Financial vulnerability and the rising cost of living

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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.

Indicators of financially vulnerability

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)

Indicators of the cost of living

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.

Indicator name	Description	Source
Households in Fuel Poverty	Shows an estimate of the number of households in Fuel Poverty. The definition of fuel poverty is based on the Low Income High Costs framework, where a household is in fuel poverty if a) their required fuel costs are above average (the national median level), and b) were they to spend that amount they would be left with an income below the official poverty line. The indicator is estimated using regional data from the English Housing Survey and modelling down to local areas based on characteristics of the local area.	Department for Business, Energy and Industrial Strategy (2019)
Current average energy efficiency of domestic buildings	Shows the average energy efficiency for domestic buildings. The data is derived from postcode level Energy Performance Certificates (EPC) for domestic buildings occurring between January 2016 and September 2020. Data has been calculated by averaging (mean) the median energy efficiencies of Output Areas. Only homes that have been built, bought, sold or retrofitted since 2008 have an EPC, which represents about 50 to 60 percent of homes within a local authority area.	Ministry of Housing Communities and Local Government (MHCLG) (2016 - 2020)
Food Vulnerability Index Score	Shows the food vulnerability index score, where higher is more vulnerable. Food insecurity has been identified as a massive immediate vulnerability. Studies of food insecurity in the UK (e.g. Smith et al. 2018) model this using a combination of benefits claims and household-level insecurity (e.g. living alone as an older person or person with low income, especially with dependent children). For this bespoke Food Vulnerability Index, Redcross have combined these indicators with others that are relevant to food insecurity during Covid-19.	British Red Cross (June 2020)
Hardship Fund Vulnerability Index Score	This analysis aimed to target the most economically vulnerable Local Authorities, according to eligibility criteria developed for the British Red Cross Hardship Fund.	British Red Cross (June 2020)
Access to Healthy Assets and Hazards (AHAH) dataset	Shows accessibility to key services in kilometres to: gambling outlets, fast food outlets, pubs/bars/nightclubs, off licenses, tobacconists, GP surgeries, A&E hospitals, dentists, pharmacies and leisure centres. These indicators are an input measure for the Access to Healthy Assets and Hazards (AHAH) index as part of the Health Services domain. The AHAH index is a multi-dimensional index developed by the CDRC for Great Britain measuring how 'healthy' neighbourhoods are. It combines indicators under four different domains of accessibility: retail environment, health services, physical environment and air quality.	CDRC (2017)
Travel time to nearest employment centre by public transport/walk Travel time to nearest Further Education Institution by public transport/walk Travel time to nearest GP by public transport/walk Travel time to nearest Hospital by public transport/walk Travel time to nearest Secondary School by public transport/walk Travel time to nearest supermarket by public transport/walk Travel time to nearest town centre by public transport/walk	Travel times in minutes to key services by public transport/walking and cycling. These statistics are derived from the analysis of spatial data on public transport timetables; road, cycle and footpath networks; population and key local services. The data shows the average minimum travel time - the shortest travel time by walking and public transport, averaged over the LSOA. Where the shortest journey is by public transport, an average of five minutes is added to allow for a margin for catching the service, but if a quicker walking journey is available, this will be used with nothing added.	Transport (DfT) (2017)
IoD 2019 Geographical Barriers Sub-domain Rank	The Indices of Deprivation (IoD) 2019 Geographical Barriers sub-domain measures the physical accessibility and proximity of local services. The following indicators are included: Road distance to a post office; Road distance to a primary school; Road distance to a general store or supermarket; Road distance to a GP surgery. Data shows Average LSOA Rank, a lower rank indicates that an area is experiencing high levels of deprivation.	Ministry of Housing Communities and Local Government (MHCLG) (2019)
Cost of Living: Vulnerable households indicator	This dataset captures the relative risk of households falling below an acceptable standard of living as a result of rising costs. The indicator is presented as a score with a higher score indicating higher vulnerability.	Minimum Income Standard (MIS)2021 HM Revenue and Customs, Department for Work and Pensions

Other relevant data sets?

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.