North East Devolution and Levelling Up

London incomes rise 30 times faster that North East’s since election – report

Average disposable real incomes in the North East have risen by less than £20 a year (or less than 0.1%) since the general election in December 2019 – the smallest increase of any region and 30 times less in money terms than in London, according to a report from the New Economics Foundation (NEF).

Elsewhere in the north, the North West and Merseyside has seen a rise of £80 (0.2%) and  Yorkshire and the Humber £90 (0.3%), while Northern Ireland has also see a rise of £90 (0.3%), the report finds.

At the same time, disposable real incomes in London have increased by more than £600 per year (1.3%) and by more than £550 in the south-east (1.1%).

Overall, the poorest 50% of UK families have seen their disposable incomes squeezed by an average of £110 in real terms while the top 5% of families have seen gains of more than £3,300. 

This sharp increase in inequality has been driven by decisions made by government in their policy response to Covid-19, says the report. 

‘Far from levelling up, these results show that the government’s handling of the pandemic has led to the richest families and regions getting richer, while the poorest families are even poorer now in real terms than the month of Johnson’s election victory (having been left particularly exposed to rising inflation).

‘This would be an indictment on any government, let alone one where the promise to ​“level up” sits at the heart of its political and policy agenda.

‘Worse still’ adds the report ‘the immediate outlook looks certain to deteriorate further. With prices expected to continue increasing, combined with the threat of a rise in interest rates and the continued effects of Brexit, things may well be about to get a lot tougher for those families that have already suffered most.

‘In the long run, any agenda to tackle these issues needs to grasp the fundamental drivers of regional inequalities for places, people, and industry – this includes spreading good green jobs across the country, as well as diversifying company ownership models and distributing the spread of wealth, including via a more progressive tax system.

‘But in the short term, more should be done to help families directly through the social security system. In particular, and considering rising prices, the analysis exposes the vulnerability of the UK’s current safety net in responding to real world change.

‘A more fundamental solution in line with NEF’s argument for a Living Income would ensure an income floor that reflects the true cost of living for families, rather than an accumulation of decades of underfunding and arbitrary cuts to cap income support costs. With windfall gains for some of the richest families over the past two years, it’s also clear who can and should be helping to pay for such reform’.