Evidence library

This report draws together analysis from a wide range of sources to provide an overview of emerging evidence on the cost of living crisis. It includes evidence from Scotland and the UK as well as from other European countries. The report has been produced by a cross-government group of analysts.

The report includes a section on 'The Impact on the Delivery of Public and Third Sector Services' and draws on data from the Scottish Third Sector Tracker.

• The cost of living crisis presents serious economic and social challenges for Scotland and the UK. We are currently witnessing rates of inflation not seen in the last forty years. Economic conditions have rapidly deteriorated since the start of 2022. UK inflation has risen sharply from 0.5% in February 2021 to its current rate of 10.1% in September. It is projected to peak at just under 11% in October. Wages have risen at a much slower pace than inflation putting considerable pressure on household incomes. Despite the UK Government's Energy Price Guarantee, energy prices have more than doubled over the last year and Scottish Government modelling[2] estimates that there are around 860,000 (35%) fuel-poor households in Scotland, of which 600,000 (24%) will be in extreme fuel poverty.
• The cost of living crisis will affect particular households, services and sectors of the economy very differently. Low income households with particular characteristics are likely to fare worse. This includes larger families; households in receipt of means-tested benefits (and those narrowly ineligible for means-tested benefits); households who rent their homes; disabled households; households with an unpaid carer; gypsy/travellers; rural and island households; single person households and single parent households. Certain groups are over-represented in these households, most notably minority ethnic groups and women.
• The UK Government response is insufficient to fully address the harms caused by the cost of living crisis.
• Further concerted and targeted action will be required to support those people and sectors most negatively affected by the cost of living crisis.
• Third sector organisations, are also facing a deeply challenging combination of increasing needs among the communities they work with, rapidly rising operating costs and reductions in fundraising income. In Wave 4 of the Scottish Third Sector Tracker, 64% of organisations reported that demand had increased, with 23% saying it had significantly increased. 71% of organisations said they were concerned about worsening that mental health among their service users, while 79% of organisations highlighted increasing financial needs. The Poverty and Inequality Commission have also reported increased demand for third sector organisations. After conducting nine visits to community organisations from June-August, with the support of their Experts by Experience Panel, they reported that most organisations described increased demand as a result of both the cost of living and the continued effects of Covid-19. Some described a change in profile of those seeking help, with more people experiencing in-work poverty and whose income is marginally above benefit thresholds. Organisations cited food costs, energy costs, debt, and transport costs as specific issues.
• Staffing issues: The Scottish Third Sector Tracker highlights how ongoing challenges relating to workforce and volunteering are being intensified by the cost crisis. Overall, 44% of organisations said that their biggest current challenge related to staffing or volunteering concerns, while 72% of organisations had at least one concern relating to staffing or volunteering in their top three challenges