More living in absolute poverty

Last Modified: 28 Mar 2007
Source: PA News

The divide between rich and poor is widening, with the number of people living in absolute poverty up by 357,000 last year, a respected think tank has said.

Analysis of Government statistics by the Institute for Fiscal Studies (IFS) showed that the wealth gap increased last year - with the rich getting richer while the poorest fifth saw their incomes fall.

Experts also revealed that there are currently around 7.4 million individual now living in absolute poverty in the UK after housing costs were factored in, up from 7.1 million in 2005/06. It is the first year since Labour came to power in which the number of people living in absolute poverty has risen, reversing a downward trend that began in the mid 1990s.

In a further blow to the Government, the IFS said ministers would have to commit an additional £4 billion a year in spending if is to stand a 50:50 chance of meeting its target of halving child poverty by 2010.

Statistics released yesterday showed that number of children living below the relative poverty threshold rose by 100,000 in 2005/06 to 2.8 million, with the figure increasing to 3.8 million when housing costs were considered.

Overall, the number of people in relative poverty rose from 12.1 million to 12.7 million last year, figures revealed. Analysis by the IFS found that income inequality rose last year and is now at its highest level since 2001/02.

Last year, incomes for the the poorest fifth of the UK fell by 0.4%, while income for the richest fifth rose by 1.5%, the IFS said.

Since Labour came to power, the gap between the very rich and very poor has widened according to most inequality measures. But the 90:10 system - which strips out the extremes at either end of the scale - reveals that inequality has fallen since 1996/97.

The IFS said changes in the distribution of income recorded last year are sure to disappoint the Government.

"This pattern of income growth, which suggests a slight rise in inequality, is more similar to that seen under Thatcher than under Blair between 1996/97 and 2004/05," the IFS concluded. Absolute poverty is defined as households with incomes below 60% of the 1996/97 average.

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