There's a party every night in Cowes, but Harry's not invited

Harry works as a barman in The Star. In the evening as he walks to work he can see the bright lights reflecting in the river and hear music drift across.

"It's as if you know there's a party going on over there but we're not invited," he says.

Harry lives and works in Cowes, the small Isle of Wight town with a reputation as a playground for the Royal Family and haven for select yachtsmen. In the eyes of an outsider it is a contented community. But for one week each summer - Cowes Week - it becomes apparent that it is a town divided.

Last week was Cowes Week, the annual extravaganza when the town hosts the world's biggest yacht regatta. In West Cowes all was glamour and idle chit-chat. The rich sampled succulent food and tried their hands at the tillers of state-of-the-art yachts. But across the river Medina, which flows through the heart of the town like a border, are people like Harry: the uninvited guests.

Their neighbourhood, East Cowes, once the location of numerous boat yards and home of the hovercraft, has suffered years of decline and is now the worst unemployment blackspot on the island. Last week the streets remained empty and undecorated; in West Cowes the bunting blew back and forth in the breeze. While the regatta, endorsed by royalty and sponsored by big business, generated up to pounds 15m worth of businessfor those in the west, the shops, pubs and cafes of East Cowes were excluded.

"If anything, the situation has got worse over recent years; they keep everything to themselves over there and they would rather we stayed away," said Harry, who lives 300 yards away across the river in East Cowes.

"The yachties look at us as some lower form of life and we can't stand them. A lot of local people won't go near the place when they are here."

Some, however, do. Three hundred yards across the watery divide, they were employed at the rate of just pounds 2.95 an hour to serve at the cocktail parties hosted by the yachting clubs. Some of the East Cowes hired hands served at the grandest of all, the Squadron Ball held in a marquee on the lawn of the Royal Yacht Squadron, with the Duke of Edinburgh and the Princess Royal guests of honour.

Waitressing is the only sign of the "trickle down" of the bounty of Cowes Week to people who live on the wrong side of the river. However, Skandia Life, the Swedish-based life assurance firm which is sponsoring the event over three years at a cost of pounds 1.5m, says its subsidy has a major impact.

"My company's support means that entry fees can be kept down," said Bill West, Skandia Life's marketing director. "Without our help yachtsmen would have to pay around pounds 2,000 a boat for a week of racing. Our sponsorship means that, in effect, they pay about pounds 200 a boat."

Back across the river, in Alfred Street, 55-year-old Colin Brewer sat on the front step of his terraced house and looked down to the river.

"There's nothing going on here, it's just dead really. I wouldn't advise anyone young to move in here. We haven't even got the money to hold our own carnival here this year."

Publican Chris Troupe, chairman of the Project Cowes Business Association, sees no reason to change: "Skandia Life Cowes Week is good news for the island. People all over the world have heard about yacht racing at Cowes. Some have only ever heard of the Isle of Wight in the context of the pop festival.

"I don't think that anything can really be done about the East Cowes situation. The Squadron is in West Cowes and so are the yacht clubs."

At the East Cowes Market, a discount store, Beverley Martin, the proprietor, said: "We get one or two extra people popping on their way down to the chain bridge, but until they locate some events in East Cowes it will make no difference to the people around here."