How can we tackle inequality in British cities?

7th May 2013

Inequality in the UK is high by international standards. Which cities are most unequal and what can be done?

A new report today reveals the most unequal cities in the UK. Dr Paul Sissons of the Work Foundation looks at what can be done to close the gap.

Inequality in the UK is high by international standards. It has grown significantly over the past 30 years, as technological change and globalisation have increased labour market polarisation – the extent to which employment is split between high- and low-skilled jobs.

The growth of income inequality in the UK has already been the source of considerable concern. Wilkinson and Pickett’s The Spirit Level (2006) created a good deal of debate about inequality and its effects, and a number of studies before and since have linked inequality to worse health and social outcomes.

In our latest report, funded by JRF, we investigate wage inequality in British cities. We find that cities with high levels of wage inequality tend to be affluent and in the south of England. London and nearby cities tend to be particularly unequal. This inequality is driven largely by affluence and a greater proportion of well-paid knowledge workers. However, these cities also tend to have higher costs of living. In particular, the ratio between wages and house prices tends to be significantly higher in more affluent cities. This makes it increasingly difficult for low-wage workers who are likely to benefit less from growth.

By contrast, lower wage inequality tends to be found in many former industrial cities where growth rates have been slower, such as Sunderland and Burnley. These cities tend to have fewer well-paid jobs, which reduces their rates of wage inequality.

There are a number of things that urban policy-makers can do to help low-wage workers. To start with they can support policies aimed at boosting wages – for example Living Wage campaigns – and develop policies that seek to boost mobility in the labour market, for example by developing career ladder programmes with local employers.

There may also be greater scope for them to influence job quality through public procurement and the planning system. Targeting the consequences of inequality is another important aim. In particular, policies that increase the supply, and reduce the costs, of housing should be a priority.

The issue of inequality is high on the policy agenda for cities, and, for local decision-makers, the solutions need to be focused on the lower end of the labour market. Economic success is good for cities generally; however, they must ensure that the lowest skilled are also able to reap the benefits.