Rising energy and food prices and the end of key government
support signal difficult months ahead for households already in
arrears due to the COVID-19 pandemic, according to the Senedd’s
Equality and Social Justice Committee.
The committee is calling on Welsh Government to continue to
support people struggling with basic household costs, warning
that the full pinch of the pandemic is yet to hit home.
The Committee’s report, Debt and the
Pandemic (attached), warns that more people are falling
into debt in order to meet daily essentials, household bills and
council tax, and that rising food and fuel prices is set to drive
people into deeper poverty this winter.
In response to this impending crisis, the Committee is
calling on Welsh Government to accelerate the work
to bring all social homes up to Energy Rating A as a result of
rising energy costs and to revise its fuel poverty action plan.
It also wants the government to further promote debt advice
services and affordable credit sources among those at heightened
risk of debt over the next six months.
Coming months “a perfect storm”
The rising cost of living was a particular concern for people who
took part in the Committee’s focus groups on debt. , Many
participants agreed that the true impact of the pandemic has yet
to be realised, referring to a “perfect storm” or a “tsunami” in
describing the likely scenario over the coming months and years.
One contributor from Rhondda Cynon Taf said:
“What really worries me is a potential 30% increase in gas
and electricity prices in 2022. That is going to push people into
Victorian poverty. And we’ve got the increase in National
Insurance contributions, you’ve got less suppliers because
they’re collapsing, the energy price cap has been raised . . .
I’m really worried about next year.”
The Bevan Foundation gave evidence to
the committee, stating that in Spring 2021, their research found
that 10% of households in Wales fell behind on a
bill, and highlighted that debt had become a greater
issue for those who were at heightened risk of it beforehand.
This was backed by research from the
charity StepChange who noted in
January 2021 that “21% of the population in Wales was
experiencing financial difficulties, and a higher
proportion of Welsh adults (18%) had experienced financial
hardship during the pandemic than in England or
Scotland.”
Citizens Advice Cymru also gave evidence to the inquiry,
and Lee Chesterman, Deputy Team Leader for Citizens
Advice Cardiff and Vale said:
“We are seeing more and more people struggling due to
uncontrollable charges such as rising energy costs. That
alongside the cost of living increasing and recent removal of the
Universal Credit uplift is a real concern.
“With various government funded support coming to an end over the
coming months as well: we are worried. Our main concern is
ensuring that there is support in place to help people who can
least afford these price rises. As we look at the near
future we as [Citizens Advice Cymru] frontline staff are gearing
up for a hard and busy winter.”
“Only now beginning to feel the full
financial force of the pandemic.”
, the Chair of the
Equality and Social Justice Committee says;
“We face a winter of rising fuel and food prices, coupled with
the end of some key government support which did so much to keep
people afloat during the pandemic., It’s clear that households
across the country are only now beginning to feel the full
financial force of the pandemic.
“At times of economic hardship in particular people are forced to
turn to debt to ease financial problems. It is scary that more
people are now taking out loans to pay bills, or to buy food, not
for consumer or ‘luxury’ items. This short term fix can easily
create long term problems for individuals.
“Our report suggests a number of steps for the Welsh Government
to take so that advice and support reaches those who need it,
particularly the most vulnerable. Better data could inform
the design and delivery of services and help tackle some of the
underlying causes of debt.
“With rising energy costs looming large, we are calling on Welsh
Government to accelerate plans to retro-fit social homes to much
higher energy efficiency standards and to revise its fuel poverty
action plan.”
Report Recommendations
The report includes 14 recommendations that will now be
considered by the Welsh Government. Including:
Recommendation 3. The Welsh Government
should set out in its response what additional measures it will
put in place to promote debt advice services to vulnerable groups
who are at heightened risk of debt, so they can make informed
choices about the options available to them
Recommendation 4. The Welsh Government
should publish revised plans within the next three months to
tackle fuel poverty, to ensure that these are in place well ahead
of the next rise to the energy price cap due to come into force
from April 2022.
Recommendation 5. The Welsh Government
should provide clarity in its draft budget on how it will
allocate sufficient funds up until 2024-25 to accelerate plans to
bring all social homes up to Energy Rating A to mitigate
increased fuel poverty as a result of rising energy costs.
