Understanding Scotland Economy Tracker - February 2023

The most recent data from the David Hume Institute and Diffley Partnership’s regular economic survey 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. Whether this is a sign of people adjusting to a new normal, or genuinely feeling things are improving, remains to be seen.

Scots are continuing to struggle to make ends meet as dissatisfaction with income levels remains high and people carry on cutting their discretionary spending levels in response to rising prices. On top of this people are being pushed into forgoing basic necessities, engaging in risky financial behaviours, and looking to change jobs or take on extra hours.

New questions for this iteration have displayed a stark financial fragility across the population, although this is not experienced equally. A significant minority of people are not confident that they could pay an emergency expense of £100 without having to borrow or take out a loan, and this number sharply increases for an emergency expense of £500. For those in the most deprived areas of Scotland, these numbers are much higher.

Read more:

• Press release - Scots’ pessimism about economic conditions remains.

• Guest blog - Shan Saba’s view from the West.

• Watch the launch event recording here.

Does Scotland need a digital wallet for skills?

From imagination to action discussion paper

A workforce, with individuals keeping their knowledge and skills up to date throughout their lives, is critical for the economy to thrive.  

Are employers losing time and money repeating training? How easy is it for job-seekers or employees to evidence all their skills and training?

This discussion paper explores if a digital wallet for skills could be critical missing infrastructure for both employers and individuals. What can we learn from elsewhere in the world? Could a digital wallet for skills in Scotland save both time and money, and ultimately help the economy to thrive?

Latest Understanding Scotland: Economy - November 2022

Latest research insights from the David Hume Institute and the Diffley Partnership on economic attitudes and behaviours has revealed widespread pessimism about Scotland’s economic outlook.

The Understanding Scotland: economy survey shows that households’ are continuing to cut their spending and go without necessities, despite many attempting to boost their income in different ways.

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.

The public mood on the economy has moved dramatically in the last 12 months. Just 1 in 10 Scots think the economy works primarily in their own interests, whilst 8 in 10 think it works primarily in the interests of the wealthy.

As we enter into economic recession and the UK faces its biggest drop in living standards on record, understanding people’s perceptions and behaviours is essential for all decision-makers.

Read more:

• Press release - Scots continue to cut spending.

• Read Shona McCarthy’s blog - The lifeblood of our economy is in peril.

• Watch the launch event recording here.

Research: The Great Risk Transfer - have we got the balance right?

How many people have the knowledge and time to manage the financial risks they face in life? To what extent does it matter?

We partnered with the Institute and Faculty of Actuaries (IFoA) to explore these questions. We aimed to find out more about what people in Scotland understand to be the key risks in relation to their long-term financial wellbeing and what helps and holds them back from addressing them.

Our engagement with people in Scotland was designed to build on recent work carried out by the IFoA which has been exploring the ongoing trend of transferring risks from institutions – such as employers, the state, and financial services providers – to individuals.

The IFoA calls this the ‘Great Risk Transfer’ describing it as posing one of the most significant yet little understood social, financial, and political challenges of our time. The changes described in this work show that far greater responsibility is being placed on individuals for managing their lifelong financial wellbeing than has been the case for most people living in Scotland since the establishment of the modern welfare state.

The Great Risk Transfer research showed that the causes of this trend are complex. They include increasing life expectancy, technological advances, changes in financial regulation and political choices. The IFoA highlighted four important areas of risk transfer: pensions, work, health and insurance. Our work was designed to find out more about relevant perceptions of risk in the Scottish population and how people respond to risks which can affect their financial wellbeing.

We explored people’s awareness of the Great Risk Transfer and their ability to manage and respond to financial risks. This revealed two interlinked themes which have implications for policymakers and others interested in either mitigating against or rebalancing responsibility for the relevant risks.

• Cultural – what people know, how they feel and what they do to manage risk

• Structural – the wider social and economic system

Our work commenced in December 2021 and concluded as inflation grew to levels not seen since the early 1980s, with rapidly-increasing fuel, energy and food prices dominating the headlines. This comes at a time when wages and social security payments have generally not kept pace with inflation, leading to widespread acknowledgement of a significant rise in the cost of living.

Not surprisingly, many of the people we spoke to were focused on immediate financial challenges. These included high housing costs, insecure tenancies and jobs, low incomes and debt, and, for some retired people, the challenge of living on a fixed income. This report is structured around four key areas which emerged strongly in our research:

• Knowledge and awareness of risks to financial wellbeing

• Trust in information providers

• Stress, fear, stigma and embarrassment

• Ability to access and understand guidance and information

Understanding Scotland: Economy - August 2022

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.

The Understanding Scotland: economy survey shows that despite households’ best efforts to cut their outgoings, the support on offer from governments is widely seen as inadequate.

Eighty per cent of people have already cut down on leisure and/or non-essentials, and over a quarter of people are skipping or cutting down on meals to save money.

Since starting this regular survey last year, 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. This is essential data to help inform the actions of decision-makers.

Read more:

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

• Watch the event recording here.

Understanding Scotland: Economy - May 2022

A new survey produced in partnership between the David Hume Institute and the Diffley Partnership has revealed widespread anxiety about Scotland’s economic outlook. The survey measures people’s attitudes and behaviours to build a picture of the public’s perceptions of the economy.

Read more.

Briefing papers: Community Insights

Throughout 2019-20, the David Hume Institute’s Action Project brought people across Scotland together to discuss what was needed to progress towards a more prosperous, sustainable, inclusive and fair country. We spoke to people from all walks of life, including many from smaller communities in Scotland which retain a strong sense of identity but feel they are not heard or understood by government and policy-makers.

Building on the Action Project and a Scotland of Better Places, in autumn 2021, we embarked on a new project in partnership with the William Grant Foundation. The aim was to gain new insights from correlating open data about Scotland’s communities.

The research aimed to draw on a range of open datasets. However, it quickly became clear there was less open data available than expected. Consequently some information was collated manually from other sources, and we were not able to include information if it was not available Scotland-wide.  Read more about the research process on the project blog.

The key findings from the analysing the data:

• Positive relationships between the number of businesses per capita and the number of charities per capita in intermediate zones

• Positive relationships between the number of charities and community spaces per capita in intermediate zones

• Fewer charities in communities defined as more deprived by the Scottish Index of Multiple Deprivation (SIMD)

• Fewer businesses in communities defined as most deprived and least deprived by the SIMD

• More community spaces in communities defined as more deprived by the SIMD

By bringing together data from this project and the Action Project, we were able to illustrate how using qualitative and quantitative data alongside each other can produce a more detailed insight to an area. Using local knowledge allowed us to question some of the assumptions which underpin other correlated datasets such as the Scottish Index of Multiple Deprivation (SIMD) and the use of data more generally. 

A key conclusion was that only using quantitative data analysis could lead to misunderstanding and reinforce assumptions about places, and the people who live in them.

The three Community Insights briefings below demonstrate the potential benefits of combining different types of data to achieve a fuller picture of an area for decision making.

Using open data sources to investigate Scotland’s communities highlighted the slow progress being made towards an open data culture in Scotland, despite the proven benefits of doing so and the cost of not doing so.

We produced a briefing in partnership with Open Data Scotland to increase understanding of this critical area. DHI will continue our work in this field, aiming to inform and accelerate publication of open data in Scotland. 

Briefing paper: What is open data and why does it matter?

Open data that can be freely used, re-used, and redistributed, has the potential to drive innovative solutions to some of Scotland’s biggest challenges. An open data culture leads to improved government, economic growth, insight, and a more participatory democracy.  However, despite the benefits demonstrated by those leading the way in open data, Scotland is moving at a glacial pace and the gap with other countries is widening.

In 2015, the Scottish Government launched its Open Data Strategy which set out its vision that, by 2020, Scotland will value data and responsibly make use of it in order to improve public services and deliver wider societal and economic benefits for all. 

Since 2015, Scotland’s data has been ‘open by default’ but progress remains slow and over half of councils still make no open data provision. Although the Scottish Government permits the reuse of core website content, 30 of the 32 local councils do not. Our briefing paper indicates that over 95% of the data that could and should be open is still locked up, at an estimated annual cost to the Scottish economy of just over £2bn.

Globally, governments and political unions, including the EU, prioritised actions which in many cases overtake Scotland’s progress in the delivery of Open Government data plans. This includes creative use of open data from countries including Kenya, Romania, Mexico, Honduras, Paraguay and Uruguay. Urgent action is needed to ensure Scotland doesn’t miss out. 

Our briefing paper, published in partnership with Open Data Scotland by lead author Ian Watt, calls for a number of specific actions from national and local government, as well as large institutions such as the NHS and Scottish Universities, to address the issue including:

• Scottish Government adopting open data as a core part of their digital strategy with appropriate resource

• Creation of a national open data portal

• Development of common open data publishing standards for Scotland

• Working together with UK Government and commercial partners to accelerate superfast broadband provision as called for in DHI’s previously published paper on Levelling up high speed broadband

Research: Scotland’s top charity leaders: how diverse are they?

Scotland needs all its current top leaders to actively champion diversity and provide the opportunities to ensure faster progress. More equal societies have higher productivity, and high productivity allows more investment to create more equal societies.

The David Hume Institute measures the diversity of Scotland’s top leaders. For the first time in our analysis this includes the leaders of the top 300 charities by income. As major influencers and lobbyists who impact on all parts of our society, charity leaders have a key role in making sure that their leadership is representative of the communities they serve.

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 - but their leaders are not representative of the communities they serve.

66% Male

34% Female

2% Ethnic minorities

The research, which analyses the backgrounds of the chairs and chief executives of the 300 highest income charities in Scotland, finds that:

• Only 1 in 3 leaders (34%) are women and only 1 in 50 (2%) are black or Asian, compared to 10% female and 1% ethnic minorities in business and investment leaders.

• 1 in 25 (4%) hold a top leadership position in another one of the top 300 charities. 

The research showed the picture is not uniform across the top 300 charities which include universities, colleges, housing associations, fee-paying schools, health and social care charities. 

Charitable status comes with high levels of public trust and tax breaks, as well as the legal responsibility to deliver public benefit. But not all organisations are open about who is in control. It is difficult for the public to hold people to account if they don’t know who they are.

The research recommends an extension of the Scottish Charity Regulator’s (OSCR) powers to create a publicly searchable register of charity trustees to bring them in line with company directors. This change will increase transparency and enable monitoring on diversity. 

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. 

Briefing paper: Levelling up high speed broadband

Levelling up access to high speed broadband in Scotland is vital for rural communities currently left behind. Our new briefing paper looks at the roll-out so far and potential for faster progress on this vital infrastructure.

Internet connectivity has become essential for modern life and business is virtually impossible without it. It is critical for productivity and regional equality, and supports education as well as access to public services. 

Areas of rural Scotland yet to access high speed broadband are at risk of increasing outward migration accentuating the already ageing population.

The UK Government has stated its intention to deliver infrastructure that improves everyday life across the UK. The two recent financial commitments from the UK Gigabit scheme partnering with the Scottish Government R100 scheme to extend the reach are welcome.

This paper looks at the physical provision of infrastructure not issues related to access as a result of poverty.

The Scottish and UK Governments must complete faster rollout to all rural communities as part of the levelling up agenda and to support economic recovery from Covid-19.