As highlighted in a recent Resolution Foundation report on ‘Pandemic Pressures’, the past couple of years have already seen basic living costs surge for low-income families. With the recent fuel shortages, hike in energy bills, tax increases, rising food costs, the end of furlough and cuts to Universal Credit, the winter looks set to continue building pressure on those already in financially vulnerable situations as they bear the brunt of the ongoing cost of living crisis.
In order to help understand where these economic tremors will have the most impact, we have pulled together a selection of indicators that provide small-area data on these topics, allowing an insight into the areas where rising costs pose the greatest threat to people already in need.
All of the datasets below are available in Local Insight for any area you care about – whether that is wards, parishes or towns. Register for a demo to find out more.
The below indicators will provide evidence of areas with high proportions of people living in particularly financially vulnerable situations – working-age households on low-incomes claiming benefits, pensioners living on low-incomes, households with high levels of personal and mortgage debt and levels of income deprivation.
These households are far more likely to feel the effects of the rising cost of living crisis and the immediate threat of rising energy bills and food and fuel shortages.
| Indicator | Description | Source and date |
|---|---|---|
| Financial vulnerability index rank | The Financial vulnerability Index is compiled by combining the following indicators: a) modelled proportion of people in the postcode who do not have a standard or better bank account b) modelled proportion of people in the postcode who view themselves as drawing on savings or running into debt c) modelled proportion of people in the postcode who have dependent children at home d) modelled proportion of people in the postcode with an equivalised household income of under £20,000 per year e)modelled proportion of people in the postcode who have an unsecured loan. f) modelled proportion of people in the postcode who have no savings or investments. Data is presented as an average LSOA rank where 1 is least vulnerable. | CACI via British Red Cross (2020) |
| Universal Credit claimants | Universal Credit provides a single payment based upon the circumstances of the household to provide support for housing costs, children and childcare costs and additions for disabled people and carers. The following benefits will be abolished as Universal Credit rolls out: Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit and Housing Benefit. Universal Credit is available to people who are in work and on a low income, as well as to those who are out-of-work. | Department for Work and Pensions (DWP) (Sept-2021) |
| Working age Benefit claimants (Benefit combinations) Working age Benefit claimants (aged 16-24) People of pensionable age claiming DWP Benefits (Benefit Combinations) | These indicators show the proportion of people aged 16-24, of working-age and pensionable age receiving DWP benefits. DWP Benefits are benefits payable to all people who need additional financial support due to low income, worklessness, poor health, caring responsibilities, bereavement or disability. Working age benefits include the following: Universal Credit. Bereavement Benefit, Carers Allowance, Incapacity Benefit/Severe Disablement Allowance, Income Support, Jobseekers Allowance, Pension Credit and Widows Benefit. | Department for Work and Pensions (DWP) (Sept-2021) |
| IoD 2019 Income Deprivation Affecting Children Index (IDACI) Score (rate) IoD 2019 Income Deprivation Affecting Older People (IDAOPI) Score (rate) | The Income Deprivation Affecting Children Index comprises children aged 0 to 15 living in income deprived families and the Income Deprivation Affecting Older People Index captures deprivation affecting older people (adults aged 60). Income deprivation here is defined as families that either receive Income Support or income-based Jobseekers Allowance or income-based Employment and Support Allowance or Pension Credit (Guarantee) or Universal Credit (in the 'Searching for work', 'No work requirements', 'Planning for work', 'Working with requirements' and 'Preparing for work' conditionality groups) or families not in receipt of these benefits but in receipt of Working Tax Credit or Child Tax Credit with an equivalised income (excluding housing benefit) below 60 percent of the national median before housing costs. | Ministry of Housing Communities and Local Government (MHCLG) (2019) |
| IoD 2019 Income Score (rate) | The Indices of Deprivation (IoD) 2019 Income Deprivation Domain measures the proportion of the population in an area experiencing deprivation relating to low income. The definition of low income used includes both those people that are out-of-work and those that are in work but who have low earnings (and who satisfy the respective means tests). | Ministry of Housing Communities and Local Government (MHCLG) (2019) |
| Mortgage debt per household Personal debt (unsecured loans) per person aged 18+ | The total amount of borrowing outstanding on customer accounts for residential mortgages and the total amount of borrowing outstanding on customer accounts for unsecured personal loans. | UK Finance (June-2020) |
The below indicators provide evidence of areas with high proportions of households living on the edge regarding the cost of heating their homes, paying for food or other necessities and accessing public services (where greater distances and travel times mean more reliance on the cost of running cars or paying for public transport).
When combined with the above measures of financial vulnerability, these households are at increased risk of falling further behind as the cost of living continues to rise.
All of the indicators listed above are available on Local Insight at small area level, enabling you to explore financial vulnerability and the potential impact of the cost of living crisis in your local areas. The datasets listed below are available at Local Authority level and can be used as additional resources for further insight into this topic, each providing an indication of levels of financial vulnerability or insecurity around rising costs.
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