Welfare spending: it’s a hot topic. From the cuts that have already taken place in recent years, to the £12bn of cuts still to come and David Cameron’s bid to reduce EU migrant benefits, the issue is rarely out of the news.

But one important factor which been largely missing from media debates on welfare is how much this spending differs across the country. And as our new report Cities Outlook 2016 highlights, it varies greatly – with benefits payments higher in Northern and Welsh cities compared to other parts of the UK. For example, welfare spending in Swansea is 1.4 times higher than in Swindon, and is twice as high in Birkenhead as in Cambridge.

Click to expand. Source: DWP 2015; HMRC 2015; DCLG 2015; Welsh Government 2015; Scottish Government 2015; NOMIS 2015, Population estimates, ONS 2015, Birth summary tables; National Registers of Scotland 2015, Births by sex, year and council area.

However, while overall benefit spending levels are highest in Northern and Welsh cities, what’s more surprising is that welfare payments have risen fastest in high-wage cities in the South East. While the welfare bill has grown by 15 per cent in Liverpool since 2004-5, it has risen by 44 per cent in Aldershot in the same period.

Click to expand. Source: DWP 2015; HMRC 2015; DCLG 2015; Welsh Government 2015; Scottish Government 2015; NOMIS 2015, Population estimates, ONS 2015, Birth summary tables; National Registers of Scotland 2015, Births by sex, year and council area.

The main factor driving this growth in welfare spending in high-wage cities is housing benefit payments. The success of places like Cambridge and Reading has pushed up demand to live in them, but house-building hasn’t kept pace – causing housing benefit payments to spiral.

While overall UK housing benefit spending increased by 47 per cent (in real terms) over the last decade in real terms, in Aldershot over the same period it doubled. It also rose by 82 per cent in Crawley.

Click to expand. Source: DWP 2015.

So while cuts to welfare spending might reduce the overall benefits bill, they won’t address the factors which are driving up welfare payments in the UK’s most economically vibrant cities – and which are causing benefits spending to remain stubbornly high in Northern cities.

To support long-term economic growth while reducing welfare, the Government and local authorities need to focus on boosting the fundamental drivers of economic growth – like skills and infrastructure – especially in cities with lower than average wages. But they must also urgently address the housing shortages in cities where welfare spending is rising fastest.

George Osborne has vowed that this government will be the “builders” of the UK’s economy. Putting that promise into action by dealing with the housing crisis will be vital if the Chancellor is to achieve his ambition of building a “high-wage, low-welfare” economy across the country.

Paul Swinney is principal economist at the Centre for Cities.

To find out more about the Cities Outlook 2016 report, click here.