PwC Report Highlights Regional Disparities in UK Household Spending Power

Almost half of households in Britain reside in areas where economic growth does not translate into an enhanced quality of life, according to analysis by consultancy firm PwC, as reported by BBC News. The research identifies a substantial disparity in household spending power between the north and south of England.

PwC’s findings indicate that regions across the north of England, the Midlands, and Wales registered household spending power below the national average. Conversely, London and the South East recorded figures comfortably above this benchmark.

Regional Discrepancies in Spending Power

The report, released on Thursday, states that an equivalent of 12.5 million households, representing 46% of the total, are located in areas where economic growth, typically indicated by increased business investment and job creation, is not leading to better living standards. Household spending power, which PwC measures by considering income after taxes and housing costs, adjusted for household size, is seen as a key indicator of whether economic growth improves living standards.

Housesholds in the North East of England experienced spending power 6.6% below the national average, equating to £1,542 less annually. The North West was £1,493 lower, while Yorkshire and the Humber recorded the largest deficit at £1,917 below the national average. In contrast, households in the South East had spending power 9% above the national average, an additional £2,154 per year, closely followed by London, according to PwC.

The report also highlighted variations within seemingly affluent areas. For instance, Richmond in London showed an average annual disposable income of £35,448, almost double the £18,384 recorded in neighbouring Hammersmith and Fulham. Rachel Taylor, government and health industries leader at PwC, noted that the research demonstrates how differently prosperity is experienced across the UK, with “stark variations not only between regions but on each other’s doorstep.” While higher housing costs affect spending power in the south, these are reportedly softened by higher incomes, thus maintaining the overall divide. Scotland and the South West of England were identified as exceptions, with lower housing costs and smaller households contributing to spending power slightly above the national average.

Policy and Economic Growth

The findings emerge as Prime Minister Andy Burnham has pledged to address the cost of living and regional inequalities. The report suggests that the next phase of devolution should empower local authorities to retain more revenues from local growth and grant them greater autonomy in resource allocation. It argues that success should be gauged by whether growth leads to increased prosperity, wider opportunities, and improved lives for local communities, rather than solely by economic growth figures.

A government spokesperson, as quoted by BBC News, stated that the creation of No10 North is part of its growth mission to reshape national administration. They referenced the announcement of financial powers for English mayors, including a share of income tax revenues, intended to boost local economies and public services. However, Conservative leader Kemi Badenoch has criticised Prime Minister Burnham’s economic approach, stating that his “diagnosis” and “theory of growth is completely wrong.” She also described the establishment of No10 North as a “gimmick.”