Levelling up: social mobility is now tougher than in last 50 years - and even harder for people from the North

It is harder for poorer families to be socially mobile now than in any other period in the last 50 years, according to new research, and particularly tough for people from the North.

Parental income and wealth is of even more importance nowadays in determining someone’s income across their lifetime, a new report from the Institute for Fiscal Studies (IFS) said.

The well-respected economic research organisation said its predictions suggest inheritances will be twice as big on average for those born in the 1980s as for those born in the 1960s, due to higher house prices and having fewer children.

The IFS said: “Your parents’ earnings are a much stronger predictor of your earnings for those born from the 1970s onwards than they were for previous generations.” 

And these differences were even starker compared with the North and the South and London. The report said: “Men who grew up on free school meals end up earning £8,700 more at age 28 if they grew up in the highest mobility areas around London than if they grew up in the lowest-mobility areas in the North of England.”

While those with parents living in London stand to inherit about twice as much on average as those with parents in the North-East or Yorkshire and the Humber, making social mobility even harder. 

Children from most ethnic minority groups on FSMs tend to out-perform their white peers in school, this advantage is reversed when it comes to work, the IFS said, as men from Pakistani, black African and black Caribbean backgrounds who grew up on FSMs end up earning less than white men who had FSMs as children.

The research, part of the IFS Deaton Review of Inequalities funded by the Nuffield Foundation, looked at lifetime income distribution – how much income people get from employment earnings and inheritance over their lifetime compared with other people.

It found that young people from Pakistani and Bangladeshi families are less than half as likely as their white peers to receive a substantial financial gift from their parents over a two-year period.

David Sturrock, a senior research economist at the IFS and an author of the report, said: “It is bad enough that it seems harder for children from poorer families to move up in the earnings distribution than it was 40 years ago.

“But this may understate the true challenges we face with respect to social mobility, which are made worse by a long period of overall earnings stagnation alongside the increased importance of wealth and growing wealth gaps between North and South.

“Poorer children from the North and Midlands face the combination of poorer educational outcomes, weaker local economies and relatively low levels of inheritance from their parents.

“While the educational achievements of ethnic minority children from poor backgrounds are a success story, for many of them this is not translating into higher later-life earnings as we might expect, and on average they can rely much less on receiving wealth from their parents than White children.

“It may be harder now than at any point in over half a century to move up if you are born in a position of disadvantage.”

It comes after 13 years of Tory rule, the government is trying to enact a so-called “levelling up” agenda. Boris Johnson was elected in 2019 with a swathe of Red Wall seats, promising to level up England.

One of the key policies was to allocate central government funds to councils for specific projects, however NationalWorld previously found that cash-strapped local authorities spent at least £27 million producing bids, with many not being awarded a penny from the government.

While dozens of the most deprived areas in England were left out of the second round of the Levelling Up Fund (LUF), while three of the least deprived areas were awarded funding, including a town in the Prime Minister’s North Yorkshire constituency.

And the IPPR North’s State of the North report found that the UK is “the most regionally divided country and getting worse”, with systematic underinvestment in infrastructure, transport, research and development holding the North of England back.