Narrowing income inequality

For students' exam answers to be lifted from the ordinary to the higher levels, they really need to add some convincing evidence for their statements of theory. Here is a nice, simple report from the BBC of the latest figures from the ONS which shows what happened to household incomes in 2011-12, which would really fit the bill nicely.

In summary:

Average household income has fallen by £1,200 since 2007-8 in real terms;

Before tax and benefits, the average income of the top fifth of households was £78,000 and of the bottom fifth was £5,400 - a ratio between them of about 14:1

After tax and benefits these had changed to £57,300 and £15,800 - a ratio of four to one

Between 2007-8 and 2011-12, the average income of the top fifth has fallen by 6.8% and the bottom fifth has risen by 6.9%, so the gap between the two has narrowed (- note that the latest changes in benefits are not included as they took place after the end of the 2011-12 year).

All groups paid more in indirect tax in 2011-12 than in the previous two years, due to rises in VAT in 2010 and 2011.