Mythbusted: Far from being the richest, Londoners rank bottom by disposable income across all UK regions
In the 19th century tale, Dick Whittington And His Cat, young Dick Whittington hears that the streets of London are paved with gold and sets off to London to find his fortune. He arrives in the capital only to find that the streets are grimy and poverty-stricken, but eventually becomes the 14th Lord Mayor of London through sheer persistence and will (a rare happy ending for tales in that era).
In 2018, over 120,000 millennials made their way to London from the rest of the UK, presumably in search of gold-paved streets as well. The capital regularly makes the headlines for being rich: it has the highest number of billionaires in the world according to the 2018 Sunday Times Rich List, and generates 30% of all UK taxes.
District 34 looked closer at the data and did our obssessive number-crunching as usual, focusing on the average Londoner rather than the uber-rich. We made a startling discovery: On average, Londoners ranked bottom across all UK regions by real disposable income — despite working the longest hours.
We’ve been Dick Whittington-ed.
Here’s how we arrived at our findings.
First, we used data from the Department of Work and Pensions, which studied the median weekly household disposable income by region. Disposable income includes earnings from employment, state support, private pensions, investments and other sources, minus money paid in direct taxes. Income figures are ‘equivalised’, meaning they are adjusted for the number of adults and children in the household.
The median is the halfway point at which half of the people have higher income and half have lower income.
London starts off strong…
The initial analysis shows that London incomes (£536) were over 10 percent higher than the UK average (£486), which placed London second only to the South East (£544). So far so good.
but drops to below average after housing costs…
However, once housing costs were taken into consideration, London dropped below the UK average, at £414 compared to £417. This is not surprising, given that London’s housing costs are easily the highest in the UK — the median monthly rent in London is £1,495, more than double the figure of £695 in England as a whole.
then plummets to the bottom after adjusting for consumer prices
This doesn’t reflect the whole picture, given that London is famous as the city of the £5 pint. Even after removing housing costs, the cost of living in London is one of the highest in the world, and easily the highest in the UK.
The Office of National Statistics helpfully provides data on UK relative regional consumer price levels (RRCPLs), which provide an indication of a region’s price level compared with the UK average.
Unsurprisingly, London tops the list at 107.2 — which means that, in general, prices for stuff in London are 7.2 percent higher than elsewhere in the UK.
Once disposable incomes after housing costs are adjusted according to price levels, London plummets to rock bottom across all regions at £386, below Wales and the North East (£391).
But wait — there’s more! Londoners also work the longest hours
To compound the misery further, we checked the data on hours worked by region. As we expected, Londoners topped the list in terms of hours worked at 34.2 hours per week, one full hour more than the UK average of 33.2.
In summary, London is #1 when it comes to:
- Housing costs
- Hours worked
- Cost of living
And comes last when it comes to disposable income.
District 34 — making London great again
Londoners know that it is not all about the money. It’s the night life, the museums, the concerts, the people, and the list goes on.
District 34 was set up to help Londoners stay part of the most cosmopolitan city in the world for as long as they want, not as long as they can. By fast-tracking Londoners onto the housing ladder in commuter towns around London, we take away the biggest push factors of London: housing costs and cost of living.
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