How Britain’s inflation epicentre exposed the North-South divide

Even as Burnley bakes in another sweltering heatwave, residents are getting the chills just looking ahead to a winter choice of "eating or heating".

“I’ve heard people say they are planning to stay under their duvet to keep warm,” says one local council worker. “That’s living in the stone age, that is.”

While the hot weather has kept costs down this summer, Susan Fegan, a care home worker, says she is bracing for a bill rise “of significance” later this year.

“Until it happens, you're not going to know how much it's going to come up by,” she says. “There's loads of people walking around that haven’t got two pennies to rub together and they’re working 60 hours a week.”

Winter might seem a while away as the mercury soars this summer but the residents of Burnley, in Lancashire, are right to be worried. Nestled in the Pennines, it is Britain’s inflation epicentre – the area where the cost of living crisis is being felt most.

Research by Centre for Cities suggests inflation in the town hit 11.5pc in May, the highest rate in the country and well above the national reading of 9.4pc.

Burnley and nearby Blackburn, Blackpool and Bradford suffering much faster price rises, as a clear North-South divide emerges. 

Residents in these northern towns are being squeezed most because of leakier, less insulated housing and a higher reliance on cars, which exposes them to soaring prices at the pump, according to Centre for Cities.

Burnley’s rate of living cost increases are also almost three percentage points higher than London and Cambridge where price pressures are at their weakest at 8.8pc.

Antony Higginbotham, the Conservative MP for Burnley, says: “With the [energy bill] forecasts being as they are, there is a significant gap widening up between what households think they can afford to pay and what energy bills look like they're going to be, so it’s not looking great.

But that’s our job as politicians to try and help residents through that as best as we can.”

Higginbotham says an emergency budget will be needed immediately after a new Prime Minister is chosen, arguing in favour of a mix of “tax cuts and direct support” for families.

He adds: “I don't think what we can continue with is these catch all massive state interventions.”

Burnley is one of the former Red Wall seats which turned blue - for the first time since before the First World War - and helped hand Boris Johnson his 2019 election victory. But as his pledge of levelling up falls by the wayside, enthusiasm is low for either Liz Truss or Rishi Sunak to become the next Tory leader - threatening the party’s future hold.

As one of the top 10 most deprived places in England, lower incomes in Burnley mean residents are hit by spending a higher proportion of earnings on essentials - the hotspots where prices are rising most, such as gas and electricity, petrol and food.

A bigger inflation squeeze in these towns is making the uphill struggle of levelling up even harder as Boris Johnson’s exit throws the whole project into doubt.  

Paul Swinney, director of policy and research at Centre for Cities, says: “It certainly is the case that over the last six months or so because of the increase in prices, the position is getting wider and worse rather than getting better.

“It does make that overall challenge even more difficult, which makes the fact there’s been so little action from the Government despite so much discussion around levelling up even more frustrating.”

Petrol cars and leaky houses

On the edges of the town centre, several tall mill chimneys that once would have billowed smoke lie dormant, nodding to Burnley’s industrial past. Yellow sandstone cottages built during its time as one of the world’s most important cotton centres line the streets of areas such as Rose Hill.

While picturesque, these old homes are sucking money from the town’s families: they leak heat easily, meaning the vast majority of residents live in homes with dire energy efficiency ratings.

Burnley has the highest household energy costs in Britain. Around eight in 10 homes have an energy performance certificate rating of C and below. That compares to less than six in 10 in London and half of homes in Milton Keynes, a city with more modern housing stock.

Ewelina Oleksy at Burnley-based The Insulation Group says energy efficiency in the town is “one of the worst around the country”, causing many homes to be in “fuel poverty”.

“It is quite rare to come across properties rated D or above, unless they are newly built or renovated,” she says.

“Houses are either heated using over 10 years old inefficient boilers, electric heaters and solid fuel files, leaving a massive carbon footprint behind them.

“What isn't helping is the lack of insulation behind it. Having a brand new boiler can be very pointless if you have uninsulated walls and draughty windows.”

Energy accounted for 4.4 percentage points of Burnley’s high inflation rate in May, compared to just two percentage points in London, according to Centre for Cities.

In 2021, households in Burnley were already paying £383 more every year for their gas and electricity on average than Milton Keynes where bills were lowest. People in the town also spent 6.2pc of their wages on household energy last year - a higher proportion than any other place in the UK and a share that will soon soar even higher.

Motorists in Burnley are also feeling the surge in prices at the pumps more than most, as pressure grows on the Government for more action to cut fuel costs.

Local MP Higginbotham says: “We don't have public transport like London, nor will we ever have that.

“We are a mix of urban and rural and that means people rely on their cars to get around. It also means people rely on their cars for their businesses.”

He says the next PM needs to “find a way of not clobbering drivers” and calls for a fuel duty cut of a much bigger scale to the 5p per litre reduction already in place.

Motoring costs added 2.3 percentage points to inflation in Burnley in May, compared to 1.5 in London as commuters in cities are insulated by taking public transport, according to Centre for Cities. On average, people in Burnley spend 23pc more on petrol.

Car ownership is high in northern towns, and longer commutes means drivers use up more fuel, the data suggests.

Joanna Dewhurst, owner of Burnley-based fragrance retailer Timeless Fragrance, says: “A lot of people work out of town now because there’s not many jobs in town so maybe that’s why people are using their cars more.

“For years lots of places have been shutting down but since lockdown it’s been even more so.”

Public transport is also of a lower quality despite often being more expensive than in cities. Burnley is too far away from major cities to be part of their sprawling transport systems, such as the Manchester Metro tram service, which includes satellite towns Bury and Rochdale.

As the cost of living crisis heats up, and the North-South divide widens, the next PM will face a battle to cling to former Red Wall seats feeling the pinch.

One poll by Redfield & Wilton Strategies put Labour 15 points ahead of the Tories in the 40 Red Wall seats the Conservatives won in 2019 - including Hartlepool taken in a later by-election. The gap has widened a further four points in recent weeks. Few voters in Burnley have faith in the next PM turning around their fortunes, both this winter and in the long run.

Dewhurst says she doesn’t think levelling was “ever going to happen” while Fegan says politicians “promise stuff but don’t come through with it”.

“All they do is talk, talk, talk, no action whatsoever,” says retiree Arthur Richardson, who believes many in the town will have to choose to put food on the table or heat their homes.

As the chill of soaring energy bills descends on households this winter, many voters in Burnley will feel their living standards have gone backwards since the lofty promises to level up Britain.