Suffering at the end of 'miracle' What a difference a decade made

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The Independent Online
A 'New poor' emerged in Britain during the 1980s. People on relatively low incomes were able to buy their council houses early in the decade, but were left struggling to make much higher mortgage payments in the early 1990s as interest rates surged, writes Robert Chote.

These new home-owners were in the vanguard of the Government's 'property-owning democracy', but they have since been among those suffering most as the Conservatives' 'economic miracle' has unravelled, according to the IFS and the Rowntree Foundation. Many found it impossible to maintain mortgage payments with low earnings and no entitlement to social security assistance.

In the early 1960s most of Britain's least well-off were pensioners, but the picture is now very different. Unemployment has more than quadrupled since then, depriving many people of working age of income from employment. Lone parents, the long-term sick and the disabled are all more numerous than in the 1960s while there are also more self-employed people making little or no profits and reporting low incomes.

Pensioners may make up a smaller proportion of the least well-off groups in the population than they did 30 years ago, but many have still fallen further behind the national average income. This is largely because pensions were linked to prices rather than average earnings from 1980, so pensioners lost out when the incomes of people in work surged during the mid-1980s.

Income growth between 1979 and 1990-91 was more than three times larger for childless couples than lone parents, who are Britain's poorest type of family, according to Stephen Jenkins of the University of Wales. This is largely the result of rising unemployment.

Regional differences in people's incomes have also changed markedly since the 1960s. People in the poorest tenth of the national population have been relatively rare in southern England throughout the past 30 years, although southerners have been hit relatively hard in the 1990s because of their burden of mortgage debt.

The poor were also under-represented in the Midlands until 1980, but the decline in manufacturing industry has meant that the Midlands has overtaken northern England as the region where the poor are most over-represented.