The Office for National Statistics has today (30 May) published an analysis of income inequality in the UK.
You can read the full article here: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2018
Key points:
• The richest 20% enjoyed pre-tax average household income of £88,200 in 2018, more than ten times the figure recorded for the poorest 20% (£7,900)
• Despite this, income inequality has actually improved significantly in the past ten years – in 2008 the richest earned nearly 16 times more than the poorest
• Income from employment increased 6.7% in real terms in 2018, boosting disposable incomes for all but the poorest in society
• However, a 10% drop in the average value of benefits has hit low income families hardest, driving average disposable incomes down 3.9%
Tom Selby, senior analyst at AJ Bell, comments: “These statistics paint a mixed picture of modern working Britain. While the highest earners receive more than 10 times the pre-tax income of the lowest earners, the gap between the richest and poorest has dipped substantially in the past decade.
“Many in society have also been boosted by the employment boom we have seen in the past 12 months, with income from employment spiking 6.7% in real terms.
“However, the poorest – who rely most heavily on cash benefits - have undoubtedly been clobbered by cuts imposed by this Government.
“Given this fact, it is unsurprising the 10.4% year-on-year decline in the value of these benefits has had an apocalyptic impact on the finances of the lowest earners, pushing down the amount low income households have to spend in the shops by nearly 4%.
“Despite this being a wide-ranging and nuanced analysis, politicians from the right and left will inevitably select the facts that best suit their seemingly diametrically opposed arguments.
“Labour will say the poorer are getting poorer, while the Conservatives will argue inequality has fallen under their watch. Both will be right.
“As Mark Twain famously put it: ‘There are three kinds of lies: lies, damned lies, and statistics’.”
