Rich world problems are irrelevant across most of the country, but poverty matters throughout Britain

On Friday the ONS, publisher of official statistics, released some “NOT official” statistics on people’s incomes for every local authority in England and Wales. This is pretty exciting stuff but before I outline some of the key findings from the data, the ONS require I make clear that:

These Research Outputs are NOT official statistics on income. Rather they are published merely as outputs from research into a different methodology to that currently used in the production of income statistics.

It is important that the information and research presented here be read alongside the outputs to aid interpretation and avoid misunderstanding. These outputs must not be reproduced without this disclaimer and warning note.

These ‘non-statistics’ provide information on the income distribution in each local authority in England and Wales for the tax year ending in 2014. This is the first time such information has been made publicly available and is, to my knowledge, the only information on income at such a small geographic area that is produced entirely using actual data rather than a statistical model.

Given this I hope this data gets the official seal of approval as it has the potential to add to our knowledge of how incomes and living standards trends play out across Britain.[1] The full release includes some of the ONS’ own analysis and is well-worth a read, but below are four of my key takeaways:

1. High-earning hotspots are concentrated in and to the West of London:

The table below shows the top 10 areas with the greatest share of residents whose incomes are £60,000 or more.

2. There is a disproportionate number of low-income areas on the coast

The map below shows that many coastal areas have the highest concentrations of people who have incomes of £10,000 or less. Of the ten areas with the greatest share of residents with low incomes eight of them are on the coast including places such Great Yarmouth, and Torridge and Hull and Grimsby. Torridge, an area that could have over 1 in 3 workers on the NLW by 2020, is the UK’s low-income hotspot with almost 40 per cent of the local population having an income of less than £10,000.

3. Areas with missing money are overwhelmingly found in London

The table below shows the top 10 areas with the greatest share of people for which ONS could not find income information for, aside from Richmondshire, Cambridge and Oxford they are all in London. This most likely speaks to the fact that for many residents in these areas self-employed or investment earnings form a large part of their incomes. There is a strong relationship between the share of people in an area with incomes over £60,000 and the share of people with missing income information, suggesting that admin data may underestimate incomes at the top of the distribution. This provides further evidence that measuring the incomes of the very rich is extremely difficult to do.

4. Most areas have a significant number of people with low incomes, but many have very few high earners.

In the 50 areas with the highest share of people on low incomes an average of less than 1 per cent of people have incomes over £60,000. Conversely in the 50 areas with the highest share of people with incomes of £60,000 or more on average over 1 in 4 people have incomes of £10,000 or less. This is nicely exemplified by looking at Richmond upon Thames and Torridge.

Virtually no one in Torridge has an income of £60,000 or more, whereas Richmond has a very large share (10 per cent). But both Richmond and Torridge have large shares of people on low incomes. Indeed, even in Richmond – one of Britain’s leading high-income hotspots – people are more likely to have an income of between £5,000 and £10,000 than an income over £60,000. Furthermore across all areas only 2.5 per cent of people have incomes of £60,000 or more.

All this suggests that ‘rich world problems’ really are limited to relatively few areas, while poverty is persistent throughout the UK.

N.B. ‘Income’ refers to income estimated from PAYE records and benefits data (which includes tax credits). It doesn’t include self-employed earnings and investments taxed via Self-Assessment. It is gross and so does not take into account taxes paid. It refers to individuals, not households. The ONS provides information on the share of people in one of nine income bands and also the share of people for which they have no income information for.

[1] To provide feedback on how this data can be improved in future the ONS has a survey for those who use such statistics.