House prices

Should workers outside London and the South East be paid less? How inflation hits different parts of the country | UK News

Liz Truss’ proposal was that local councils should set the salaries of government employees based on where they live, which would drive down salaries for civil servants outside wealthy areas like London and the South East.

But the poorest cities in the North, West Midlands and Wales are seeing the biggest reductions in real wages, according to a study by policy institute Center for Cities.

The cost of living is rising faster in Burnley than in any other urban area in England and Wales. Inflation in the Lancashire town is estimated at 11.5% – the highest rate of the 58 urban areas examined by the researchers.

This is significantly higher than London and Cambridge, which have the lowest rate of 8.8%, and the UK average of 9.1%.

Many of the poorest towns and villages are the most squeezed.

This means that the people least able to cope – those with the lowest wages and the most debt – see their standard of living eroded the most.

The findings suggest that workers in these parts of the country need higher wage increases to keep up with rising prices, rather than falling further behind as they would have in the plans announced by Ms Truss.

Experts have warned that to reach the £8.8billion in savings the policy was meant to deliver, the plan would need to diversify beyond ministries, with teachers, nurses and police also facing salaries lower than those of workers in the South.

Team Truss claimed there was a ‘deliberate misrepresentation’ politics, but former Tory whip Mark Harper, who backs Ms Truss’ opponent Rishi Sunak, said they should ‘stop blaming journalists’ for reporting details in his own press release .

Other Sunak supporters said the policy would “kill leveling”, was “a totally bad move” and “a surefire way to lose the next general election”.

The highest inflation for the poorest households

Jack Leslie, senior economist at the Resolution Foundation, says Center for Cities research agrees with their own findings that inflation is 1.6 percentage points higher for the poorest tenth of households than for the most rich.

“The extent of rising cost pressures depends to some extent on families’ spending habits and where they live,” he says.

“With inflation currently driven by increased energy bills and gasoline pricesrural areas with less well-insulated housing stock and less public transport connections experience particularly strong cost pressures.”

Read more: How much is an extra pint in London? How inflation affects different parts of the UK

Many urban areas in the north of England also have poorly insulated houses.

In Burnley, 80% of homes are energy intensive and 15% of spending is on vehicles. Whereas in London, these figures are only 58% and 10%.

High energy bills are a major driver of high inflation in poorer urban areas. This erodes purchasing power because wage increases do not keep up with rising prices.

Does housing drive up inflation?

Besides energy costs, you might think that high house prices and rents are a key driver of inflation in places like London.

Housing costs were not included in the calculations made by the Center for Cities researchers due to a lack of data.

Sky News’ analysis of SpareRoom rental data found that the amount of income spent on rent varies widely. But despite high prices in the capital, rent eats up roughly the same amount of income in Burnley.

Households in Burnley spend 21% of their wages on rent, compared to 22% in London and just 17% in Cambridge.

This does not say it all, as many people own their own homes or live in social housing.

But Valentine Quinio, a senior analyst at the Center for Cities, says that doesn’t change much because housing isn’t the main driver of inflation at the moment.

“Our estimates always paint an accurate picture of the geography of inflation [as] the main driver is energy (and food prices), so it’s looking at how these vary between cities that gives the clearest idea of ​​where the most affected are,” she says.

Government donations help but not enough

The government recently announced £15 billion to help households cope with rising energy costs.

Research from the Center for Cities found that households in the North and Midlands are likely to get more than other parts of the country, but despite this most people still face higher energy costs.

Only 19% of the 58 urban areas studied are better off after the handout. The average Burnley household still faces a £109 increase in annual energy costs.

A spokesperson for the Department for Leveling, Housing and Communities said: “We recognize the challenges households are facing with the cost of living which is why we are providing a £37billion support package which helps millions of people to meet the rising costs of living.

“We are investing a total of £6.6 billion in this parliament to improve energy efficiency across the country, benefiting tens of thousands of homes and saving an average of £300 a year on their utility bills. ‘energy.

“The changes we’ve made to Universal Credit mean that 1.7million households will keep an average of around £1,000 extra a year.”

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