Poverty and inequality in the UK: 2009

Abstract

This Briefing Note provides an update on trends in living standards, income inequality and poverty. It uses the same approach to measuring income and poverty as the government employs in its Households Below Average Income (HBAI) publication. The analysis is based on the latest HBAI figures (published on 27 March 2007), providing information about incomes up to the year 2005-06. The measure of income used is net household weekly income, which has been adjusted to take account of family size ('equivalised'). The income amounts provided below are expressed as the equivalent for a couple with no children, and all changes given are in real terms (i.e. after adjusting for inflation). For the first time in recent years, data are available for the whole of the United Kingdom, not just Great Britain, but data for Northern Ireland are only available from 2002-03. Some comparisons over time are provided for Great Britain only, but others will compare statistics for GB before 2002-03 with those for the UK afterwards. Living standards and inequality Median equivalised disposable income in Great Britain in 2005-06 was £363 per week: half the population have higher incomes than this and half lower. This amount is considerably lower than the average (mean) income of £445 per week. For the fourth year in a row, both mean and median income grew modestly compared with the growth during Labour's first term: median income was 1.0% higher in 2005-06 than in 2004-05, and mean income 1.3% higher. These represent much smaller rises than the average annual rises since 1996-97, which have been 2.0% for median income and 2.3% for the mean. There is now clear evidence that the rapid growth in household disposable income experienced in the government's first term came to a halt after 2001-02. Income growth since 2004-05 has tended to be faster the higher are incomes: while median income grew by 1.0%, incomes amongst the poorest fifth of the UK fell by 0.4%, and incomes of the richest fifth rose by 1.5%, though it should be noted that none of these changes is significantly different from the others or from zero. Many measures of income inequality rose slightly between 2004-05 and 2005-06. According to the most common measure, the Gini coefficient, income inequality in 2005-06 has reached its highest level since 2001-02, and is once again statistically significantly higher than that which the Labour government inherited. On the other hand, other measures of inequality that do not take into account incomes at the very top and very bottom of the income distribution, such as the 90:10 ratio, have fallen since 1996-97.

The wealth and saving of UK families on the eve of the crisis

“…For more on equivalisation and the scale used, see pp. 82-83 of Brewer et al (2008). particular year, income decile 2 represents the next poorest 10%, and so on.…”

Child and working-age poverty in Northern Ireland from 2010 to 2020

“…Hence, absolute poverty projections will tend to be biased 15 Table D.2 provides a complete list of the default indexation rules. 16 See appendix C in Brewer et al (2008). 17 This helps to explain the discrepancies between official poverty statistics and those produced by HMRC, which are based on administrative data.…”

Pride and prejudice: Comparative corruption research and the British case

“…[55]. 13 Furthermore, wealth inequality in Britain rose by 20% between the mid-1980s and the early 1990s, the largest increase amongst all countries surveyed during that period, including the US [51:22]. Income inequality in the UK in 2008 was equal to its highest-ever level since records began in 1961 [14]: as the wealthiest 1% of the population saw their share of total personal wealth increase from 17% in 1988 to 23% in 2002, the bottom 50% saw their share drop from 10% in 1986 to 6% in 2002 [36:4].…”

“…cit., 84). 14 To the extent that intergenerational mobility can be regarded as a measure of economic opportunity, 'life chances', or 'meritocracy' accorded by a particular system, the recorded decline of social mobility in Britain over recent decadesreaching the lowest level amongst eight European and North American counterparts in 2005 (excepting the US)-suggests that the country can hardly be characterised as internally well-integrated or egalitarian (see [9]; see further [70]; 'Riven by class and no social mobility, Britain in 2007', The Guardian, 20 October 2007; [104]). As has been repeatedly found by international studies [88,107], wealth inequalities in Britain are correlated with levels of political and civic participation.…”