Policy Failure - Rising Inequality

Labour’s long-term aim of abolishing child poverty and scaling back the depths of relative poverty among Britain’s poorest households looks to be falling apart judging from the latest official statistics on the number of families living below average income.

The data finds that the number of people living in poverty has climbed to 11 million by March 2008, a rise of 300,000 since 2006. And nearly a quarter of a million working adults fell below the poverty line last year - the line being families living on less than sixty per cent of median income adjusted for household size. According to the Institute of Fiscal Studies, inequality (or relative poverty - for it amounts to the same thing) has risen to its highest level since 1961. The Gini Coefficient, a measure of income inequality, is now at its highest level since the IFS began compiling figures in 1961

And this before the true effects of the recession on poverty start to show through in published figures.

The core facts are these:

In 2008-08 median income was £393 per week and mean income was £487 per week. (Students should be able to explain the difference!)

The Gini coefficient rose to 0.36 in 2007-08 - the highest recorded figure since 1961

In 2007/08, there were 2.9 million children living in UK households with below 60 per cent of contemporary median net disposable household income - one child in five lives in a family operating below the poverty line. Britain has one of the highest incidences of child poverty in the European Union

In 2007/08, there were 5.6 million working-age adults living in UK households with below 60 per cent of contemporary median net disposable household income Before Housing Costs, and 7.5 million After Housing Costs.

In 2007/08, there were 2.5 million pensioners living in UK households with below 60 per cent of contemporary median net disposable household income Before Housing Costs, and 2.0 million After Housing Costs.

In 2007/08, there were 11.0 million people living in households with below 60 per cent of contemporary median net disposable household income Before Housing Costs (BHC), and 13.5 million After Housing Costs (AHC).

More here

Guardian: Child poverty reduction halted by recession

Telegraph: Gap between rich and poor grows to record levels, official figures show

Revision on the Gini Coefficient

The Gini coefficient is a popular measure of income inequality that condenses the entire income distribution into a single number between 0 and 1: the higher the number, the
greater the degree of income inequality. A value of 0 corresponds to the absence of inequality, so that having adjusted for household size and composition, all individuals
have the same household income. In contrast, a value of 1 corresponds to inequality in its most extreme form, with a single individual having command over the entire income in the economy. The most recent year (between 2006–07 and 2007–08) has seen a further small increase in the Gini coefficient, to reach 0.36 – the highest level since our
comparable time series began in 1961.

Source: Institute for Fiscal Studies