PwC Report Finds 46% of UK Households Miss Growth Benefits
A PwC report shows 46% of UK households live where economic growth fails to raise living standards, highlighting a North-South divide in spending power.
Almost half of UK households see no improvement in their quality of life from national economic growth, according to a new report from consultancy PwC. The research identifies a stark North-South divide in household spending power, with every region in the north of England, the Midlands, and Wales falling below the national average.
The North-South Spending Power Divide
The report states that 12.5 million households, equivalent to 46% of the total, live in parts of the country where growth in business investment and jobs does not translate to better living standards. Household spending power, measured as income after taxes and housing costs adjusted for household size, is used as the key metric.
Researchers found all northern English regions, the Midlands, and Wales had lower spending power than the UK average. London and the South East were comfortably above it.
| Region | Spending Power vs. National Average | Annual Difference |
|---|---|---|
| North East England | 6.6% less | £1,542 less |
| North West England | Not specified % less | £1,493 less |
| Yorkshire and the Humber | Not specified % less | £1,917 less (worst off) |
| South East England | 9% above | £2,154 more |
Variations Within Prosperous Regions
While the broad geographic split is clear, the PwC analysis also uncovered significant disparities within areas deemed better off. Rachel Taylor, government and health industries leader at PwC, said the just how differently prosperity is experienced across the UK, with stark variations not only between regions but on each other's doorstep.
For example, within London, the average annual disposable income in Richmond was £35,448. This is nearly double the £18,384 recorded in the neighbouring borough of Hammersmith and Fulham. The report noted that higher housing costs in the south impact spending power, but this hit is softened by higher average incomes, preserving the overall divide.
Exceptions and Policy Recommendations
Scotland and the South West of England were exceptions to the dominant trend. The report attributed their slightly above-average spending power to lower housing costs and smaller average household sizes.
The report connects its findings to the political debate on regional inequality and devolution. It argues that the next phase of transferring power from central to local government must allow local areas to retain more of the revenues generated by local growth alongside more freedom on how best to use resources. Success, it contends, should be judged not simply by whether local economies grow, but by whether that growth leads to greater prosperity, wider opportunity and better lives for the people and communities within them.
Prime Minister Andy Burnham, who has pledged to tackle regional inequalities, has made devolution a central part of his leadership. This includes a pledge to create the conditions for good growth in every postcode. A government spokesperson cited the creation of 'No10 North' and new financial powers for English mayors as part of its growth mission.
However, Conservative leader Kemi Badenoch criticized the approach. She said Burnham's diagnosis and theory of growth is completely wrong, arguing that more government spending does not make a nation richer. She has called the establishment of No10 North a gimmick. The report's release coincides with questions over the Prime Minister's fiscal plans, as rising government borrowing costs are expected to limit his options in the upcoming October Budget.
