This report explores the challenges facing different places during the cost-of-living crisis. It combines an updated version of our cost of living vulnerability index highlighting which places in England are most vulnerable to the impact of rising costs, with interviews with local authority officers revealing the experiences of those on the front line in local government dealing with the crisis. We offer policy recommendations to give areas the financial power and agency required to support residents and businesses, both in immediate response to the crisis, and to recover and rebuild in the long term.

Which places in England have become more vulnerable to the cost of living crisis?

The report updates CPP’s previous Cost of Living Vulnerability Index, to reveal the changing nature of places most susceptible to poverty and finds:

• Ex-industrial towns including Middlesbrough, Sandwell, Walsall, Barking & Dagenham, Wolverhampton, Doncaster and Hull are among areas where residents are most vulnerable to the impact of rising prices; coastal areas remain at risk, while some rural areas are increasingly so
• Hartlepool, Northumberland, Shropshire and Stoke-on-Trent are among the areas in the North and Midlands where this vulnerability is compounded by heavy reliance on energy-intensive jobs
• The North East remains the most vulnerable region overall, but the North West has overtaken Yorkshire & Humber as the second most vulnerable region in England since the index was last published in April. This is driven by greater levels of economic inactivity and a higher benefit claimant count. 71% of former Red Wall areas are identified as in the most vulnerable 25% of places.
• Many rural areas have become more vulnerable to the crisis and this is not consigned to any particular region but is rather a national trend that is driven by the same two factors: economic inactivity and low pay. These include places such as East Lindsey, Northumberland, and Wyre.

How are places responding to the cost of living crisis?

The report summarises interviews with 21 local government officers working on the frontline to explore the key challenges places are facing. Key findings:

• Local government officers feel limited in how much support they can realistically provide to households due to years of severe funding cuts and only small pots of funding allocated to this crisis with strict spending criteria – with the Household Support Fund a clear example of this.
• Concerns about funding extend beyond support for households, and to the business community. While some officers point to the existence of certain funding pots alongside potential business rates relief, the reality is local government has few financial levers to pull to support business through the crisis.
• Some officers argue that the cost of living crisis is providing new opportunities for a renewed focus on sustainable inclusive growth by underlining the importance of expanding retrofitting and the living wage, but for these to be fully realised there needs to be greater national as well as local impetus.
• While places are working with the VCSE sector to ensure it plays a more strategic role in locally led crisis responses, the sector as a whole is struggling to cope with rising demand.

Recommendations

The analysis and interviews underline a strong case for providing vulnerable places with greater financial assistance to deal with the crisis, allied with stable long-term funding to deliver sustainable inclusive growth. To meet these aims, this report makes several recommendations:

1. Revamp the Household Support Fund – significantly increasing its size and removing the numerous strings currently attached to allocating it locally.
2. Reform the UK Shared Prosperity Fund so that it more than matches previous EU structural funds, broadens the range of spending opportunities, and is genuinely long term.
3. Create two new place-based funds:
   1. The Business Transition Fund to support the transition of energy-intensive sectors to a decarbonised economy while preventing job losses. This will be particularly helpful for those places that are both highly vulnerable to the cost of living crisis and have a high proportion of energy intensive sectors.
   2. The Retrofitting Investment Fund to retrofit millions of homes. It will put the responsibility for delivery in local government hands and will be enabled through a renewed push on skills and training including:
      1. Establishing a new T-Level and occupational map for energy and utilities, and a new range of competence-based qualifications that correspond with different facets of the green economy.
      2. Developing new, clear skills pathways to support groups of people currently out of work to transition into skilled green jobs, designed through collaboration between local statutory bodies, skills providers, and employers.
4. Allocate all funding to local areas based on need – with the CPP vulnerability index an example of the sort of clear and transparent formula for dispersing funds that could be adopted. Crucially, places would not need to undertake competitive bidding for money, with central government adopting a more creative and ambitious approach in how the social and economic outcomes of funds are measured.
5. Additionally, places should be able to consolidate these funds with other local government funds where possible, which would increase the utility of different funding pots where there is overlap in the remits of each fund

Our package would cost £11.8bn annually over the course of this crisis and is accompanied with a further £9.6bn of investment annually from 2024 until 2030. In the face of the immediate crisis, this ambitious new package would shift considerable power to places and transform the local government funding landscape, empowering places to better respond to the needs of their communities while laying the foundations for their recovery and decarbonisation.