Inequality in Britain
Inequality in Britain

In the recent report* by the Resolution Foundation, the think tank found that typical incomes had stagnated in 2017-18. They are projected to grow slowly over the next five years with annual income growth expected to reach only 1.3 per cent by 2022-23 – well below the pre-crisis average of over 2 per cent.

‘Low to middle income’ working-age households or the ‘just about managing’ still face three years of falling or flat incomes.

Inequality is projected to increase after 2016-17. On some measures inequality is projected to rise to record highs by 2022-23.

Rather than the strong income growth at the top of the distribution which widened inequality in the 1980s, the next five years are typified by the poorest working-age households getting left behind.

This negative outlook is driven by a combination of weak real term pay growth and the increasing impact of large scale cuts to working-age benefits, and comes despite a progressive outlook for the distribution of pay thanks to the National Living Wage.

If policy or economic factors change living standards could beat this outlook. EG. Tax and benefit policy changes can easily alter the distribution of growth and are in the gift of governments; a surge in employment rates would boost income growth but will only slow the projected rise in inequality; an upgrade in the forecast for wages, with a return to pre-crisis rates of pay growth would greatly improve income growth but – all else equal – further widen inequality; slower growth of private rents would strengthen working-age incomes and lessen the projected rise in inequality.

Labour will work toward tax and benefit reform and wage growth, but will always maintain that the widening equality gap must be addressed.


*The Living Standards Oulook 2017/18 – Published Feb 22nd 2018

The Resolution Foundation is a non-partisan and award-winning think-tank that works to improve the living standards of those in Britain on low to middle incomes.

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