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The Research Brief: How the average Briton became £10,200 worse off

Your weekly dose of policy thinking.

By Spotlight

Welcome to the Research Brief, where Spotlight, the New Statesman’s policy section, brings you the pick of recent publications from the think tank, charity and NGO world. See more editions of the Research Brief here.

What are we talking about this week? Do not adjust your sets: this is yet another report confirming how badly Britain’s flatlining post-2010 economy has hit people’s wallets. (See a previous Research Brief covering this bind.)

The average Briton has £10,200 less to spend or save, than they would have had if the economy continued growing at the same rate it did between 1998 and 2010. That’s the headline figure from the annual “Cities Outlook” report from the Centre for Cities think tank.

“The UK has had a torrid time since the [2008] great recession,” said the Centre for Cities chief executive, Andrew Carter. “Everywhere, up and down the country, including places that were doing relatively well before, has been levelled down because of the lack of growth.”

Levelled down? While the impact of Britain’s post-2010 malaise has been generally negative, some places have been hit harder than others. Researchers compared disposable incomes across the UK’s 63 largest cities over time and found that “every place is out of pocket – both north and south, and from former industrial towns to innovation superstars”.

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Aberdeen is the locale that’s been most affected: residents in the Scottish city are £45,000 worse off than they would have been had the economy grown at levels seen between 1998-2010 over the past 13 years. Burnley is the most affected English city, where people are £28,090 worse off. Other negatively affected areas include Glasgow (£23,500), Milton Keynes (£21,610) and Cambridge (£21,340).

Only seven cities, including Derby and Northampton, saw disposable income growth compared to pre-2010 trends. But this was “in almost all cases due to underwhelming growth in the 1998-2010 period”, according to researchers.

What’s behind the decline? Mostly stagnant productivity. The dip in Aberdeen’s economy was mainly driven by its declining role in the oil and gas industry – an estimated 9,000 jobs have been lost in the sector since 2010, the researchers note. Prior to this, Aberdeen had the sixth-highest disposable income level in the UK.

Despite all but two cities seeing a growth in jobs since 2010, productivity “was poor across almost all cities” researchers said. Productivity growth also dropped from pre-2010 performance on an almost national basis, and despite advancements in working practices, 18 cities were less productive in 2021 than in 2010.

Fuelled by 14 years of Conservative austerity, the cost-of-living crisis (catalysed by the war in Ukraine), and Liz Truss’s disastrous tax-slashing mini-Budget in 2022, working-age household incomes are expected to be 4 per cent lower at this year’s general election than they were at the last one, in 2019.

What needs to be done? Ideas on how to stimulate growth will be key to both main political parties’ pitches at this year’s general election. Labour’s first “mission for government” is to “restore economic stability”. While the Conservatives are trying to assure voters that “the plan is working” by pointing to falls in inflation and wage rises.

Carter is calling for whoever the next government is to start a “multi-decade policy programme” to stimulate urban Britain. Cities account for 9 per cent of land, but over 60 per cent of the economy, including 72 per cent of all high-skilled jobs. “There is no plausible way of achieving higher growth [for cities] without increasing the innovation and dynamism of urban Britain,” Carter says.

“This means reforming the planning system to enable cities to grow, devolving more powers and financial freedoms to encourage our big cities to make decisions that support growth, and following the levelling up rhetoric with bold actions.”

Read the full report from the Centre for Cities here.

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