Context
Each year, CACI releases an estimate of the gross income and outgoings of households across the UK (Paycheck Data). This data shows the average and modelled distribution of household incomes and essential outgoings for the 1.6 million residential postcodes in the UK.
Areas of analysis include:
- The average household income in the UK and how it’s changed since the previous year
- What does the UK wealth distribution look like?
- What’s the state of wealth inequality across the UK?
- Where are the richest areas in the UK?
- Where are the poorest areas in the UK?
The study
In this seventh annual report, CACI have analysed the latest Paycheck data to reveal the state of the nation’s finances and investigate whether Covid-19 has influenced an increased disparity in income and if the impact has been uniform across the country.
Average household income has been analysed by broader geographic areas such as Postcode Sectors (e.g. W14 8) and Local Authority Districts / Unitary Authorities. CACI have identified local concentrations of wealth and hardship by ranking neighbourhoods with the highest proportion of high and low earners.
Throughout the Covid-19 pandemic CACI have been producing regular reports tracking the changing movement behaviours of the UK population, using anonymised mobile app data from their partners at Location Sciences. The movement index tracks changes in the number of mobile phone events (or pings) occurring outside of the neighbourhood in which people live or work compared to baseline levels at the beginning of March 2020.
The report focuses on the spatial variation in the average income of the UK population. This insight highlights how Covid 19 has influenced the movement of people by affluence as well as potentially fuelling a larger disparity in income inequality in the future.
Key findings
Household Income
- In 2021, the average gross household income in the UK was £40,300, which is lower than the 2020 Paycheck release figure of £41,100. The data reflects that as lockdown restrictions were easing, many people were still on furlough, and/or had reduced salaries.
- The mean and median incomes are lower than the previous year in all regions except London. The South East remains the region with the highest mean gross household income at £46,900 and Northern Ireland the lowest at £33,100.
Disposable Income
- The South East has the highest disposable income at £19,800, however, Londoners are worse off than the UK average. After starting off with the second highest gross income of £45,500, they end up with a net disposable income of just £13,000 per household, the lowest across all regions, compared to a UK average of £17,200.
- A more granular look at the data finds that 28% of households are living below the statutory poverty line; defined as households with an income less than 60% of the national median income. This figure remains almost the same as 5 years ago when it was 29%. At the other end of the scale the number of households with incomes over £100,000 has increased in the last 5 years from 1.2m in 2016 to 1.38m in 2021, an increase of 15%.
Household Debt
- Total household debt remains mainly unchanged at only 2.4% higher than the previous year, but there is evidence that this figure is not evenly distributed. Those on low incomes appear to have run down savings and increased debt since the start of the pandemic to cover everyday costs like food and housing as well as entertaining children at home. Whereas those on higher incomes who are spending less on travelling and entertainment have been able to pay down debt and increase savings.
Savings
- Since the beginning of the coronavirus pandemic, official statistics show that total household savings have increased. An additional £125bn was added to savings accounts in 2021 and the household savings ratio has tripled.
Mobility
- Those with the highest incomes had the highest levels of mobility (frequency of movement) pre-pandemic both for work and leisure, and the lowest income groups had the lowest mobility. Through the various lockdown phases there was a huge levelling up, as the more affluent were also more likely to be able to work from home, and leisure trips were curtailed, whilst key workers who still had to travel to their place of work were likely to be amongst the least affluent.
Points to consider
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Methodological strengths/weaknesses: Whilst there are no specific methodological details available in this report, the use of the established, national dataset – Paycheck – gives the reader confidence in the validity of the findings.
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Generalisability/ transferability: This report (presuming the above assumption is correct) uses a robust methodology. Therefore, these findings can be applied with a degree of confidence universally within the UK.
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Relevance: This report is relevant to all stakeholders, academics and policymakers who are interested in segmenting the UK population according to their income and financial behaviour and how this has been influenced by the pandemic.
- This data provides an important source of longitudinal data on UK household savings in the context of the global pandemic.
