Average incomes grew faster in Scotland than across the UK over last 40 years, finds IFS

Average incomes have grown faster in Scotland than across the UK as a whole over the last 40 years, according to a new report from the Institute for Fiscal Studies.

The rise in average income in Scotland has brought the country up to the UK average, while increases in the south east of England means the region is now nearly twice as far above the national average as it was in the 1970s, though the IFS found that inequalities within regions are far larger than those between them.

But while the report, Living Standards, Poverty and Inequality in the UK, found income inequality in the UK was lower in 2015–16 than prior to the recession, median earnings were down by around five per cent.

Meanwhile the IFS found that one in four children living in poverty are in the 10 per cent most deprived local authorities, with poverty especially geographically concentrated for working-age households. It found that just 13 per cent of pensioners in poverty are in the 10 per cent most deprived localities.

The IFS found that although absolute poverty rates saw large reductions over previous decades, the last ten years had seen little very change, warning “this lack of progress is historically unusual and reflects the more general lack of real income growth”.

Robert Joyce, an Associate Director at the IFS, said: “Although the post-recession years have seen modest income growth, with little change in poverty rates and inequality, many people have seen large changes in their incomes. Fluctuating incomes mean that many fewer people are classed as persistently poor than have a low income at any point in time.”

Between 2010–2011 and 2014–2015, 37 per cent of people experienced a fall in their household income of more than five per cent, and 50 per cent saw a rise of more than five per cent.