Title: Cost of Living paper
Paper
sponsors:
Dr
Sarah Aitken, Executive Director of Public Health and Strategic Partnerships,
ABUHB
Lyndon
Puddy, Chair, Gwent Strategic Well-being Action Group (Torfaen County Borough
Council)
Paper
authors:
Richard
Lewis, Principal Public Health Practitioner, PHW
Stuart
Bourne, Consultant in Public Health, ABUHB
Date:
29th September 2022
1. Introduction
1.0 At
its meeting on 1st September 2022, the Gwent Strategic Well-being
Action Group (GSWAG) discussed the current and ongoing cost of living crisis.
The group recognised that public service organisations would already be
planning within their own organisations, but also discussed the potential for
the PSB to have a wider discussion and whether collective action across public
partners could add value ahead of what may be a very difficult period for our
communities, especially now that organisations are planning for the winter. One particular area is whether there is a
role for Gwent PSB to help signpost and communicate to residents the
availability of advice, support and information available through PSB member
organisations.
2. Background
2.0 The Gwent
Well-being Assessment 2022 highlights a range of challenges which could widen
inequalities across Gwent, including the climate and nature emergencies,
Covid-19 pandemic, and Britain’s exit from the European Union (increasingly
referred to as the ‘triple challenge’).1
2.1 The
UK, along with other countries in Europe, is currently facing a situation of extremely
high energy and fuel prices, which are set by international markets.2
The reason for these surging prices is two-fold: the world emerging from the
COVID-19 pandemic (increasing demand); and, Russia slowly switching off gas
supplies to Europe in response to the sanctions which it is facing because of
its invasion of Ukraine.3
2.2 The energy regulator for Great Britain,
Ofgem sets a price cap to limit the amount energy suppliers can charge
customers for each unit of gas, oil and electricity, as well as a maximum daily
standing charge. The cap is reviewed every three months and is mainly based on
the costs of wholesale energy and the costs of building and maintaining the distribution
network.4
2.3 Since 1st April 2022 consumers
have experienced a 54% increase in the energy price cap,5 and it was
set to further increase on 1st October 2022 to £3,549 per year for dual fuel for
an average household (see paragraph 3.8).3 Recent UK Government
announcements have subsequently capped the average household to circa
£2,500 for the next 2 years. Businesses have been offered similar arrangements
capped for 6 months and subject to review. Either way the increase in energy
bills even at the £2,500 cap is a significant impact on all households, but
most keenly impacted on those households with lower incomes.
2.4 The graph below illustrates the sharp rise
in 2022 of the wholesale gas price cost in the cap (pence per therm).
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2.5 This paper is sponsored against the
background of Gwent becoming a Marmot region, which will be implemented through
the five-year Gwent Well-being Plan, and is mindful of Marmot Principle 4: Ensure a healthy
standard of living for all. However, it
is acknowledged that any actions in the Gwent Well-being Plan that might
mitigate the cost of living crisis will not be in place by this winter, and
that as a public service board, Gwent PSB has agreed to adopt the eight Marmot Principles
as the framework for action to reduce health inequalities between our
communities across Gwent.
3. Assessment
The impact on the population of Gwent
3.0 These
sharp cost of living increases are being experienced directly by our citizens
across Gwent through the cost of heating homes and fuelling vehicles, and by
businesses in the cost of heating premises and fuelling fleet vehicles, as well
as indirectly by both citizens and businesses when purchasing goods and
services, including food, through the supply chain. As prices rise, people make
difficult choices on what to cut back on, and where they need to rely on
community support.
3.1 Households responding to a recent ONS survey reported that they
are spending less due to the rising cost of living (see chart below).5i
Just over 60% said they are spending less on non-essentials, while almost 50%
said they are using less fuel at home and spending less on food. These are both
public health concerns and, further, the impact of higher prices is likely to
be felt more acutely by those on lower incomes because items such as food and
energy make up a higher proportion of their spending.
Source:
https://www.bankofengland.co.uk/monetary-policy-report/2022/august-2022
3.2 Citizens Advice has
developed its first cost of living dashboard to give a near real-time insight
into the problems people are facing when they contact the charity. The latest
indicators highlight:
· People needing to rely on food banks;
· People needing advice on their energy bills (projected to
reach 233,738 people by Dec 22), and replacing Council Tax arrears as the main
debt issue;
· People not being able to afford to use any energy;
· People not being able to afford to top up their prepayment
meter (projected to reach 21,604 people by Dec 22).
3.3 In all
indicators people are struggling to cope and are approaching Citizens Advice in
crisis in larger numbers than in any of the past three years. The graph below illustrates
the concerning rise in crisis support in 2022.6
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3.4 Certain groups
within the population are struggling more with the cost of living. This is the
main reason for disabled people to contact Citizens Advice, including because
their energy costs tend to be higher. Further, some people are not eligible for
public support due to visa conditions6i; some people are on
prepayment meters; and, others are in a negative budget where outgoings exceed
income.
3.5 Referrals to
food banks have increased dramatically for all demographics, but in particular
for single people, social housing tenants, and disabled people. This has also impacted
those households in full time employment and on tax credits to support existing
employment. It is also impacting on some of our own public service workforce.
New Marmot review on fuel poverty
3.6 Earlier this month, Professor Sir Michael
Marmot published his review, ‘Fuel Poverty, Cold Homes and Health
Inequalities’. 7 This latest Marmot review predicts significant
inequalities – health, social and educational – for a new generation of
children if, as forecast, 55% of UK households (15 million people) fall into
fuel poverty by January 2023 without effective interventions, and thousands of
people will face shorter lives as a result.
3.7 Fuel poverty is driven by three main
factors – household income, energy costs and home energy efficiency. People on
low incomes, living with disabilities, and Black and Minority Ethnic groups are
most at risk.
3.8 Professor Marmot emphasises, as with other
inequalities, that fuel poverty cannot be reduced through one single action. He
recommends a range of short and long term interventions under four main areas
(and provides examples of local interventions in each area):
· Reducing deprivation
and income inequality
· Improving housing
quality and energy efficiency
· Addressing energy costs
· Addressing health needs
and NHS interventions
National Political
response (UK and Wales level)
3.9 On 8th September 2022 the UK
Government announced the ‘Energy Price Guarantee’, which means that from 1st October 2022 a
typical household will pay no more than £2,500 per year for each of the next
two years, superseding the Ofgem energy price cap. Equivalent support will be
available to consumers using heating oil. Businesses and organisations will be
offered an equivalent guarantee for six months, followed by further support to
‘vulnerable sectors’, which will be defined through a review.8
3.10 Since earlier in 2022, the UK Government has
been providing support through the ‘Energy Bills Support Scheme’ and ‘Warm
Homes Discount’, alongside further support for households most in need.3
3.11 In March 2022, Welsh Government announced
its support through the ‘Cost of Living Support Scheme’ and ‘Discretionary Cost
of Living Support Scheme’.9 The ‘Winter Fuel Support Scheme’ will be available
from 26th September 2022 for low-income households.10
3.12 The Welsh Government’s fuel poverty plan,
published in March 2021 before the current situation, aims to ensure by 2035
that ‘no households are estimated to be living in severe or persistent fuel
poverty as far as reasonably practicable’.11
3.13 The Welsh Government has been delivering its
‘Warm Homes Programme’ to make homes more energy efficient since 2011.12
Further information on the next iteration of the programme is expected from the
Welsh Government following the Welsh Parliament’s summer recess.5
3.14 In terms of
prevention from future international crises, the UK’s current exposure to
volatile global gas prices highlights the importance of the need to generate
more lower-priced, clean renewable energy [and nuclear power] in the UK, to
reduce the reliance on expensive fossil fuels and accelerate the transition to
net zero.2 These are key visions in realising Wales’ well-being
goals in the Well-being of Future Generations Act. Whilst accelerating the
deployment of clean and renewable energy technologies, the UK is also quickening
North Sea oil and gas production, and taking steps towards shale and nuclear
energy production.8
National sources of support
for consumers
3.15 National sources of help for consumers
include: energy suppliers, Ofgem, National Debtline and Citizens Advice.3
Existing communications
in Gwent of sources of support
3.16 The table in annex one shows some of
the web-pages of PSB members to support citizens with the current cost of
living. The sources of support highlighted address a range of health (mental
and physical health), social and educational factors.
4.
Recommendations
Gwent
PSB is asked:
4.1
To consider the content of the report and
discuss whether the PSB through GSWAG takes collective action to pool together
the advice and assistance available across partner organisations and publish on
partners’ and the PSB’s websites.
5.
References
1. https://www.gwentpsb.org/en/well-being-plan/well-being-assessment/
2. https://www.gov.uk/government/news/russia-ukraine-and-uk-energy-factsheet
3. https://www.ofgem.gov.uk/publications/ofgem-updates-price-cap-level-and-tightens-rules-suppliers
5i. https://www.bankofengland.co.uk/monetary-policy-report/2022/august-2022
8. PM Liz
Truss's opening speech on the energy policy debate - GOV.UK (www.gov.uk)
9. gov.wales/cost-living-support-scheme-guide-local-authorities-html
10. https://gov.wales/wales-winter-fuel-support-scheme-2022-2023
11. https://gov.wales/tackling-fuel-poverty-2021-2035-html
12. https://gov.wales/get-help-energy-efficiency-households
Annex One - Web-pages
of PSB members to support citizens with the current cost of living
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PSB member |
Web-page |
|
Aneurin Bevan
University Health Board |
https://abuhb.nhs.wales/healthcare-services/staying-well-and-healthy/cost-of-living-support/ |
|
Blaenau Gwent County
Borough Council |
https://www.blaenau-gwent.gov.uk/en/resident/financial-advice-and-support/ |
|
Caerphilly County
Borough Council |
https://www.caerphilly.gov.uk/Services/cost-of-living-support |
|
Monmouthshire County
Council |
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|
Newport City Council |
https://www.newport.gov.uk/en/Support-and-Advice/Support-and-Advice.aspx |
|
Torfaen County Borough
Council |
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|
Tai Calon Community
Housing |
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Torfaen Voluntary
Alliance |