A Divided Britain? – Inequality Within and Between UK Regions

Inequality between the rich and the rest is now well documented. But the characteristics of this inequality continue to be questioned and explored. Is wealth inequality the real issue? Is rising executive pay the problem, or the lack of a Living Wage, and so on. Amidst this confusion rare moments of consensus emerge. One such case is the received wisdom that while London remains an economic powerhouse, relentlessly driving our economy forward, our other regions are failing to pull their weight. This is apparent when we hear George Osborne talk of turning the north into an economic ‘powerhouse’, or when discussion turns to improving links between northern cities. The tacit suggestion is the same – the north needs to catch up.

Clearly London is a special case, and our other regions do not have the same economic size and stature. More importantly, there are good reasons to support investment in infrastructure within and between northern cities, and to support the development of regional economies outside of London. But what is equally clear is that when pay and wealth is looked at, from the richest to the poorest, the idea that London is rich and the rest of the UK poor seems hopelessly simplistic.

Our analysis of ONS data found that there are more highly paid people in London than there are in any other region, even after adjusting for its size. It also found London has the highest median wage – so far, no great surprises. But when looking at disposable income after housing costs, London is behind not only the South East, but also the East of England and Scotland. And this is not the only surprising statistic when looking at income and wealth within and between UK regions.

When total wealth is looked at, those at the top in London are amongst the wealthiest in the UK. But in stark contrast, the poorest quartile in London has less wealth than the poorest quartile in all other regions bar the North East. In other words, while London does have high wages and huge wealth at the top, the gap to those at the bottom is huge.

Inequality within and between UK regions is a significant problem, and we should not trivialise just how unbalanced the UK is towards London and the South East. But it must also be noted that the most significant and troubling inequality is not between London and other UK regions, but nationwide between those at the top and the rest of us. The UK desperately needs to reduce its excessive levels of inequality. To do that it needs nationwide policies that go beyond measures to enhance regional economic growth.

For our full briefing note, A Divided Britain – Inequality Within and Between the Regions, see here. If you would like information on how you can find and use official statistics on wealth and income, our ‘How to’ guide can be found here.

John Hood, Media and Communications Manager.