A new report by the consultancy firm PwC highlights a growing economic divide in Britain, revealing that nearly half of all households live in areas where economic growth has not led to improved living standards. The report points to a "stark" North-South divide in household spending power, with regions like the north of England, the Midlands, and Wales showing lower spending power than the national average. In contrast, London and the South East have significantly higher spending power. This comes as Prime Minister Andy Burnham has pledged to tackle the cost of living and regional inequalities to improve living standards. However, concerns remain about how rising UK government borrowing costs might affect public spending decisions. According to the report, released on Thursday, 12.5 million households—nearly 46% of the population—live in areas where economic growth does not translate into better living conditions. For example, households in the North East of England have a spending power 6.6% below the national average, which equates to £1,542 less annually. In the North West, the difference is £1,493, while households in Yorkshire and the Humber have the largest gap, with spending power down by £1,917 compared to the national average. On the other hand, households in the South East have a spending power 9% above the national average, adding an extra £2,154 per year, followed closely by London. Spending power is a key indicator of whether economic growth is improving people's quality of life. PwC measures this by looking at income after taxes and housing costs, and adjusting for household size and composition to understand how much money is available for other expenses. Despite weak economic growth in recent years, the UK economy expanded by 1.2% in the first half of this year, according to official data. However, the report notes that economic growth does not always lead to increased spending power, as the benefits of growth can take time to reach individuals and may not be evenly distributed. The report also highlights significant variations in spending power even within areas considered wealthy, such as London and the South East. For instance, Richmond in London has an average annual disposable income of £35,448, nearly double the £18,384 recorded in neighboring Hammersmith and Fulham. Rachel Taylor, a leader at PwC in the government and health industries, said the research shows how differently prosperity is experienced across the UK, with stark differences not just between regions but also within them. While higher housing costs in the South of England contribute to lower spending power compared to the North, this is somewhat offset by higher incomes, maintaining the North-South divide. Scotland and the South West of England are exceptions, with lower housing costs and smaller households leading to spending power slightly above the national average. The report calls for the next phase of devolution—transferring power from central government to local authorities—to ensure that local areas can keep more of the revenue generated by local growth and have greater control over how resources are used. Success should be measured not just by economic growth, but by whether that growth leads to greater prosperity and better lives for people and communities. Devolution has been a central part of Burnham’s leadership vision, with a focus on creating "the conditions for good growth in every postcode." A government spokesperson said the creation of No10 North is part of a broader mission to reshape how the country is run, with English mayors now having unprecedented financial powers to boost local economies and improve public services. However, Conservative leader Kemi Badenoch has criticized Burnham’s approach, calling his "diagnosis" of economic growth and his belief that increased government spending will make everyone richer as incorrect. She also dismissed the establishment of No10 North as a "gimmick."