EXECUTIVE pay has risen 400 per cent as average wages in the North-East have stagnated, said a think tank which has accused big corporations of "pillaging" the region.

Wealth is being sucked out of the North-East as low wages fund
executive pay packets and profits according to a new report published today by the High Pay Centre.

It challenges claims that the region is dependent on public spending funded by taxpayers in the South.

Instead, it said that much of the money earned in our region is transferred to London and the South-East to fund company profits and executive pay.

Last night, Katja Hall, chief policy director at employers' organisation the CBI, attempted to sound a more positive note, when she said: "We want to ensure growth reaches all parts of the UK and that means co-ordinated action to rejuvenate all of our regions.

"This is not a matter of north versus south, or large firms versus small.
"We need to remember that corporate profits are the source of people's pensions, wherever they live."

However, the report, which is called, The Corporate Conquest, said that  supermarkets, energy, mobile phone networks, clothing stores and chain petrol stations - which all have a market share of at least 97 per cent - extract from the North-East most of the income they generate in the region.

The report exposes how most products sold in the North-East by major corporations are made elsewhere, stored in distribution hubs and transported across the country. This means that hundreds of pounds spent by each North-East household on essential items leaves the region each week.

The report argues that attempts to rebalance the UK's economy will fail unless policymakers address this systematic transfer of wealth away from regions.

Jonathan Walker, NECC head of Member Relations, said:

“This report highlights what we have known for a long time, namely the need to attract more businesses to the North-East and how important it is that we nurture our home-grown firms to help them maximise their potential and become the economic drivers of the future.

“The issue in the North-East was not that we were too over-reliant on the public sector, but that we needed to create more employment opportunities in the private sector and our members are doing that at the moment, with our Quarterly Economic Survey demonstrating that more businesses are investing in staff and equipment than at any time since before the recession. They are also seeing rising sales and orders both at home and overseas.

“As a region we need to have a good mix of global industries, national chains and high-performing regional companies. This report highlights the lack of industry headquarters in the region, but we must not forget the high quality jobs that these businesses bring to the North-East, whether it’s engineers at Nissan, financial controllers at Tesco or logistics experts at Asda.”]

According to the report:

* Just 5 of the FTSE 350 companies are based in the North-East.

* There are now 51 McDonalds; 106 Costa Coffees; 41 JD Wetherspoon pubs; 21 Next stores and 19 Topshops in the North-East. Before the 1980s, these companies were virtually non-existent in the region.

* Supermarkets have also expanded in the North East over the past 30 years: Tesco now have 65 stores in the region, while Asda have 44.

* 75 per cent of the retail outlets in the MetroCentre, the largest shopping centre in the UK, are chain stores. These companies provide mainly low-paying, low-skilled jobs to the North-East while threatening local businesses, according to the report. 

* Average pay for workers in the North-East has stagnated at £23,000, but pay for the average FTSE 100 chief executive has increased by 400 per cent over the past decade, to £4.5m.

* Between 1977 and 2008, company profits increased from 25 per cent to 29 per cent of national income, while workers' wages fell from 59 per cent to 53 per cent.

Deborah Hargreaves, High Pay centre director said: "The system rewards southern shareholders more and more, and northern workers less and less, as pay falls but profit taking rises. Local shops have been closing as national chains taking their place so profits made from consumers now flow outside the regions they are made in.

"All this makes the north look less productive. The story goes that people in the North contribute less to the economy and they rely on public sector jobs.  But the reality is that the north is being pillaged.

"This represents a profound change to our economic life that is rarely discussed. Instead many people, including David Cameron, focus on the misleading claim that the North-East is dependent on public spending from taxpayers in the south."