The cost of living is one of the most pressing issues affecting residents across London. As the cost of goods and services continues to rise, it is crucial that local authorities are enabled to take action to support residents. To support the boroughs in this mission, London Councils, the Greater London Authority (GLA) and LOTI have been working to obtain and analyse additional data sources previously not consistently available to boroughs.

The Cost of Living Crisis in Context

The cost of living crisis in London has reached critical levels since late 2021, with a rapid increase in the cost of essential goods and services such as energy, food, rent and fuel. Inflation has soared to a 40-year high and is continuing to remain high as we approach the middle of 2023. As a result, London is witnessing the sharpest decline in living standards since the 1950s, making it increasingly challenging for low-income households to meet their basic living costs.

The latest GLA London Cost of Living polling for April shows no significant change in the proportion of Londoners that are ‘financially struggling’ (20%) or that describe their financial situation as ‘just about managing’ (28%). At the same time 40% of Londoners say that they will struggle to pay their energy bills in the next six months.

Whilst wholesale energy costs are now falling, it is not known when this will translate into lower prices for consumers. At the same time inflation is still anticipated to be significantly higher than previous long-term trends with the cost of many essential items, including food, expected to be high. Previous price rises may become ‘baked in’, while the experience of the pandemic quickly followed by the Cost of Living crisis has worn down Londoner’s overall financial resilience.

It is anticipated therefore that the Cost of Living Crisis will continue to present a significant challenge for Londoners across the income distribution, but particularly those on low-incomes. Co-ordinated support for low-income households will continue to be necessary during this difficult time.

As the big central government policy interventions on energy costs are being phased out, boroughs are continuing to play an important role in supporting residents who are struggling to make ends meet. Local authorities are the delivery vehicle for essential support, such as the Household Support Fund. In addition, there are numerous examples of boroughs across London developing and implementing additional support measures for their residents.

Additionally, a number of boroughs have already taken the step of identifying the increasing cost of living as key corporate risk. Beyond the obvious impact on the financial wellbeing of residents, the increased cost of living has the potential to negatively effect boroughs in several ways, including:

• Increases in Council Tax and Rent arrears as residents are less able to meet their core costs
• Increased in statutory homelessness and rough sleeping as resident are no longer able to meet their housing costs
• Increases in the demand for statutory interventions, such as children’s services and safeguarding

Supporting the Policy Response

To address the impact on welfare and corporate risks, most borough analysis teams are using a range of data to measure and understand the impact of the cost of living crisis in their areas. Drawing out insights on where and how the crisis is being felt and identifying who might be most at risk. 

London Councils, GLA and LOTI have held a number of workshops with Cost of Living analysts to identify where there might be gaps in their analytical models and capability. Through this process, we have identified a number of data sets that we have been working to bring together to provide policy makers with the information that they need to design local Cost of Living support programmes and other interventions, as well as support the production of reports and insights into the impact of the Cost of Living crisis at a local and pan-London level.

Citizens Advice Data

Currently, borough staff have a good view of the take up of local welfare support or benefit programmes and this data can be used by each borough to identify the scale of the problem and change over time. However, there can often be a lag of several months between the resident having the need and starting to receive support, so any tools or dashboards will always be behind the curve

Relying solely on local data makes it difficult to put those figures in context. We identified data collected by Citizen’s Advice services across London as a source of regular data on resident support needs as a way to provide additional insights with a smaller time lag to support a more rapid identification of changing patterns of need and emerging trends.

Working with Citizens Advice London we have secured an agreement for this data to be made available on a monthly basis. The raw data will be available to any London Borough analyst in a secure area of the London DataStore, please get in touch with the LOTI team for access.  Our initial analysis is also publicly available.

This aggregated view shows the increasing demand for advice on food banks and fuel relative to key policy and inflationary factors highlighted.

The number of referrals for food banks and charitable support increased rapidly during the pandemic and has continued to increase year on year since. The number of referrals in 2022 was 72% higher than 2019, following a 70% increase from 2019 to 2020. In January 2023 the number of referrals has continued to grow.

Fuel issues remained relatively stable until November 2020, when they began to increase steadily throughout 2021 before jumping significantly in 2022, which saw a 68% year on year increase

Inflation and the GLAs monthly Cost of Living polling are provided for additional context. Full meta data available here. 

Experian Discretionary Income Data

London Councils have purchased an Experian data array that provides a view of average discretionary income band by a number of demographic variables at a borough level. This data has been shared with boroughs via the London DataStore for use in their analysis and to support them in identifying the types of households hardest hit by the increased Cost of Living. For access to the London DataStore, please get in touch with the LOTI team. 

This data set provides a view of average discretionary income by several demographic variables at a borough level.

Discretionary income is defined as the average amount of money a household has left to buy non-essential goods and services after paying for a basket of 31 essential items as defined by ONS. 

Monthly Discretionary income has been banded into nine bands:

• < £0
• £0 – £30
• £30 – £125
• £125 – £250
• £250 – £500
• £500 – £1,000
• £1,000 – £1,500
• £1,500 – £2,000
• £2,000 +

The demographic categories are as follows:

• Mosaic UK 7 classification 
• Household income 
• Age band 
• Employment status 
• Household composition 
• Residence type 
• Tenure 
• Fuel poverty 

The data is provided for both 2022 and 2023 enabling the identification of population groups most impacted based on current and forecasted change. Over the next 12-months there will be three quarterly updates to the data, including Experian’s latest economic forecasts for  2023, which will enable boroughs to keep track of movements/changes to the population’s discretionary incomes.

Feedback from officers is that it is proving useful in identifying groups most affected and sense-checking their current assumptions. Some boroughs have reported they are now using the data as one of several key indicators they use to assess current pressures on residents, along with other local and national data sets.

The GLA are currently building a visualisation tool to make it easier for officers to explore the data. It is proposed that this analysis includes examining the variation in impact in different demographic groups across London.

Next steps

• London Councils, LOTI and GLA are continuing to work to secure a consistent feed of data from Citizen Advice London. Our hope is that monthly updates will be flowing from next month.
• The visualisation tool for the Experian Discretionary Income data will be available by the end of the month and made available to boroughs officers via the London DataStore Cost of Living Page.
• We are pursuing the collection of key data sets directly from boroughs to supplement the Citizens Advice and Experian data. Acknowledging the pressure borough data teams are under we have focused on a limited number of data sets across housing, free school meals and council tax.

Feedback

If you are a borough officer working on the Cost of Living crisis please get in touch and share your feedback on: if the data and analysis made available has been helpful or if there is any other data or insights that might support your work.