Richest 10 per cent have twice income of bottom half

The richest ten per cent of the UK working-age population now have nearly twice the original income between them of the entire bottom half of the distribution, according to a report from the Resolution Foundation think tank.

The Foundation's annual audit of trends in living standards also reveals that, despite the beginnings of a slow improvement, the living standards of the typical household will still be 3.5 per cent lower in 2018-19 than they were at the start of the financial crisis of 2008, only just inching above the level they were last at in 2005-06.

Key findings

  • Households have taken a large and permanent 'hit' to their living standards from an unprecedented squeeze. Had income growth continued at the rate seen in the decade before the crisis, the median disposable income among all households would have been £30,300 in 2018-19, a third higher than the £22,900 which is now projected.
  • During 2013-14 and 2014-15 household incomes are likely to remain broadly flat. Typical (median) household disposable income is projected to be as low as £22,300 in 2014-15, its lowest point in a decade.
  • Typical household incomes are projected to rise very slowly – just 0.2 per cent in 2015-16 and then slightly faster in subsequent years. This period of slow income growth would mean that the typical household has around the same level of income in 2018-19 as in 2005-06.
  • A large number of Britain’s 7.6 million low-to-middle income families are now living close to the edge. Two thirds have less than one month’s income in savings. Nearly three quarters of low-to-middle income working-age adults who have had a job have either no pension or a frozen pension.
  • The UK is now one of the developed world’s most unequal societies. According to the latest data (for 2011-12), a tenth (11 per cent) of all original income went to the top one per cent, and a third (34 per cent) to the top ten per cent. The richest ten per cent of the working-age population now have nearly twice the original income between them of the entire bottom half (18 per cent).
  • Even after redistribution through taxes and benefits, the top ten per cent of the working-age population have as much income as the bottom half combined (27 per cent).
  • In the early years of the crisis inequality appeared to fall slightly, as households with lower incomes were more protected by the benefits system while those on middle and higher incomes were more exposed to a weakening labour market. However, it now seems likely the statistical fall was exaggerated by artificial manipulation of earnings between tax years by the richest groups.

SourceThe State of Living Standards, Resolution Foundation
LinksReport | Resolution Foundation press release | Guardian report

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Publication date: 
Feb 11 2014