Adam Smith Institute

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If only the Resolution Foundation could make up their minds

As is obvious we care rather less about inequality of outcome around here than do many others in our current society. But it would still be useful if those doing such worrying could actually make up their minds. For example, here we’ve the Resolution Foundation insisting that regional inequality isn’t much of a thing:

More young people are getting stuck where they grew up or went to university because they cannot afford rents in places where they can earn more money, according to the Resolution Foundation thinktank. It found the number of people aged 25 to 34 starting a new job and moving home in the last year has fallen 40% over the last two decades.

Whereas previous generations were able to move to big cities such as London and Manchester or regional hubs like Leeds and Bristol to develop their careers, the current millennial generation is enduring a slump in mobility caused by rising rents, which can wipe out all of the financial gains of a move.

Even moves over short distances are barely worth making, the data shows. A person on average earnings in Scarborough paying average rent would have been 29% better off if they had moved to Leeds in 1997 and paid average rent and earned average money. In 2018, rising rents and stagnant wages means the benefit after taking into account rent was just 4%.

Some places do indeed have higher wages. They also have higher costs of living, the two rather neatly near exactly cancelling each other out. We’ve thus not got regional inequality of the only type that can even conceivably matter, inequality of consumption.

Thus most of the statistics about inequality in Britain are wrong, based as they are upon income, not consumption. This is, of course, something we have been saying for a long time. Britain has regional differences in pay, yes, but also regional differences in the cost of living. Britain has more of both of those than most other countries, it’s this which makes British inequality figures look so different. It’s also this that makes British inequality figures largely an irrelevance.

We do wish though that the Resolution Foundation could actually make up its mind. For only a year ago they were whining bitterly about regional inequality in Britain. That very thing they’ve just shown doesn’t exist in any manner that is important, in consumption.

Yes, obviously, we’re being picky and all that but is consistency - in saying something other than the modern world’s bad, M’Kay? - really all that much to ask for?

And anyway, isn’t the young moving back home after their education a welcome symptom of local community anyway? Instead of all the brains and human capital draining out of the provinces into the Great Wen?