying they understood these risks. This compares to half (50%) of more affluent ABC1 workers acknowledging the choices involved.

Yet while the increase of risks people face is the result of deliberate policy decisions by Government and employers to encourage more individual consumer choice in the pension market, the survey suggests most people still expect Government to safeguard their wellbeing if things go wrong. 

Over half (52%) of people surveyed said that Government ought to be “entirely” responsible for ensuring that everyone, including vulnerable people, has a living income and decent standard of living in retirement. Only 23% placed that responsibility entirely on individuals. 

Shelagh Young is one of the authors of the report, The Great Risk Transfer, which exposes the increasing burden of risk that is falling on the individual. She commented:

“Despite the fact that a majority of people clearly expect Government to take responsibility for making sure retirement incomes are sufficient, comparatively few understand that Government expects them to live by their own choices – even if, as in the case of pensions, there is now a far higher chance that things will go wrong.

“Our research showed that many over 50s often described themselves as being part of a ‘lucky’ generation that has benefitted from better access to affordable housing and better returns from employer protected pensions, contrasting an ‘unlucky’ cohort in their mid-forties and younger facing considerable risk to retirement income.

“As the cost-of-living crisis ramps up and financial pressures for workers grow, we need to see ministers working closely with businesses on steps to help people de-risk retirement. Failure to do so may result in the millions of those who miss out squarely blaming government for a failure to safeguard their future livelihoods”.

ENDS

Link to online article

The Great Risk Transfer was commissioned by the Institute and Faculty of Actuaries. It will be published on 28 September 2022 with an online debate hosted by Susan Murray, Director of David Hume Institute held on 3 October. Watch the recording of the event below.

Blog: A View from the Lab

by Shelagh Young, Engagement Lead, David Hume Institute

25th September 2022

Friday’s “fiscal event” has proved to be a powerful curtain raiser for new research we are launching later this week exploring how ordinary people are coping with growing risks to their financial wellbeing.

If you feel like a rat trapped in the Trussonomics laboratory unsure whether the trickle down drug will cure your financial ills, you are not alone. The markets have already announced their damning verdict on the risks being taken with the UK economy as the pound tumbled and money was sucked out of pension funds at a rate which will have a substantial number of people rapidly recalculating their retirement plans.

Even impartial commentators such as the Institute of Fiscal Studies, have referred to the UK Government’s decisions as a gamble. Chancellor Kwasi Kwarteng maintains that the tax cuts will benefit everyone while others have named it a “budget for the rich”. 

However it is described, the facts are clear. At the sharpest ends the tax cuts announced will give the average FTSE100 CEO a return of £162,500 a year while the Resolution Foundation has calculated the annual benefit to the poorest fifth of households at just £90. That staggering difference means the difference between paying your energy standing charges for just four months while the richest receive a tax cut worth more than 99% of the UK population are paid in a year.

The risks to the Government are obvious - electoral success in 2024 surely lies in ensuring that their hoped for economic growth meets the needs of our struggling NHS and social care systems as well as enabling people outside the top 1% to feel their living standards are protected. The risks to the rest of the population vary. Most obvious are reduced returns from pensions and other investments if markets slump further and the spectre of further austerity measures if the large scale public borrowing is not mitigated by growth.  

One tiny part of this unprecedented low tax, high spending, banker’s bonus bonanza of a budget provided a clue as to who is most at risk if the gamble doesn’t pay off. The decision to require low paid part-time workers who receive income top-ups through Universal Credit to seek more paid working hours. 

In August we surveyed how people in Scotland are responding to the cost of living challenge. 9% had already tried and failed to find more hours of work. The devil will be in the under-researched detail, but it is interesting to know why people cannot find more paid work when businesses are crying out for staff. Is it well-known barriers such as the fact that hospitality requires evening work which doesn’t fit with caring responsibilities or that wages are too low to cover the costs of additional child or elder care? This is the type of evidence that should be driving the Government’s policy. Instead, our poorest households are being forced into the vanguard of an unprecedented experiment.

The “fiscal loosening”  prescribed by Kwasi Kwarteng is based on the belief that low taxes and a small state are the treatment for fuelling growth.  Unlike the markets, business organisations have welcomed the approach but if the rest of the lab rats had been given a vote would they have chosen to test this risky drug?

DHI welcomes new trustee

The David Hume Institute has appointed Liam Fowley to the board of trustees.

Liam is currently in his final year studying to be a teacher with the University of the Highlands and Islands. He was recently elected as the Depute President (Education) at the Perth UHI Student Union.

He is also a former board member of YouthLink Scotland and was Vice Chair of the Scottish Youth Parliament until April 2022. His experiences include being a member of the Scottish Government's COVID-19 Education Recovery Group and the Scottish Education Council, as well as being one of the leaders of the climate change citizens assembly in Scotland. He was instrumental in the work surrounding Scotland’s exams in late 2021, and the subsequent restructuring of the SQA and Education Scotland. Liam volunteers with the RAF Air Cadets and serves as a Trustee of the charity Independent Advocacy Perth & Kinross.

Ken Barker, Chair of the David Hume Institute, said: "We are delighted to welcome Liam to our board at a crucial moment for public policy debate in Scotland.

"We face a complex and changing world, in which objective, independent economic and public policy analysis is vital.  Liam’s wide ranging experience further strengthens the David Hume Institute board as we continue to expand our contribution to diversity of thought in Scotland."

Liam added: "I am honoured to be taking on this role at this time of unprecedented changes in the economic and public policy landscape of Scotland, the UK, and world. The David Hume Institute enjoys a unique place in Scottish public life and our upcoming work will see the Institute provide a fresh and informed perspective on the public policies affecting the people of Scotland.”

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: Behind the scenes at museums

by Shelagh Young, Engagement Lead, David Hume Institute

2nd September 2022  

If you've been dreaming of saving on your energy costs by swapping a wintry day under your duvet binge watching box sets for time spent sitting on a hard bench surrounded by dinosaur bones or mediaeval quern stones, bad luck, it's just not happening. 

No sooner had museums been added to the list of suggested warm refuges from the cost of living storm, up pops the Museum Association to dust off one of today's rarest artefacts - the simple truth. A lot of museums and heritage centres won't be open as often as usual because they can't afford their energy bills either. 

This matters.

Not just because a huge number of people need more than imaginary warm spaces as a defence against the dark parts of winter but because museums are incredibly important to the economy.

Alongside providing jobs they help drive tourism. 

The National Museum Director's Council states that 40% of visitors to the UK cite culture as their reason to visit, and 43% visited a museum or gallery while in the UK.  

They come to see the fascinating antiquities and that doesn't include us. But all old things need to be well looked after. If you've ever spent a night in the mildewed sheets of a damp caravan or thumbed the flyblown pages of a wrinkled vintage paperback you will already know that climate control is fundamental to the healthy preservation of stuff, not just people.  

Shorter museum opening hours cut some costs but climate controlled museum storage is a sophisticated and costly business which cannot be turned off without posing an existential threat to the heritage industry. 

Alongside uncapped unaffordable energy bills, which have reportedly risen by 400% for some institutions,  museums are seeing a reduction in donations and visitor numbers, both signs of growing public belt tightening. Without additional support we have to ask how long it will be before the cost of merely preserving collections, let alone enabling anyone to see them, outstrips the sector's ability to afford it? 

In a week in which health experts are warning that cold homes will damage the lung and brain development of children, it might seem odd to champion investment in the preservation of things. But a healthy economy including the arts, culture and heritage industries, is integral to maintaining public health. There is no better future to be built from ignoring the whole in favour of its parts.

Energy industry privatisation was likened to selling off the family silver. Looking at current energy industry profits, they’ve already turned our lost legacy into gold. Some would point to this as a sign that the private sector really does do the energy business better than public ownership ever could.

Whatever your view, it is surely far from ideal to forge ahead with policies that risk leaving many of the remaining national heirlooms too damaged to generate any income at all. 

---

For an insight into how people in Scotland are feeling about the rising cost of living take a look at the latest edition of our quarterly Understanding Scotland: economy research.

Press release: nine in ten Scots anticipate a recession and worsening inflation

Press release from the David Hume Institute and the Diffley Partnership

30th August 2022

Overwhelming majority say UK and Scottish governments have done too little to help with soaring prices, as nine in ten Scots anticipate a recession and worsening inflation.

New research produced in partnership between the David Hume Institute and the Diffley Partnership on economic attitudes and behaviours has revealed widespread anxiety and pessimism about Scotland’s economic outlook.

• 8 out of 10 people are cutting down on non-essential items and leisure, and over a quarter of people are skipping or cutting down on meals to save money

• 3 in 10 people in Scotland are now losing sleep over their finances

• The overwhelming majority think support from the UK (89%) and Scottish (73%) governments thus far has been insufficient

The Understanding Scotland survey found that 87% of people in Scotland expect the soaring cost of living to cause a recession, and more than nine in ten expect things to get worse before they get better.

Despite households’ best efforts to cut their outgoings, the support on offer from governments is widely seen as inadequate. 64% of people report feeling worse off now than over the past year, and 57% say their income does not satisfactorily cover their cost of living, rising to 73% and 71% respectively in the most deprived neighbourhoods.

Eighty per cent of people have cut down on leisure and/or non-essentials, and over a quarter of people are skipping or cutting down on meals to save money. Despite these efforts to economise, including by foregoing basic necessities, 89% and 73%, respectively, say that the UK and Scottish governments have done too little to help.

There is particular hostility towards energy companies: 95% of people think they have done too little to help people cope with rising prices, and a fifth of people think that the single biggest cause of soaring inflation is companies maximising their profits. This is only just behind the war in Ukraine at 21%, and ahead of pandemic-related supply chain issues at 12%.

Rising prices, in the absence of further support, have seen large numbers of people pushed into greater vulnerability and riskier behaviours. Two in five have depleted their savings, and over a third (35%) have taken on debt and/or borrowed money. The latter figure rises to 44% in the most deprived neighbourhoods, 20 percentage points higher than in the most affluent. 

The impacts of soaring prices are not being felt equally across society. Rather, they are hitting the already vulnerable hardest, with 73% of people in the most deprived fifth of neighbourhoods reporting that they feel worse off now than over the past year, compared to 60% in the most affluent areas.

While 80% of people believe that salaries and wages should rise in line with inflation, only a third say they would feel comfortable asking their employer for a pay rise and far fewer - less than 7% - have actually done so. Women, young people, and those in part-time work - already more likely to be in low-paid positions - are especially uncomfortable doing so. The ‘wage-price spiral’ counterargument - that higher wages only serve to drive up demand and inflation - does not appear to have much traction, with only 4% of people deeming this the primary cause of inflation. Only eight per cent of people believe that pay should not rise in line with inflation, a tenth of the proportion that said it should.

Reflecting on the findings, Mark Diffley, founder and director of Diffley Partnership who conducted the research, said:

“It is unusual to see the public mood being so unambiguously bleak. Financial pressures and anxiety at soaring prices are widespread across society, but particularly acute for those who are already most vulnerable. Across all demographic groups, and especially in more deprived communities, a clear majority are saying that the response to date from the UK and Scottish governments alike are simply not enough.”

Susan Murray, Director of the David Hume Institute, who collaborated on the survey, added:

“Since we started this survey, sadly most people have seen their financial situation deteriorate. With three in ten people now losing sleep due to financial stress, and over a quarter skipping or cutting meals, there are obvious consequences for the economy, labour market and people’s health. Eighty per cent of people have already cut down on non-essentials and leisure, and over a fifth have taken on or tried to take on more work, but it’s still not enough. Despite their best efforts, two-thirds of people say their money simply isn’t going far enough, and most expect things to get considerably worse before they get better. We need a concerted package of targeted support, and we need it now.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,227 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 4th - 8th August. Results are weighted to the Scottish population by age and sex.

2. About Understanding Scotland: 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.

Consultation response: public finances in 2023-24

Response from the David Hume Institute to the Scottish Parliament call for views on Scotland’s public finances in 2023-24 and the impact of the cost of living and public service reform.

About our submission

DHI welcomes the opportunity to respond to the Finance and Public Administration Committee’s call for views on Scotland’s public finances 2023-24 and the impact of the cost of living and public service reform.

Central to our work are the people of Scotland, including those who are seldom heard; from different ethnic and cultural backgrounds; different genders, ages and abilities. 

We apply the critical thinking which has long defined DHI to encourage action to address the contemporary issues of our time. 

Our response draws on a range of previous research including:

• The Action Project - the largest multi generational research project in Scotland in recent years heard from over 5,000 people about their thoughts on action to help Scotland build forward better.

• Our 2022 briefing paper on open data, which sets out the lack of progress on open data in Scotland and the cost to the economy and public services.

Summary

We call on the Committee to recommend that the Scottish Government:

• Maintain the essential focus on commitments to reducing child poverty and the transition to net zero is critical to the economy

• Fully implement the Scottish Government’s 2021 benefit take-up strategy

• Recognise that there is little evidence that tax cuts will help with the cost of living or inflation

• Work to reduce levels of ‘inactivity’ amongst those who want to work by reducing barriers to work in order to increase the tax base.

• Fully realise the benefits of their own Open Data commitments to improve public services and boost the economy.

• Better utilise the sustainable procurement duty to deliver national outcomes

Consultation response: Scotland's Innovation Strategy

The David Hume Institute responded to the Scottish Government’s call for evidence on Scotland’s Innovation Strategy.

Our response is based on common themes from one to one interviews and a roundtable conducted in line with the Chatham House Rule in June 2022. Participants were from different backgrounds and areas of expertise. The response also draws on previous research conversations from the Action Project, see appendix 1 of the submission.

Key recommendations

1. Think long term and be brave

2. Have clarity of purpose

3. Lead by Example

4. Ensure data and facts underpin decision making

5. Play to our strengths but there is more than one game

Read the full submission to find our the detail of our recommendations.