Richest 16 Times Greater Wealth Than Poorest

Despite efforts to bridge the gap, the hole between the rich and poor in the UK remained big in 2007-8 according to official statistics from the Office for National Statistics (ONS).

The top fifth richest people in the UK apparently have 16 times greater wealth before tax and benefits than the poorest fifth of the population, around £72,000, compared to around £4,500.

The last three years has seen a widening inequality in disposable income as well as an fast increase in investment income among higher earners compared to the country’s poorest.

The ONS also said there has been a rapid rise in inequality in the late 80’s. Though this hasn’t been reversed, it has levelled off. The report stated: “During the 1990s and 2000s, there were periods of both rising and falling equality, but the level of inequality remained high by historical standards.”

The effect of taxes and benefits narrows the gap between the two extremes. Once these are taken into account the final income for the top fifth of homes is £52,400, and the bottom fifth is £14,300.

Single Parents & Pensioners Benefit

Single parent also gain a lot from benefits. Before benefits, the average household income of a single parent is £11,000 per year, afterwards it is £22,900.

Also, most non-retired households pay more in tax than they receive in benefits, but those with children benefitted more than those without.

Pensioners also have a higher household income with benefits than without. An increase of £9,100 to £22,200 after benefits are added and tax deducted.

The bottom two-fifths of income levels receive 57% of all benefits such as Income Support, Pension Credit and Child Benefit. Such benefits make up 58% of the income of the poorest fifth of the population and 2% of the richest fifth.

The richest members of the country get paid a bigger proportion in direct taxes link income tax, while the poorest have to pay higher indirect taxes such as VAT.

How Does This Compare To Previous Research?

State health and education are known as benefits in the ONS statistics. They calculated that the financial equivalent of these benefits is £7,500 for the poorest fifth and £4,100 for the top fifth.

This means pensioners and households with children were more likely to receive these services.

These findings contradict research by the Organisation for Economic Co-operation and Development (OECD) last October which said that the decrease in inequality in Britain has been ‘remarkable’ since 2000.

However, the report says that the UK still has one of the highest income inequalities in the developing world.

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