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Social Justice

What you need to know about UK inequality

The gap between rich and poor in the UK is among the worst in Europe. The Big Issue outlines the facts and figures of UK inequality

Differences in income andpoverty levels, health and opportunity are all elements of UK inequality, which researchers said is among the worst in the developed world. 

The Covid-19 crisis shone a light on rising inequality in the UK as people in poverty, Black and minority ethnic communities, disabled people and migrants all faced mounting financial hardship and barriers to health.

And as the government prepares to cut universal credit and hike national insurance, critics warn it will be those already struggling to get by who carry the cost.

Here are the main things you should know about the significant level of UK inequality.

What is inequality in the UK?

Inequality is an umbrella term which covers income and wealth but alsorace and ethnicity, disability, sexual orientation,gender identity, age, location and more. 

It is measured to show how different people have different life experiences and how problems such as poverty and unemployment link to health problems and reduced life expectancy, and is tracked to help policymakers find answers to the problem.

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Is there inequality in the UK?

Income inequality – one of the primary measures of inequality – in the UK is very high in comparison to other similarly wealthy countries, according to the Equality Trust, and has been so for some time. 

Poverty was already on the rise before the Covid-19 crisis hit the UK, which as well as affecting people’s immediate quality of life can limit the opportunities a child has access to in future.

The average income for the UK’s richest 20 per cent of people had increased by nearly five per cent between 2017 and 2018,Office for National Statistics figures showed. But the average income for the poorest 20 per cent of people dropped by nearly two per cent in the same time period. The most well-off Brits had 40 per cent of the country’s total income per year, compared to just eight per cent received by the poorest families.

By 2018, the UK’s most disadvantaged people had roughly £12,800 in disposable income, while the wealthiest people held more than £69,000 in disposable income.

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Such figures can sometimes be misleading, because there is a large wealth gap between the country’s richest 20 per cent of people and the richest one per cent. In 2005, that one per cent were worth around £250 billion. By 2015, this had grown to roughly £547 billion, an increase of more than 100 per cent.

The wealthiest 100 people in the UK have as much money as the poorest 18 million people, according to the Equality Trust.

Has wealth inequality increased in the UK?

The gap between rich and poor, while significant, hadnarrowed before the Covid-19 crisis. But the pandemic exacerbated existing inequalities in the UK, resulting in higher mortality among disadvantaged communities. As of 2021,the UK has the fifth most billionaires in the world.

Households across the country were already in a “precarious position” ahead of the pandemic as a result of pay stagnation anda decade of austerity under the Conservative government, according to researchers. Studies carried out during the pandemic nearly unanimously reported disadvantaged people were most affected by the pandemic in terms of income, employment and health outcomes.

Most Brits believed the Covid-19 pandemic had widened inequality and “increased the gulf between social classes”. 

The pandemic drove down life opportunities for young and already disadvantaged people, say 70 per cent of Brits, as experts warned poverty puts the public’s faith in Boris Johnson at “serious risk”.

More than six of every 10 people (63 per cent) said the Covid-19 crisis widened the gap between rich and poor people, according to a study by charity Turn2us, with redundancies, lost work hours and increased living costs pushing people deeper into hardship.

“The prime minister can be in absolutely no doubt about the momentous task he faces in ‘levelling-up’ left behind areas of the UK,” said Sara Willcocks, head of external affairs for the charity.

“The faith many voters placed in him to deliver improved regional equality seems to be at serious risk.”

For 36 per cent of 18 to 24-year-olds the Covid-19 crisis meant having to put on hold their plans to move out of their parents’ home, the study showed.

Health Foundation researchers found the UK’s poorest areas were facing a“double whammy” of illness and poverty, as the worst-off areas in the UK also saw the highest Covid-19 death rates. Analysts said this was due to a combination of poverty-driven preexisting health conditions, overcrowded housing, difficulty accessing the necessary health care (particularly for BAME communities) and an increased likelihood of working a low-paid public-facing job which could not be done from home during lockdown.

Women and people of colour were more likely to have their hours cut or lose their jobs entirely during the pandemic.

And research showed people from Pakistani, Bangladeshi, Arab and traveller backgrounds had roughly the same health levels of much older white British people during the crisis,according to a University of Manchester study. Participants over 55 from those ethnic groups had a similar level of health to white British people over 75.

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It is “essential” the government addresses the ways in which “racial discrimination and economic disadvantage have disproportionally impacted these communities”, Lord Simon Woolley, crossbench peer and former chair of the Race Disparity Unit’s advisory group, told The Big Issue.

“To ensure that we tackle this issue head on, we must place a greater focus on people-led policies – from education, employment and housing – to support communities to live a healthy life,” he added, calling further Health Foundation research “compelling evidence”.

The support measures introduced during the pandemic also exacerbated inequality, according to campaigners. People claiming so-called legacy benefits – mostly disabled people – did not receive the weekly £20 increase given touniversal credit recipients, which campaign groups reported was forcing people togo without food and heating.

The inequality someone experiences in the UK is very commonly dictated by their parents’ wealth. People born into rich families were an average six times richer than those from poorer backgrounds by the time they reached their thirties, analysis by the Institute for Fiscal Studies (IFS) showed. 

One in five Brits whose parents are in the richest fifth of people have an income of more than £40,000, compared to just one in ten of people whose parents are in the second-wealthiest group. 

The research showed parents’ overall wealth, such as assets and property, was more likely to mean their children would be wealthy compared to the link between parents’ earnings and children’s earnings.

Home ownership made up the largest proportion of wealth in the UK, the IFS research showed, which was likely exacerbated by rising house prices during the Covid-19 crisis.

Parents’ wealth had an impact on the educational attainment of children too, according to analysts. 

The children of the wealthiest group were four times as likely to reach high levels of education, as well as finding it easier to build savings.

How are different kinds of people affected by inequality?

People of Black, Asian and other minority ethnic backgrounds are much more likely than white people to face income, health and social inequality. 

Critics including theRunnymede Trust said a recent major government report – claiming institutional racism didn’t exist in the UK – ignored the reality of people of colour’s experiences in the UK.

Nearly 36 per cent of ethnic minorities were likely to live in poverty compared to 17.2 per cent of white people, the Equality and Human Rights Commission said. Meanwhile nearly 31 per cent of Pakistani or Bangladeshi people lived in overcrowded housing, a figure dropping to 8.3 per cent for white people.

Around half of working agedisabled people in the UK were employed in 2020, according to ONS figures, compared to more than 80 per cent (eight in 10) of non-disabled people, and are more likely to become trapped in poverty.

There are many ways in which a person can be put at risk of feeling the adverse effects of inequality, and reports suggest it is difficult to escape. As many as40 per cent of people in the UK think it is becoming more difficult for disadvantaged people to increase their income and stability and access more opportunities, while young people are becoming less likely to see themselves as better off than their parents’ generation.

What is the wealthiest place in England and the rest of the UK?

Where you live is one of the main factors which can determine if you experience inequality. Surrey consistently tops wealth lists for England as a result of the high incomes earned by people living in the area as well as the high number of assets such as property owned by people there.

The UK has the worst regional inequality in the developed world,a leading University of Sheffield scientist said, with people in England’s North East worst-off overall. That affects their incomes but also their access to better-paying, more secure jobs.

The biggest gap between rich and poor is found in London, which is over-represented in both the top incomes and lowest incomes in the country.

After housing costs, nearly 30 per cent of Londoners live in poverty,according to the IFS, compared to 22 per cent across the UK generally. However 16 per cent of people in London receive among the highest 10 per cent of incomes.

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