UNEQUAL BRITAIN: RICHEST 10% ARE NOW 100 TIMES BETTER OFF THAN THE POOREST
A detailed and startling analysis of how unequal Britain has become offers a snapshot of an increasingly divided nation where the richest 10% of the population are more than 100 times as wealthy as the poorest 10% of society.
Gordon Brown described the paper, published recently, as “sobering”, saying: “The report illustrates starkly that despite a levelling-off of inequality in the last decade we still have much further to go.”
The report, An Anatomy of Economic Inequality in the UK, scrutinises the degree to which the country has become more unequal over the past 30 years. Much of it will make uncomfortable reading for the Labour government, although the paper indicates that considerable responsibility lies with the Tories, who presided over the dramatic divisions of the 1980s and early 1990s.
Researchers analyse inequality according to a number of measures; one indicates that by 2007-8 Britain had reached the highest level of income inequality since soon after the second world war.
The new findings show that the household wealth of the top 10% of the population stands at £853,000 and more – over 100 times higher than the wealth of the poorest 10%, which is £8,800 or below (a sum including cars and other possessions).
When the highest-paid workers, such as bankers and chief executives, are put into the equation, the division in wealth is even more stark, with individuals in the top 1% of the population each possessing total household wealth of £2.6m or more.
Commissioned by Harriet Harman, minister for women and equality, the National Equality Panel has been working on the 460-page document for 16 months, led by Prof John Hills, of the London School of Economics.
The report is more ambitious in scope than any other state-of-the-nation wealth assessment project ever undertaken.
It concludes that the government has failed to plug the gulf that existed between the poorest and richest in society in the 1980s. “Over the most recent decade, earnings inequality has narrowed a little and income inequality has stabilised on some measures, but the large inequality growth of the 1980s has not been reversed,” it states.
Hills said: “These are very challenging issues for any government because the problems are so deep-seated.”
“But we hope that by doing this work, policy makers have now got information they never had before, to try and get at the roots of some of those problems.”
Harman said the issues raised meant the government needs to “sustain and step up” action introduced by government over the past 13 years, such as children’s centres and tax credits. “It takes generations to make things more equal,” she told Radio 4’s Today programme.
Social mobility was “essential” for the economy, she said. “The government should take action to ensure everyone has a fair chance.”
The panel found “systematic differences in equality panel economic outcomes” remained between social groups, and said many would find the “sheer scale of inequalities” in outcomes “shocking”.
Inequality in earnings and income is high in Britain compared with other industrialised countries, the report states.
A central theme of the report is the profound, lifelong negative impact that being born poor, and into a disadvantaged social class, has on a child. These inequalities accumulate over the life cycle, the report concludes. Social class has a big impact on children’s school readiness at the age of three, but continues to drag children back through school and beyond.
“The evidence we have looked at shows the long arm of people’s origins in shaping their life chances, stretching through life stages, literally from cradle to grave. Differences in wealth in particular are associated with opportunities such as the ability to buy houses in the catchment areas of the best schools or to afford private education, with advantages for children that continue through and beyond education. At the other end of life, wealth levels are associated with stark differences in life expectancy after 50,” the report states.
It echoes other recent research suggesting that social mobility has stagnated, and concludes that “people’s occupational and economic destinations in early adulthood depend to an important degree on their origins”. Achieving the “equality of opportunity” that all political parties aspire to is very hard when there are such wide differences between the resources that people have to help them fulfil their diverse potentials, the panel notes.
Researchers analysed the total wealth accrued by households over a lifetime. The top 10%, led by higher professionals, had amassed wealth of £2.2m, including property and pension assets, by the time they drew close to retirement (aged 55-64), while the bottom 10% of households, led by routine manual workers, had amassed less than £8,000.
Harman acknowledged in the report that the “persistent inequality of social class” was a large factor in perpetuating disadvantage, adding that the government would begin to address this with the new legal duty placed on public bodies to address socio-economic inequality, included in the equality bill.
The report follows research published by Save the Children which revealed that 13% of the UK’s children were now living in severe poverty, and that efforts to reduce child poverty had been stalling even before the recession began in 2008.
The Hills report also found that:
• Divisions between social groups are no longer as significant as the inequalities between individuals from the same social group; inequality growth of the last 40 years is mostly attributable to gaps within groups rather than between them.
• White British pupils with GCSE results around or below the national median are less likely to go on to higher education than those from minority ethnic groups. Pakistani, Black African and Black Caribbean boys have results at the age of 16 well below the median in England.
• Compared with a white British Christian man with similar qualifications, age and occupation, Pakistani and Bangladeshi Muslim men and Black African Christian men have an income that is 13-21% lower. Nearly half of Bangladeshi and Pakistani households are in poverty.
• Girls have better educational outcomes than boys at school and are more likely to enter higher education and achieve good degrees, but women’s median hourly pay is 21% less than men’s.
The significance of where you live is another theme. The panel says the government is a “very long way” from fulfilling its vision, set out in 2001, that “within 10 to 20 years no one should be seriously disadvantaged by where they live”. The paper notes “profound and startling differences” between areas. Median hourly wages in the most deprived 10th of areas are 40% lower than in the least deprived.