Cost of living crisis: the areas of Greater Manchester which data shows are most financially vulnerable

Constituencies across Greater Manchester have higher scores on the Financial Vulnerability Index than both the UK and North West averages.

Households are battling with high levels of inflation and soaring bills as part of the cost of living crisis - and new data shows just how Greater Manchester’s constituencies are faring.

The latest update to the Financial Vulnerability Index (FVI) shows that areas across the city-region are more financially vulnerable than the UK or North West averages.

Manchester has been experiencing above-average levels of financial vulnerability since the peak of the Covid-19 pandemic in summer 2020 and it has only decreased slightly, the data experts say.

And there are concerns that credit use is rising sharply across the North West as households attempt to cope with everything becoming more expensive.

What is the Financial Vulnerability Index?

The FVI measures how vulnerable to financial problems residents living in an area are and there are six things which it uses to measure that.

They are the percentage of people in an area who are in default, who are claiming benefits, who have high-cost loans, who lack emergency savings and who are reliant on alternative financial products such as payday loans.

The sixth measure considered is the average credit use among residents to work out how heavily they are relying on it.

Each parliamentary constituency then gets an overall score of between 0 and 100. The higher the score, the more financially vulnerable an area’s residents are.

The index is a joint project between credit management service company Lowell and the Urban Institute, a US-based research organisation,

It is based on anonymised data from around 9.5m Lowell UK customer accounts and other publicly-available data sources.

What does the index show for Greater Manchester?

The latest figures in the FVI show constituencies across Greater Manchester are significantly more vulnerable than the average.

The UK average score is 43.1 and the North West average is 49.1.

But the latest index gave Blackley and Broughton a score of 60,9, with around 60% of adults in the constituency lacking emergency savings and more than a quarter in default.

Manchester Gorton has an index score of 58.1 and Wythenshawe and Sale East had a financial vulnerability rating of 56.9, while in Bolton South East it was 56 and in Oldham West and Royton it was 55.7.

In Salford and Eccles it was 53.5, while in Manchester Central it was 53.3.

The latest published figures from the index also show that Manchester has been experiencing above-average levels of financial vulnerability since the second quarter of 2020, and since then it has only decreased by 3.1 points.

And like residents across the North West as a whole credit use in Manchester is going up as bills rise, with average credit usage in the city reaching 51.9%.

What does the index show for the UK as a whole?

The latest updates to the index show that across the UK households are resorting to credit use as inflation means that everyday necessities now cost more. Credit usage in the latest quarter was the highest it has been since the start of 2020.

Interest rate rises have also done nothing to deter the most financially-vulnerable residents from borrowing, which the index’s creators say proves that for the worst-off consumers having to borrow money is a necessity, not a choice.

There is better news, though, in that financial vulnerability in the UK has declined overall since the last update to the index, which the experts say is primarily due to the decline in the share of adults claiming social benefits.

Payday lending across the UK as a whole has also continued to fall.

What has been said about the latest figures?

John Pears, UK CEO at Lowell, said: “The cost of living is increasing across the board and is hitting cities in the North West like Manchester hard.

“Households are having to fork out more money to pay for essentials like food and bills. With the rising cost of living stretching budgets to their limit, people are turning to credit more and more.

“For many now, a single income shock can be enough to push a household into problem debt. People need help to reduce costs.

“The new government needs to take action to ensure households, especially the lowest incomes, get the support they need.

“With the recent changes to the price cap, bringing energy bills down has to be the priority. This needs to be at the top of the agenda.”