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Inequality in Britain has risen significantly since the 1980s across various dimensions, including wage, income, wealth, and regional disparities. The most dramatic increases occurred during the 1980s, driven by changes in labour market institutions, economic policies, and educational demands. While some measures of inequality have stabilized or grown more slowly since the 1990s, the overall trend points to a more unequal society compared to the pre-1980s period.
The question of whether inequality has risen in Britain since the 1980s is a significant one, with implications for economic policy, social justice, and public perception. This article examines the trends in various forms of inequality in Britain over the past four decades, drawing on multiple research studies to provide a comprehensive overview.
Wage Inequality
Wage inequality in Britain has seen a marked increase since the 1980s. The decline of labour market institutions, such as unions and minimum wage protections, has played a crucial role in this rise. The weakening of these institutions has disproportionately affected the lower end of the wage distribution, leading to a sharper increase in wage inequality compared to other advanced countries1. The 1980s witnessed the most rapid widening of the wage gap, which continued to rise, albeit at a slower pace, in the 1990s and 2000s7.
Income Inequality
Income inequality also saw a dramatic increase during the 1980s. The number of people living in poverty doubled, and the real living standards of those at the bottom stagnated, while those at the top experienced substantial increases5. This period is often referred to as the inequality ‘boom’ due to the significant rise in earnings inequality2. However, since the 1990s, income inequality has not shown a consistent upward trend. While the top 1% has increased their share of income, this has not come at the expense of the bottom 90%, whose incomes have also risen10.
Wealth Inequality
Wealth inequality in Britain has shown a more complex pattern. While the 1980s saw a modest increase in wealth inequality, it was not as pronounced as in the United States8. However, the overall trend indicates a growing concentration of wealth among the top echelons of society. This is consistent with global trends, where the top 1% has seen a significant increase in their share of wealth3.
Regional Inequality
The 1980s also marked a period of increasing regional inequality in Britain. The economic, social, and political disparity between the prosperous south and the relatively depressed northern regions became more pronounced. This regional divide has its roots in historical economic developments but was exacerbated by the economic policies of the 1980s, which failed to address the growing socio-economic inequalities9.
Educational Inequality
Educational inequality has also contributed to the overall rise in inequality. The demand for more highly educated and skilled workers has increased, leading to higher wage premiums for those with higher educational qualifications. Despite the increase in the number of workers with higher education, wage differentials have not decreased, indicating a persistent demand for skilled labour4.
Has inequality risen in Britain since the 1980s?
Danny Dorling has answered Near Certain
An expert from Oxford University in Geography
How did we get here? What went wrong? Equality for the bottom 90 per cent peaked in 1978 when they took home 72.2 per cent of all the income there was to take that year. This high point had followed us reaching a slightly smaller (and almost always ignored) peak of 71.5 per cent in 1968. Between those two dates we stumbled along a ridge of high equality and we could have chosen to go even higher. In hindsight, it is far easier to see. At the time, no one in Britain had a clear idea of just what a momentous period the late 1960s and early 1970s were.
The British establishment had almost no idea of how economically reliant it was on the empire. Almost all leading Conservatives, most Liberals and a significant section of the Labour Party had come to believe that running the empire was the white man’s burden, a great sacrifice – something they did at a loss even.
The pound had been falling in value against the dollar since at least around 1910. By the 1960s Conservative politicians blamed immigrants from the Caribbean, and then the trade unionists at home. They blamed the miners in the early 1970s and then the few socialists in government during that decade. Britain joined the European Economic Community in 1973 in search of a solution to its economic woes. At no point, ever, did the British contemplate how the centres of all former empires, from Ottoman to Hapsburg, from Rome to Lisbon, had suffered in the immediate aftermath of the loss of empire.
Soon the British became used to inequality rising with each year of Mrs Thatcher’s government, before stuttering during John Major’s rule (1992-1997) and rising sharply again under Tony Blair’s New Labour.
We reached an inequality high point in 2007 when the bottom 90 per cent only took home 57.4 per cent of all income, the least they had taken since, tellingly, 1929, the year of the Wall Street crash that began the Great Depression.
Tony Blair was the king of income inequality. No British prime minister since Stanley Baldwin had seen the bottom 90 per cent take so little as they did under New Labour. Under Gordon Brown the share of the bottom 90 per cent rose slightly but so did the share of the wealthiest 0.1 per cent. During David Cameron’s coalition government inequalities rose again, but not to the heights of the Blair era.
Today, with Theresa May in charge, the statistics are no longer released. Under the Conservatives’ austerity regime, HMRC has not received funding rises, despite the obvious benefits of better-regulated taxation in helping reduce the deficit. The Conservatives also appear to have instructed HMRC not to make the publication of income inequality statistics a priority. Resolution Foundation researchers have complained about the lack of good inequality data from HMRC. However, the fact that FTSE 100 chief executive pay has fallen recently suggests that we have reached peak inequality. History may never repeat, but inequalities always eventually hit a high and then fall.
The American geographer Waldo Tobler once told me that income inequality in the US was stacked like a pile of sand. We were near his home close to Santa Barbara, California, where the sand cliffs are cut steeply by the Pacific and where income inequalities hit their West Coast summit (beneath the Neverland Ranch). He explained that with a pile of sand there was an angle that could be maintained. Cut away sand from the bottom of the pile after that steep angle has been attained and soon the whole collapses.
The income distribution pile in Britain began to be cut away in the early 1990s under John Major. Back then a pseudo-equality began to rise. If you ignored the top 10 per cent, then within the bottom 90 per cent you could begin to see equalities increasing, even as the top 10 per cent took more and more. More money was trickling down from within the upper levels of the bottom 90 per cent. The top of the sand pile was still solid but slowly becoming undermined. The income share of the next 9 per cent above the bottom 90 per cent peaked in 1993, at 28 per cent of all income; by 2014, it had fallen below 25 per cent, according to the World Income Database. This is the latest figure we have.
Equalities are still rising within the bottom 90 per cent. Those in the top 10 per cent but not in the top 1 per cent – crucially, a group that traditionally votes Conservative – have been losing out relatively for 25 years to those both better off and worse off than them. This is the group that struggles to find money for private school fees, that uses private health care if it can and that takes out huge mortgages (because these people are not quite rich enough simply to buy property with cash). They (assuming a household with two adults and two children) have a post-tax total annual household income of £75,000 to £200,000 a year. This is the group that Thatcher looked after but that Tories have since taken for granted on the grounds that they had no one else to vote for if they wanted to protect their accrued wealth, primarily their house prices.
For graphs showing these trends see: http://www.dannydorling.org/?p=6682
The gap between the very rich and the rest is wider in Britain than in any other large country in Europe, and society is the most unequal it has been since shortly after the First World War. But is great change coming?
There are many ways in which inequality can be felt and innumerable ways in which it can be measured. However, it is annual income that trumps all other measures, because it is income that gives us respect and the freedom to do everything from buying a bus ticket to securing a mortgage. We can only live how we live by dint of the income we receive.
Income inequality in the UK is higher than in any other European country, except occasionally one of the Baltic states (during a bad year for them). All other European Union countries enjoy greater income equality. Because of this their citizens are freer to live where they wish, to mix equally, to go to school with each other rather than segregate their children, as the majority of parents in the top 10 per cent of income distribution in Britain feel compelled to do.
Peak inequality is when the town you live in is so segregated that the school-aged children do not mix – not between schools, not socially, not at all. Peak inequality is where the best-off people in your workplace demand “housing allowances” because they could not possibly live near those who clean their workplace, or those who ensure the photocopier works, or who keep the computer servers working night and day.
We live in times of peak inequality. It pervades almost every aspect of our lives in Britain in ways that we now accept as normal. Like goldfish in a bowl of dirty water we have adapted to think that our tank is normal. But it isn’t.
Among all European nations we have become the most inequitably rewarded – we are swimming in the dirtiest of fish tanks. The transition to this state of affairs came slowly. In the 1970s we were living in the second-cleanest large tank of all in Europe; only Sweden’s was cleaner. I say “clean” because as yet there is no evidence of any harm coming from high levels of equality – once a basic level of affluent subsistence has been achieved, there is no downside to being more economically equal.
Nowhere are the repercussions of living with gross inequality more evident than in health. The physical health inequalities that come with tolerating the highest income inequalities in Europe are not as extreme as the damage to our mental health (as documented in Richard Wilkinson and Kate Pickett’s new book The Inner Level), but they are still shocking. For instance, a child born in Sweden is half as likely to die in childhood as a child born today in the UK. There are no causes of death among children that are significantly more frequent in Sweden than in the UK. By 2015 the UK ranked 19th out of 28 in the European league table of neonatal mortality: deaths within the first 28 days of life. In 1990 we had ranked seventh. Bulgaria ranks 27th and Romania 28th, but infant mortality in both is falling. Since 2015 we have seen a statistically significant rise in infant mortality across Britain: no other state in Europe has experienced that. And this is despite, not because of immigration.
Immigrants, who are on average younger and healthier, are essential for the running of our health services. Their presence has prevented overall life expectancy from falling across the UK – though it is already now falling for many groups in many parts of the country. In everywhere else in Europe life expectancy is rising faster than in the UK (it is rising fastest in Norway and Finland). Until 2015 the UK had not experienced growth in numbers of grieving parents since during the Second World War – when infant mortality last rose for two years in a row.
After a time the statistics begin to turn you numb. You become used to bad news. Year after year the number of children waking up in shabby temporary accommodation rises. It now does so with each passing Christmas Day. A record 130,000 children were living in bed and breakfasts over Christmas 2017.
You become used to hearing that ever greater numbers have recourse to food banks (1.3 million parcels were given out in the year to April 2018), to such an extent that you almost forget that as recently as the 1990s there were no food banks in Britain. There was no need for them, before inequality reached its new peak – just as there was a time when the soup kitchens of the 1930s all disappeared once equality rose high enough. When the income share of the bottom 90 per cent is used as the comparator, today our levels of inequality are the same as in 1930. That is why the soup kitchens and feelings of hopelessness have returned.
Has inequality risen in Britain since the 1980s?
Lindsay Richards has answered Near Certain
An expert from Oxford University in Social Sciences
Income inequality measured as the 90/10 ratio was at around 3 during the 1960s and 1970s and rose to around 4 during the 1980s. This means that income at the 90th percentile (i.e. an income at which only 10% of households have more) was around 3 times as large as the income at the 10th percentile (i.e. an income at which 90% of households have more) before the 1980s, but rose to around 4 times as large by the end of the 80s. You see an almost identical pattern using the ‘Gini coefficient’.
These figures have been derived using data from IFS (and are summarised in Heath (2018) Social Progress in Britain) and are based on ‘net real household incomes’ which is to say, after taxes and benefits have been accounted for (see Office for National Statistics for the effects of transfers on inequality, e.g. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2017.
Inequality of earnings or gross household incomes is higher than inequality after taxes and transfers.
Inequality has not continued to rise (as is sometimes assumed), but rather has wobbled about at around the same level throughout the 1990s and 2000s. If you look at income inequality at the extreme, e.g. Share of income going to the top 1%, then the trend continues to rise, i.e. Britain continues to grow more unequal.
Has inequality risen in Britain since the 1980s?
Jong In Kim has answered Near Certain
An expert from Wonkwang University in Health Economics
Inequality has risen in Britain since the 1980s.