Briton is becoming a segregated society with the gap between rich and poor reaching its highest level for more than 40 years, a report showed today.
During the past 15 years there has been an increase in the number of households living below the poverty line, with these households accounting for more than half of all families in areas of some cities, according to the Joseph Rowntree Foundation.
At the same time, households in already wealthy areas have tended to become disproportionately wealthier, with many rich people now living in areas segregated from the rest of society.
The group said the widening gap between rich and poor had led to a fall in the number of average households, which were classed as being neither rich nor poor, with these families gradually disappearing from London and the South East.
Since 1970 levels of poverty and wealth in different areas of Britain have changed significantly, with the country now moving back towards levels of inequality last seen more than 40 years ago.
While the number of people who are living in extreme poverty has fallen, the number of people living below the poverty line has increased, with more than one in four households classed as being so-called breadline poor in 2001.
At the same time the number of asset wealthy households rose dramatically between 1999 and 2003 with more than a fifth of families now falling into this category.
But the proportion of average households fell from around two-thirds of families in 1980 to just over half by 2000.
The group, which drew up a poverty and wealth map for Britain, said there was evidence of increasing polarisation, with rich and poor now living further apart.
It said urban clustering of poverty had increased, while wealthy households were becoming concentrated in the outskirts and surrounds of major cities.
The report said: "Poor, rich and average households became less and less likely to live next door to one another between 1970 and 2000.
"As both the poor and wealthy households have become more and more clustered in different areas, so the spatial concentration of average households has also increased."
A second report by the group, also published today, said the public thought the gap between rich and poor was too large.
It found that during the past 20 years, a "large and enduring" majority of people felt this way.
But it added that people were more likely to think those on higher incomes were being overpaid, than to think those on low incomes were being underpaid.
The research also found while people thought the gap between rich and poor was too great, there was no clear consensus on how the issue of inequality should be tackled.
Author of the report Michael Orton said: "There is evidence that a high level of inequality may cause real socio-economic problems.
"There is widespread acceptance that some occupations should be paid more than others: but the gap between high and low paid occupations is far greater than people think it should be."
Minister for Employment and Welfare Reform Caroline Flint said: "Our commitment to ensuring everyone shares the nation's increasing wealth has resulted in the rising trend of inequality recently stabilising.
"Since 1997, 600,000 children and over one million pensioners have been lifted out of poverty. Thanks to reforms of the tax and benefits system, the average household is £1,000 better off than 10 years ago.
"The investment of £20 billion to regenerate cities, towns and neighbourhoods will help previously excluded areas to bridge the gap between themselves and the rest of the country."
Liberal Democrat spokesman David Laws said: "This report shows that Britain is becoming a more polarised society with growing inequality of wealth, geographic concentrations of deprivation, and falling social mobility.
"Britain is a meritocracy, but one in which the chances of acquiring merit are diminishing for as much as a quarter of the population.
"This left out 25% is in danger of feeling totally marginalised from mainstream society, which will breed high levels of disillusionment, crime and exclusion.
"The Government needs to tackle the causes of these massive inequalities by improving education, making the housing market work, and getting millions of people trapped on benefit back into employment."
Shadow home secretary David Davis, who is chairing the Tories' social mobility taskforce, said: "When it comes to opportunities for the least well off, our society is flatlining.
"Not only is this a loss of opportunity for young people and a tragedy for families and individuals trapped at the bottom of the pile - it is also a massive loss of talent and creativity for our nation.
"Britain's decline in social mobility has been accompanied by a fall in her economic competitiveness; this is no coincidence.
"This is why my recently established taskforce will examine what is blocking the different routes to wealth and wider success and set out proposals as to how they can be overcome."
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