The incomes of the poorest 10 per cent have fallen by 17 per cent in real terms since the Conservatives came to power, and the number of people living on an income below the European 'poverty line' - half the average income - has risen from 5 million to 13.9 million, a quarter of the population in 1991-92.
The figures, described as 'scandalous', show that nearly one-third of all children are now living in poverty, from 3.9 million to 4.1 million since 1990-91, according to statistics in the report Households Below Average Income, published by the Department of Social Security.
The number of people in jobs and experiencing poverty has trebled to 12 per cent since 1979. This contrasts with the number of people earning more than the equivalent of pounds 700 a week, which soared from 100,000 to 1.4 million. The income of the richest tenth rose by almost two- thirds between 1979 and 1990- 91, but was stagnant or fell slightly by 1991-92, an analysis by Steve Webb of the Institute for Fiscal Studies showed.
The income of the top 10 per cent, after housing costs, rose by 62 per cent; the income of half of the population rose by 50 per cent; but the income of the bottom half rose by only 10 per cent.
The analysis reveals a change in the type of people in the bottom 10 per cent. Pensioners have moved out of the poorest bracket, but more self-employed people have moved in. In 1979, 31 per cent of the poorest 10 per cent were pensioners, compared with 9 per cent in the latest report. The proportion of self-employed in the bottom bracket (after housing costs) rose from 10 per cent to 15 per cent. The number of unemployed people in the botton 10 per cent has doubled from 16 to 34 per cent.
Of those living below the poverty line, the proportion of lone parents rose from 19 per cent to 59 per cent, single pensioners rose from 12 per cent to 40 per cent, and two parents with children trebled from 8 per cent to 24 per cent - one in four couples with children.
Although the income of the poorest 10 per cent has declined in real terms, individuals are not necessarily poorer. More people on lower incomes have joined the bottom group, pushing higher- earning people into the second lowest 10 per cent and so lowering the median income of the bottom group.
This enabled Peter Lilley, Secretary of State for Social Security, to say: 'The results certainly do not show that the poor have become poorer, though they inevitably reflect changes in the number of unemployed people. But they do show how government policies have continued to increase the prosperity of the population of the whole.'
However, Donald Dewar, Labour's social security spokesman, said: 'These figures back up the claim that Britain is more divided now than it has been for a generation. This is a condemnation of this Government and the easy chatter about increasing prosperity that the bottom tenth of families are 17 per cent worse off than they were in 1979.
'We all pay the price of inequality on this scale. It means higher taxes to fund welfare bills, and rising crime and social decay. These figures show that Tory 'trickle- down' economics have failed totally. Wealth has not trickled down. Poverty, like rising damp, creeps ever higher.'
Sally Witcher, director of Child Poverty Action Group, said: 'Britain is a wealthy country. There is no excuse for this level of poverty and we should be deeply ashamed. Not even being in employment will mean staying out of poverty.'
Paul Goggins, national co- ordinator of Church Action on Poverty, said: 'Poverty has increased remorselessly, reaching utterly scandalous levels. Yet we still have no indication of regret or remorse from the Government, nor any signs of a plan to reconnect those who are systematically cut adrift from mainstream society.'
Households Below Average Income: A Statistical Analysis 1979 to 1991-92; HMSO; pounds 25.