South's rich areas get richer

People in Britain's richest areas have gained most from the strong economy since Labour came to power, with areas reliant on farming and manufacturing gaining least, according to a survey released today.

Household income in Surrey rose by 12% over the past two years, well above inflation, while Cornwall's grew by 1.7%, well below inflation, now at 3.2%, meaning that its economy is, in effect, in recession.

The fabled north-south divide is too simplistic to describe differing income levels, with the poorest regions being the south-west, East Anglia and Wales as well as the north.

Overall incomes have risen, with the average household earning £23,200 a year, a growth of 8.6% since the last survey two years ago by the market analysts CACI, and a rise of 19.6% since 1996.

Comparing counties, household income in Surrey is 88% higher than the level in Cornwall, and 80% higher than Tyne and Wear.

In Surrey, the richest county, the average income was £33,400 followed by Berkshire with £31,700, with the rest of the top 10 comprising London and the home counties. Bottom of the county list was Cornwall and the Isles of Scilly where average household income is £17,700.

But even within counties there are huge disparities which the study can highlight by providing a breakdown of income by postcode. Merseyside, one of the poorest, contains the seventh richest neighbourhood in the UK, which is Heswall, Wirral, where the average household income is £46,600.

But nearby Liverpool contains four of the 10 poorest postcode sectors. The Vauxhall, central, Seaforth and Kirby areas of the city have an average income as low as £9,100.

The survey also highlights deprived areas enjoying a boom. One of Britain's poorest boroughs, Hackney, north-east London, experienced a 22.5% income growth in two years taking its average to £26,000. This is believed to be due to the "gentrification" of the area with professional and middle-class people moving in after finding property prices in neighbouring Islington too high. But even in Islington, affluence and poverty sit side by side. One postcode in the Highbury area enjoys an average household income twice as high as one less than 100 metres away.

The highest earning postcode is west London, with an average income of £34,200, up 13.4% since 1998. The lowest is Sunderland, with an average income of £17,000 per household, an increase over two years of 5.8%.

The highest earning postal code areas are in London and the south-east, and this is where the biggest rise in incomes over the past two years is concentrated.

The survey does not detail the causes behind why those areas that have the most wealth are doing best. But London and the south-east are where more people work in sectors such as IT, financial services, consulting, higher skilled service sector jobs, and non-public sector professions.

Highest earning area by postcode sector: South Kensington, London, average household income £47,700. Poorest: Vauxhall, Liverpool, £9,100.

Ave household income in the constituencies of Tony Blair (Sedgefield) £18,700; William Hague (Richmond) £22,200; Charles Kennedy (Ross, Skye and Inverness) £20,800.