Development of UK Income Inequality

Inequality Since 1938

The UK became a much more equal nation during the post-war years[1]. The data available shows that the share of income going to the top 10% of the population fell over the 40 years to 1979, from 34.6% in 1938 to 21% in 1979, while the share going to the bottom 10% rose slightly.

Since 1979 this process of narrowing inequality has reversed sharply. As shown in the graph below, inequality rose considerably over the 1980s, reaching a peak in 1990. Since 2010, income shares have been relatively unchanged.

[2]

Inequality in Recent Years

Since the early 1990s, changes in inequality have been less dramatic than the change from 1979 to 1991. After falling slightly over the early to mid-1990s, inequality, as shown by the Gini coefficient, reached a new peak of 0.358 in 2009–10. Inequality fell in 2010 and has stayed relatively level since.

1990-2017 UK Gini coefficient, ONS[3]

Inequality Since the Financial Crisis

The unequal way that income is shared across society has, however, changed very little over the last few years. The financial crisis, which occurred in 2008, has had only a very small effect. The top fifth continue to dominate the income spectrum, taking almost half the income before and after the crisis[4].

Inequality in 2011-12 was lower than before the recession. This was due to falling incomes at the very top of the distribution and increases at the very bottom, largely from social security payments[5]. Income increases at the top, however, resumed in the following years, as the graph below shows.

Income changes since 2000, ONS

Income Change at the Bottom, Middle and Top

Rising inequality has seen a dramatic increase in the share of income going to the top, a decline in the share of those at the bottom and, more recently, a stagnation of incomes among those in the middle[6].

In 2010, while the top 10% received 31% of all income, the bottom 10% received just 1%[7]. In terms of wealth, in 2010 (the latest year for which data is available), 45% of all wealth in the UK was held by the richest 10%. The poorest 10% held only 1%.

Income share change over time, WID[8]

[1] Lansley and Mack, 2010

[2] 1938/9 and 1972/3: Royal Commission in Income and Wealth; 1979; 1990/1 JRF 1995; 1996/7 onwards HBAI. The 1938/9 and 1972/3 figures are not strictly comparable with the later series, and are merely indicative. The figures after 1979 are calculated after housing costs. Figures may not sum to 100 because of rounding.