Yes, £70,000 is a great salary – but it’s worth more in some places than others

Loadsamoney. Image: Getty.

The latest instalment of our weekly series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Europe’s cities.

It’s only day four of the election campaign, and already the quality of the debate is so high that it’s making me want to claw my own eyes out and stuff them in my ears in excitement. This week’s highlight: a serious and lengthy debate about whether earning £70,000 a year made you rich.

This suggestion, made by the shadow chancellor John McDonnell when talking about tax policies, was perceived in some circles as a bit of a clanger – something that showed that Labour wasn’t on the side of aspirational hard-working families and so forth.

The only slight problem with this argument is that earning £70,000 puts you in the top 5 per cent of all earners; this, one might think, would expose the previous argument as the sort of nonsense put about by out-of-touch metropolitan elitist types who haven’t the first clue about how people live in the real world.

Except there’s a problem with that, too, which is that income is not the same as wealth. Someone on £70,000 but can’t afford a house big enough to start a family may legitimately argue that they’re a lot less rich than a pensioner who owns a five-bed semi without a mortgage.

I hesitate to take this one too far: £70,000 is a very good salary, and those who claimed otherwise mostly served to make themselves look spoilt. But it’s true that it’ll get a lot further in some parts of the country than others.

Which brings us to our chart. On the horizontal axis it shows average weekly wages in 63 British cities; on the vertical one, the mean house price in 2016. The dotted lines represent the national averages: around £524.50 a week (just under £27,300 a year), and £267,840 respectively.

It’s a bit rough and ready, but nonetheless splitting Britain’s cities up in this way seems to shed some light on the £70k debate.

The bottom left quadrant contains cities with both wages and house prices which are below the national average. From the standpoint of Bradford, Manchester or Cardiff, say, then yes, £70,000 seems like a good salary, for the very good reason that it is.

In Wigan, in the very bottom left corner, average wages are less than £22,000, and you can get an average house for under £130,000.  If McDonnell’s message resonated anywhere, it’ll be here.


The bottom right quadrant contains cities where wages are higher, but house prices are still below the national average. It’s a slightly baffling mix – Swindon, Edinburgh, Aberdeen, Derby. McDonnell’s message will play worse here: £70,000 may sound like a less impressive salary, and wealth is a less important part of the equation.

Things get worse still in the top right corner: the cities where many people are likely to earn high salaries but still can’t get on the housing ladder, and thus feel all poor and hard done by.

You can probably guess which cities you’d find here: Oxford,  Cambridge, the M4 corridor, and, in the far corner, inevitably, London. The sort of people who say baffling things like, “I don’t know anyone who’d think £70,000 a year made you rich” will largely live in places like these.

Lastly, in the top left quadrant are cities where wages are below the national average, but house prices, cruelly, are above it. They’re all London commuter towns; and except for one (Basildon) all seaside resorts too (Southend, Worthing, Bournemouth, Brighton).

The obvious explanation is that these are places where  London exiles have bid up the house prices, while local wages have stubbornly remained low. What people in these would make of McDonnell’s comments is anybody’s guess.

Anyway, in conclusion, three points:

1) The value of money is relative. £70,000 a year is worth a lot more in Wigan than it is in London. This, one suspects, is why trying to formulate national policy in so many areas in hard.

2) It’s not that relative. £70,000 a year is still a great salary and anyone going round saying it isn’t sounds deeply silly.

3) It may still be a losing message for Labour. My colleague Stephen Bush recalls this illuminating extract from Talking to a Brick Wall by pollster Deborah Mattinson.

Yes, £70,000 is a brilliant salary. That doesn’t mean people will vote for a Labour party planning to raise taxes on those who earn it.

Anyway. Here’s an interactive version. Hover over the dots to get the details.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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What do new business rates pilots tell us about government’s appetite for devolution?

Sheffield Town Hall, 1897. Image: Hulton Archive/Getty.

There have been big question marks about any future devolution of business rates ever since the last general election stopped the legislation in its tracks.

Not only did it not make its way to the statute book before the pre-election cut off, it was nowhere to be seen in the Queen’s Speech, suggesting the Government had gone cold on the idea. (This scenario was complicated further recently by the introduction of a private members’ bill on business rates by Conservative MP Peter Bone, details of which remain scarce.)

However, regardless of the situation with legislation, the government’s announcement in recent days of a pilot phase of reforms suggests that business rates devolution will go ahead after all. DCLG has invited local authorities to take part in a pilot scheme which will allow volunteer authorities to retain 100 per cent of the business rates growth they generate locally. (It also notes that a further three pilots are currently in operation as they were set up under the last government.)

There are two interesting things in this announcement that give some insight on how the government would like to push the reform forward.

The first is that only authorities that come forward with their neighbours with a proposal to pool all business rates raised into one pot across a wider geography will be considered. This suggests that pooling is likely to be strongly encouraged under the new system, even more considering that the initial position was to give power to the Secretary of State to form pools unilaterally.

The second is that pooled authorities are given free rein to propose their own local arrangements. This includes determining, where applicable, a tier split (i.e. rates distribution between districts and counties), a plan for distributing additional growth across the pool, and how this will be managed between authorities.

It’s the second which is most interesting. Although current pools already have the ability to decide for some of their arrangements, it’s fair to say that the Theresa May-led government has been much less bullish on devolution than George Osborne in particular was, with policies having a much greater ‘top down’ feel to them (for example, the Industrial Strategy) rather than a move towards giving places the tools they need to support economic growth in their areas. So the decision to allow local authorities to come up with proposed arrangements feels like a change in approach from the centre.


Of course, the point of a pilot is to test different arrangements, and the outcomes of this experiment will be used to shape any future reform of the business rates system. Given the complexity of the system and the multitude of options for reform, this seems like a sensible approach to take. But it remains to be seen whether the complex reform of a national system can be led from the bottom up. In effect, making sure this local governance is driven by common growth objectives, rather than individual authorities’ interests, will be essential.

Nonetheless, the government’s reaffirmation of its commitment to business rates to devolution and its willingness to test new approaches is welcome. Given that the UK is one of the most centralised countries in the western world, moves to allow local authorities to keep at least some of the tax revenue that is generated in their area is a step forward in giving places more autonomy over how they spend their money. That interest in changing this appears to have been whetted once more is encouraging.

There are, however, a number of other issues with the current business rates system which need to be ironed out. Centre for Cities is currently working on a briefing of the business rates system, building on our previous work in this area, and we’ll be making suggestions as to how the system can be improved.

Hugo Bessis is a researcher for the Centre for Cities, on whose blog this article originally appeared.

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