Transcript Living Standards and Poverty in the Regions David Phillips Institute for Fiscal Studies 11th June 2008

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%
Source: HBAI Data and authors’ analysis
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%
Source: HBAI Data and authors’ analysis
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%
Source: HBAI Data and authors’ analysis
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
Median Income in 2004-05 (BHC)
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
Source: HBAI Data and authors’ analysis
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
Source: HBAI Data and authors’ analysis
Median Income in 2004-05 (BHC)
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
Source: HBAI Data and authors’ analysis
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%
Source: HBAI Data and authors’ analysis
Poverty in 2004-05 (BHC)
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%
Source: HBAI Data and authors’ analysis
Poverty in 2004-05 (BHC)
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%
Source: HBAI Data and authors’ analysis
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)