Can't afford to leave, can't afford to stay (18-Jul-2007)

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Can't afford to leave, can't afford to stay

18-Jul-2007

"I can’t afford to leave, can’t afford to stay." That’s the Catch 22 situation described by a Lochinver participant in research on rural Scotland’s financial capability and inclusion.

This statement gives a new report from the Scottish Council Foundation its title. Can’t afford to leave, can’t afford to leave: Financial inclusion and capability in Scotland aims to address the fact that knowledge of this subject in the UK comes mainly from low-income urban areas.

Financial capability involves the knowledge and understanding, skills, confidence and attitudes to make appropriate financial decisions. Financial inclusion is most relevant to those who experience, or at risk of, financial exclusion, for example unmanageable debt or people who are unbanked.

The in-depth study looked at three communities, Lochinver in North West Sutherland, Port Ellen on the isle of Islay and Dalmellington in East Ayrshire, and has produced some interesting findings.

Some actions not distinctly rural

Many of the actions proposed in the report are not distinctly rural. Protecting banking services, free-to-use cash machines and the need for financial services to be confidential also affect those living in towns and cities.

However, there were factors in rural areas which led to more distinct challenges and actions. These included creating a road tariff system offering discounted tax and/or petrol costs for car users and addressing the combined effects of limited employment and housing opportunities in many rural areas.

Rural issues

Image of blueprints for house The higher cost of living in a rural area was highlighted. Food, fuel and heating less energy efficient homes in a harsher climate all cost more. It was felt that the welfare system does not take into account these additional costs.

It was felt that the nature of the rural labour market affected students who stayed or returned home, making it harder for them to repay student debt. Short term contracts and insecure earnings also put some people off investing in pensions, leaving them at risk of poverty in older age.

In Lochinver and Port Ellen, participants felt their local earning power was becoming more detached from increasing house prices. Housing issues such as lack of land available for self-build, lack of social rented accommodation and a high proportion of second homes were thought to drive young people away.

Releasing more land for slef-build, flexible mortgage products and policies on council tax and rent that take into account the income fluctuation were seen as essential to the viability of communities.

UK's finances hit the headlines

image of a hand holding pound notes The financial situation of the nation has been making the headlines recently. A new report from the Joseph Rowntree Foundation shows that the gap between rich and poor in the UK is as wide as it has been for 40 years.

And the Commission for Rural Communities’ annual State of the Countryside report, which looks at rural England, shows that those in English rural areas spend £60 more per week than their town and city counterparts.

The State of the Countryside 2007 also sees the retention of young people in rural communities as vital. Launching the report, Dr Stuart Burgess, Chairman if the Commission for Rural Communities and the Government’s Rural Advocate said, "The loss of young people is a real threat to the future diversity and sustainability of rural communities. Much more needs to be done to retain young people and provide them with opportunities and incentives to return to their roots."

What do you think?

You can download the Can't afford to leave, can't afford to stay report from the Rural Gateway documents library. You will also find the summary of findings there.

What do you think of the report and its proposed actions? What's the situation in your area? You can let us know by adding a comment to this article. The Scottish Council Foundation are keen to hear feedback about their report and we will forward all comments made on to them.

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