“Annual income twenty pounds, annual
expenditure nineteen, nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery....”
David Copperfield by Charles Dickens
Income, expenditure and debt
Most people will recognise income and expenditure as two faces of the same coin. As Mr Micawber in David Copperfield also recognised, an imbalance in these two components results in another significant influence on our wellbeing – debt or borrowing. Our net national debt currently absorbs almost two thirds of the annual value of UK goods and services produced (64% of Gross Domestic Product (GDP)); and public sector expenditure currently exceeds £565 billion a year. As national financial numbers are the aggregation of our earnings, spending and borrowing habits, we all have an interest in reducing these conditions that contribute to ‘misery’.
Of course balance sheets of income, expenditure and borrowing vary by time and location, differently influencing the wealth and wellbeing of every household and community. In this article I have been invited to set out some of the financial characteristics of our rural economies. Weaving through the limitations of analysing official statistics for rural areas, I will attempt to offer a coarse grain income and expenditure profile more relevant to rural households and businesses.
For context, broadly 19% of England’s population lives in rural areas (slightly over 9.8 million people). A quarter of England’s businesses registered for VAT
value of goods and services produced by industry in our predominantly rural districts exceeded 14% of national Gross Value Added (G VA)
6 www. countryway. org. uk
Tracing rural Roger Turner, Head of Rural Economies,
or PaYE tax operate from rural areas (500,000 enterprises). Five million employees living in rural England form about 20% of England’s workforce. In 2007, the value of goods and services produced by industry in our predominantly rural districts exceeded 14% of national Gross Value Added (GVA) – £144 billion, with other rural districts and authorities contributing a further £252 billion to the overall total.
Whilst, for most people, assets and wealth do not make regular contributions to the income side of our balance sheet, I start my profile with household wealth, as we know that in good times it is an important source of funds that aids the creation and growth of rural businesses.
In 2010 the Office for National Statistics estimated the wealth of rural households at £1.6 trillion – that is
£1,602,800,000,000! By this survey, 21% of the total wealth of England’s households is found in rural dwellings and communities – in the form of property wealth (40%), private pension wealth (38%); financial wealth such as earnings and savings (11%) and physical wealth, for example as valuables and other contents of rural residences.
Large and aggregate figures such as these conceal wide variation and inequalities across rural England. Whilst the least affluent households own between them less than 0.5% of total rural wealth (just £8 billion for the bottom 20%), the top 10% of households own 46% of rural wealth. The lowest median amount of rural household wealth is owned by households headed by students, those looking after family or home, or sick or disabled residents. In contrast those led by self employed and retired rural residents appear to have the highest, a relationship more pronounced in rural than urban areas.
Keeping in mind the wide diversity in the size, shape and activities of rural households, the median rural household in 2007/08 had an income of £21,400
before housing costs (the equivalent figure for the whole of England was £20,300). Commercial data from 2010 records a markedly lower median household income in rural towns in sparsely populated areas. Lower average wage levels and higher proportions of retired people help to explain such lower income levels in sparsely populated rural areas.
Rural England also contains approximately one in five rural households on incomes below the government’s recognised measure of income poverty. In 2010 this recognised poverty level was £17,833 per annum after deducting tax and NI payments and allowing for housing costs. This is equivalent to an average of just £343 per week per household – an amount that I will show later falls below the average weekly expenditure of rural households.
Reducing household incomes to average weekly amounts offers a base to compare with average household expenditure. Thus the mean annual household income of £21,400 is a weekly equivalent income of £411. In 2010 village households had a mean weekly income of £610 (villages in sparsely populated areas) and £755
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