Distribution of real household disposable income, UK/GB
The extent of inequality in the income distribution has changed considerably over the last three decades. However, between 1994/95 and 2002/03 the income distribution was broadly stable. Disposable income (adjusted for inflation) grew by over a fifth for both those on incomes at the top of the distribution (90th percentile) and those at the lower end (10th percentile).
Between 1979 and 1983 inequality gradually decreased, but this was more than reversed in the 1980s. Between 1981 and 1989 disposable income in real terms grew by 38 per cent for those at the 90th percentile. This was more than five times the rate of growth of 7 per cent for those at the 10th percentile. During the economic downturn of the first half of the 1990s there was little real growth anywhere in the income distribution.
The distribution of wealth is even more unequal than that of income. Half the population of the UK owned just 5 per cent of the wealth in 2001. This compares with 8 per cent in 1976. However, wealth became more evenly distributed over the 20th century as a whole. It is estimated that the richest 1 per cent held around 70 per cent of the UK's wealth in 1911, compared with 23 per cent in 2001.
Some people may have to borrow money and can get into debt. In October 2003 about a third of adults had some form of unsecured debt (through personal loans, overdrafts and credit cards) over and above that which they expected to pay off at the end of the month. This proportion was highest (54 per cent) among 25 to 34 year olds. The average amount owed by all debtors was £3,500, but 13 per cent owed £10,000 or more.
One definition of low income is where a household is below 60 per cent of median disposable income. In 2002/03, 17 per cent of the population lived in households with income below this level (£194 per week). This compares with a peak of 21 per cent in 1991/92. Working-age adults were generally at lower risk than the population as a whole of being on a low income, though those living in workless households were at much greater risk.
People living in households with income below 60 per cent of the median, UK/GB
Children were also at greater risk of living in low income households than the population as a whole. In 2002/03 around one in five children (2.6 million) were living in low-income households (measured before deduction of housing costs). A similar proportion of pensioners were living in low income households in 2002/03, though this had fallen from one in three in 1990/91.
Sources: Institute for Fiscal Studies (1971 to 1993/94) sourced from Family Expenditure Survey (covers United Kingdom) Households Below Average Income series, Department for Work & Pensions (1994/95 to 2002/03) sourced from Family Resources Survey (covers Great Britain)
Notes: The source of data changed in 1994/95 from FES to FRS. The definition of income changed slightly and geographic coverage changed from United Kingdom to Great Britain.
The income data in the distribution of income chart are adjusted to 2002/03 prices using the Retail Prices Index less local taxes and are before the deduction of housing costs.
Ten per cent of individuals live in households with income above the 90th percentile, and 10 per cent below the 10th percentile. The closer the 90th and the 10th percentiles are to the median, the greater the equality in the distribution.
printer-friendly
Focus on Social Inequalities home page