Rich getting richer while poor get poorer, official figures show – with ‘Brexit and benefits freeze to blame’

Incomes of richest fifth of households grow by 4.7 per cent – while poorest fifth of households suffer a 1.6 per cent fall

Rob Merrick
Deputy Political Editor
@Rob_Merrick
Tuesday 26 February 2019 12:58
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Theresa May addresses 'burning injustices' in UK during first speech as prime minister

The rich are getting richer while the poor get poorer, according to official statistics, dealing a heavy blow to Theresa May’s claim to be tackling “burning injustices”.

They showed the incomes of the richest fifth of households grew by 4.7 per cent last year – while the incomes of the poorest fifth of households fell by 1.6 per cent.

The respected Resolution Foundation thinktank blamed the controversial freeze on benefit levels, adding to problems caused by higher inflation following the Brexit referendum.

“The deeper income squeeze for poorer households has been driven by government policy,” said Adam Corlett, the organisation’s senior economic analyst.

John McDonnell, the shadow chancellor, said: “Today’s evidence of surging income inequality shows that this Tory government is not creating an economy that works for the many.”

Overall, the figures for the financial year 2017-18 revealed disposable incomes to be stagnating at a median of £28,400, the same level as the previous year.

The office for national statistics (ONS) said that “despite the small increase, income inequality remains slightly lower than levels reached 11 years ago”.

In her first speech as prime minister, Ms May pledged to confront injustices and “do everything we can to help anybody, whatever your background, to go as far as your talents will take you”.

However, the ONS figures showed the gap between rich and poor widening in what was the prime minister’s first year in Downing Street.

“Low-income households in particular have borne the brunt of a renewed living standards squeeze, driven by the freeze in the value of working-age benefits,” said Mr Corlett.

“The result is that inequality has increased, but remains below pre-crisis highs.”

The figures come on the back of warnings, including from the Resolution Foundation, that weak income growth and benefit cuts will send child poverty to record levels by 2022.

The prime minister is under increasing pressure to end the benefits freeze, including from senior Conservatives who have warned voters will punish her otherwise.

Late last year, five former cabinet ministers, including David Davis and Justine Greening, called for payments to rise in line with inflation, a move that would cost £1.4bn a year.

The freeze was introduced by former chancellor George Osborne in 2015 and is scheduled to run until at least 2020.

The ONS also reported that the richest 1 per cent of the population enjoys more than 7 per cent of total household disposable income, averaging 7.1 per cent between 2011 and 2018.

However, this share is down from the figures of 9.6 per cent and 9 per cent reached in 2008 and 2010 respectively – the period immediately before and during the economic downturn.

Disposable income is the money households have available for spending and saving after direct taxes, including earnings from employment, private pensions and investments as well as cash benefits.

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