The Centre for the Study of Financial Innovation’s latest research, titled “The ‘Cost of Inequality,'” details the disparities in life expectancy, health, and economic opportunity between the richest and poorest regions of England.
Professor les Mayhew thinks that the key to ‘levelling up’ is to improve health and to relate that improvement to increased economic activity in impoverished regions.
This means that policies aimed at improving health must be coupled with efforts aimed at increasing skill levels and directing investment toward local communities.
Prof Mayhew’s research contributes to the Government’s ambitious goal of doubling health life expectancy by 2035. Early retirement is a significant barrier to economic growth and raises health and welfare expenditures.
Healthy lifestyles would generate headroom, allowing individuals to work and save for longer periods of time.
The research, created in collaboration with the International Longevity Centre and City University’s Business School, combines data on total lifetime, working lives, and years spent in poor health to calculate deprivation in 150 English districts.
The disparities shown include an average longevity of 12 years longer for individuals who live in the top 1% of the most impoverished areas compared to those who live in the lowest 1%.
The report also reveals an almost 12-year difference in the average age at which ill health begins between individuals living in the richest 5% of districts and those living in the lowest 5% – approximately 69 vs 57.
And an average age of over 60 for those in the top 5% at the end of their working lives, but less than 55 for those in the poorest 5%.
Fourteen districts, the most of which are in the south-east of England, have high ratings for total life expectancy, healthy life expectancy, and working lifetimes. They include the Oxfordshire towns of Wokingham and Bromley, as well as Windsor and Maidenhead.
The 18 with poor ratings on all three points are primarily concentrated in the Midlands and north, with Hartlepool, Manchester, Liverpool, Birmingham, and Nottingham among them. The report includes scores for all districts.
The research calculates the cost of disparity by combining local scores with the cost of delivering benefits and healthcare services in each area.
This is then translated to a hypothetical local tax rate based on average earnings over an average working life in order to generate a single index of inequality.
Again, the disparity is substantial: the hypothetical rate for the most advantaged district is 21%, while the rate for the least advantaged district is 34%. On one level, this illustrates the critical nature of redistribution of tax money from wealthy to impoverished communities.
More importantly for the government’s objective of levelling up and its health agenda, which includes the establishment of a new Office for Health Promotion, is the fact that increasing healthy life expectancy is a critical first step.
According to the research, an additional year of HLE would add approximately 3.4 months to working lives and 4.5 months to total life expectancy.
The second critical stage is for gains in HLE to transfer into increased economic activity via longer working lives, therefore increasing the revenue base necessary to fund healthcare and benefits costs.
Additionally, increasing the years spent in excellent health increases the number of older adults who are able to volunteer for community and other activities. The background is that the number of persons aged 65 and above in the UK is anticipated to grow to 16.4 million by 2035, up from 12. 7 million in 2021.
The report argues that health-related policies must be accompanied by fiscal incentives, such as raising the state pension age, to encourage more people to work during their additional healthy years, as well as investment in skills training and technological innovation to support increased productivity.
While improved health will help achieve this, more targeted assistance will be required to narrow inequality gaps in the most disadvantaged communities.
Prof Les Mayhew, Professor of Statistics at the Business School (formerly Cass) and Head of Global Research at the International Longevity Centre, said: “This is the first time that it has been possible to link health and work to key economic indicators in one context, providing a single measure of inequalities and of the factors causing them.
“Used properly it can help to design policies that work with the aim of levelling up areas, although extra targeting of the worst affected areas will be needed.
“By measuring the financial impact of poor health on welfare payments, pensions and earnings, policy makers can turn their attention to preventative action, as well as reacting more effectively to immediate needs.
“The approach is novel but relatively simple. Its potential applications can help the UK to ‘build back better’ after COVID-19 and to ‘level up’ deprived areas.”