The UK has some of the highest inequality between different regions in the OECD. Successive prime ministers have promised to rectify this. But analysis we’ve conducted at NEF has found that, when it comes to regional inequality, we’re moving backwards. And it’s families in the north of England who have been hit hardest, losing over £1300 in yearly income since 2015.

To understand how regions have been made worse off, we break down changes in household income into different periods. Regional divides have existed for decades in the modern British economy, but between 2015 and 2019, these were exacerbated by policy choices under both David Cameron and Theresa May. Households receiving social security payments had their incomes capped by harsher limits and new rules on eligibility. These changes exacerbated existing regional inequalities as poorer regions were more dependent on social security in the first place.

Furthermore, cuts to public services made us all poorer by squeezing public sector wages. The continuation of austerity policies spilled out into the wider economy in the form of reduced demand and government underinvestment, contributing to the productivity crisis keeping private wages low.

Our results show that between 2015 and 2019, the average household in the north-east saw their income fall by nearly £1000. In contrast, households in the south-east and east of England were slightly better off, by an average of £130 and £180, respectively.

Figure 1: regions become more unequal under David Cameron and Theresa May