Incomes and spending – 1977 and 2012 compared

People in general have become much better off in the last 35 years, says a think-tank analysis, with household incomes more than doubling. But although this extra wealth has been shared among all family types, it has been accompanied by a very big increase in inequality.

Researchers at the Institute for Fiscal Studies marked the Diamond Jubilee by looking at changes in incomes and spending since 1977 – the year of the Silver Jubilee.

Key points

  • Up to 1977, income inequality had been on a long-term downward trend, which turned around towards the end of the 1970s.
  • The 1980s saw a historically unprecedented increase in inequality.
  • That increase has not been unwound since, despite the very substantial growth in the benefit and tax credit budget in the 2000s.
  • In 1977, someone 90 per cent of the way up the income distribution had an income 1.7 times as high as someone in the middle, and 3.0 times as high as someone just 10 per cent of the way up it. By 2009/10, they had an income more than twice the median, and more than four times as high as someone at the 10th percentile.
  • The income share of the richest 1 per cent has nearly trebled since 1977. Even after tax, the richest 1 per cent of households took home nearly 9 per cent of all income in 2009/10 – compared with 3 per cent in 1977.

Source: Jonathan Cribb, Paul Johnson, Robert Joyce and Zoe Oldfield, Jubilees Compared: Incomes, Spending and Work in the Late 1970s and Early 2010s, Briefing Note 128, Institute for Fiscal Studies

Link: Briefing Note