The poorest fifth of British households are among the most economically
deprived in western Europe and suffer levels of poverty on a par with
those in the former Eastern bloc, according to new research.
The High Pay Centre, an independent UK think-tank, has published an
analysis of OECD data showing that “life is much worse here than it is
for the poorest fifth in virtually every other northwest European
country”.
Questions over how the proceeds of a recovering UK economy are being
shared will form the backdrop to the campaigns in the run-up to the next
general election in May.
The High Pay Centre found that, with average household incomes of
$53,785, the richest 20 per cent in the UK were the third richest in
their bracket of all EU countries measured by the OECD, lagging behind
Germany and France.
However, a very different story applied to the bottom 20 per cent in the
UK whose incomes were much lower than in other, more equal countries
with a similar average income.
The OECD calculates the average income of the bottom fifth of UK
households at just $9,530, much lower than the poorest 20% in France
($12,653), Germany ($13,381), Belgium ($12,350), the Netherlands
($11,274) and Denmark ($12,183).
Poor Britons’ living standards are much closer to those of the poorest
in countries such as Slovenia and the Czech Republic, the High Pay
Centre says. It argues the disparities reflect “political and economic
choices that set us on the path of greater inequality”.
There are several ways to measure household incomes – which are tricky
to compare across countries – and some other data sets point to less
stark conclusions.
The Luxembourg Income Study Database, for example, suggests that UK and
French households at the 20th percentile – poorer than the top
four-fifths of households – have very similar incomes. And both are only
slightly less worse off than equivalent households in Germany.
Yet both data sets agree the poor in the UK have lower living standards
than the poor in the Netherlands, Sweden, Norway, Finland and Denmark.
Other figures confirm that some regions of the UK are on a par with the
poorer parts of Europe. According to Eurostat, the EU’s statistical
agency, gross domestic product per person is lower in West Wales and the
Valleys than it is in Poland. Similarly, GDP per person in Tees Valley
and Durham is lower than in the Czech Republic. Meanwhile, Inner London
is by far the richest region in the EU.
Deborah Hargreaves, director of the High Pay Centre, said: “These
figures suggest we need to be more concerned about inequality and how
prosperity is shared, as well as average incomes or aggregate measures
like GDP. The fact that the rich are richer in the UK than many other
countries hides the fact that the poor are poorer.”
The High Pay Centre suggests the difference is the share of income going
to the top 1 per cent. In the UK, this richest group takes 13 per cent
of total income, much more than in most other western European
countries.
The figure is more than double the share of total income taken by the
wealthiest 1 per cent in the Netherlands and Denmark, for example.
It cites the World Top Incomes Database, run by economists Thomas
Piketty and Tony Atkinson, which puts total incomes in the UK in 2011 at
£1tn, making the share of the top 1 per cent about £130bn a year, using
2011 data, the most recent availabl
FT
