North-South divide in living standards still widening as the UK’s northern regions experience falling incomes, lengthier commutes and fewer start-ups
The economic and social divide between the North and the South of the UK has widened over the past three years and is continuing to grow, new data suggests.
Increases in household income, a decline in the rate of women claiming job seeker’s allowance, and rise in the proportion of ethnic minority workers employed in the region have all contributed to higher social and economic prosperity in the South.
However, the North has become less prosperous as a result of falling household incomes, fewer small businesses and lengthier journeys to get to work.
‘Lifeblood of the UK economy’: The report highlights the importance of small businesses to the local economy
This is according to Mastercard’s new ‘inclusive growth score’ for the UK, which aims to draw a comprehensive economic and social picture of communities across the country.
It does so by analysing 21 different social and economic indicators – ranging from housing affordability and broadband speed to access to public green space, clean air as well as small business representation and commercial diversity.
And it shows that so far in 2021, the south of the UK has an average growth score of 54 out of 100, marking an improvement from a score of 53 in 2018.
But the North scores lower at 48, with the region’s economic and social situation having worsened since three years ago, when the score was 49. The Midlands has a score of 51.
‘This disparity between scores is evidence of inequality in social and economic prosperity between the regions and highlights the need to rebalance the country,’ the Mastercard Center for Inclusive Growth said.
The data show the importance of diverse worker representation for communities’ prosperity
The report highlights the importance of small businesses to the local economy, with micro and small businesses accounting for 50 per cent of total revenue generated by UK businesses and 44 per cent of the labour force.
Kelly Devine, president of UK & Ireland at Mastercard, said: ‘Small businesses are the lifeblood of the UK economy and their success is crucial in driving sustainable, inclusive growth in communities.
‘In the UK, Without small businesses, local communities would suffer from a lack of local employment opportunities and the government’s levelling up agenda would be impossible to achieve.’
She also said it was ‘vital’ that communities had diverse worker representation if they were to be ‘truly inclusive’.
‘This is key for post-pandemic economic recovery as it’s estimated that £24billion could be added to the UK economy if racial disparities in the labour market were addressed.’
Leeds, Manchester and Preston buck the northern trend…
While on average southern areas are more prosperous than northern regions, there are some cities in the north of England that have bucked the trend with better-than-average growth.
Leeds, for example, scored 55 this year, driven by increases in ethnic minority worker representation and overall community wellbeing.
Similarly, Manchester scored 53 in 2021 despite the economic challenges presented by the pandemic, with this down to increases in education accessibility and access to healthcare.
Manchester scored 53 in 2021 despite the economic challenges presented by the pandemic, with this down to increases in education accessibility and access to healthcare
Preston, a city in Lancashire known for the ‘Preston model’ of sustainable economic development and experimentation in ‘community wealth building’, also scored above the average at 53.
Andrew Western, Greater Manchester councillor for digital, work, skills and apprenticeships, said: ‘In Greater Manchester we know social and economic inequalities are a significant barrier in helping us achieve our ambition that our city-region become one of the best places in the world to grow up, get on and grow old.
‘The Mastercard Inclusive Growth Score is an important tool in aiding our understanding of what support is needed locally to nurture inclusive, economic, and social growth, helping us to drive improvements to make things better for our people across Greater Manchester.’
… While Bath, Canterbury and Exeter buck the southern trend
There are also some southern cities where the score is lagging behind the regional average, including Bath which scored 48, and Canterbury and Exeter which each scored 45.
In both Bath and Canterbury, the decline was due to decreases in public green space and accessibility of education, while Exeter saw prosperity decline as minority worker representation and small business both fell.
Devine said the findings could help policymakers and community leaders ‘uncover and prioritise’ areas where more support is needed.
‘The range of indicators provide a comprehensive view of conditions in an area and help local policy makers make decisions that meet the specific needs of communities and residents through community projects, affordable housing, and investment in local businesses,’ she added.
The report comes as the government recently reiterated its commitment to ‘level up’ the country, closing the gap between depressed areas of the UK, mostly in the north, and London and the south-east.
The data used is collected from publicly available sources such as Office for National Statistics and HM Land Registry, as well as from Mastercard.