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Income

Volume 711: debated on Monday 1 June 2009

Question

Asked by

To ask Her Majesty's Government further to the Written Answer by Lord Myners on 11 May (WA 155), in the light of the recently published annual households below average income data, what is their assessment of the trend in the gap between rich and poor people in the United Kingdom over the past decade. [HL3651]

On the latest data, the Gini coefficient—a measure of income inequality—is at a high level. However, since 1997-98, changes have been small compared with the sharp increases in inequality in the 1980s, when the Gini coefficient rose by almost 10 points.

Analysis by the Institute for Fiscal Studies has shown that tax and benefit reforms since 1997 have clearly been progressive.

Household survey data show that living standards for the poorest 20 per cent of households have risen by over 1.5 per cent a year in real terms since 1997-98, keeping pace with incomes of the richest 20 per cent of households.

This contrasts sharply with the period during the 1980s to the mid 1990s when the living standards of the poorest 20 per cent of households rose by less than 1 per cent a year compared with 2.4 per cent for the richest 20 per cent of households.