To receive and consider the recommendations of the Cabinet (Minute 131 (b)) as an amendment to the following Notice of Motion submitted previously to the Council by Councillor Hannaford and referred thereto in accordance with Standing Order 8(2), namely:
Council notes with concern that;
According to the House of Commons Library, the UK cost of living has been rising since early 2021, but in December 2021 inflation reached its highest recorded level in decades, seriously affecting the ability of households to afford basic goods and essential services. Economic experts agree that the UK is now expected to experience will be the sharpest fall in disposable incomes since records began in 1990, as the cost of living crisis wreaks havoc among middle and lower-income households.
Inflation
Consumer prices, as measured by the Consumer Prices Index (CPI) , were 5.4% higher in December 2021 than a year before – the highest inflation rate recorded since 1992. In mid-December, the Bank of England forecast the CPI inflation rate to remain around 5% over the winter, before rising to 6% in April 2022. However now against a backdrop of rising household energy prices, the Bank said inflation was on course to peak close to 7.25% in April, a sharp adjustment to its previous forecast.
Fuel and Petrol Prices
Petrol and diesel prices both fell over the first two months of the first lockdown. At the end of May 2020 they were at their lowest level for around five years: the UK average was 104.9 pence for a litre of petrol and 111.7 pence for diesel. Prices increased steadily during most of 2021 and particularly rapidly in October and November. Petrol reached a record price of 147.5 pence per litre on 29 November 2021. Diesel reached a record price of 151.3 pence per litre on the same day. Both prices have fallen slightly since then; on 17 January 2022 average prices were 144.8 and 148.7 pence for a litre of petrol and diesel respectively. However these prices were still historically very high and are even more economically regressive in a rural county like Devon, where driving is often essential.
Housing Costs
Particularly in the private rental sector ever rising costs are adding pressure to those in most in need. The latest HomeLet Rental Index figures show average monthly rental costs in the UK rose by 8.6 percent, with the average rent being £1,060. An article on the cost-of-living crisis in the homeless charity magazine, The Big Issue, noted, “Already, data shows that private rents are unaffordable for the poorest in the country, with data from 2021 showing that there are just two areas in England where the poorest families spend less than 30 per cent of their income on rent costs.”
As proven by the research done by Team Devon, the distortion of the rental market from ever more holiday homes, second homes , and an explosion in Airbnb properties, and the scarcity of affordable and social housing in all parts of Devon, are all feeding into this crisis.
Also following recent Bank of England interest rate increases, homeowners with mortgages are expected to see an average £15-a-month increase, but for many its much higher, , depending on their own individual rates, and especially in Devon where property prices remain some of the highest in the UK.
Energy Prices and Devon’s Fuel Poverty
A particularly important driver of inflation is obviously energy prices, with household energy tariffs increasing . Between January and November 2021 domestic gas prices increased by 28% and domestic electricity prices by 19%.
Energy regulator Ofgem has now announced the new energy price cap on , confirming it will increase by 54 per cent, or £693, from 1 April. This will allow energy firms to charge customers up to £1,971 per year, up from the previous limit of £1,277. The energy price cap is the maximum amount a utility company can charge an average customer in the UK per year for the amount of electricity and gas they use.
Consultancy Cornwall Insight said that the households whose energy bills are tied to the price cap can expect the cap to rise further, to around £2,350, at the next review in October.
The number of homes set to be plunged into ‘fuel stress’ could rise to over six million in April when a new price cap comes into play, according to the think-tank Resolution Foundation. This will see the proportion of households in England in fuel stress rise from nine per cent to 27 per cent.
The current international situation in Ukraine could make matters even worse, with Europe highly dependent on Russian natural gas. Although the UK imports barely any gas from Russia. It meets about half of its gas requirements from the North Sea, while another third is sourced from Norway. The rest is imported by pipelines connecting the UK to Europe, or in the form of liquefied natural gas (LNG), which is transported by tankers typically from Qatar or the US.
However the UK’s gas sources could all becoming eye-wateringly expensive if markets in Europe soar. The UK’s market is closely connected to markets in Europe, so a price rise in Germany or the Netherlands , should tensions rise , would also lead to higher prices in Britain.
Rising energy charges such as these could devastate the UK’s poorest families, analysis suggests, as many adults could be forced to spend more than half of their income after housing costs on electric and gas bills.
The latest government information from April 2021 , that does not factor in the forthcoming price hikes, already indicates substantial fuel poverty in Devon, and it is also widely estimated that these figures hide a much higher actual number in reality.
|
|
|
Number of Number of households1 households in fuel poverty |
Proportion of households fuel poor (%) |
||
|
Devon |
355,130 |
38,051 |
|
10.7 |
|
|
East Devon |
64,942 |
6,148 |
|
9.5 |
|
|
Exeter |
54,298 |
6,439 |
|
11.9 |
|
|
Mid Devon |
36,079 |
4,162 |
|
11.5 |
|
|
North Devon |
43,963 |
5,073 |
|
11.5 |
|
|
South Hams |
40,597 |
3,834 |
|
9.4 |
|
|
Teignbridge |
59,478 |
5,886 |
|
9.9 |
|
|
Torridge |
30,763 |
3,637 |
|
11.8 |
|
|
|
West Devon |
25,010 |
2,872 |
|
11.5 |
Food Prices
Food and non-alcoholic drink prices were up by 4.2% in the year to December 2021 on the official CPI measure of inflation. They may rise further in the coming months. However some everyday food items have increased in price by 344% in a year.
It comes as food poverty campaigner, activist and chef Jack Monroe has successfully urged the Office for National Statistics (ONS) to reconsider how the cost of living is actually measured in the wake of rising prices for everyday essentials, such a flour, pasta, rice and milk, rather than luxury items , that the poor cannot afford and never buy.
Nationally its estimated that Foodbanks are already handing out 32 meals a minute, despite seeing a big drop in donations because of the cost of living crisis.
One in 10 households in the Devon County Council area suffer "substantial disruptions" to get enough food. Overall, 17% of households were shown to experience some food insecurity and "not having reliable access to enough affordable, nutritious food".
Other Pressures On Household Budgets
As well as higher inflation, household budgets will be also be further squeezed by changes in taxes and benefits in the coming months. This includes an increase in National Insurance Contributions from April 2022, and changes to income tax, as well as the withdrawal of the £20 Universal Credit uplift.
Stagnant wages will also affect household incomes. Furthermore public transport costs will be raised.
Overall a recent report by The Resolution Foundation predicts households will be on average at least £1,200 a year worse off from this year.
Low Income Households & Child Poverty
Low income households spend a larger proportion than average on energy and food, and will therefore be relatively more affected by increases in prices. The Joseph RowntreeFoundation (JRF) say that low-income families may have to spend, on average, 18% of their income on energy bills, which rises to 54% for single adult households, and around a quarter for single parents and couples without children.
Low income households are paying an estimated “poverty premium” of £478 each year, according to research by the campaign group Fair By Design.
As a result thousands of people already in poverty across Devon are paying more for essentials such as energy and insurance, because they are unable to afford lump sums and instead have to opt for pricier regular payments. This includes higher tariffs and fees through prepayment meters and car insurance premiums.
Recent data from 2016 shows that 12.3% of children in Devon are in low income families compared to 17% for England, although this does not take into account the social and economic effects of the pandemic.
However a fifth of children were living in households with a low income for at least three of the four years between 2016-2019, rising to around one in three children in single-parent families. The child poverty rate for children in families with three or more children, was almost twice as high as the rate for children in one- or two-child families (47% versus 24%).
Financing Progressive Measures
The governments financial position is much better than expected. Tax revenues are coming in higher than forecast, and some substantial expected government spending has not occurred. We are nine months into the current financial year and thanks largely to that more money is coming into the exchequer than expected, the deficit is lower than expected. It is still huge, £147bn, because of the economic effects of the global pandemic , but that is £13bn less than the Office for Budget Responsibility expected. So in conjunction with an new annual windfall tax and some careful strategic borrowing , the government does have some considerable financial headway to make sure its leveling up agenda in the face of a cost of living crisis is more than just an empty slogan.
Council Notes;
The recent announcements by the Chancellor including;
· All households will receive £200 off their energy bills in October under a rebate and claw back” scheme – but then pay the discount back by £40 a year over five years from 2023.
· Council taxpayers in England in bands A to D would receive a rebate of £150 from their bills in April, which will not have to be paid back.
· Local authorities would receive £150m to make discretionary payments to the neediest.
· The number of poorer households eligible for the warm homes discount – worth £150 from October – would be increased by a third to 3m.
Council Believes That:
The Government has made an limited intervention to tackle the energy bills crisis. But this isn’t the only cost of living challenge families face.
As such the Chancellor’s announcements are hopelessly inadequate. For most families it’s just £7 a week and more than half must be paid back. It’s too little, it’s poorly targeted, and it’s stop gap measures instead of fixing the big problems.
The support may not reach people quickly enough. The £200 energy bills rebate won’t arrive in people’s bank accounts until October. But people are struggling right now.
And while the £150 Council Tax rebate is coming this April, one-in-eight of the poorest families in England won’t even qualify for support because of the houses they live in.
Finally, most of the £9 billion of support is being paid for via higher energy bills over the next five years. This is a very risky strategy, especially if the cost of gas doesn’t fall sharply and soon. High energy bills could be a feature of the 2020s – continuing to hammer the poorest in society – and a reminder of the need to wean ourselves off fossil fuels.
Council therefore resolves;
To call on the UK Government and our local Members of Parliament to effectively tackle the cost-of-living crisis facing Devon families and act now to support them with the following specific measures;
a) A new revised local government settlement that adequately funds local councils so that council tax does not have to be raised this year to protect and operate vital front line services.
b) A twelve month pause in the proposed National Insurance rise to directly help those on low and fixed incomes.
c) Revise the planned 3.1% increase in the value of welfare and benefits, and build in a rise of 6% to protect the poorest and most vulnerable in society.
d) A VAT cut on everyone’s home energy bills for a year from 5% to 0% percent.
e) Increasing the Warm Home Discount from £140 to £400 per year and expanding the number of households eligible to 9.3 million.
f) Introducing a year-long increase to corporation tax for North Sea oil and gas producers in order to secure at least a £1.2 billion windfall from their increased price rise profits to help mitigate household energy bills.
Having had regard to the aforementioned, any factual briefing/position statement on the matter set out in Report (CSO/22/06) and other suggestions or alternatives considered at that meeting the Cabinet subsequently resolved:
‘that Council be recommended to
(a) note that one the Council’s Strategic Plan priorities for 2021 to 2025 is to make Devon a fairer place, address poverty, health, and other inequalities, and ensure support for those people and families struggling most;
(b) agree that the Annual Plan for 2022/23 should include measures to address poverty in the light of current increases in the costs of living; and
(c) work with Plymouth City Council, Torbay Council and Team Devon in the forthcoming devolution deal negotiations with Government to devolve flexibilities and responsibilities which will help to address issues described in the Notice of Motion.’
Decision:
The amendment in the name of Councillor Hart was then put to the vote and declared CARRIED and subsequently thereafter also CARRIED as the substantive motion.
Minutes:
Pursuant to County Council Minute 91 of 17 February 2022 relating to the Notice of Motion set out below as previously submitted and formally moved and seconded by Councillor Hannaford that:
Council notes with concern that;
According to the House of Commons Library, the UK cost of living has been rising since early 2021, but in December 2021 inflation reached its highest recorded level in decades, seriously affecting the ability of households to afford basic goods and essential services. Economic experts agree that the UK is now expected to experience will be the sharpest fall in disposable incomes since records began in 1990, as the cost of living crisis wreaks havoc among middle and lower-income households.
Inflation
Consumer prices, as measured by the Consumer Prices Index (CPI) , were 5.4% higher in December 2021 than a year before – the highest inflation rate recorded since 1992. In mid-December, the Bank of England forecast the CPI inflation rate to remain around 5% over the winter, before rising to 6% in April 2022. However now against a backdrop of rising household energy prices, the Bank said inflation was on course to peak close to 7.25% in April, a sharp adjustment to its previous forecast.
Fuel and Petrol Prices
Petrol and diesel prices both fell over the first two months of the first lockdown. At the end of May 2020 they were at their lowest level for around five years: the UK average was 104.9 pence for a litre of petrol and 111.7 pence for diesel. Prices increased steadily during most of 2021 and particularly rapidly in October and November. Petrol reached a record price of 147.5 pence per litre on 29 November 2021. Diesel reached a record price of 151.3 pence per litre on the same day. Both prices have fallen slightly since then; on 17 January 2022 average prices were 144.8 and 148.7 pence for a litre of petrol and diesel respectively. However, these prices were still historically very high and are even more economically regressive in a rural county like Devon, where driving is often essential.
Housing Costs
Particularly in the private rental sector ever rising costs are adding pressure to those in most in need. The latest HomeLet Rental Index figures show average monthly rental costs in the UK rose by 8.6 percent, with the average rent being £1,060. An article on the cost-of-living crisis in the homeless charity magazine, The Big Issue, noted, “Already, data shows that private rents are unaffordable for the poorest in the country, with data from 2021 showing that there are just two areas in England where the poorest families spend less than 30 per cent of their income on rent costs.”
As proven by the research done by Team Devon, the distortion of the rental market from ever more holiday homes, second homes, and an explosion in Airbnb properties, and the scarcity of affordable and social housing in all parts of Devon, are all feeding into this crisis.
Also following recent Bank of England interest rate increases, homeowners with mortgages are expected to see an average £15-a-month increase, but for many its much higher, depending on their own individual rates, and especially in Devon where property prices remain some of the highest in the UK.
Energy Prices and Devon’s Fuel Poverty
A particularly important driver of inflation is obviously energy prices, with household energy tariffs increasing. Between January and November 2021 domestic gas prices increased by 28% and domestic electricity prices by 19%.
Energy regulator Ofgem has now announced the new energy price cap on , confirming it will increase by 54 per cent, or £693, from 1 April. This will allow energy firms to charge customers up to £1,971 per year, up from the previous limit of £1,277. The energy price cap is the maximum amount a utility company can charge an average customer in the UK per year for the amount of electricity and gas they use.
Consultancy Cornwall Insight said that the households whose energy bills are tied to the price cap can expect the cap to rise further, to around £2,350, at the next review in October.
The number of homes set to be plunged into ‘fuel stress’ could rise to over six million in April when a new price cap comes into play, according to the think-tank Resolution Foundation. This will see the proportion of households in England in fuel stress rise from nine per cent to 27 per cent.
The current international situation in Ukraine could make matters even worse, with Europe highly dependent on Russian natural gas. Although the UK imports barely any gas from Russia. It meets about half of its gas requirements from the North Sea, while another third is sourced from Norway. The rest is imported by pipelines connecting the UK to Europe, or in the form of liquefied natural gas (LNG), which is transported by tankers typically from Qatar or the US.
However, the UK’s gas sources could all becoming eye-wateringly expensive if markets in Europe soar. The UK’s market is closely connected to markets in Europe, so a price rise in Germany or the Netherlands, should tensions rise, would also lead to higher prices in Britain.
Rising energy charges such as these could devastate the UK’s poorest families, analysis suggests, as many adults could be forced to spend more than half of their income after housing costs on electric and gas bills.
The latest government information from April 2021, that does not factor in the forthcoming price hikes, already indicates substantial fuel poverty in Devon, and it is also widely estimated that these figures hide a much higher actual number in reality.
|
|
|
Number of Number of households1 households in fuel poverty |
Proportion of households fuel poor (%) |
||
|
Devon |
355,130 |
38,051 |
|
10.7 |
|
|
East Devon |
64,942 |
6,148 |
|
9.5 |
|
|
Exeter |
54,298 |
6,439 |
|
11.9 |
|
|
Mid Devon |
36,079 |
4,162 |
|
11.5 |
|
|
North Devon |
43,963 |
5,073 |
|
11.5 |
|
|
South Hams |
40,597 |
3,834 |
|
9.4 |
|
|
Teignbridge |
59,478 |
5,886 |
|
9.9 |
|
|
Torridge |
30,763 |
3,637 |
|
11.8 |
|
|
|
West Devon |
25,010 |
2,872 |
|
11.5 |
Food Prices
Food and non-alcoholic drink prices were up by 4.2% in the year to December 2021 on the official CPI measure of inflation. They may rise further in the coming months. However, some everyday food items have increased in price by 344% in a year.
It comes as food poverty campaigner, activist and chef Jack Monroe has successfully urged the Office for National Statistics (ONS) to reconsider how the cost of living is actually measured in the wake of rising prices for everyday essentials, such a flour, pasta, rice and milk, rather than luxury items, that the poor cannot afford and never buy.
Nationally its estimated that Foodbanks are already handing out 32 meals a minute, despite seeing a big drop in donations because of the cost of living crisis.
One in 10 households in the Devon County Council area suffer "substantial disruptions" to get enough food. Overall, 17% of households were shown to experience some food insecurity and "not having reliable access to enough affordable, nutritious food".
Other Pressures On Household Budgets
As well as higher inflation, household budgets will be also be further squeezed by changes in taxes and benefits in the coming months. This includes an increase in National Insurance Contributions from April 2022, and changes to income tax, as well as the withdrawal of the £20 Universal Credit uplift.
Stagnant wages will also affect household incomes. Furthermore public transport costs will be raised.
Overall a recent report by The Resolution Foundation predicts households will be on average at least £1,200 a year worse off from this year.
Low Income Households & Child Poverty
Low income households spend a larger proportion than average on energy and food, and will therefore be relatively more affected by increases in prices. The Joseph RowntreeFoundation (JRF) say that low-income families may have to spend, on average, 18% of their income on energy bills, which rises to 54% for single adult households, and around a quarter for single parents and couples without children.
Low income households are paying an estimated “poverty premium” of £478 each year, according to research by the campaign group Fair By Design.
As a result thousands of people already in poverty across Devon are paying more for essentials such as energy and insurance, because they are unable to afford lump sums and instead have to opt for pricier regular payments. This includes higher tariffs and fees through prepayment meters and car insurance premiums.
Recent data from 2016 shows that 12.3% of children in Devon are in low income families compared to 17% for England, although this does not take into account the social and economic effects of the pandemic.
However a fifth of children were living in households with a low income for at least three of the four years between 2016-2019, rising to around one in three children in single-parent families. The child poverty rate for children in families with three or more children, was almost twice as high as the rate for children in one- or two-child families (47% versus 24%).
Financing Progressive Measures
The governments financial position is much better than expected. Tax revenues are coming in higher than forecast, and some substantial expected government spending has not occurred. We are nine months into the current financial year and thanks largely to that more money is coming into the exchequer than expected, the deficit is lower than expected. It is still huge, £147bn, because of the economic effects of the global pandemic, but that is £13bn less than the Office for Budget Responsibility expected. So in conjunction with an new annual windfall tax and some careful strategic borrowing , the government does have some considerable financial headway to make sure its leveling up agenda in the face of a cost of living crisis is more than just an empty slogan.
Council Notes;
The recent announcements by the Chancellor including;
· All households will receive £200 off their energy bills in October under a rebate and claw back” scheme – but then pay the discount back by £40 a year over five years from 2023.
· Council taxpayers in England in bands A to D would receive a rebate of £150 from their bills in April, which will not have to be paid back.
· Local authorities would receive £150m to make discretionary payments to the neediest.
· The number of poorer households eligible for the warm homes discount – worth £150 from October – would be increased by a third to 3m.
Council Believes That:
The Government has made a limited intervention to tackle the energy bills crisis. But this isn’t the only cost of living challenge families face.
As such the Chancellor’s announcements are hopelessly inadequate. For most families it’s just £7 a week and more than half must be paid back. It’s too little, it’s poorly targeted, and it’s stop gap measures instead of fixing the big problems.
The support may not reach people quickly enough. The £200 energy bills rebate won’t arrive in people’s bank accounts until October. But people are struggling right now.
And while the £150 Council Tax rebate is coming this April, one-in-eight of the poorest families in England won’t even qualify for support because of the houses they live in.
Finally, most of the £9 billion of support is being paid for via higher energy bills over the next five years. This is a very risky strategy, especially if the cost of gas doesn’t fall sharply and soon. High energy bills could be a feature of the 2020s – continuing to hammer the poorest in society – and a reminder of the need to wean ourselves off fossil fuels.
Council therefore resolves;
To call on the UK Government and our local Members of Parliament to effectively tackle the cost-of-living crisis facing Devon families and act now to support them with the following specific measures;
a) A new revised local government settlement that adequately funds local councils so that council tax does not have to be raised this year to protect and operate vital front line services.
b) A twelve month pause in the proposed National Insurance rise to directly help those on low and fixed incomes.
c) Revise the planned 3.1% increase in the value of welfare and benefits, and build in a rise of 6% to protect the poorest and most vulnerable in society.
d) A VAT cut on everyone’s home energy bills for a year from 5% to 0% percent.
e) Increasing the Warm Home Discount from £140 to £400 per year and expanding the number of households eligible to 9.3 million.
f) Introducing a year-long increase to corporation tax for North Sea oil and gas producers in order to secure at least a £1.2 billion windfall from their increased price rise profits to help mitigate household energy bills.
and having had regard to the advice of the Cabinet set out in Minute 131(b) of 9 March 2022:
Councillor Hart MOVED and Councillor McInnes SECONDED that the Cabinet’s advice be accepted and that Council
(a) note that one the Council’s Strategic Plan priorities for 2021 to 2025 is to make Devon a fairer place, address poverty, health, and other inequalities, and ensure support for those people and families struggling most;
(b) agree that the Annual Plan for 2022/23 should include measures to address poverty in the light of current increases in the costs of living; and
(c) work with Plymouth City Council, Torbay Council and Team Devon in the forthcoming devolution deal negotiations with Government to devolve flexibilities and responsibilities which will help to address issues described in the Notice of Motion.’
The amendment in the name of Councillor Hart was then put to the vote and declared CARRIED and subsequently thereafter also CARRIED as the substantive motion.