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Income of top fifth of households ten times that of the poorest

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The richest 20% of UK households have an income 10x that of the poorest 20%, according to new government statistics. 

The top fifth of households have pre-tax average household income of £88,200 compared to just £7,900 for the poorest.

That said, this represents an improvement over the past 10 years. In 2008, the richest earned 16x more than the poorest.

The statistics also show that the tax system is helping to redistribute wealth. After all taxes and benefits are taken into account, the ratio between the average household income of the richest and poorest fifth of people (£65,500 and £18,900 respectively) is reduced to less than 4. 

Companies are paying their employees more – with income from employment increasing 6.7% in real terms. However, the poorest have been hit by falling benefits, driving average disposable incomes down 3.9%.

Tom Selby, senior analyst at AJ Bell, said: “These statistics paint a mixed picture of modern working Britain. While the highest earners receive more than 10 times the pre-tax income of the lowest earners, the gap between the richest and poorest has dipped substantially in the past decade.

“Many in society have also been boosted by the employment boom we have seen in the past 12 months…However, the poorest – who rely most heavily on cash benefits – have undoubtedly been clobbered by cuts imposed by this Government.

He said politicians from the right and left will inevitably select the facts that best suit their seemingly diametrically opposed arguments: “Labour will say the poorer are getting poorer, while the Conservatives will argue inequality has fallen under their watch. Both will be right.”

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