North-south divide getting wider, despite progress on earnings

THE gap in wealth and education between London and the rest of the UK is widening, even though the earnings of people living outside the capital are catching up, a study has found.

In a report showing the scale of the “levelling up” challenge faced by Boris

Johnson, the Institute for Fiscal Studies found that average earnings in London were still 54 per cent higher than in the North East of England, despite the gap having narrowed in the past 18 years.

This is largely because progress on wages has been dwarfed by the growing wealth of Londoners, fuelled by rising property prices and stock market gains. Average property and financial wealth in London and the South East grew by 150 per cent and 50 per cent, respectively, in the decade up to 2018, but just 3 per cent in the North East.

Three times as many Londoners earned over £50,000 as people in the North East and Wales – a rate of 30 per cent against 10 per cent.

The education divide is even more stark, the report says. Even the poorest children in the capital outperformed all children in all but one region when it came to reaching university.

More than half of state school pupils in inner London now go to university, up from 33 per cent in 2005, while in the South West, the number has risen from 29 per cent to just 37 per cent.

Of children who receive free school meals, those in London are at least twice as likely to go to university as those living elsewhere in the country, with the exception of the North West and the West Midlands.

The downside for Londoners is the high cost of renting and the disproportionately high number of people who rent. This has eroded much of the gain in earnings growth. Average full-time earnings in London, after inflation, have increased by 1.5 per cent since 2002, compared with 5.6 per cent elsewhere, while rents have increased by 43 per cent since 2005 in London, but only 19 per cent in the North East.

Inequalities within regions can also be stark. In London, earnings are 53 per cent above average in Kensington and Chelsea, but 3 per cent below in Barking and Dagenham.