The TUC has demanded action from the government to close Britain’s regional inequality divide after a report showed that incomes in the Midlands, Wales and the north of England are no higher than they were in the south-east two decades ago.

Frances O’Grady, the TUC general secretary, said ministers could not shrug off findings from the Institute for Fiscal Studies indicating that incomes in the most prosperous part of Britain – the south-east of England – were 25% higher than in the poorest region, the West Midlands.

The IFS’s annual living standards, poverty and inequality report highlighted Britain’s growing north-south divide and the impact of decades of deindustrialisation on living standards in the UK’s traditional manufacturing heartlands.

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The IFS said that in the mid-1970s, the east and West Midlands joined London and the south-east as the only four regions of the UK where median income was above the national average.

By the mid-2010s, median income in the West Midlands was the lowest of any UK region and almost 10% below the national average. The east Midlands was 6% below the national average.

The report also highlighted the concentration of hardship, with the poverty rate twice as high in the most deprived tenth of local areas as in the least deprived tenth. As a result, according to the IFS, a quarter of all poor children live in the 10% most deprived areas.

Liberal Democrat welfare spokesperson Stephen Lloyd MP said: “This report shows for the first time we are creating geographical ghettos of poverty that are trapping a generation of people and their children.

“The government, for all their talk about ‘strivers’ and the ‘just about managing’, are actively doing nothing to help.”

The IFS said London – which has some of the richest neighbourhoods alongside some of the poorest – was the most unequal region in the UK but that inequality had fallen over the past decade as a result of falling incomes for the better-off accompanied by an increase in low-paid jobs.

Since the late 2000s the incomes of those in the poorest 10th of households had risen by 10% while the incomes of those in the richest 10th of households had fallen by more than 10%.

London’s position in the national rankings varied according to whether incomes were calculated before or after housing costs. The high cost of property in the capital meant average incomes were slightly below the average for Great Britain after housing costs but 10% higher before housing costs were taken into account.

Agnes Norris Keiller, a research economist at IFS and an author of the report, said: “There are important gaps between the average incomes of different regions, though inequalities within regions are far larger than those between them. While London remains the most unequal part of the country, inequality in the capital has seen a dramatic decline over the last decade.”

O’Grady said: “Action must be taken to close Britain’s regional income gap. People are still missing out on the chance of decent, well-paid work because of where they live.

“These findings cannot be shrugged off. Ministers need to explain how they’ll deliver growth and boost living standards in every corner of the country. Not just wealthier parts of the capital.

“The government has to get on with its much-trumpeted industrial strategy if we are to create good jobs where they’re needed most. And they must put serious investment behind it.”

A Treasury spokesman said that recent figures from the Office for National Statistics showed inequality in disposable income was lower than it had been for three decades, and the UK had the fifth lowest persistent poverty rates of the 28 countries in the EU.

“We are building an economy that works for everyone by sharing prosperity and opportunity throughout the UK so nobody is held back because of where they come from”, the Treasury said. “We have recently agreed seven devolution deals worth £4.8bn, giving local leaders extra money and powers to create jobs, boost skills, build homes and improve local transport. Our national living wage is also helping to deliver the fastest pay rise in 20 years for the lowest-paid across our country.”



