WESTERN ISLES SOCIO-ECONOMIC OVERVIEW
June 2008

Department for Sustainable Communities

POPULATION

The most recent mid-year population estimates (2006) for the Western Isles (also known as the Outer Hebrides), gives a population of 26,350. This shows a decrease of 0.1% (-20 persons) since the mid-2005 estimates. This decrease can be attributed to the negative ‘natural change’ (-130) being greater than positive ‘net civilian migration’ (+110). Deaths (375) continued to exceed births (245) over the period; although the number of births was up by 11% on the previous year. The ‘average age’ in the islands was estimated to be 41 years for males (Scottish average 38 yrs) and 44 years for females (Scottish average 41 yrs) in June 2006

The decline in population over the last ten years (between 1996 and 2006) in the Western Isles was the highest of any Local Authority in Scotland at -7.9%. Over the same period, Shetland saw a fall of -4.3%, Orkney an increase of 0.2%, while Scotland overall saw an increase of 0.5%. Graph 1 below plots the estimated population of the Western Isles over the last ten years (1996-2006).

Figure 1. The ‘estimated’ population of the Western Isles (1996-2006)

At the last census in 2001, the resident population of the Western Isles was recorded to be 26,502. This represents a decline of around 10% (3,098 people) since 1991. Looking back further over last century (1901-2001), the population of the Western Isles has declined by 43% (46,000 in 1901), as figure 2 illustrates.

Figure 2. Western Isles Population recorded by the Census (1901-2001)

As figure 3 illustrates, from 1861 to 1961, the Western Isles experienced the smallest population decline (%) of any of the local authority ‘island dwellers’ in Scotland (at -10%). The largest percentage decline during this 100 year period was Highland, with a -62% decline in its island population. However, from 1961-2001, the Western Isles experienced the largest percentage decline of any local authority ‘with island dwellers’ at -19%. The second largest decline during this period was Argyll and Bute at -14%. During the same period, there were increases of between a fifth and a quarter in the island populations of Highland, North Ayrshire and Shetland.

Figure 3: Island Dwellers by Local Authority Area 1861-2001

Demographically, the population of the Western Isles is ageing. As figure 4 illustrates, the greatest decline by age group has occurred in the 15-29 year category (from representing 17% of the population in 1995 to 14% in 2006). The greatest increase by age group has occurred in the 45-64 category (from representing 24% of the population in 1995 to 28% in 2006).

Figure 4: Age structure of the Western Isles, 1996 and 2006

VITAL EVENTS

In 2000-01 deaths exceeded births by 130, while net migration was –219, resulting in a total loss of 349 people.

In 2001-02 natural change was the major factor, with 166 more deaths than births and net migration of -84 so the total loss was 250 persons.

By 2002-03 the islands were experiencing positive net migration, with a total estimated gain of +56; although deaths continued to exceed births by 156 so the population still fell by 100 people.

From 2003-2004, there was an overall increase of population despite the fact that deaths (400) continued to exceed births (245) during this period. This increase can be attributed to positive net civilian migration (+315), thus the population is estimated to have increased by 160 persons (0.6% increase on the previous year).

From 2004-2005, there was an estimated population increase for the second year running. Again, this increase can be attributed to positive net civilian migration (+245). Deaths (355) continued to exceed births (220) over the period, resulting in a ‘natural change’ of -135 persons.

From 2005-2006, there was a marginal decline of 20 persons to 26,350 (-0.1%). This decline can be attributed to an excess of negative natural change (-130) in comparison to positive net civilian migration (+110).

POPULATION PROJECTIONS

Using the 2006 population estimate (26,350) as a base and taking into account key assumptions (mortality, fertility and migration); the total population of the Western Isles is projected to fall to 24,892 by 2031. This is a projected decline of 5.5% or 1,458 people between 2006 and 2031. The equivalent figure for Scotland over the same time period is a decline of 5%.

Projections suggest an increased proportion of the population will be elderly with a corresponding reduction in younger age groups, as they are based on the continuation of current trends, as figure 5 illustrates.

Between 2006 and 2031, the Western Isles is projected to see a large decline in the key age groups of 0-15 years (-25%) and those of working age, 16-64 yrs (-11%). By this date, 33% of the population is expected to be 65 years and over.

The Western Isles is projected to see a large percentage decline in annual births between 2006 and 2031 at -38%. Births are set to fall from 250 in 2006/07 to 154 in 2030/31.  In Scotland the percentage decline in annual births is 11%.

Figure 5: Projected Change by Age Group for the Western Isles, 2006-2031

MIGRATION

In February 2007, the Outer Hebrides Migration Study was launched. This study was commissioned to carry out in-depth research into the issues surrounding in and out migration to the Outer Hebrides.

Although past trends are well documented little was understood about the true dynamics of ‘migration’ and the social and economic impacts of past and future change. The report provides a comprehensive analysis of past and current trends and their causes and gives an in depth look at the motivations and experiences of key migration groups. This report provides policy makers with clear and robust findings on the implications of population change and recommends potential policies and practices that could help address out-migration and encourage in-migration.

An inter-agency strategy group has been formed to progress the recommendations and they are working with the Outer Hebrides Community Planning Partners to deliver an action plan on migration.

GDP

The most current estimate of Gross Domestic Product (GDP) specific to the Western Isles is that produced in the 2003 Regional Accounts.  This study estimated GRDP per head of population to be 66% of the UK average and 78% of the average EU25 GDP per capita. In comparison, the Highlands and Islands region is 69% and Scotland is 96% of the UK average.  

The 2003 Regional Accounts estimates that the overall Western Isles economy has experienced 2.5% growth in real terms since the 1997 study, a rate significantly lower than that experienced in the UK economy as a whole. Total Gross Regional Domestic Product (GRDP) of the Western Isles in 2003 was £263.02m or £10,078 per capita. 

Tourism has grown in significance for the regional economy; contributing 15.6% to GRDP in 2006 as compared to 14.3% in 1997 and only 4% in 1988/89.

The five most important sectors in terms of generating value added (i.e. earnings in terms of wages, profits, etc.) in 2003 were Distribution (12.5% of total Western Isles GRDP), Other Public Services (10.6%), Education, Health and Other Private Services. In aggregate these five sectors contributed 47.3% to the total Western Isles value added.  This is less than the top five sectors accounted for in 1997 (56.5%) suggesting the economy has become slightly more diverse in structure.

Although down in both absolute and percentage terms since the 1997 Regional Accounts Study, the fish farming sector contributed most to the overall trade balance in 2003; exporting goods valued at £30.7m and importing only 5.6m of imports. Fish processing follows with exports of £19.6m and imports at £1.3m, i.e. positive trade balance contribution of £18.3m. Sea fishing saw the largest percentage drop in real terms in the value of exports between 1997 and 2003. 

In 2003, the Western Isles had an external trade deficit of £163.4m.

HOUSEHOLDS AND INCOME

The 2007 estimate for the number of ‘households’ in the Western Isles was 11,706; an increase of 109 (0.9%) since 2006. Following the national trend, despite this increase in number of households, the average household size is decreasing, with fewer large ‘family’ households and more people living alone.

Using the 2006 based household projections we can see that there is estimated to be a 14% increase in the number of households in the Western Isles from 11,600 in 2006 to 13,230 in 2031. This represents a significant increase on previous Household Projections (2004 based). The projected increase can largely be attributed to more people living alone or in smaller households; the average household size in the Western Isles is projected to decrease from 2.25 in 2006 to 1.85 in 2031; sixth lowest out of Scotland’s 32 local authorities.

Changes in household type between 2006 and 2031 are projected to occur as follows:

• 43% increase in ‘one adult’ households;
• 20% increase in ‘two or more adult’ households;
• 26% increase in ‘one adult plus one or more children’ households,
• a 53% decrease in households containing ‘two or more adults plus one or more children’

Home ownership in the Western Isles was 72% at the time of the 2001 census; this is significantly higher than the national figure of 63%. The percentage of the population renting from the Comhairle (16%) or other social landlords (1%) is lower, whilst those renting from the private sector (7%) or living rent free (4%) is the same as the national average. The Western Isles also has the highest percentage of ‘vacant / 2^nd homes’ of any Scottish local authority at 14% (Scotland 4.5%).

Of the 32 Scottish Local Authorities areas, the Western Isles is estimated to have; the highest % of detached dwellings at 64% (national average 20%): the lowest % of occupied dwellings at 87% (national average 96%); the highest % of vacant dwellings at 7.1% (national average 2.8%); the second highest % of holiday homes at 6.2% of all dwellings (Argyll and Bute highest at 8.2%; national average 1.4%); and the lowest % of dwellings with occupied exemptions at 0.6% (national average 2.5%).

Household car / van ownership is slightly higher than the national average. In the Western Isles 30% of households have no vehicles (34% in Scotland) but the majority of households have one (46%) or two (20%) vehicles.

A ‘Wealth of the Nation 2003 Report’ reports the Western Isles average household income at £23,400 for 2003. This represents a 5% increase from 2001, however, the Western Isles is ranked 3rd equal lowest out of 121 UK Postcode Areas, only Dumfries and Truro are lower.

COST OF LIVING

HIE have produced a number of Rural Scotland Pricing Surveys, the latest being for 2003.  As part of this survey the prices of various goods and services at locations throughout the Western Isles are included.  The overall price of the selected goods and services considered by the survey in 2003 was 3.7% higher in the Western Isles than the survey average and this was the second highest in Scotland (Shetland was highest). The cost of food is on average 15.2% higher and fuel 13% higher than in mainland urban areas.

The household sector is mainly responsible for the economy’s large trade deficit. Western Isles households spent an estimated £100.1m on imported goods in 2003, either through direct purchases (through mail order etc or while on trips away from the region) or on goods imported into the regions and then sold on by Western Isles wholesalers and retailers. Household expenditure on imports has increased by nearly 21% in real terms since 1997.

The 2003 Regional Accounts found that in terms of expenditure, Western Isles Households spend more on necessities, in particular: food and drink; fuel and light, than their Scottish or UK counterparts.

The Scottish Index of Multiple Deprivation 2006, shows that in 2005 the Western Isles had the highest % (14.3) of total population who are income deprived in comparison to Shetland (8.8), Orkney (7.8), Highland (11.3) and Scotland (13.9) (Source - Scottish Neighbourhood Statistics).

The Western Isles has a relatively high incidence of ‘Fuel Poverty’ in comparison to other areas of Scotland. Poorer climate conditions, a high proportion of Below Tolerable Standard housing (in excess of 10%) and the high use of solid fuel fires contribute to the high cost of heating homes throughout the islands. The results of the Scottish House Conditions Survey 2002 released in April 2004, state that the Western Isles has the highest level of Fuel Poverty across all of Scotland, with 34% of households spending more than 10% of their household income on fuel costs (Scottish average of 14%).

LABOUR MARKET

In May 2008, the unemployment rate in the Western Isles was 2.1%, the lowest since records began. As figure 6 illustrates, this has fallen from a high of 9.3 in 1996 to a low of 2.1% in May 2008. This is in comparison to 2.3% in Scotland. Although better than the national average, the trend for the Western Isles is more erratic. This is consistent with an economy where there is a higher than average prevalence of seasonal and part-time work.

Source: NOMIS claimant count with rates and proportions
WA = Working Age Population

Figure 6: Claimant Rate (Western Isles, Scotland, Great Britain) 1996-2007

In 2006, 58.6 % of the population of the Western Isles were of working age (males aged 16-64 and females aged 16 - 59). This is a lower than average rate compared to key comparable areas (60.8% for Highland, 60.1 % for Orkney and 61.2% for Shetland) and is due to the islands skewed demographic structure; which has a high percentage of it population in ‘older’ age groups and a lower percentage in ‘younger’ ones.

The average gross weekly pay for full-time workers in the Western Isles is much lower than key comparable areas and was estimated to be £402.50 in 2007. In comparison: Scotland was £431.40; and the UK £449.60.

The activity of the public sector is significant to the Western Isles economy. Based on the 2003 Regional Accounts, 30% of total employment is in the public sector (admin; defence; education; health; or social work); the national average is 27%.

Primary sectors are also more important in terms of employment with 8% of those employed in 2003 working in agriculture and fishing.  The national rate is 2%.
Western Isles households derived a higher proportion of their total income from self employment (8%) than in Scotland as a whole (5%) in 2003; however analysis suggests that the dependence on self employment income has declined since 1997. 

NOTES

1) The UK Census of Population was held on 29 April 2001. All levels of data are now available from national figures to output area statistics (http://www.scrol.gov.uk/scrol/common/home.jsp). Comparison with the 1991 Census will be possible for much of the data. However, the Census is designed as a ‘snapshot in time’, some questions have changed, some are new and the geographies used to collect the data are not all compatible with 1991 boundaries so care must be taken.

2)   Projections are trend based and therefore envisage conditions in the future based on what currently occurs. Issues such as migration and natural change must be factored in and the GROS acknowledge there are limits. As a rule, the smaller the population and the further forward from the base year, the more unreliable the projection, particularly due to the effect of migration. This is particularly relevant for the Western Isles. Population estimates should be used with caution due to their acknowledged unreliability in application to smaller populations.

SOURCES

General Register Office for Scotland: The Census 2001 Population Estimates 2001-2005
General Register Office for Scotland: 2006- Based Population Projections
General Register Office for Scotland: 2007 Household Estimates

General Register Office for Scotland: 2006 - Based Household Projections
Scottish Neighbourhood Statistics Scottish Index of Multiple Deprivation 2006

General Register Office for Scotland: 2004 - Based Household Projections
CACI: Wealth of the Nation 2003 Report
New Earnings Survey (2002)
Highland and Islands Enterprise Rural Scotland Price Survey 2001 (2003)
NOMIS (2007)
Modeling the Western Isles Economy: Regional Accounts 1997
Modeling the Western Isles Economy: Regional Accounts 2003
Annual Survey of Hours and Earnings (2004)