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.

Pianodrome (2018). Photo: Andrew Downie. Edinburgh Festival Fringe Society.

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 

Sharing thumbnail image - Pianodrome (2018). Photo: Andrew Downie. Edinburgh Festival Fringe Society.

Press release: Scots continue to cut spending

22nd November 2022

Image credit: Photo by Andrew Seaman free from Unsplash 22.11.2022

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

Image credit: Photo by Michael Shannon free from Unsplash on 28.09.2022

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.

Image credit: Sharing thumbnail image photo by Aaron Burden free on Unsplash 26.09.2022

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.

Image credit: Photo by Louis Reed free from Unsplash 25.09.2022

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

Image credit: photo by Amie Johnson free on Unsplash 05.09.2022

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  

Image credit: Photo by Laurie Byrne free on Unsplash 02.09.2022

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

Image credit: photo by David Clarke free from Unsplash 30.08.2022

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

Image credit: Sharing thumbnail image photo by Chris Flexen free from Unsplash 19.08.2022

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.

Image credit: Sharing thumbnail image photo by FORTYTWO free from Unsplash 30.06.2022

Blog: The business of sleep

by Susan Murray, Director, David Hume Institute

25th May 2022

Image credit: Photo by Peopleimages from iStock 30.06.2022

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.

New research reveals widespread economic anxiety in Scotland

Press release from the David Hume Institute & Diffley Partnership

25th May 2022

Image credit: Photo by zimmytws from iStock 25.05.2022

A new survey produced in partnership between DHI and the Diffley Partnership has revealed widespread anxiety about Scotland’s economic outlook. Amid surging prices, the new Understanding Scotland - Economy survey finds:

• A quarter of people have lost sleep due to stress over personal finances, rising to 3 in 10 people in the most deprived areas.

• Adverse financial conditions have pushed many to forego basic necessities, with 3 in 5 going without heating, and more than a fifth skipping or cutting down on meals to save money. 

• Rising prices also appear to be pushing people into more vulnerable circumstances, with a third of people eating into their savings, and a quarter taking on debt. The equivalent figures are even higher in deprived areas, at 36% and 32% respectively.

While concern is widespread, rising prices have not hit everyone equally: 23% of people in the most deprived areas say their finances have become ‘much worse’, compared to 13% in the most affluent areas. Parents and families are also feeling the squeeze, with 43% of households with children having taken on debt or borrowed money. In addition, three quarters of those unable to work due to sickness or disability, and four fifths of the unemployed also report feeling worse off.

While the present picture is concerning, most people expect things to get worse before they get better. The poll finds that 84% of people believe that economic conditions in Scotland have deteriorated over the past 12 months, and 77% expect this downward trajectory to continue. A similar picture emerges with regards to people’s personal finances, which 62% judge to have worsened over the same time period, and 59% expect this to continue over the coming year.

Mark Diffley, founder and director of Diffley Partnership said:

 “These are some alarming results with no silver lining in sight. Our polling finds extensive and, for some, acute anxiety over a cost of living crisis that is hitting people across all parts of society. A majority of people in all forms of work say that their incomes simply aren’t going far enough, and the picture is even more alarming for those out of or unable to work.”

Susan Murray, Director of the David Hume Institute said:

 “These findings draw attention to the urgent need for action to help those at the sharpest end of surging prices. A quarter of people across the country are losing sleep because of worry about their finances and over half of people are cutting back spending. The potential long-term impacts on the nation's health and economy are huge.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,203 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 5th - 9th

   May 2022, and received 2,170 responses from the adult population, aged 16+, across

   Scotland. 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.

Blog: Prioritise the 3 R’s for over 50s - recruit, retain, and retrain

Blog by Tom Ockendon, Project Co-ordinator, David Hume Institute

18th May 2022

Mass exodus of over 50s contributing to UK labour and skills shortage

The past two years have turned many people’s lives upside down. The way we lived, worked and played were upended by the pandemic and only now are we starting to understand some of the longer term effects. Shortages in the labour market have prompted grand theories like ‘The Great Resignation’, later downgraded to ‘The Great Contemplation’, but now might be better referred to as ‘The Great Retirement’.

One of the most important economic statistics emerging post Covid is the number of over-50’s dropping out of the labour market. This is reversing a trend for older people staying in the workforce longer that dates back to 1971.

It’s hard to begrudge people choosing to work less as they approach older age, if this is a conscious choice. Many people of all ages have evaluated what really matters in life since covid. There is also some information we don’t yet fully know on the impact of long-term sickness and clinical vulnerability amongst older workers. However, this trend is significant and affects us all, and for some leaving the labour market might not be a choice. 

Older workers bring a wealth of knowledge and experience, and maintaining a diverse workforce is crucial for organisations that want to be innovative and resilient. 

Although the connection between older workers leaving the labour market and rising inflation might not be immediately apparent, it almost certainly exists. The Bank of England recently announced they expect inflation will top 10% by the end of the year and the UK economy contracted in March, boosting fears of a prolonged recession. 

Since the end of 2019, a third of inflation has been caused by domestic factors, including labour shortages. Between the end of 2019 and 2021, 522,000 left the labour market and those aged 50 or over contributed 94% to the overall change. As the furlough scheme came to an end in 2021, redundancies were highest for the age group 50-64 and many of those made redundant have not returned to employment.

Those from the professional occupations, particularly men educated to degree level or equivalent, were more likely to leave the workforce between the ages of 50 and 64 between 2019 and 2021. On the flip side, as the state pension age increased from 65 to 66, those found to be working for longer were disproportionately women, those with lower levels of education, and those living in the most deprived areas of the country. Potential diverging retirement ages for different groups within society bring issues of fairness and equality. This matters as it is long established that more equal economies have higher productivity.

What can be done to address this trend? We need to value what older workers can bring to the table, challenge assumptions about ageing, and invest in older workers with training and development to ensure we do not lose people that want to work. Some older workers might benefit from more targeted support to stay in the workplace.

We also need to better understand how pension policy could be making the problem worse. This includes whether the ability to access defined contribution pensions from the age of 55 has played a part in enabling older workers to step out of the labour market and whether some of them might need to rethink in the context of stock market volatility and high rates of inflation. On top of this, the loss of older staff as a result of taxation rates, often perceived as punitive, for those workers who have reached their lifetime pension savings allowance could be making the problem worse. This is especially a problem in the NHS as the BMA have highlighted.

Moving forward, as our population ages, we need to be thinking about 3 R’s for over 50s - retain, recruit, and retrain. Making the most of our highly skilled and experienced workforce for longer will be essential to ensure a prosperous, inclusive and fair Scotland.

Blog: Scotland’s declining population – a crisis looming?

Blog by Eric Hildrew, Communications Lead, David Hume Institute

28 April 2022

Image credit: Photo by George Clerk from iStock 28.04.2022

As demographers, you might think Esther Roughsedge and Michael Anderson deal firmly with hard facts, however as they were keen to stress at our recent event on Scotland’s changing populations, predicting future population size is a practice laced with uncertainty. In the 1930s, it was estimated that Scotland’s population by the first quarter of the 21st century could be as low as 1.5m (fewer than now live in the central belt alone), though thankfully methods of projection have also improved since then.

So the headline of recently released figures from National Records Scotland – that Scotland’s population will peak at 5.48m in 2028 before declining, making Scotland the only UK nation to forecast a downturn – should be treated with caution. If accurate, a 1.5% decline would put Scotland in the company of Italy, Slovenia, and Finland (all predicting similar reductions) but significantly more stable than either Iceland (predicting 30% growth in population) or Latvia (23% decline).

Graph courtesy of National Records Scotland.

What is more certain is that whether births, deaths, and migration combine to decrease or grow Scotland’s overall population, the age profile of the country is going to change dramatically. In just 23 years’ time, Scotland is expected to have almost a quarter less children and almost a third more over 65s. The proportion of working age people is also expected to decline, particularly in the 30-and-under age-range.  The Scottish Government established a population taskforce in 2019 to investigate barriers to having children in light of the country’s steadily declining birth rate, but current estimates don’t predict a significant change in this trend is on the horizon.

To complicate this picture, we don’t know exactly how these changes will be distributed across our towns, cities and rural areas, but we do know that population decline will affect some areas more than others, with west, south west Scotland and the islands likely to see steeper a drop than central and eastern areas. On a more granular level, specific council areas are likely to see significant decline while others nearby grow, creating markedly different pressures and life experiences for residents. 

Graph courtesy of National Records Scotland.

These changes have huge implications for local, national, and UK governments. From the size of Scotland’s tax base and the UK Government block grant, to education, housing and social care provision, matching resources with demand will be an ongoing challenge. Much like climate change and inequality, population change is an underlying structural issue which outlives any  election cycle or immediate crisis. 

Scotland’s slow but steady population growth this century has been fuelled not by babies but by migration, specifically (until Brexit) from the EU though also from the rest of the UK. Other countries have tried incentivising couples to have more children, but there is little evidence to suggest this approach works. Uncertainty about future circumstances such as home ownership and job security is unlikely to be assuaged by modest cash incentives or tax breaks. 

Instead, an effective adaptation strategy will need to reconsider outdated attitudes to ageing and older people, ensuring that they stay economically and physically active for longer as well as being offered better options to combat loneliness, isolation, and declining health. The delivery of effective social care must be seen as an investment, not a cost. 

Scotland has been shaped by outward and, more recently, by inward migration. As the trajectory of our population growth begins to diverge from that of other UK nations, so must our ability to implement a devolved migration policy which fits the needs of our labour market and which encourages movement of labour to those parts of Scotland most affected by population decline in the years to come.

Population change is inevitable, but its consequences are not.

DHI responds to Resource Spending Review Framework

Photo credit: George Clerk

The Scottish Government recently launched its first multi-year Resource Spending Review since 2011, outlining proposed spending plans on administration and the day-to-day delivery of services and programmes, such as school meals, concessionary bus passes and most public sector staff salaries.

In publishing the review framework, Scottish Government pledged to take an outcomes-focussed, evidence-based, and consultative approach to the review process, which it aims to complete by May 2022.

The David Hume Institute responded to questions on the spending priorities indicated by the review, the primary drivers of public spending, the public sector workforce, equality, and achieving value from public sector spending. 

About our submission
DHI welcomed the opportunity to contribute to the review and our response drew on a number of our recent research projects. Broadly, we call on the Scottish Government to:

• More clearly situate the Review Framework and its priorities within the overall context of Scotland’s existing National Performance Framework to focus on long term change

• Prioritise cross-government collaboration including focusing on tackling tensions between different policy areas in addressing the Scottish Government’s priorities 

• Ensure demographic change is factored into resource spending and planning, including better recognising the contribution older people make to society and the economy 

• Revise its modelling of the impact of rising inflation, which is now likely to exceed previous estimates

• Include climate change as a key driver of public spending, as well as being a resource spending priority

• Use public procurement and planning policy as a means of prioritising long term gains to maximise the impact of public spending

• Take action to radically shift to preventative spending, as suggested over 10 years ago by the Christie Commission

• Improve equality by reforming local taxation

DHI recognises that the challenging economic conditions mean tough choices will need to be made. There is a need to be transparent about priorities and trade-offs. A mature debate will ensure that political point scoring doesn’t increase polarisation in society and negatively impact on the economy. We welcome the pragmatic cross-party approach and look forward to further conversation.

Blog: Another strategy launch, will it make a difference?

Blog by Susan Murray, Director, David Hume Institute

2 March 2022

Image credit: Photo by Ross Sneddon, free on Unsplash on 02/03/2022

It seems to be the time of year for governments to announce strategies.  However, as our hearts and minds are drawn to events in Ukraine, it can be hard to focus on domestic policy.

Cabinet Secretary Kate Forbes acknowledged world events at the start of the launch of the National Strategy for Economic Transformation (NSET) yesterday.  After months of meetings and consultations, there is a “laser focus on delivery” of Scotland’s new economic strategy.

This is good news but what will be different this time from previous economic strategies?  The biggest difference I observed is the focus on the interconnectedness of different policies and action, along with the role of women.

More women were involved in the development of the strategy and it's clear the government is keen to power up The Double X economy.  What does this mean?  It's not one action but lots of small ones to address structural inequality such as investor bias.

Linked to NSET is another Scottish Government strategy the David Hume Institute has been looking at in partnership with Open Data Scotland.  Our briefing paper on Open Data, released later this week, highlights a 2015 strategy with good intentions but a subsequent lack of delivery.

Lack of open data is a barrier we keep coming up against in our research and, from our conversations, we know that others are too.  Open data is a driver of economic activity estimated to be worth over £2bn to the Scottish economy.  It is fast becoming as much about data as mindset and culture in a country. It is an opportunity but one Scotland is failing to grasp and risks being left behind on.

Open data should be viewed as part of having a global outlook.  It is part of the UN Sustainable Development Goals which are the central operating principle underlying the National Performance Framework.

The UNSDGs are now a common operating language across the world for all sorts of organisations and the good news is the Welsh Assembly and the UK Government are signed up to them too. However, the UK Government Levelling Up strategy only had one mention of them - which seems like a missed opportunity for collaboration on shared goals across the UK.

A recent Westminster environmental audit committee evidence session looking at aligning the UK’s economic goals with environmental sustainability feels very relevant.  It is well worth watching both evidence sessions, including the hard hitting evidence from our partners, the Institute and Faculty of Actuaries.

The content of the evidence session was not new - what feels fresh is that the discussion is at the heart of Westminster at a time when business as usual is not an option. Whether it's the Levelling Up Strategy or National Strategy for Economic Transformation nothing works in isolation as we live in a deeply interconnected world.

So while the many policy brains wade through the reams of paper making up these new strategies, will they make a difference?

The answer to that lies with people – all of us make choices every day that impact on others both at work and in our personal lives.

What’s clear from reading Poles Apart by Ali Goldsworthy, is that everyone reading the strategies is doing so with a lens looking for confirmation of what they already believe. How many of us will change our actions and behaviours at a result of a new strategy - perhaps only time will tell?

Blog: The future is curious

Blog by Eric Hildrew, David Hume Institute

23 February 2022

The past two years have brought changes to the David Hume Institute’s work in ways which could never have been predicted when Susan Murray joined as Director in 2019. Through the necessary shift away from in-person events and networking, we’ve significantly grown our online audience, and while the greater geographic reach made possible by the web has been a rewarding trend, we do miss seeing new and familiar faces in a (real) room together. As the light at the end of the Covid tunnel finally starts to shine a little brighter, we decided it was time to find out a bit more about our current audience and engage in a conversation about where the DHI should be heading next.

We approached social researchers  The Lines Between to undertake research with DHI audiences and stakeholders to find out more about who they are, how they think we’re doing, and where we might be best focusing our resources as Scotland emerges from the pandemic. Through a combination of survey responses and anonymised in-depth interviews, The Lines Between explored a range of questions relating to our work and brand.

Given our historical association with Edinburgh we weren’t surprised to find the majority of our audience is based in the city, however the ‘pandemic effect’ has been real – over half of those who started interacting with us in the last year live outside Edinburgh and the surrounding area. Overall, 10% of the DHI audience lives outside Scotland, spread across the UK from Glamorgan and Oxford, to York and London.

DHI engages with a wide spectrum of professionals, spanning the public, private and charity sectors. Many of our stakeholders are in senior positions, although we have a growing audience of younger professionals.

Positive perceptions of DHI include seeing us as dynamic, trusted, independent, and thoughtful, though a minority of our stakeholders feel we’re old-fashioned and stuffy (interestingly, these responses were from people who have not engaged with us recently). Open access events, original research and briefing papers were identified by our audience as their most valued elements of our work.

Some of our stakeholders feel we should be more actively political and provocative, while others feel we should direct our efforts towards improving the diversity and inclusion of our work and reach, particularly outwith Edinburgh and by engaging with younger professionals. In contrast, other stakeholders specifically value our impartiality and role as a trusted convener of divergent views. A minority of those surveyed felt the Institute should engage in a more public discussion about David Hume’s legacy and a small number felt our name should change as a result. 

Asking colleagues and constituents what they really think of you can be a daunting process but it’s a vital learning journey for any organisation which wants to inform strategy with meaningful data. We’ve been pleased and motivated to learn that the majority of our stakeholders value our work and respect the values we hold dear. 

There was clear feedback to do more to define our areas of strategic interest and our impact. We have to communicate better with our various audiences and we need to make a stronger case for the funding of our work to ensure our future sustainability. We are committed to an open conversation about the legacy of David Hume, recognising that views and perceptions may change over time and that ignoring contemporary concerns runs contrary to our values. The research indicates a clear direction of travel for DHI as a bridge and facilitator within the realm of economic and social policy, connecting a diverse range of people with evidence-led insight.

The DHI team and trustees have found this consultation exercise hugely informative. We are now committed to acting on the feedback we’ve received and are embarking on a strategic planning process which will shape our work in the months and years ahead as we all adapt to the post-pandemic landscape. We’re grateful for your support and constructive feedback, and look forward to you joining us on the exciting journey ahead.

DHI teams up with the Institute and Faculty of Actuaries

Press release from the David Hume Institute

15th February 2022

Image credit: Photo taken by Ross Sneddon free on Unsplash 15.02.2022

The David Hume Institute and the Institute and Faculty of Actuaries are teaming up to learn more about how people in Scotland are managing financial risks.

We are pleased to announce a new partnership with the Institute and Faculty of Actuaries (IFoA) exploring the ways in which people think about and manage financial risks and the practical measures that might help them.

The IFoA has been campaigning since early 2020 on what it calls ‘the Great Risk Transfer’ which is the trend to transfer risks from institutions – such as employers, the state and financial services providers – to individuals who are often not well equipped to handle those risks.

Drawing on examples already explored with IFoA stakeholders, including changes in pension provision and access to affordable insurance, we are working with groups and individuals to better understand their perceptions of the risks they face. We also want to find out what helps people when they make decisions and take practical steps to mitigate risks.

Nicholas Chadha from the IFoA Scottish Board said:

 “We think there are opportunities to ease the burden for consumers, who are not often well-equipped to manage complex risks by shifting prime responsibility for certain risks back towards institutions. New products and services are also necessary to help consumers to make informed decisions which lead to better outcomes for themselves and for wider society. 

 Our recommendations focus specifically on pensions and insurance, in which actuaries’ skills and experience enable them to contribute to solutions. They include the development of Collective Defined Contribution schemes, investment pathways for drawing down pension pots, and defining a minimum level of insurance protection needed by all.

 Working in partnership with the David Hume Institute will help us further develop our thinking and our policy recommendations in this area.”

 Susan Murray, Director of the David Hume Institute said:

 “The Great Risk Transfer reflected much of what we heard from individuals during our previous research on The Action Project. We heard from households that the ability to plan for the future is severely compromised by the pressures of everyday financial challenges. 

 This partnership allows us to explore the implications of that for the IFoA’s policy recommendations as well as enabling us to reach out to a diverse range of people. Our work will focus on finding out what people consider to be the most important areas of financial risk for them, the ways in which they have addressed or plan to address them, and what barriers they might face.”

Insights from the research will be published later this year.

Charity is everybody's business - do we know enough about the leaders?

Press release from the David Hume Institute

7th February 2022

Image credit: Photo by Ian Schneider free from Unsplash 07.02.2022.

New research shows a lack of diversity in Scotland’s top charity leaders.

Scotland’s leading independent think tank, the David Hume Institute, today publishes new research finding a lack of diversity in Scotland’s highest income charities.

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.

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% people from 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. 

Researchers also found it harder to find information about some organisations and their leaders than for other sectors in Scotland. There was less diversity and transparency for religious organisations and school leaders.

Susan Murray, director of the David Hume Institute, says:

“In a sector that is often associated with bake sales rather than billions in income, many will be surprised at the scale and the range of charities analysed in this research. 

“We thought we would find it easier to find out about leaders in this sector and that was not the case across the board.  

“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 hard for the public to hold people to account if they don’t know who they are.” 

Unlike businesses, there is no searchable public register of who is making the decisions and it is difficult to find out when an individual is connected to multiple charities. Before the creation of Scottish Charitable Incorporated Organisations) many more charities were limited companies and were required to declare their directors.

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. 

The research found one significant difference to the recent analysis of business leaders; there was a wider range of experience in the two key leadership positions, often with the Chair and CEO having professional backgrounds. In both roles, the public sector was the most common background at 18% and 19% respectively:

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

“Scotland needs all its current top leaders to actively champion diversity and provide the opportunities to ensure faster progress. 

“Increasing diversity of thought is in everyone’s interests as it helps avoid the pitfalls of group think, and improves risk management and productivity. More equal societies have higher productivity, and high productivity allows more investment to create more equal societies. 

“Charity leaders are no different and if anything, have more responsibility to champion diversity given their legal duty to deliver public benefit.”