Living Standards and Poverty in the Regions

Living Standards and Poverty in the Regions

David Phillips

Institute for Fiscal Studies

11th June 2008

What’s coming up?

• Living Standards in the Regions

• Poverty in the Regions

• How things change when we use regional price levels

The Regions of the United Kingdom

• Nine English Regions

• North East, North West, Yorkshire and Humber, East Midlands, West Midlands, East of England, London, South East and South West.

• Wales

• Scotland

• And Northern Ireland

• Twelve ‘regions’ altogether.

Regions and Price Levels

• Prices differ across regions.• Housing etc expensive in London and the South

East • Affects real purchasing power in different parts of the

country. • “Real” income higher where low prices• “Real” poverty lower where low prices

• Regional prices may change our view about living standards and poverty rates across the UK.

But…

• No consistent regional price series.• The ONS has produced only two recently: 2003

and 2004. We use the latter years regional price data LATER.

• We therefore use national prices for most of this analysis.

• Might lead to misleading estimates of real incomes and overestimation of poverty rates but should capture relative trends over time.

Median Income (BHC)

• Same measure of income as usual.• Household income after taxes and benefits, but

before housing costs and adjusted for household size.

• Use two year averages.• UK-wide median = 100.

• Bigger than 100 means higher than UK• Lower than 100 means lower than UK

Real Income (2005-06 and 2006-07)Region Relative Income

South East 116.6

London 112.7

East of England 107.5

South West 100.8

Scotland 98.6

East Midlands 95.0

Yorkshire 93.7

Wales 93.1

North West 92.9

North East 90.9

Northern Ireland 90.9

West Midlands 90.8

Source: HBAI Data and authors’ analysis

Real Income Growth (1996-97 to 2006-07)

Region Percentage Growth

London 28%

North East 26%

South West 24%

Yorkshire 23%

Wales 22%

Scotland 21%

East of England 20%

North West 18%

East Midlands 18%

South East 18%

West Midlands 14%


Mean Income (BHC)

• Similar pattern except London now has the highest incomes by a considerable margin.• Indication of the high levels of inequality in London

with a sizeable ‘very rich’ population.

Defining and measuring poverty

• We use the same measure of poverty as usual.• Household income below 60% of the national

median, AHC and BHC. • Because of small samples at the regional level we

use two-year averages.• We only report poverty rates for the population as a

whole as sample sizes for sub-groups are small at the regional level.

Poverty Rate (2005-06 and 2006-07)Region Relative Poverty (AHC)

London 27.5%

West Midlands 24.4%

North West 24.0%

North East 23.4%

Wales 22.5%

East Midlands 22.5%

Yorkshire 22.2%

Northern Ireland 19.9%

South West 19.6%

Scotland 19.3%

East of England 18.7%

South East 18.3%


Change in Poverty (1996-97 to 2006-07)Region Change in Poverty

North East -6.3%

Wales -4.9%

Scotland -4.6%

South West -4.0%

Yorkshire -3.5%

London -2.8%

East of England -2.6%

North West -2.0%

South East -1.7%

East Midlands -1.4%

West Midlands -0.0%


Regional Poverty (BHC)

• Using incomes measured BHC there are a few differences• Highest in the West Midlands at 20.8%• Mid-table for London at 17.2%• Lowest in the South East at 13.6%

• The changes in relative rankings over time are similar to AHC poverty, although poverty has risen slightly for a few regions (North West, East Midlands, West Midlands and the South East).

Using Regional Prices

Regional Price Indices

Region Price Level

London 109.7

South East 105.3

South West 101.3

Eastern 101.1

West Midland 97.8

East Midlands 97.4

North West 96.9

Northern Ireland 95.8

Yorkshire 94.2

Scotland 94.5

North East 94.2

Wales 93.1

Source: Office of National Statistics

Region National Prices

South East £429

London £415

East of England £396

South West £377

Scotland £371

East Midlands £355

North West £352

West Midlands £347

Yorkshire £342

Northern Ireland £341

Wales £339

North East £330

Median Income in 2004-05 (BHC)


Region National Prices Regional Prices

South East £429 £407

London £415 £378

East of England £396 £392

South West £377 £372

Scotland £371 £393

East Midlands £355 £364

North West £352 £363

West Midlands £347 £355

Yorkshire £342 £363

Northern Ireland £341 £356

Wales £339 £364

North East £330 £350



Region Regional Prices

South East (0) £407

Scotland (+3) £393

East of England (0) £392

London (-2) £378

South West (-1) £372

East Midlands (0) £364

Wales (+4) £364

Yorkshire (+1) £363

North West (-2) £363

Northern Ireland (0) £356

West Midlands (-3) £355

North East (0) £350



Poverty in 2004-05 (BHC)

Region National Prices

North East 21.6%

Northern Ireland 20.6%

West Midlands 19.7%

Wales 19.3%

East Midlands 18.9%

North West 18.4%

London 18.2%

Yorkshire 18.0%

Scotland 17.2%

South West 14.1%

East of England 13.8%

South East 12.2%


Region National Prices Regional Prices

North East 21.6% 18.0%

Northern Ireland 20.6% 18.4%

West Midlands 19.7% 19.0%

Wales 19.3% 15.3%

East Midlands 18.9% 18.2%

North West 18.4% 16.9%

London 18.2% 22.6%

Yorkshire 18.0% 15.1%

Scotland 17.2% 14.9%

South West 14.1% 15.5%

East of England 13.8% 14.6%

South East 12.2% 14.9%



Region Regional Prices

London (+6) 22.6%

West Midlands (+1) 19.0%

Northern Ireland (-1) 18.4%

East Midlands (+1) 18.2%

North East (-4) 18.0%

North West (0) 16.9%

South West (+3) 15.5%

Wales (-4) 15.3%

Yorkshire (-1) 15.1%

Scotland (-1) 14.9%

South East (+1) 14.9%

East of England (-1) 14.6%



Summary

• Median income

• highest in the South East and London

• lowest in the North East, Northern Ireland and West Midlands.

• Poverty

• highest in the North West, West Midlands (BHC) and London (AHC).

• lowest in South East

• Accounting for cost of living has big impact on relative rankings in terms of both median income and poverty (e.g. London and Wales)

Documents

Living Standards and Poverty in the Regions