New research highlights varied impact of cost of living crisis in Wales
New research by economics thinktank the Centre for Progressive Policy outlines the significantly different impacts the cost of living crisis is having in different places in Wales. The report examines the impact of the cost of living crisis on different areas of Scotland, Wales and Northern Ireland. Much analysis of the impact of rising prices to date has focused on England, largely due to a lack of available data.
Researchers grouped Welsh local authority areas by the type of settlement most of the population live in, and in doing so found that areas where most of the population live in small towns or villages have much higher rates of fuel poverty. Almost all such Welsh local authorities rank amongst the 10 places with the highest rates of fuel poverty. Gwynedd and Ceredigion are the worst affected areas, with fuel poverty rates of 23% and 21% respectively. The most recently available data is from 2017-18, meaning it is difficult to get an up-to-date picture of the impact of the crisis. However, other indicators such as the proportion of low paid jobs, indicate these areas are likely to have continued to struggle in more recent years.
The prevalence of low paid work is another factor that leaves many Welsh communities exposed to the impact of rising prices. Across the Isle of Anglesey, Powys and Pembrokeshire, 17% of local jobs are low paid, which is the joint highest across all Welsh authorities. The five local authorities with the highest rates of low paying jobs are all dominated by small towns or villages.
Medium sized towns in Wales had higher rates of food insecurity going into the crisis (2021), with Merthyr Tydfill a particular outlier with a very high rate of food insecurity of 27.97%. Four of the five Welsh authorities with the highest rates of food insecurity have populations where the majority live in medium-sized towns:
|Local authority||Predominant geography type||Food insecurity rate|
|Mostly medium town||
|City or large town||17.44%|
Rhondda Cynon Taf
|Mostly medium town||17.27%|
|Caerphilly||Mostly medium town||16.56%|
|Blaenau Gwent||Mostly medium town||14.96%|
Several existing pieces of research point to the Welsh experience of the cost of living as one of most severe and acute. A recent survey by the University of Bristol’s Personal Finance Research Centre found that over 1 in 5 households (22%) in Wales were facing ‘serious financial difficulty’ as a result of the crisis, which is higher than Scotland, Northern Ireland, and all the regions of England. 
It is striking that the pressures on residents of Wales’ cities and large towns - Cardiff, Swansea, Newport and Wrexham – differ significantly from those faced in villages and small towns. Cities and large towns have lower than average rates of fuel poverty and low paid jobs, but much higher average housing costs. Renters on low incomes face particular challenges: 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. 
As rising interest rates push up mortgage repayments, households with high mortgage loan-to-income ratios are particularly exposed. Looking at those who took out mortgages between 2018 and 2021 with a loan four times or more than annual household income, Cardiff stands out as the area with the highest proportion and number of such mortgages, at 29.7% of all recent mortgage-borrowers, or 3,742 households. 1,767 such households in Newport are in this position. While Llandudno (22.9%) and Swansea (22.0%) have lower proportions of households in this position, the number of affected households remains significant: 1,229 in Llandudno and 1,640 in Swansea.
In response to the cost of living crisis, in 2022 the Welsh Government introduced a £152m package of measures to help local authorities deliver support to their communities. But just 16% (£25m) of this was discretionary funding for councils to allocate themselves, while the remainder was for council tax relief, a broad-based measure. CPP is calling on the devolved governments of Wales, Scotland and Northern Ireland to provide more discretionary funding for councils, similar to the Household Support Fund available to English local authorities, to spend as they judge best to support their residents.
CPP also calls for better data collection and sharing by councils and other local partners to enable local leaders to make better informed decisions about how to target support.
Ross Mudie, Research Analyst at CPP and report author, 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.
“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.”