Gap between rich and poor is ‘making a mockery of democracy’

The Institute of Fiscal Studies has launched a five-year review of the inequality between the UK's haves and have-nots

The UK could be heading for a gap between rich and poor that is similar to the USA, warns the Institute of Fiscal Studies (IFS) as it launches a five-year review of inequality.

Only the United States, out of all the major economies, has wider income inequality than the UK and has seen average life expectancy fall for the last three years.

Stagnant wages and evidence of ‘deaths of despair’ – what the IFS terms as deaths from suicide and drug and alcohol abuse – in the UK have shown signs of rising.

That is why the IFS has launched the review, chaired by Nobel Laureate Professor Sir Angus Deaton, to analyse inequalities in income, wealth, health, social mobility, political participation and more as well as the reasons behind them and how to tackle them.

“I think that people getting rich is a good thing, especially when it brings prosperity to others,” said Sir Deaton. “But the other kind of getting rich, ‘taking’ rather than ‘making’, rent-seeking rather than creating, enriching the few at the expense of the many, taking the free out of free markets, is making a mockery of democracy. In that world, inequality and misery are intimate companions.”

To mark the announcement of the review, IFS researchers Robert Joyce and Xiaowei Xu published their own report on the state of inequality in the UK.


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The pair found that inequality in total net household income has remained similar to levels seen in the Eighties while household earnings have become more unequal.

On the health front, deaths from suicide, drug overdoses and alcohol-related liver disease have been rising among middle-aged people in England while a small rise in mortality for the same age group has bucked the trend of the last few decades.

The family make-up has changed among lower-income families – one in six children in the UK are born to single-parent families with a heavy concentration of them to lower earners.

There has also been a lack of earnings progression for mothers, particularly those who work part-time.

And the report also highlighted stark geographical inequalities – citing a 66 per cent difference in the average weekly earnings in London compared to the north-east of England.

Paul Johnson, director of IFS, added: “I can’t think of anything more important than understanding what drives the inequalities we see today and working out what we might do to influence them.”