A new report from the Centre for the Study of Financial Innovation, entitled “The ‘Cost of Inequality’, exposes the gaps in life expectancy, health and economic opportunity between the richest and poorest parts of England. The author, Professor les Mayhew, argues that the key to ‘levelling up’ is to improve health and to link that to increasing economic activity in deprived areas. This means that policies designed to improve health need to be combined with initiatives to raise skill levels and target local investment.

Prof Mayhew’s research addresses the Government’s ambitious aim to extend health life expectancy by five years by 2035. Early exit from the workforce is a major impediment to economic output and increases health and welfare costs. Healthy lives would create headroom to enable people to work and save for longer.

The report, produced in partnership with the International Longevity Centre and The Business School at City University, London, combines data on overall lifespan, working lives and years spent in ill health to produce a measure of deprivation for 150 English districts.

The gaps exposed include:

• an average lifespan that is 12 years longer for those living in the top 1%, least deprived districts compared with those in the bottom 1%;
• a gap of nearly 12 years in the average ages at which ill health kicks in between those in the richest 5% of districts and those in the poorest 5% – nearly 69 versus 57; and
• an average age of over 60 for the end of working life for the top 5%, but less than 55 for those in the bottom 5%.

Fourteen districts, mainly in the south-east of England, have high scores for overall lifespans, healthy life expectancy and working lives. They include Wokingham, Bromley, Oxfordshire, and Windsor and Maidenhead. The 18 with low scores on all three counts are mainly in the Midlands and the north, including Hartlepool, Manchester, Liverpool, Birmingham and Nottingham. Scores for all districts can be found in the report.

To put a price on inequality, the research combines local scores with the cost of providing benefits and healthcare services to each district. This is then converted into a hypothetical local taxation rate drawing on average earnings over the average working life to provide a single index of inequality. Again, the gulf is wide: the hypothetical rate is 21% for the most advantaged district versus 34% for the least. At one level, this demonstrates the necessity of redistributing tax revenues from richer to poorer areas.

More important for the government’s levelling up goal and its health agenda, which includes creating a new Office for Health Promotion, is that improving healthy life expectancy is a crucial first step. The report finds that a one-year extension in HLE would add around 3.4 months to working lives and 4.5 months to overall life expectancy.

The equally important second step is for improvements in HLE to translate into greater economic activity via longer working lives, which will help to increase the tax base to cover the cost of healthcare and benefits. Another advantage of increasing the number of years spent in good health is that it bolsters the number of older people able to volunteer for community and other activities. The context is that the number of people in the UK aged 65 plus is expected to increase to 16.4m by 2035 compared with 12. 7m in 2021. 

The report argues that measures to improve health need to be accompanied by fiscal incentives, such as increasing the state pension age, to convert more of the extra healthy years into work, and by investment in skills training and technological innovation to support increased productivity. While better health will achieve this, more targeted help will still be needed for the most left behind areas to close the inequality gaps.

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.

Media enquiries:

Luke Lambert, Senior Communications Officer, City, University of London

T: +44 (0) 20 7040 3431 M: +44 (0) 74 2363 8025 E: luke.lambert@city.ac.uk

Lily Parsey, Global Policy and Infludencing Manager, ILC-UK

E: LilyParsey@ilcuk.org.uk

T: +44 (0) 208 638 0832

Jane Fuller, co-Director, CSFI

T: +44 (0) 79 8030 5278

Notes to Editors

‘The Cost of Inequality – putting a price on health’ by Professor Les Mayhew can be read in full on the CSFI website at: https://bit.ly/3x3Devq

The report will be launched at a digital event on 5 July. To join in, please send an email to research@csfi.org with your name and you will receive the link 24 hours in advance.

About the author

Les Mayhew is head of global research at the International Longevity Centre (ILC), the UK’s specialist think tank on the impact of longevity on society, and professor of statistics at The Business School (formerly Cass), City University, London. His previous experience includes 20 years in the Department of Health and Social Security, the Department of Social Security, HM Treasury and the Office for National Statistics, where he was also a director. He is an alumnus of the International Institute for Applied Systems Analysis (IIASA) in Vienna, and an Honorary Fellow of the Institute of Actuaries.

About the Centre for the Study of Financial Innovation

The CSFI is an independent think tank where financial services professionals, regulators, academics and other observers can share ideas about the challenges and opportunities facing the sector. The Centre organises events (nearly 300 virtual ones since the outbreak of Covid) and produces publications on emerging trends and ideas that affect one of the most dynamic and important parts of the UK economy. The spirit of free and intelligent discussion, unshackled by competitive constraints or partisan agendas, has been at the heart of the CSFI’s reputation since its founding in 1993. 

About the International Longevity Centre

The ILC is the UK’s specialist think tank on the impact of longevity on society. ILC UK was established in 1997 as one of the members of the International Longevity Centre Global Alliance.

Since our inception, we have published over 250 reports and organised over 300 events including the annual Future of Ageing conference. We work with central government, local government, the private sector, and professional and academic associations to provoke conversations and pioneer solutions for a society where everyone can thrive, regardless of age.

About the Business School

The Business School (formerly Cass) has been at the forefront of business education for over 50 years, developing leaders who help businesses thrive through change and uncertainty. The faculty are experts in their fields, producing cutting-edge research. The last Research Excellence Framework results assessed 84 per cent of its research to be world-leading or internationally excellent.

The School has strong links to both the City of London and the thriving entrepreneurial hub of Tech City. It educates nearly 4,000 students each year, including undergraduate, postgraduate and Executive Education. It has an alumni community of more than 48,000 in more than 160 countries.

In April 2021, the decision was taken to rename the School as Bayes Business School from September 2021. This followed the University’s announcement in July 2020 that the Cass name would be removed after the news that some of Sir John Cass’s wealth was obtained though his links to the slave trade. The School had carried the Cass name between 2002 and 2020 after a donation from the Sir John Cass Foundation, an educational charity which has now been renamed The Portal Trust.

A short biography of Thomas Bayes and his theorem is available here.