Dundee and Aberdeen record the UK’s fastest disposable income growth over the last five years

Publications that covered this story include the Independent and the Scotsman, 11 February.

  • Household disposable income in Aberdeen rockets 23% in five years
  • Top-5 fast growing cities benefitted from public sector investment – and could be hit hard by cuts

Dundee and Aberdeen saw the UK’s biggest booms in household disposable income – the money a household has left to spend or save after taxes and mortgages or rent – over the last five years, according to our latest research.

We looked at the growth in average household disposable income in the UK’s Top-40 largest towns and cities (by population size) between 1 January 2006 and 31 December 2010 (latest data).

The Top-5 towns in terms of growth in average household disposable income were:

  1. Dundee, 18% increase from £12,169 to £14,925 over five years;
  2. Aberdeen, 16.1% increase from £15,308 to £17,777 over five years;
  3. Blackpool, 16% increase from £10,826 to £12,553 over five years;
  4. Birkenhead, 15.8% increase from £13,338 to £15,444 over five years; and
  5. Plymouth, 15% increase from £11,603 to £13,338 over five years.

As a whole, the UK’s average household disposable income only grew by 12% over the same period, from £14,027 to £15,727.

Marc Waterman, partner in our London office, comments: “As a major global energy hub, Aberdeen is the boom town that has become a powerhouse driving the Scottish economy. It has been completely transformed since the 1990s.”

“There is an enormous amount of wealth in the city now, with plenty of millionaires who have built oil services companies from the ground up.”

He adds: “Oil prices recovered very quickly from their blip during the financial crisis and have been more or less consistently above the $100-per-barrell mark since early 2011. Aberdeen has shrugged off additional North Sea oil taxes and continues to go from strength to strength.

“Aberdeen and Dundee topped the growth charts last year, with Aberdeen holding the top spot for GDHI growth in the UK’s largest towns between 2005 and 2009.”

Dundee’s position as the fastest growing city for disposable income was driven by public sector investment.

Marc says: “Combining the public sector-driven growth in Dundee and the oil-wealth in Aberdeen, the North-East of Scotland has outperformed the rest of the UK in terms of growth in disposable income.”

However, UHY Hacker Young warns that public sector cuts will take a heavy toll on disposable income in some of the places that have seen the biggest growth.

Marc comments: “Several UK towns particularly benefitted from increasing public sector investment in the years leading up to the financial crisis. High levels of public spending significantly boosted towns and cities with high proportions of public sector workers.”

“However, it is these same towns that will be hardest hit by the austerity measures of the current government.”

The proportion of the population employed in the public sector in Dundee (35.8%) and Birkenhead (29.5%) is well above the UK average of 23%. The equivalent figure for Aberdeen is 19.9%.

National pay bargaining in the public sector contributed to the rapid disposable income growth in the UK’s regions.

Marc says: “Public sector pay is negotiated on a national basis, which means public sector workers in Dundee will earn the same amount as their colleagues in more expensive parts of the UK, and only slightly less than Londoners benefitting from London-weighting. Public Sector wages will go much further in towns with lower housing costs.”

“If the Government follows through with its ideas for localising public sector pay deals to reflect local labour market conditions, some towns could be hit by a double-whammy of public sector job cuts and hefty wage reductions.”

London consistently has the highest average gross disposable household income in the UK, with an average Gross Household Disposable Income of £20,238. Reading and the Thames Valley ranked second in 2010, with an average of £18,010.

Marc says: “London and commuter areas in the South-East appear somewhat recession proof. The South-East has continued to see new investment and new jobs, despite the financial crisis.”

“Meanwhile, over the past five or so years, London has become increasingly attractive to overseas investors keen to find a safe haven for their wealth. This injection of wealth at the higher end of the income scale has helped keep London’s disposable income moving upwards as the benefits of that investment seem, to outweigh the impact on housing costs.”

The towns with the slowest growth in average disposable income between 2006 and 2010 were:

  • Sheffield, 7.7% growth from £12,002 to £12,928 over five years
  • Leeds, 7.3% growth from £12,402 to £13,303 over five years
  • Derby, 6.9% growth from £11,677 to £12,484 over five years
  • Luton, 5% growth from £11,749 to £12,338 over five years
  • And Cardiff, 3.6% growth from £13,906 to £14,403 over five years.

Commenting on these figures, Marc says: “These figures show the government just where support is needed during the recovery from recession. Businesses here have missed out on private and public sector investment over the past decade and cannot be allowed to fall further behind.”

“Leeds, Sheffield, and Derby will all benefit from new ‘Enterprise Zones’ and it will be interesting to see what impact these have.”

Top-40 UK towns and Cities by Percentage Increase in Gross Disposable Household Income

Towns by Increase in  GDHI (2010 ave. GDHI rank)

Average 2006 GDHI (£)

Average 2010 GDHI (£)

Change in average GDHI (£)

% Change in average GDHI

Dundee (14)

   12,649

   14,925

      2,276

17.99%

Aberdeen (3)

   15,308

   17,777

      2,469

16.13%

Blackpool (29)

   10,826

   12,553

       1,727

15.95%

Birkenhead (11)

   13,338

   15,444

       2,106

15.79%

Plymouth (22)

   11,603

   13,338

       1,735

14.95%

London (1)

   17,614

   20,238

      2,624

14.90%

Belfast (15)

   12,954

   14,873

       1,919

14.81%

Preston (17)

   12,441

   14,197

       1,756

14.11%

Gillingham and Medway (12)

   13,286

   15,156

       1,870

14.07%

Swansea (18)

   12,192

   13,899

       1,707

14.00%

Stoke-on-Trent (35)

   10,749

   12,238

       1,489

13.85%

Middlesbrough (28)

   11,112

   12,616

       1,504

13.53%

Liverpool (27)

   11,251

   12,766

       1,515

13.47%

Portsmouth (37)

   10,768

   12,169

       1,401

13.01%

Sunderland (33)

   10,971

   12,398

       1,427

13.01%

Brighton (6)

   14,995

   16,863

       1,868

12.46%

Glasgow (21)

   12,001

   13,496

       1,495

12.46%

Coventry (32)

   11,110

   12,477

       1,367

12.30%

Southampton (31)

   11,183

   12,477

       1,294

11.57%

Hull (39)

   10,018

   11,149

        1,131

11.29%

Warrington (13)

   13,502

   15,004

       1,502

11.12%

Barnsley (24)

   11,841

   13,103

       1,262

10.66%

Bournemouth (7)

   14,840

   16,413

       1,573

10.60%

Birmingham (36)

   11,059

   12,229

       1,170

10.58%

Newcastle (26)

   11,638

   12,858

       1,220

10.48%

Leicester (38)

   10,336

   11,413

       1,077

10.42%

Manchester (20)

   12,289

   13,548

       1,259

10.24%

Milton Keynes (8)

   14,497

   15,937

       1,440

9.93%

Southend-on-Sea(9)

   14,429

   15,802

       1,373

9.52%

Edinburgh (4)

   15,770

   17,253

       1,483

9.40%

Crawley and West Sussex (5)

   15,663

   17,119

       1,456

9.30%

Reading and Thames Valley (2)

   16,515

   18,010

       1,495

9.05%

Northampton (10)

   14,213

   15,473

       1,260

8.87%

Nottingham (40)

     9,861

   10,702

          841

8.53%

Bristol (19)

   12,786

   13,811

       1,025

8.02%

Sheffield (25)

   12,002

   12,928

         926

7.72%

Leeds (23)

   12,402

   13,303

          901

7.26%

Derby (30)

   11,677

   12,484

         807

6.91%

Luton (34)

   11,749

   12,338

         589

5.01%

Cardiff (16)

   13,906

   14,403

         497

3.57%

Top-5 UK towns and Cities by Percentage Change in Gross Disposable Household Income

Town

Average 2006 GDHI (£)

Average 2010 GDHI (£)

Change in average GDHI (£)

% Change in average GDHI

Dundee (14)

   12,649

   14,925

      2,276

17.99%

Aberdeen (3)

   15,308

   17,777

      2,469

16.13%

Blackpool (29)

   10,826

   12,553

       1,727

15.95%

Birkenhead (11)

   13,338

   15,444

       2,106

15.79%

Plymouth (22)

   11,603

   13,338

       1,735

14.95%

Bottom-5 UK towns and Cities by Percentage Change in Gross Disposable Household Income

Town

Average 2006 GDHI (£)

Average 2010 GDHI (£)

Change in average GDHI (£)

% Change in average GDHI

Sheffield (25)

   12,002

   12,928

         926

7.72%

Leeds (23)

   12,402

   13,303

          901

7.26%

Derby (30)

   11,677

   12,484

         807

6.91%

Luton (34)

   11,749

   12,338

         589

5.01%

Cardiff (16)

   13,906

   14,403

         497

3.57%