The cost of living crisis is affecting local authorities in Wales in different ways, according to a new economics report. Small towns and villages in rural parts of Wales are the most exposed to fuel poverty and low-paid work, while medium-sized towns face higher food insecurity and Welsh cities contend with rising housing costs.
The report, published by independent economics thinktank the Centre for Progressive Policy (CPP), looks at the varied impacts of the cost of living crisis and how they are impacting different areas of Wales.
It found that low-paid employment is leaving many rural communities in Wales exposed to the impact of rising prices. Of the five local authorities with the highest rates of low-paying jobs in Wales, the report identified that all of these were small towns or villages.
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Anglesey, Powys and Pembrokeshire all recorded the highest rates of low-paid employment at 17%. Rural areas also recorded the highest rates of fuel poverty in Wales. Gwynedd and Ceredigion were the worst affected, with fuel poverty rates of 23% and 21% respectively.
However, larger towns in Wales, including Rhondda Cynon Taf, Caerphilly and Merthyr Tydfil, faced higher food insecurity. Merthyr Tydfil had the highest rate of food insecurity at a rate of 28%, followed by Rhondda Cynon Taf (17%), Caerphilly (17%) and Blaenau Gwent (15%). The city of Newport also ranked in the list at 17%.
Residents living in Wales’ cities - Cardiff, Swansea, Newport and Wrexham - were reported to have lower than average rates of fuel poverty and low-paying jobs but were exposed to much higher housing costs.
Low-income renters in the city are particularly vulnerable to high rents and a lack of properties for those claiming housing benefit. A recent report by the Bevan Foundation found that there is a severe shortage of properties available to rent at Local Housing Allowance (LHA) rates in Wales.
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While a high number of recent mortgage borrowers were at risk from rising interest rates pushing up mortgage repayments. Households with high mortgage loan-to-income ratios are particularly exposed, the report found.
Cardiff had the highest proportion of people who had taken out mortgages between 2018 and 2021 with a loan four times or more than their annual household income, at 29.7% of all recent mortgage-borrowers (3,742 households). There were 1,767 households in Newport also in this position, alongside 1,229 households in Llandudno and 1,640 in Swansea.
However, the report pointed out that much of the most recent available data is from 2017-18, making it difficult to get an up-to-date picture of the impact of the crisis. It added that much analysis of the impact of rising prices to date has focused on England, largely due to a lack of available data.
CPP warned these “vastly” outdated official figures for Wales were hampering effective policy responses as it called for better data collection and urgently updated local area poverty statistics.
In 2022, the Welsh Government introduced a £152m package of measures to help local authorities deliver support to their communities. However, the report said only 16% (£25m) of this financial aid was discretionary funding for councils to allocate themselves, while the remainder was for council tax relief - a broad-based measure.
CPP said devolved governments needed to provide more flexible and local discretionary funding for councils, similar to the Households Support Fund in England, to allow local authorities to spend as they judge best to support their residents.
Ross Mudie, research analyst at CPP and author of the report, said: “Rising living costs are adding pressure to virtually all households in Wales, but our analysis reveals significantly different pressures in different parts of the country.
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“Renters, particularly those on low incomes, are being squeezed by high rents and a lack of available properties for those claiming housing benefit. Almost a third of all recent mortgages taken out in Cardiff are four times the size of homeowners’ incomes, meaning rising interest rates will have serious knock-on effects. For those in small towns and villages, it is high rates of fuel poverty and low paid jobs that leave people vulnerable to the impact of rising prices – although a lack of available data makes it difficult to pinpoint these pressures in more detail.
“Local authorities know their communities best, so the Welsh government must provide more flexibility in how funding can be used to target the support that is most needed. It must also urgently update local area poverty statistics, so that local and national policy can better understand and respond to the situation on the ground.”
CPP is a not-for-profit organisation which is not aligned with any political party and supports inclusive economic growth.
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