living standards and poverty in the regions
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Living Standards and Poverty in the Regions. David Phillips Institute for Fiscal Studies 11 th 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 - PowerPoint PPT PresentationTRANSCRIPT
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
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)
Source: HBAI Data and authors’ analysis
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
Median Income in 2004-05 (BHC)
Source: HBAI Data and authors’ analysis
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
Median Income in 2004-05 (BHC)
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
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%
Poverty in 2004-05 (BHC)
Source: HBAI Data and authors’ analysis
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%
Poverty in 2004-05 (BHC)
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)