Poverty and prosperity sit side by side in British cities

Relative poverty is on the rise in British cities, with deprived neighbourhoods often sitting side by side with more affluent areas. Using Britain’s second city, Birmingham, as a case study, the Human City Institute has mapped how austerity, welfare reform, a slowly recovering economy, and reductions in central government funding to British cities have widened the gap between poor and prosperous neighbourhoods over the last five years.

Cities like Birmingham have been hit hard by austerity economics, with its expenditure on local services cut by £560m since 2010. It now faces a further £250m reduction in spending over the next four years.

Birmingham is rated the fifth most deprived local authority of 326 in England, based on the Index of Multiple Deprivation (IMD) 2015, the official measure of relative deprivation in English neighbourhoods.

Two fifths of Birmingham’s 639 neighbourhoods are placed in the 10 per cent most deprived nationally, which has increased since the IMD was last published in 2010. These neighbourhoods are located mainly in inner city areas, which contain the city’s highest population densities, older and often overcrowded housing, household with the lowest life expectancy, and large black and minority ethnic communities.

‘Continued austerity will probably embed

inequality more deeply in the nation’s cities’

Birmingham’s more affluent suburbs, on the other hand, are among the least deprived nationally. In many cases, barely a quarter of a mile separates poor and prosperous communities, underscoring growing inequality in health, incomes, secure and well-paid employment, education, and life chances.

Rising inequality in a city which has secured improved levels of general economic prosperity in recent years, through its investment in prestigious infrastructure projects, cultural capital and education, is exemplified by deep tenure changes and a widening income divide between top and bottom earners.

By way of illustration, home ownership in Birmingham has receded to just over 50 per cent, while private renting has more than doubled since 2001, with 1 in 5 of all Birmingham households now renting privately. The result is a growing wealth gap as a dwindling number of (mainly older) homeowners control housing assets with an inflated value whereas private (predominantly young) renters pay rapidly rising rents.

Alongside this, the differential between the average wage for the top and bottom 10 per cent of Birmingham earners has widened by 4.2 per cent from £34,985 in 2010 to 36,467 in 2015.

Against a backdrop of austerity and dwindling public resources, Birmingham-based agencies have striven to counteract worsening poverty. These agencies, from the city council to social landlords and the voluntary and community sector, are working to spread the benefits of renewed economic growth.

Birmingham has a long history of confronting poverty, and seeking synergy between economic and social prosperity, being the home of ‘the civic gospel’, where the Chamberlains showed the nation what active local government could achieve. Birmingham has further opportunities to shape its own future as power and resources are devolved to city region level, such as the West Midlands Combined Authority.

Birmingham is also steeped in the Quaker tradition begun by the Cadbury family. Agencies such as Bournville Village Trust, the Barrow Cadbury Trust, and Birmingham Settlement still make significant contributions today. Birmingham in 2016 has a rich tapestry of third sector agencies, such as the Birmingham Impact Hub, that are aiding inclusive growth and wealth creation while extending asset ownership.

Tackling poverty in cities like Birmingham, through localism, devolution, inclusive growth strategies and a vibrant third sector can realise results. Yet continued austerity will probably embed inequality more deeply in the nation’s cities, offering little hope for people in poverty to improve their position. So local action must be matched by a national commitment to spreading prosperity and reducing inequality through progressive taxation, a more affordable housing system, and a welfare state that supports rather than stigmatises.

• This blog is based on the findings of a new report by the Human City Institute – ‘A Tale of Two Cities: Poverty and Prosperity in Birmingham’ with a foreword by Julia Unwin, chief executive of the Joseph Rowntree Foundation