Taking a local look: Household disposable income

Today’s figures from the ONS show that household disposable income continued to fall in 2011. This is part of a longer term trend of stagnation and decline in incomes that began around 2003. As we showed in the Commission on Living Standards, disposable income per head fell in every English region outside London from 2003 to 2008, even while the economy continued to grow. For much of the UK, the squeeze started long before 2008.

Today’s new data show this trend is worsening. Disposable incomes across the UK fell in 2011 much more than in the previous year. Across the UK, the average fall from 2010 to 2011 was 2.4 per cent, compared to a fall of 1.2 per cent in 2010 and growth of 3.1 per cent in 2009.

But again it is the regional breakdown of income growth that is most striking. The chart below shows the change in disposable income per head from 2003 to 2011 in English regions, Scotland, Wales and Northern Ireland. It is clear that some areas have fared much worse than others. Yorkshire and the Humber and East of England have seen the largest decline in disposable incomes (6.7 per cent and 6.5 per cent respectively). At the other end of the spectrum, London is only English region to have positive growth over this period, and Scotland is the only country to do so. Even within these averages, it is likely that low and middle income households will be faring worse still.