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The income gap between Londoners and the rest of the UK population is at a record high, new statistics show, revealing the challenges the government faces in delivering its flagship “levelling up” agenda.

According to statistics, households in the capital will have £31,094 per person to spend or save in 2021, which is 43% higher than the national average of £21,679. data It was released on Thursday by the Office for National Statistics. This is the largest gap since records began in 1997.

When the ONS started tracking the data 25 years ago, total disposable household income per person in London was 22% above the national average, rising to 37% in 2008.

In the years since, as the capital’s financial sector recovered from the banking crisis, the gap narrowed and then widened again.

“The big picture is that the UK has not translated its escalation rhetoric into reality,” said Lindsay Judge, research director at the Resolution Foundation think tank. “To tackle this we need to look at major cities outside London where poor economic performance is holding back national prosperity,” she added.

Line chart of total disposable income per head of households in London, UK average = 100 shows that the gap in disposable income between London and the UK average has widened

Then-Conservative leader Boris Johnson’s successful 2019 election campaign came on the promise of leveling up. But a recent report by the Institute for Government found it had “stalled” under Chancellor Rishi Sunak. The discovery was rejected by Downing Street as “untrue”.

Gross household disposable income is a measure of the household budget after tax, including benefits, but excluding housing costs, which are significantly higher in London than in much of the rest of the UK.

Figures from the Office for National Statistics show that with the exception of Scotland and Northern Ireland, which were essentially unchanged, disposable income per head fell relative to the national average in all other regions.

In the West Midlands, disposable income per person fell from 91% of the national average in 1997 to 86% in 2021. Over the same period, per capita disposable income in the East Midlands fell from 91% to 87%. Disposable income in the Northeast and Northwest fell by 4.4 percentage points and 3.7 percentage points respectively, to 81% and 87% of the national average.

Jonathan Portes, professor of economics and public policy at King’s College, said: “These figures show the depth and persistence of regional inequality in the UK”.

Addressing the problem “requires sustained investment in transport and other forms of connectivity in disadvantaged areas, as well as planning and land use reforms to promote the development of more high-productivity clusters outside London”, he added.


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