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Pay gap widens in the north

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Local authorities can play a key role in countering a growing inequality in the north of England, according to a new report.

The Institute for Public Policy Research North (ippr) say that salary rises in the north, which occurred in the last period of economic growth, were accompanied by an increase in pay discrepancy.

They say the highest 20% of earners in the region saw wages grow at double the rate of the lowest 20%.

Ed Cox, director of ippr North, said: “Our research has found that inequality is potentially bad news for everyone and may affect the social fabric of our communities.

“Policymakers should focus now on a model of growth which balances economic and social objectives, rebalancing the economy between North and South but also narrowing the gap between the rich and poor.”

The ippr study lays out five recommendations for what should happen at a local level to remedy this trend:

  • Councils should start to monitor inequality patterns within their area. This will help Local Enterprise Partnerships (LEPs) to prioritise ‘good growth’ by creating strategies that take into account geographical variations in employment.
  • LEPs should look at industrial sectors with low productivity and a high number of employees. The ippr say improving output should have a knock-on effect on wage levels.
  • Employers should be encouraged to sign up to a pay ratio scheme to limit excessive wages at the top. A ratio of 1 to 20 is being considered for the public sector.
  • Getting people from welfare to work is the best way to reduce inequality. Therefore LEPs should co-commission the Work Programme to ensure it addresses local needs and market conditions
  • Local authorities should have greater financial power to shape their areas, for instance by being able to raise funds through property or income taxes.  
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