Rising inequality among ‘rich and poor’

New figures published by the Office for National Statistics (ONS) have revealed a rising level of inequality between those individuals deemed the richest in society and those who are the poorest.

According to the latest Effects of Taxes and Benefits on Household Income report for 2012/13 from ONS, the most affluent fifth of households in the UK witnessed an increase in disposable income last year, while all other groups saw their levels of disposable income fall.

Overall, the top 20 per cent of households benefited from an average rise of £940 over the 12-month period, while a typical reduction of £212 was seen across second, third and fourth tiers of households.

Perhaps more worrying is the fact the bottom fifth of households saw their levels of disposable income diminish by £381 during the year.

The ongoing cost of living crisis is therefore causing significant headaches for many people that are less well off in the UK right now, with financial insecurity for millions of people an ongoing issue.

In total, the ONS statistics showed the top fifth of households in the UK now have an average income that is 15 times greater than that of the bottom fifth – £81,300 in comparison to just £5,500.

However, following adjustment for average taxes and benefits received for each group, the ratio falls to four times, with typical incomes of £59,900 and £15,600 per year respectively.

Cash benefits were shown to make up more than half of all income (56.4 per cent) for those households in the lowest income tier, compared to just 3.2 per cent for the richest fifth, while both groups were shown to pay a similar proportion of their income in taxes to the government (37.4 and 35.1 per cent respectively).

Responding to the findings, general secretary of the Trade Union Congress Frances O'Grady argued: "The return of rising inequality should worry everyone as it suggests that nothing has been learned from the financial crisis, despite the huge fall in living standards that so many people are still experiencing."

She added that despite the fact levels of inequality appeared to have stabilised in the years following the economic crash of 2008, this return to growing disparity between the prospects of the richest and poorest in society is now a real cause for concern.

"This is further proof that most people are failing to have a fair share in the benefits of recovery," Ms O'Grady concluded.

Individuals currently struggling to make ends meet should therefore consider the benefits of seeking the counsel of a qualified financial adviser, who could help them to both budget more effectively and also advise them on other measures that may help their financial position in the long-term.

Anyone struggling with large debts could certainly benefit from such a course of action, with several options open to them, such as the use of debt consolidation or an individual voluntary arrangement, which could both bring down the amount they are paying out each month.

Posted by James Francis