Northern Ireland households may be better off than once thought
LIFESTYLE and living costs in Northern Ireland differ substantially from the experience in other regions and, also, contrast with the overall UK averages.
Remarkably, the average Northern Ireland household spends are almost the same amount as the average for the UK. In the last three years, 2010-12, average household weekly spending has been £481, equivalent to just over £25,000 per annum. This is fractionally lower than the UK average of £482.
The household survey also confirms that household incomes are, on average, lower. Weekly household disposable income averaged £502 compared to a UK figure of £587. Northern Ireland, on this basis, has household income levels 14% below the overall average.
If incomes are 14% lower but total spending per household is comparable, a significant message is that, provided the survey results are statistically reliable, household savings at 4% of disposable income, are a much lower share of income in Northern Ireland than the UK average of 18%.
There is no official measure of how the cost of living differs between regions in the UK. From time to time individual items attract publicity on a one off basis. For example, independent comment occasionally compares motor fuel prices, motor insurance rates and home energy costs, usually to the discomfort of local households.
If an estimate is needed of the different prices for elements of the cost of living, then some major public sector comparators are relevant.
House rents, measured to allow for the higher impact of the housing benefit rules, domestic rates and water charges are each significantly determined by Government decisions. In Northern Ireland, the absence of water charges and a much lower levy for domestic rates, make a large difference to budgeting costs.
The average local household has lower bills for rates, rent and water that, using the household survey evidence, save a typical household about £1,600 per year, or over £31 per week. Charges for these services in Northern Ireland are lower than in any other region.
Lying behind this favourable outcome are key decisions by the Executive:
- the absence of direct water charges is possibly the largest
- the rental levels set by the Housing Executive and housing associations
The levels of offset to rents through the housing benefit rules have been helpful and, until recently, have been set at UK standard rates. In 2012, housing benefit was typically worth half of the gross rent payable by households in rented property.
In a typical household budget there are features which are somewhat surprising.
The local household spends nearly the same amount as the average UK family. The spread of that spending shows very significant differences in addition to those caused by Government decisions.
The average size of household (number of people in a family unit: 2.38) is now similar to the UK average.
The household spending patterns, by value not price, show:
* Food and non-alcoholic drink 7% higher
* Alcoholic drink and tobacco 33% higher
* Clothing and footwear 72% higher
* Restaurants and eating out 18% higher
and, in contrast,
* Transport spending 6% lower
* Household goods & services 16% lower
* Recreation and leisure 6% lower
For reasons that must inevitably be somewhat speculative, spending on clothing and footwear in Northern Ireland is well above the UK average. Similarly, the higher spending on drink and tobacco has occurred in these surveys over several years.
As a surprising feature, particularly taking account of the generally lower average earnings figures, the family spending records show that eating out budgets are higher than in any other region except London.
As a result of these household inquiries, what overall assessment can be made? Do we congratulate ourselves on maintaining higher living standards (or spending) than five other English regions as well as Scotland and Wales? Do we urge more caution when polemic arguments conclude that Northern Ireland has high living costs which hit living standards?
Perhaps we are better off than we thought.