The cost of living crisis in Scotland, Wales and Northern Ireland

How rising costs are hitting different places in the devolved nations

19 July 2023

By Ross Mudie

4 minute read

Download the report: The cost of living crisis across the devolved nations

CPP’s latest report examines the varied impact of the cost of living crisis across Scotland, Wales and Northern Ireland. Much analysis of the crisis to date has focused on the experience in England, largely for data reasons, and this report seeks to fill the gap. Its key findings include:

High housing costs in cities

The report finds that high housing costs are adding pressure in cities across the three nations. Private rents are equivalent to 39.7% of median take-home pay in Midlothian; 34.5% in Glasgow; and 31.3% in the City of Edinburgh. The rental market in Northern Ireland has become the most overheated of all four nations, with rents rising 9.9% in the year to March 2023.

Large numbers of households in cities in Scotland and Wales have high mortgage burdens, a concern as interest rates continue to rise. Recent analysis shows the number of households with recent mortgages that are four or more times the size of their income. In Scotland, Edinburgh is most susceptible to this financial strain, with 32.7% (or 4,423 households) of mortgages taken out between 2018 and 2021 having ratios four times their income. In Wales, Cardiff is the area most exposed to this trend, with 29.7% of all recent mortgage-borrowers, or 3,742 households, in this position.

Higher food costs for remote rural communities in Scotland and medium Welsh towns

With UK food inflation now at 18.4% year on year, remote rural and island communities in Scotland are particularly exposed to higher food prices, which are compounded by the additional costs of transporting food. A previous study revealed that pre-crisis, weekly food costs in remote rural areas on the Scottish mainland and Scottish Islands were already 2-4% and 5-13% higher respectively than in urban UK areas, depending on household size.

Medium sized towns in Wales had higher rates of food insecurity going into the crisis (2021), with Merthyr Tydfil a particular outlier with a very high rate of food insecurity of 27.97%. The prevalence of low paid work 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.

Fuel poverty in remote areas

Remote communities across the three nations are more vulnerable to fuel poverty. In Wales, areas where most of the population live in small towns or villages have the highest rates of fuel poverty. Gwynedd and Ceredigion have the highest rates of 23% and 21% respectively. The most recently available data for Wales is from 2017-18, meaning it is difficult to get an up-to-date picture of the impact of the crisis.

In the absence of official statistics in Northern Ireland, in 2022 the fuel poverty charity National Energy Action (NEA) estimated that around 45% of households were living in fuel poverty - more than double the 22% figure from 2016. Most areas outside of Belfast are not connected to the gas grid: an estimated 68% of the population depends on heating oil to power their homes, rising to 82% in rural areas. The Energy Price Cap has never been applicable to Northern Ireland, and heating oil trades within a completely unregulated market which spiked long before the Energy Price Cap neared its peak.

Policy recommendations

CPP recommends that:

  • Future cost of living funds delivered in Scotland, Wales and Northern Ireland should give councils flexibility to respond to local pressures, similar to the Household Support Fund available to English local authorities
  • Local poverty statistics should be update, produced more regularly and should align definitions across borders so that policy solutions can be better designed to meet the needs of different places
  • Better processes for sharing data between councils and other local partners so that they can respond at pace during crises
  • Governments should conduct spatial impact analyses of future support funds to help identify gaps in support across different places

Learn more about how Inclusive Growth Network (IGN) members Belfast City Council and North Ayrshire Council are responding to the crisis: