Gap between the incomes of the richest and poorest highlighted

New figures from the ONS have highlighted the gap between the incomes of the richest and poorest fifths of people in the UK.

The figures show that In the period leading up to the pandemic, the richest (£107,800) one-fifth of people’s average household incomes before taxes and benefits was over 12 times larger than the poorest fifth (£8,500); however, this gap reduced to four times (£75,600 and £18,600 respectively) when taxes and benefits were taken into account.

Inequality has widened over the past decade, partly because benefits were frozen for four years and the introduction of the benefit cap.

During the past ten years, the total income of the very richest in the UK rose 0.9% a year after inflation, while the income of the very poorest fell 0.3% a year on average.

Commenting on the figures Sarah Coles, Personal Finance Analyst at Hargreaves Lansdown said “After a decade of the rich getting richer and the poor getting poorer, millions of people were in a far weaker financial position even before the pandemic hit. A year on, there may have been slightly better news for the very poorest people in the UK. The real financial pain hit those earning slightly less than average.”

“For those on the very lowest incomes, small boosts to benefits during the crisis may actually have improved their position. The benefits freeze and the cap had meant years of struggling by on less, so the small bump in Universal Credit during the crisis will have eased the squeeze slightly.”

“There’s also likely to be a boost for the better paid. They’re more likely to have been able to work from home, so it was business as usual for their income. Meanwhile, an awful lot of them spent less and had holidays cancelled, so they may well have paid less in taxes like VAT.”

“The real pain was reserved for those who are working but on lower incomes, especially those in industries that have been more dramatically affected by the virus – so may have faced furlough or had their hours cut. Others will have lost work, and may well have dropped into the bottom fifth of earners.”