Gap between richest and poorest widens

Fuel poverty is one indicator of the widening gap between the UK's richest and poorest

Fuel poverty is one indicator of the widening gap between the UK's richest and poorest

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Income levels have risen since 1980 but the gap between the richest and poorest fifth of households has widened, according to an analysis of household income over the past three decades by the Office for National Statistics (ONS).

However, the percentage of the household population living in relative low income has fallen, and fewer households are living in fuel poverty, according to the ONS’ Personal and household finances in the UK report.

The study warned, however, that the figures do not necessarily indicate an increase in the standard of living, due to a drop in the average income levels following the recession at the end of the last decade.

Fewer children are living in “relative low income” now than 14 years ago, the study found. There were 2.3 million children classed as living in households with low income in the UK in the financial year ending 2013, making up 17 per cent of all children – a fall from 26 per cent in the financial year ending in 1999.

The figures showed a similar drop for pensioners, while the number of working-age adults living in low income households remained static at around 15 per cent of the population.

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“Since 1980, income levels for all households have generally been rising (after accounting for inflation) but this has been accompanied by an increase in income inequality,” the report said.

“In terms of disposable income, the richest fifth of households have seen the greatest percentage increase in their incomes, while incomes for the poorest fifth have increased at a slower rate.”

It added: “It is important to remember that falls in the number and percentage of people living in relative low income in part reflects the recent falls in median income.

“This means the relative low income definition based on 60 per cent of median income, has fallen. Therefore, these reductions do not necessarily reflect an increase in the standard of living.”

UK households spent £517.30 on average per week in 2013. However, when taking inflation into account, average spending has actually decreased since 2006 – when households spent £539.80. The largest single area of spending in 2013 was on housing, excluding mortgages, fuel and power at £74.40 a week.

Fuel poverty has continued to be a problem in recent years, as the cost of utilities has soared, while household incomes have been squeezed in the wake of the recession.

Since 2004, domestic energy prices for the UK have generally risen in price by more than the rate of inflation, although the cost of bills fell in 2014 and the main suppliers have cut prices further recently.

A household is said to be experiencing fuel poverty if it needs to spend more than 10 per cent of its income on fuel to maintain an adequate level of warmth in the home.

In 2012, the poorest fifth of UK households spent £93 a month on household energy – equivalent to 11 per cent of their disposable income – compared with £126 a month for the richest fifth, which is equivalent to just 3 per cent of their disposable income.

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