Large productivity gaps, income disparities and child poverty remain persistent across the UK, even though employment and wage gaps have narrowed, research has found.
The research, detailed in the report ‘Uneven ground’ from the Resolution Foundation, examined a range of economic measures to assess the geographic inequality that the new government is facing.
This assessment revealed that the employment gap between low and high-employment local authorities shrank by 3 percentage points during the 2010s.
This is because it has become easier to find work in historically low-employment areas, explained report author Charlie McCurdy, economist at the foundation.
For example, in Tower Hamlets and Manchester the employment rate has increased from around 50 percent to 70 percent during the last 30 years.
Wage gap narrows
Wage gaps between areas have also narrowed, mostly at the lower end of pay distribution, which the report mainly attributed to minimum wage rises.
It showed that the pay gap between the lowest-paid workers in Basingstoke (one of the highest-paid areas) and Plymouth (one of the lowest-paid areas) was 26 per cent in 1997. But this gap had reduced to just 3 percent by 2023.
However, the report also said that overall income gaps between places haven’t really changed since the late 1990s.
The average income per head in the richest area (Kensington and Chelsea) is more than four times that of the poorest area (Leicester). The average before-housing-cost income per head in Hammersmith and Fulham has been consistently two-to-three times higher than in Burnley since the late 1990s.
Persistent productivity gap
Productivity was another economic measure where gaps between geographies remained both large and persistent.
The report showed that in 2022, gross value added (GVA) per job in London was 45 percent above the national average, while in Manchester GVA per job was just 7 percent above the average, with Leeds 2 percent above and Birmingham 4 percent below.
McCurdy said that these productivity gaps are “rooted in the 1980s deindustrialisation period”. He explained that areas outside London struggled to transition from manufacturing industries to tradable services as effectively as the capital.
Child poverty gap
The report also revealed that regional gaps in child poverty levels have increased.
In 2022/23 nearly half of children in eight local authorities were in poverty. This included Birmingham, Tower Hamlets and Manchester, where the figure was 48 percent, for Sandwell it was 47 percent, and in Stoke, Oldham, Wolverhampton and Walsall 46 percent of children were in families in poverty.
The location of child poverty hotspots has also changed. In 2014/15, 19 of the 20 hotspots were in London. But by 2022/23, only three were in London, while the rest were split between the North West and West Midlands.
Report author McCurdy, said that the big picture on the evolution of regional economic gaps is mixed.
“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.”
