New report reveals areas where living standards and jobs are most at risk from rising energy costs

22 September 2022

5 minute read

The latest version of an index developed by economic thinktank the Centre for Progressive Policy (CPP) reveals that Middlesbrough, Sandwell, Walsall, Barking & Dagenham, Wolverhampton, Doncaster and Hull are among the areas of England that are most vulnerable to the impact of rising prices.

The analysis also highlights 11 local authorities, predominantly in the North and Midlands, that – as well as having populations that are vulnerable to the impact of rising prices – are also heavily dependent on energy-intensive sectors such as manufacturing for employment. East Lindsey, Hartlepool, Luton, North Lincolnshire, Northumberland, Redcar and Cleveland, Rotherham, Sandwell, Shropshire, Stoke-on-Trent and Tendering face this double hit, as a large proportion of local employers in these areas are likely to be particularly badly affected by higher energy costs, meaning more redundancies are likely without effective intervention.

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.

Northumberland, Wyre in Lancashire and East Lindsay in Lincolnshire are among the rural places that are increasingly at risk. Rural places at increasing risk are not concentrated in any particular regions but found across England. The two most important factors driving the increased vulnerability of rural places are rising economic inactivity among the working age population and increasing numbers of low paying jobs in rural places.

Several places previously identified as being highly vulnerable to the impact of rising costs have become even more so. South Tyneside has risen from 32nd place in the index of over 300 local authorities in England to 10th, and Oldham has risen from 33rd to 13th. Other ex-industrial towns like Middlesborough and Walsall remain highly vulnerable, as do coastal areas like Hastings and Thanet.

The index is part of a report which also includes insights from interviews with 21 local government workers, and policy recommendations for government.

The Centre for Progressive Policy is calling for central government to devolve more powers and funding to local authorities so that they can respond to the needs of their residents and businesses. CPP’s proposed £67bn support package includes:

  • Business Transition Fund, worth £4bn annually, to provide employers in energy-intensive sectors with immediate support with costs, and long-term support to decarbonise their business models while protecting jobs. This could allow employers to invest in skills and training for workers whose jobs may change, or to provide businesses with seed capital to modify production processes and invest in new green technology.
  • A new Retrofitting Investment Fund, worth £3bn annually, to provide an immediate cash injection to local economies that will also develop local markets for retrofitting, provide training and employment opportunities and improve inefficient housing stock.
  • Boosting the existing Household Support Fund by £5bn for the duration of the crisis, and removing the criteria attached to it so that local areas can use resources where they are needed most.
  • An additional £600m to be added to the current round of the UK Shared Prosperity Fund to protect current projects from inflation, and for the next round to brought forward to 2024 on a 7-year cycle, matching prior EU funding with current inflation rates, worth £18bn over the 7 years.

Ben Franklin, Director of Research & Policy at CPP said:

“Local places are uniquely well positioned to support both residents and businesses through the cost-of-living crisis, but their funding and agency were decimated during austerity, and the national crisis response has largely ignored them. Resourcing local authorities with the funding and powers they need should be a core pillar of central government’s immediate response to this crisis and long-term strategy to adapt and strengthen our economy.

“The new PM and Chancellor want to focus on growth as a route out of this crisis, but have said little about how their plans will deliver for the people and places who need it most. Providing places with immediate support to help with rising costs is the right thing to do, but the government must also look to the future. More flexible, long-term funding for local authorities can help households and businesses become less energy-intensive while protecting living standards and creating jobs.”