In this thesis welfare is examined in a spatial context. A broader definition of welfare is taken so that it includes more than just income. In-kind benefits, indirect costs, life-satisfaction, locational effects are all examined in a spatial context. The impact of these welfare drivers on the spatial distribution is examined with each chapter focusing on a different welfare driver. Differences between areas may be psychical (e.g. climate) or structural (e.g. high education attainment) using a spatial approach can account for some of this variation. An interaction exists between space and the economy which results in agglomeration economies and clustering based on social class. However, there are market failures (e.g. congestion) which can reduce welfare. A broader measure of welfare which includes additional components and not just monetary income acknowledges the spatial heterogeneity that exists across space. A small area examination allows for pockets of deprivation and poverty to be identified. Some of the reasons behind the inequality that exist between and within areas is explored and described. Taking each component in isolation has the power to show the effects of that driver on welfare. International studies are often limited by a lack of income data at a small area level. This thesis uses the output from a spatial microsimulation model to overcome the lack of income data at a spatial scale. This income data is enhanced through a data fusion process to create and include additional spatially rich welfare data. Spatial methods such as interpolation and network analysis tools are utilised to calculate and create new small area datasets. Mapping tools such as GIS provide the added benefit of displaying results in an effective way. This newly created data can be used to calculate how welfare varies spatially depending upon the definition of welfare used. The broader definition of welfare adopted is based on conceptual underpinnings that any benefits/costs which increase/decrease individual potential to consume should be included in a measure of welfare. Drivers of welfare examined include intertemporal effects, housing, commuting, labour markets, spatial attributes and exposure to flooding. The sensitivity and impact of each component on individual welfare is examined. By using a spatial approach differences in the impact of each driver across space can be measured. Due to the heterogeneous nature of welfare, some drivers can have positive benefits in some areas but negative in others. By adopting a spatial approach these differences can be identified. Measuring welfare at a disaggregated spatial scale is required before we attempt to understand why the spatial distribution of welfare looks the way it does. Research such as this is crucial to evaluate and recommend policies that improve welfare and reduce spatial inequalities. Due to their limited nature, identifying areas with greater “need” allows resources to be targeted more efficiently. This thesis makes a number of recommendations in this regard as to why policy should adopt a more holistic approach to welfare. It highlights particular challenges in the area of data collection and the need for greater focus on spatial impacts of various policy measures at a small area level.