Income for 62% is below average pay: Labour study finds rise of three million people in poorer category since 1979

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The Independent Online
ALMOST two-thirds of people in the United Kingdom live on an income below average earnings of pounds 250 a week, according to research for Labour's social justice commission to be published today.

The commission's analysis of the latest government statistics shows that 62 per cent of people live below average income, after tax and housing costs, compared with 59 per cent in 1979 - an increase of nearly 3 million people.

The research also shows that the bottom half of the population in terms of income took a one-quarter share of the national income cake compared with one-third in 1979. The figures are based on the 1990 and 1991 Family Expenditure Surveys at April 1993 prices.

Those without paid work fare worst, although the survey also identifies large numbers of 'paid poor'. The poorest groups in society are the unemployed, single-parent families, the disabled and many elderly people.

Further information from the Inland Revenue reveals that the richest 1 per cent of the population owns 18 per cent of the country's wealth, such as property assets and savings, while the bottom 50 per cent owns only 8 per cent.

A chart showing the breakdown of UK income distribution between different types of families has been produced to coincide with the publication of the commission's first two discussion documents.

Run under the auspices of the left- of-centre think-tank, the Institute of Public Policy Research, the commission was set up by John Smith, the Labour leader, last December to investigate the level of social injustice and to advise Labour on how to redesign the future welfare state, taking into account recent economic and social changes.

Chaired by Sir Gordon Borrie, the former Director-General of Fair Trading, the commission has just completed the first phase of setting its objectives. It is about to examine various policy options and is seeking comments on its discussion papers before reporting in summer 1994.

The first pamphlet, Social Justice in a Changing World, argues that solving unemployment is the key to curbing the spiralling costs of the benefits system. The second paper, The Justice Gap, analyses the extent of social injustice; for instance it shows that the gap between the highest and lowest- paid is greater than at any time since 1886.

The analysis has been prepared by Steven Webb, an economist from the Institute of Fiscal Studies who is a member of the commission.

The chart shows that 36.7 million people live on incomes below pounds 250 a week while just 500,000 people earn more than pounds 1,000 a week. Of these, 200,000 people are in couples, 100,000 are single and the rest are couples and their children.

Families with children tend to be poorer than childless couples and single people.