Progress has been made in narrowing some geographic economic gaps, but the same areas have tended to either lag behind or prosper that did so thirty years ago, and spatial disparities in child poverty have widened since 2014-15 – according to new Resolution Foundation analysis published this week
Their analysis reveals a mixed picture, as some economic gaps have shrunk, some remain unchanged, and some worsening, particularly in the most recent years.
The good news is that employment and wage gaps between different parts of the country have fallen since the 1990s.In Manchester, for example, the employment rate has risen from around 50 to 70 per cent over the last 30 years.
Wage gaps have also come down, primarily at the bottom of the pay distribution, thanks to a rising minimum wage.
However the less good news is that overall income gaps between places haven’t changed much since the late 1990s. The average income per head in the richest areais over four times that of the poorest area
Productivity gaps between places are also both large and persistent. In 2022, gross value added (GVA) per job in London was 45 per cent above the national average, while Manchester’s GVA per job is just 7 per cent above the average, with Leeds 2 per cent above and Birmingham 4 per cent below.
This says the report, is rooted in the 1980s deindustrialisation period, as areas outside of London struggled to transition from manufacturing industries to tradable services as effectively as London did.
The bad news is that spatial disparities in child poverty have increased. The result is that nearly half (48 per cent) of children living in Birmingham and Manchester are now growing up in relative child poverty (after housing costs). The report notes that the geographic location of child poverty hotspots has shifted: in 2014-15, 19 of the 20 hotspots were in London, but by 2022-23, only three remained in London, with the rest split between the North West and West Midlands.
The new Government may have ditched the language of ‘levelling up’, but their growth agenda cannot be achieved without unlocking the potential of the UK’s second cities and ensuring living standards improve in all parts of the country. More than six-in-ten people say that gaps between areas are one of the most concerning types of inequality the country faces but, as the Foundation notes, regional economic differences are deeply entrenched and won’t be solved overnight.
“While the UK has narrowed employment and wage gaps across the country over the last three decades, income and productivity gaps have remained large, and child poverty gaps have grown in recent years.
“Of most concern is that regional economic differences are deeply entrenched: across multiple measures, the places that were doing worst in the late 1990s have generally continued to do so.
“The new Government may have ditched the language of ‘levelling up’, but their growth agenda cannot be achieved without unlocking the potential of the UK’s second cities and raising living standards in all parts of the country.”
