These maps show how ridiculously unequal Britain’s economy is

Islands in the stream: blue is richer, red is poorer. Image: CER/Google.

Britain is a rich country: this relaxed assumption about our place in the economic pecking order has helped fuel everything from Brexit to the complacency that led to Brexit.

Thing is, though, Britain is also, by European standards at least, both a big country and an unequal one. So while it contains some of the richest regions on the entire continent, it also contains some of the poorest in western Europe.

A new paper from the Centre for European Reform has quantified all this, which is exciting for us mainly because it includes an interactive map. Look:

The map, the authors write,

…illustrates Europe’s economic fault-lines. It shows regional productivity, measured by economic output per worker: the deeper the blue, the higher the region’s productivity as a percentage of the EU average, while the deeper the red, the lower.

It shows that many regions in richer countries are far less productive than the EU average, and some places in poorer countries are more productive than that average.

This is true – but it also highlights inequality in its different forms. Some countries are uncomplicatedly rich (Ireland, the Scandinavians) or poor (most of eastern Europe). But others are much more mixed. In Spain and Italy definitely have rich norths and poorer souths. With France and, especially, Germany, it’s hard even to spot a pattern. Although you’d expect the east of the latter to be poorer than the west, it’s surprisingly hard to see that on this map – an artefact, perhaps, of the fact those countries have been divided here into relatively small units.

And then there’s the UK, which is all over the shop.

For one thing, there’s Northern Ireland, where Belfast has an output per worker of 163 per cent of the European average, on a par with Denmark or the Republic of Ireland; but where the rest of the province is way below the European average.

The south east of England has some rich areas, which you’d expect. It also has some pretty poor, which you probably wouldn’t. On this measure, Central Hampshire has productivity at 115 per cent of the EU average, roughly on a par with Germany. South Hampshire, right next door, has productivity at just 88 per cent of the EU average – which is on a par with Greece.

It’s a similar story in the north, only this time instead of red bits on a blue background it’s rich blue bits surrounded by red. Liverpool has productivity of 114 per cent of the EU average (Germany again); across the Mersey on the Wirral it’s just 69 per cent (Solvenia). To the west, southern Manchester is pretty rich; northern Manchester eye-wateringly poor. Leeds is an island of prosperity surrounded by a struggling sea.

We probably shouldn’t over interpret this: at least part of the p attern is explained by the relatively small size of the units being analysed. London, for example, is split into well over a dozen of the things, with the top ranked (Westminster; 930 per cent of the EU average) being 13 times more productive than the bottom ranked (Redbridge & Waltham Forest; 72 per cent).

This presumably reflects that the former has a load of hedge funds and film companies working within its boundaries, while the latter is largely coffee shops and markets; but since some of the people who live in the latter work in well paid jobs in the former, it’s not an accurate reflection of how life in the two areas actually feels.

That said, productivity in Britain does seem to be both less equal and less evenly distributed than that in most European countries. Some areas really do look, economically, more like Greece than Germany. It’s hard to see this as a good thing.

Anyway, you can play with the full, interactive map here.

Jonn Elledge is editor of CityMetric and the assistant editor of the New Statesman. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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“Without rent control we can’t hope to solve London’s housing crisis”

You BET! Oh GOD. Image: Getty.

Today, the mayor of London called for new powers to introduce rent controls in London. With ever increasing rents swallowing more of people’s income and driving poverty, the free market has clearly failed to provide affordable homes for Londoners. 

Created in 1988, the modern private rented sector was designed primarily to attract investment, with the balance of power weighted almost entirely in landlords’ favour. As social housing stock has been eroded, with more than 1 million fewer social rented homes today compared to 1980, and as the financialisation of homes has driven up house prices, more and more people are getting trapped private renting. In 1990 just 11 per cent of households in London rented privately, but by 2017 this figure had grown to 27 per cent; it is also home to an increasing number of families and older people. 

When I first moved to London, I spent years spending well over 50 per cent of my income on rent. Even without any dependent to support, after essentials my disposable income was vanishingly small. London has the highest rent to income ratio of any region, and the highest proportion of households spending over a third of their income on rent. High rents limit people’s lives, and in London this has become a major driver of poverty and inequality. In the three years leading up to 2015-16, 960,000 private renters were living in poverty, and over half of children growing up in private rented housing are living in poverty.

So carefully designed rent controls therefore have the potential to reduce poverty and may also contribute over time to the reduction of the housing benefit bill (although any housing bill reductions have to come after an expansion of the system, which has been subject to brutal cuts over the last decade). Rent controls may also support London’s employers, two-thirds of whom are struggling to recruit entry-level staff because of the shortage of affordable homes. 

It’s obvious that London rents are far too high, and now an increasing number of voices are calling for rent controls as part of the solution: 68 per cent of Londoners are in favour, and a growing renters’ movement has emerged. Groups like the London Renters Union have already secured a massive victory in the outlawing of section 21 ‘no fault’ evictions. But without rent control, landlords can still unfairly get rid of tenants by jacking up rents.

At the New Economics Foundation we’ve been working with the Mayor of London and the Greater London Authority to research what kind of rent control would work in London. Rent controls are often polarising in the UK but are commonplace elsewhere. New York controls rents on many properties, and Berlin has just introduced a five year “rental lid”, with the mayor citing a desire to not become “like London” as a motivation for the policy. 

A rent control that helps to solve London’s housing crisis would need to meet several criteria. Since rents have risen three times faster than average wages since 2010, rent control should initially brings rents down. Our research found that a 1 per cent reduction in rents for four years could lead to 20 per cent cheaper rents compared to where they would be otherwise. London also needs a rent control both within and between tenancies because otherwise landlords can just reset rents when tenancies end.

Without rent control we can’t hope to solve London’s housing crisis – but it’s not without risk. Decreases in landlord profits could encourage current landlords to exit the sector and discourage new ones from entering it. And a sharp reduction in the supply of privately rented homes would severely reduce housing options for Londoners, whilst reducing incentives for landlords to maintain and improve their properties.

Rent controls should be introduced in a stepped way to minimise risks for tenants. And we need more information on landlords, rents, and their business models in order to design a rent control which avoids unintended consequences.

Rent controls are also not a silver bullet. They need to be part of a package of solutions to London’s housing affordability crisis, including a large scale increase in social housebuilding and an improvement in housing benefit. However, private renting will be part of London’s housing system for some time to come, and the scale of the affordability crisis in London means that the question of rent controls is no longer “if”, but increasingly “how”. 

Joe Beswick is head of housing & land at the New Economics Foundation.