Understanding UK inequality

Britain is a deeply divided country. Inner London is the richest part of the entire European Union, while Cornwall and Wales benefit from the regional aid dispensed by Brussels.

As John B often points out if you took London out of the picture then inequality in hte UK would be entirely normal. For, without London, the UK is an entirely boring Northern European economy. London is part of that Great Global economy and that\’s where a lot of the recorded inequality comes from.

And as I like to point out, if we actually adjusted incomes for costs, most especially house prices in London, then a lot of UK inequality again disappears. Precisely because of this dominance of London consumption inequality is very, very, much lower than income inequality.

38 thoughts on “Understanding UK inequality”

  1. The other issue is that the relatively small, but hugely rich, number of foreign oligarchs & similar who are based in London part time completely skew the data for inequality, wealth etc which the Left like to show to demonstrate unfairness in UK society.

    Now, if there were 30 Dukes of Westminster they might have a point, but seeing as the SundayTimes Rich List is predominantly foreigners who just happen to own an expensive house in London they live in for a few weeks a year, then does this really having anything to say about “UK society” as a whole ?

  2. It’s a national scandal, this inequality. Time the Welsh and the Cornish got off their backsides and made some money

  3. Absolutely right Tim.

    On the “adjusting incomes for costs” point, the data suggests that service workers in global megacities don’t do any financially better after cost-of-living is considered than service workers in one-horse nowhere towns. The benefits all go to the best-paid third of the megacity’s population.

    Shinsei: if they’re not residents, they’re (obviously) not classed in the data.

  4. Surreptitious Evil

    Shinsei: if they’re not residents, they’re (obviously) not classed in the data.

    This rather depends on whose methodology, whose data and whose analysis. They’re not included in ‘official figures’ but then the Sunday Times Rich List isn’t produced to ONS methodology or quality standards. And, of course, they do contribute even to official data on house prices etc.

  5. @john b

    I currently work in IT in Bristol and, having run the numbers, I reckon I’d need at least a 50% payrise to make working in London worthwhile for me (i.e. having the same discretionary income as I have now). The main factors in this would be my housing costs rising from about

  6. SE: all true, but Tim was quite explicitly talking about inequality stats, which are produced to ONS methodology and are based on either the income or wealth of UK residents.

  7. It does feel like a city state, and England feels a different place, even in the well-heeled bits like Bath, Chester, York. Watching those Toon fans threatening to punch police horses yesterday one wonders what had become of England.

  8. For ages now, ever since yesterday in fact, I’ve been wondering how the London Bubble fits with the “Dutch Disease” thing we were discussing, since that seems to apply to all situations in which a lot of revenue is getting dumped into an economy, so far as I can tell.

  9. @John Price “Watching those Toon fans threatening to punch police horses yesterday one wonders what had become of England.”

    That sort of thing has always gone on – whether you mean violence towards animals or general violent and riotous behaviour.

    The difference is that in different times (and now, in different countries) it would have resulted in police cracking heads and lengthy jail terms.

    Now, it’s quite easy to imagine it resulting in columns in the Guardian headlined ‘The toxic legacy of Tory Britain’, and seeking to suggest that the fat jackass who punched that horse did so because Maggie Thatcher was evil.

  10. Surreptitious Evil

    johnb: I was looking at the linked post – which doesn’t reference ONS stats, merely some generic Guardianista whining and this “CRESC” study. Tim and your choice of stats provider might well be excellent 🙂

    IanB: as I said, yesterday (#11), London’s financial market pre-eminence is, indeed, an example of this sort of distortion. It is mitigated by it also being the political and (as far as art snobbery goes) artistic centre and that it was an established and significant economic area beforehand, so the dominance is significantly less than you tend to find with natural resource bubbles.

  11. Interested: “The difference is that in different times (and now, in different countries) it would have resulted in police cracking heads and lengthy jail terms.”

    Stop training police horses to be calm & docile in these situations, and start training them like medieval warhorses – a half-ton of biting, rearing, kicking horseflesh would clear a crowd a lot quicker!

  12. Having looked at the job market in the UK, and not being very particular about where to live, I noticed that whilst being less available, the kind of job I do is not massively lower paid in the shires, and would therefore lead to a better standard of living.

  13. It’s worth recalling that under Thatcher, London was a bit of a dump. There was the growth in the city, with bankers buying up old warehouses and bits of the East End, but the rest of it was a hole.

    It’s under Major and Blair that London became a modern city. Thatcher spent almost nothing on grand projets anywhere, and most of the grand projet spending went on London. And if you spend a few hundred million doing up the Royal Opera House, that is a transfer of millions from people in other places that indirectly goes into glazers, signwriters and builders in the South East.

    Then there’s housing benefit, of which the amount spent on London is nearly double what is spent on JSA for the whole country. Cut that to say 1/3rd of average UK rents and see what happens to vibrant London.

  14. @Tim Almond

    Didn’t Thatcher build Channel Tunnel, Dartford Bridge, Terminal 4, Stansted, extra lane on M25, Docklands regeneration & Thameslink to name just a few infrastructure projects that come to mind.

  15. Surreptitious Evil

    Then there’s housing benefit, of which the amount spent on London is nearly double what is spent on JSA for the whole country. Cut that to say 1/3rd of average UK rents and see what happens to vibrant London.

    A sudden and precipitous decline in rent levels for those sorts of properties lived in by people who can claim housing benefit?

    Anyway, isn’t this what the gbp26k “maximum household benefit” is intended to achieve? Dunno if they’ve set the level right – haven’t rented since 1987 and never in London.

  16. Re the inequality stats.

    If an oligarch is a non dom here then surely he will appear in the official stats ?

    Even if his Siberian copper mine riches have little to do with UK society.

  17. Shinsei67,

    Channel Tunnel = private
    Dartford Bridge = private
    T4? Perhaps
    Stansted? BAA privatised in 1986, construction began in 1988.
    M25 4th lane? Announced to parliament about 5 days after Thatcher left office, but maybe. I’d hardly call sticking an extra lane on a motorway a grand projet.
    LDDC? Formed in 1981.
    So, Thameslink, yes. A chicken feed project.

  18. A bit of a dump in the 1980s? A little shabbier, perhaps, but a lot more real. Although the gap wasn

  19. A bit of a dump in the 1980s? A little shabbier, perhaps, but a lot more real. Although the gap wasn

  20. Glad to hear that Thatcher didn’t waste state spending on grand projects like many other vain leaders who need their ego boosting.

    So you think state spending on grand projects leads to a trickle down effect. I thought trickle down (by the state or some rich bastard) had been proved wrong.

  21. @John Price – hear hear for JuliaM’s suggestion that police horses should be trained to act like medieval war horses?

    Er, whatever turns you on.

    It would be a good idea, as long as you never, ever want them deployed on the streets of London or indeed at any major demo – or you’re prepared to pay millions in damages for death and injury.

    I don’t know if you know anything about the subject (I’m sure JuliaM knows nothing about them, because she appears to know nothing about anything), but horses are not people.

    You can train them to keep calm, and you can train them to charge, but you cannot train them to identify and charge only at those few people in a crowd of hundreds who are actually throwing things at the cops, and, even if you could, by the time you get near the culprits they will have melted back into the crowd and you are sitting on three-quarters of a tonne of muscle and bone doing 25mph through a city street. Try reining that in.

    I’m not saying go easy on rioting scum – I’m saying use water cannon and baton rounds.

    Don’t expect horses to do much more than push people back and provide a mobile platform for eyes and ears.

    @IanB – you remember right, London *was* great in the 1980s. But (given your age and mine) we were in our early 20s then…

  22. @Tim Almond

    I wasn’t clear. Yes, I realise all those infrastructure spends were by the private sector, though obv governments have to grant the planning permission.

    The point I was making was to counter your view that the UK was a bit of a dump in the 80s due to lack of investment in grand projets. Whereas I don’t think it was a dump and there was plenty of new investment.

    Whether it was by the public or private sector I really don’t care.

  23. Shinsei1967,

    I didn’t say that the UK was a dump. I said that London was. OK, Kensington wasn’t, but a lot of bits of London are much smarter now than they were in the 1980s.

    But private vs public does matter in this context, because private has to collect from users and public doesn’t. Tube fares are cheaper in London because the public subsidises it to the tune of

  24. Shinsei1967,

    I didn’t say that the UK was a dump. I said that London was. OK, Kensington wasn’t, but a lot of bits of London are much smarter now than they were in the 1980s.

    But private vs public does matter in this context, because private has to collect from users and public doesn’t. Tube fares are cheaper in London because the public subsidises it to the tune of 3bn quid a year. This makes living in London cheaper than it should be, as the users of transport are getting it funded by those outside London.

    What it actually does is to increase rents, though, but then another distortion comes in, which is that we pay HB to people in London to cover those rents.

  25. You might conclude that it is the inflated house prices in London that cause the trouble but property price inflation is straightforward market forces so there’s nothing can be done about it.Is there? All those land taxers who say otherwise are flying in the face of nature. If not nature then the majority of English voters who say with one mighty bellow “Not a penny off the house prices even if it creates jobs and places for our kids to live.”

  26. DBC Reed,

    But they are only set at the market price that is itself influenced by external forces. And housing benefit is an external force. We don’t just hand people an amount of money and tell them to house themselves, we pay them based on their location, which is why half the housing benefit bill is London.

    If you add up the total of JSA and income support for the whole country, it’s barely more than the HB bill for London (

  27. @SE
    Who’s the monomaniac? You make the same comment every time. But don’t stop : you’re the only one who shows me I’m getting through.

  28. Surreptitious Evil

    Who’s the monomaniac? You make the same comment every time.

    I managed to make three substantive comments on this thread alone, without ever alluding to, never mind mentioning, you.

    But don’t stop : you’re the only one who shows me I’m getting through.

    Endless dragging of threads o/t to insist that the one, true and only way is LVT isn’t you “getting through”. It’s simply you being moronically irritating.

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