FRSC COL Update FINAL 071123

Renfrewshire Council · 15 November 2023
Back to Fairer Renfrewshire Sub-committee — 15 November 2023 and its agenda

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________________________________________________________________________
To:  Fairer Renfrewshire Sub-Committee 
On:  15 November 2023
_____________________________________________________________________
Report by:  Chief Executive 
_____________________________________________________________________
Heading: Cost-of-living Update 
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1. Summary 
1.1 At each of the Fairer Renfrewshire Sub-Committee meetings, an overview of the key context and
evidence around current pressures on household finances, both in terms of household income
and expenditure has been provided to members. 
1.2 Since the last meeting of the Sub-Committee on 6 September 2023, there have been a number of
changes in economic factors including further reported reductions in energy costs from 1 October
23.  Inflation and interest rates have remained high and largely unchanged, and the longevity of
these high rates and associated costs of living pressures mean households are still struggling
according to some of the evidence and information which has been collected.  Elected members
are asked to note that: 
 The rate of inflation has remained at 6.7% (Sep 23), still well above the 2% target set by
the Bank of England
 The inflation rate for food has reduced slightly; now 12.2%.  
 The Bank of England has recently kept the interest rate unchanged at 5.25% which is the
highest rate in 15 years. 
 The Energy Price Cap, originally introduced by Ofgem in January 2019 to set limits on the
underlying rates energy suppliers, is now set at £1,834 from the 1 October until 31
December. This means households who use gas and electricity and pay by direct debit will
pay on average £1,834, with the reduction reflecting recent falls in wholesale energy
prices.

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1.3 In addition, the Joseph Rowntree Foundation published their ‘Poverty in Scotland’ Report in
October. This report offers evidence on the reality of poverty in Scotland, with a focus on low
wages and in-work poverty.
1.4 This paper provides an overview of information collated by officers at both a national local level
where available.
2. Recommendations
2.1 It is recommended that members of the Fairer Renfrewshire Sub-Committee note the content of
the report.
3. Background
3.1. At the Fairer Renfrewshire Sub-Committee meeting on 6 September 2023 an overview of key
context and evidence around current pressures on household finances, both in terms of
household income and expenditure was examined.
3.2. Although since then some pressures have eased slightly, such as the fall in costs for home energy,
the management of household finances remains challenging due to continued increases in prices
for household goods and the current high interest rates. The long-term nature of the crisis means
issues around money and debt are enduring, and indications are that more families who have
been managing previously, including those who are working, may be struggling. This paper gives
an update on the current cost of living challenges and impacts for families.
4. Impacts of cost-of-living crisis
Income vs Expenditure for low income households
4.1. ONS has looked at rising living costs, and commonly reported reasons among adults who said
their cost of living had increased were:
 the price of food shopping (96%)
 gas or electricity bills (57%)
 the price of fuel (37%)
 rent or mortgage costs (27%)
4.2. In their report of 6 October, Citizens Advice estimates that since September 2022, living costs for
low-income households have risen by more than £90 per month and that by April 2024 that figure
will have risen to £130.

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4.3. Their findings show that certain groups are significantly over-represented in the proportions
experiencing food insecurity and using food banks, with two thirds of people referred to Trussell
Trust foodbanks being disabled and families with children being over-represented in referrals.
Working age adults, especially those who live alone and who aren’t working are also more likely
to be referred. 
Renfrewshire Foodbank 
4.4. In Renfrewshire, numbers using the Foodbank have increased this quarter compared with the
same quarter last year. In the quarter to 30 September 1295 vouchers were issued compared to
1009 last year, a 28% increase. This quarter 1295 adults and 704 children received Foodbank
assistance. 
4.5. This most recent data also showed 583 vouchers issued due to ‘Rising costs of essentials’
compared to 488 last quarter. This was the reason with the highest number of vouchers issued. In
terms of Foodbank vouchers by ward, although numbers are still small at 62, ‘Houston, Crosslee
and Linwood’ saw an 148% increase in vouchers since the same quarter last year. The next
highest percentage increase was for Paisley Southwest, which saw voucher numbers increase
from 72 to 122, an almost 70% increase.  Johnstone South and Elderslie saw a 35% increase, and
as previously reported figures suggest that those people in areas with potentially less deprivation
overall may be increasingly needing support to combat cost-of-living pressures.

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4.6. The Foodbank has reported there has been an increase in people seeking support who are
currently in employment. The increased voucher numbers in the less deprived areas may be
linked to this.
Debt
4.7. In April, insolvency practitioner Carrington Dean found that on average Renfrewshire residents
have £17,050 worth of personal debt, higher than the Scottish figure of £16,133. Including
mortgages, the Money Charity found that the average total debt per household is £65,661. They
also found that debt rates had increased for individuals over the year to the end of July 2023, with
adults on average owing £702 more this year than last.
4.8. According to the August Commons Library briefing, people are using savings and debt to pay for
essentials because of the rising cost of living. Debt advice charities like Stepchange and Citizens
Advice are reporting an increase in debt advice clients. An ONS survey shows that of the 56% of
adults who saw an increase in their cost of living in July-August 2023 compared to the month
before, 19% reported using more credit than usual as a result.
4.9. Outstanding credit card debt across the UK to July 23 averaged £2376 per household and £1248
per adult. This is an increase of 8% on the previous year. According to Which? Credit card holders
who fail to pay their statement in full could be paying the highest interest in more than 27 years,
with average rates hitting 23.8% in September, up from 21.89% a year before. On a credit card
with the average interest rate the average debt would take 26 years and 3 months to repay for
someone making only the minimum repayments each month.
4.10. Which? has also found that the cost of borrowing has increased, with the average interest rate for
a £5000 loan taken out over 3 years being 10.8% in October 2023 compared to 6.9% in December
2021. Loan repayments now would be £162.04 per month, compared with £153.68, meaning in
total an extra £300 would be paid over the term of the loan.

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4.11. Advice agencies are noticing an increase in those who are working coming forward for support
both around debt, and for advice more generally. Step Change has seen the percentage of clients
in work coming forward increase to 44% in August from 42% in July. Renfrewshire Citizens Advice
Bureau report a significant increase in the number of debt clients in full time work (35% increase).
The Bureau has also seen an increase in the numbers of those with debt issues generally who are
coming forward for support at 363 this quarter against 268 for the same quarter last year.
4.12. The Council’s Advice Works service has seen a rise in the numbers of clients who are working full
time. In their Quarter 1, to 30 June 2023, more clients who were working full time were seen, than
those working part time at 97 compared to 74, with 11 self employed people also coming forward.
They have also noted an increase in foodbank vouchers being given to those in work.
4.13. Renfrewshire Affordable Credit Alliance are currently carrying out a survey on savings, borrowing
and debt, which we hope will provide useful information and help paint a picture of borrowing,
including illegal borrowing across Renfrewshire. Results of this will be brought to a future Board.
5. Housing costs
5.1. According to the ONS, private rental prices have continued to grow across the whole of the UK.
Overall rental prices have increased 5.7% in the year to September 2023. Their latest research
indicated that just over 4 in 10 (43%) adults in Great Britain paying rent or a mortgage said they
were finding the payments very or somewhat difficult to afford. This has increased from 30%
during a similar period last year. 40% of rent and mortgage payers stated that their payments had
increased in the last 6 months.
5.2. According to data from Pay.UK and Vocalink, average monthly mortgage payments made by
Direct Debit have been rising steadily, from £718 in December 2021 to £880 in September 2023.
The proportion of mortgage payments made by Direct Debit which failed because of insufficient
funds last month was the highest since May 2023.
5.3. Even if the bank interest rate has peaked (which may not be the case), we know the impact of
increased mortgage costs is yet to be felt. According to the Resolution Foundation the average
interest rate paid by mortgagors is expected to rise from 2 per cent in Q1 2022 to a peak of 4.8 per
cent in Q4 2027. They estimate that the average household remortgaging next year will see their
annual payments rise by around £3,000.
5.4. Research led by the University of Stirling and University of Nottingham, found that when interest
rates increased, those who were heavily indebted experienced an increased likelihood of mental
health difficulty. While low interest rates encouraged borrowing, mortgage or otherwise,
researchers found that for each 1% increase in interest rates, there was a 2.6% increase in the
incidence of mental health issues experienced by those heavily in debt. UK-wide, researchers
estimated each percentage point increase would result in 20,000 additional cases of mental
health difficulty – at an overall cost to society of £156 million.

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5.5. Since February 2022, the Bank of England’s base rate has increased by 4.75%, so this indicates the
possibility of at least 95,000* additional cases of mental health difficulty nationwide in relation to
interest rate rises not just debt anxiety itself. In November 2023, the Bank Of England Governor
said ‘it was much too soon to be thinking about cutting rates’, and has indicated that there is
potential for mortgage interest rates to rise if inflation doesn’t fall quickly enough.
5.6. A survey carried out on behalf of Mind, found that 29% of the adult population in England and
Wales say the increase in mortgage rates has affected their wellbeing. It found that the rise
particularly affected young people, with 48% of those aged 16 – 24 saying the mortgage situation
had affected their mental health. There is no reason to doubt a similar result in Scotland.
6. Benefits
DWP: Universal Credit and Child Tax Credit claimants
6.1. The Department for Work and Pensions (DWP) published statistics in July 2023 related to the
policy that provides support for a maximum of two children in Universal Credit and Child Tax
Credit. The two-child limit was implemented in 2017, with benefit entitlement no longer being
applicable for third or subsequent children.
6.2. The statistics provided a snapshot of the Universal Credit (UC) and Child Tax Credit (CTC)
caseload in April 2023 across the UK. Nationwide the statistics show:
6.3. In Renfrewshire, the number of households with 3 or more children with either UC or CTC is 1,350.
Previous reports on this subject indicate that to fully mitigate the impact of the limit in Scotland
would cost approximately £78m per year based on 2023 figures. In Renfrewshire affected
households in financial crisis can apply for a Crisis Grant from the Scottish Welfare Fund, and
those with a shortfall in their housing costs can apply for a Discretionary Housing Payment (DHP).
6.4. It should be noted that some households affected by the two-child limit, may also be affected by
the Benefit Cap, which caps total benefit amounts paid to £423.46 per week for couples and lone
parents and £283.71 per week for single adults. The Benefit Cap is currently mitigated in full
(where possible) by DHP awards.

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7. Employment and Wages
7.1. The ONS has reported that pay rises are now meeting price growth, however with inflation
forecast to remain above 2% in 2024, prices will keep rising, especially for food where inflation
rates remain well above where they have been in recent years.
7.2. On 24 October an increase in the Real Living Wage to £12 per hour was announced. Employers
adhering to the Real Living Wage (as opposed to the national living wage, which is lower) have 6
months (until 1 May 2024) to implement the increase. The previous rate was £10.90, and a full
time worker receiving the new rate will received £3000 more per year than someone receiving the
national living wage. By the end of 23/24 Renfrewshire had 85 living wage employers, of which
Renfrewshire Council is one.
7.3. The Claimant Count for those claiming unemployment-related benefits remained similar in July
23 compared with the previous year at 3.3%. This equates to 3760 people aged between 16 and
64. Those currently receiving Tax Credits have been part of a managed migration to Universal
Credit which commenced in August 2023. In May 2023, 14,087 households in Renfrewshire were in
receipt of Universal Credit. This will rise until the legacy Tax Credit caseload closes in 2024. This
has caused an upturn in individuals in receipt of Tax credits accessing advice in Renfrewshire.
8. Inflation
8.1. UK inflation as measured by the Consumer Prices Index (CPI) is currently standing at 6.7%, which
represents no change from the August figure. According to the ONS, however, it’s not a consistent
picture across the board, for example, motor fuel is the largest contribution to upward increases
in price, while furniture and household goods and food and non-alcoholic beverage inflation
rates are showing a downward trend.
8.2. Food prices rose by 12.2% in the year to September, down from 14.9% in the year to July. The
largest downward contributions in the easing of the annual rate for food and non-alcoholic

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beverages between August and September 2023 came from the milk, cheese and eggs as well as
soft drinks and juices. Despite easing inflation, the ONS reported that half (50%) of adults across
Great Britain say they have spent more than usual to get what they normally buy when food
shopping within the past two weeks.
8.3. The Bank of England has warned that food inflation is unlikely to fall below 10% by the end of the
year as farmers, distributors and food manufacturers costs are continuing to rise at a fast pace.
The cool wet summer has also affected UK crops such as wheat and potatoes, which may affect
prices.
8.4. The increase in price of motor fuels was one of the main contributing factors in the inflation rate
remaining static. The average price of petrol rose by 5.1 pence per litre between August and
September 2023 to stand at 153.6 pence per litre, with the average price of diesel rising by 6.3
pence per litre to stand at 157.4 pence per litre. Oil prices have increased mainly due to the
decision by some oil producing countries who are members of OPEC+ to cut production of crude
oil and so increase the price per barrel. This increase in price is then reflected in the retail prices
paid at fuel forecourts. The Israel-Gaza crisis may also have consequential impacts on oil prices
due to the geo-political volatility in the Middle East.
8.5. It is widely predicted that the inflation rate will again fall next month, with it expected that the
energy price cap reduction from 1 October 2023 will contribute to see at least a 1 percentage
point reduction in the overall inflation rate.
9. Fuel – Energy Support for Households
9.1. Support with energy bills will continue until at least March 2024, albeit at a reduced or scaled
back level. The price cap applies to most households, and sets the maximum amount that
suppliers can charge for a unit of energy. From 1 October 23, a typical dual-fuel household will

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pay £1834 per annum. This is a reduction in price per unit for both gas and electricity, however
standing charges for electricity have remained static, while those for gas have increased by 3
pence per day.
9.2. The cap is applied to customers on a default energy tariff including those who pay by Direct Debit,
standard credit, prepayment meter, or who have an Economy 7 meter. It should be noted that the
cap does not limit the total bill, which depends on energy consumption, only the amount charged
per unit.
9.3. As previously reported to the Committee, the UK Government has also announced that the £400
payment paid to all homes in winter 2022/23 will not be repeated. Instead, support will be
provided in three instalments only for those receiving certain means tested benefits.
9.4. The second, Autumn instalment of £300 will be paid between 31 October and 19 November, with
a further £299 to follow in Spring. In addition a ‘Pensioner Cost of Living Payment’ of either £150
or £300 will be paid later in the year, along with Winter Fuel payments. The total amount received
is based on age and circumstances during a qualifying week in September. The maximum Winter
Fuel payment (including the Cost of Living Payment) is £600, and the minimum £250 and those
eligible will receive a letter advising how much they are due in October or November.
10. Joseph Rowntree Foundation Poverty in Scotland Report 2023
10.1. In October, JRF published their Poverty in Scotland report. This report highlights the issue of
increasing levels of in-work poverty. It found that over one million people still live in poverty in
Scotland, with nearly half of those (490,000) living in very deep poverty and around a quarter
being children. Their report also suggests that with inflation rates still high, this winter will be
difficult especially for those living in poverty with a continuing struggle to afford essentials for
their households.
10.2. The report includes analysis of which families are more likely to experience in-work poverty:
 One in four people in working single-parent families are in poverty
 Larger families, with 3 or more children also face an in-work poverty rate of around one in
four

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 One in ten people experiencing in work poverty live in couple families with children where
both parents work full-time
 Households where someone is disabled or a carer also face an increased risk of in-work
poverty.
 Woman are more likely to be on low pay and work part time than men, with career
progression also negatively impacted. 
10.3. The report offers solutions to reducing in work poverty, including employers paying Real living
Wage, targeting training and progression to employees on low pay and offering flexible roles. 
10.4. As discussed throughout this report the issue of in-work poverty is one that seems to be on the
rise in Renfrewshire, with the Foodbank and our advice services, including those providing advice
around energy, reporting an increase in those who are working, whether full or part time, coming
forward for support. 
10.5. For those who are not working a level of three out of four people in families who are unemployed
are living in poverty. 
Implications of the Report
1. Financial – There are no financial implications associated with this report, which provides an
overview of the position and is for noting. 
2. HR & Organisational Development – none 
3. Community/Council Planning – This report provides a detailed summary of the current evidence
relating to household income and expenditure. Wider poverty related issues are a key element of

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both the Council and Community Plan and the information included within this report is part of
the wider Strategic Needs Assessment for these plans. 
4. Legal - none 
5. Property/Assets - none 
6. Information Technology - none 
7. Equality and Human Rights – The report provides an overview of the position around household
income and expenditure, and is for noting. As such there are no impacts arising from the
recommendation of this paper. It is however important to note that impacts on households
explored within this paper are likely to be disproportionately felt by equality groups. 
8. Health and Safety - none 
9.  Procurement – none 
10. Risk – none 
11.  Privacy Impact – none 
12. COSLA Policy Position – none 
13. Climate Risk – none 
Author: Diane Dunn, Social Renewal Lead Officer, diane.dunn@renfrewshire.gov.uk