What you need to know about UK inequality

Inequality in the UK is among the worst in the developed world, according to researchers. People in poverty, disabled people, Black and minority ethnic communities and migrants are disproportionately impacted by financial hardship and barriers to healthcare.

The pandemic shone a light on rising inequality in the UK. Now, as the country experiences a cost of living crisis, the scale of inequality is set to worsen and many families will face destitution in the coming months.

As energy and food prices soar, experts warn that it will be those already struggling to get by who will carry the greatest cost. Here are the main things you should know about the significant level of inequality in the UK.

What is inequality in the UK?

Inequality is an umbrella term which covers income and wealth but also race and ethnicity, disability, sexual orientation, gender identity, age, location and more. 

It is measured to show how different people have different life experiences and how problems such as poverty and unemployment link to health problems and reduced life expectancy, and is tracked to help policymakers find answers to the problem.

Is there inequality in the UK?

Income inequality – one of the primary measures of inequality – in the UK is very high in comparison to other similarly wealthy countries, according to the Equality Trust, and has been so for some time. 

Poverty was already on the rise before the Covid-19 crisis hit the UK, which as well as affecting people’s immediate quality of life can limit the opportunities a child has access to in future.

The average income for the UK’s poorest fifth of the population dropped by two per cent between 2020 and 2021, figures from the Office for National Statistics showed. By comparison, the average income for the richest fifth of the population only dropped by one per cent.

Between 2012 and 2021, the average income of the richest fifth of the population has increased by more than nine per cent. But the average income of the poorest fifth of the population has stayed the same over those nine years.

By 2018, the UK’s most disadvantaged people had roughly £12,800 in disposable income, while the wealthiest people held more than £69,000 in disposable income.

Such figures can sometimes be misleading, because there is a large wealth gap between the country’s richest 20 per cent of people and the richest one per cent. In 2005, that one per cent were worth around £250 billion. By 2015, this had grown to roughly £547 billion, an increase of more than 100 per cent.

The wealthiest 100 people in the UK have as much money as the poorest 18 million people, according to the Equality Trust.

Has wealth inequality increased in the UK?

The gap between rich and poor, while significant, had narrowed before the Covid-19 crisis. But the pandemic exacerbated existing inequalities in the UK, resulting in higher mortality among disadvantaged communities. The UK has the ninth most billionaires in the world, according to Forbes statistics from 2022. Households across the country were already in a “precarious position” ahead of the pandemic as a result of pay stagnation and a decade of austerity under the Conservative government, according to researchers. Studies carried out during the pandemic nearly unanimously reported disadvantaged people were most affected by the pandemic in terms of income, employment and health outcomes.

Most Brits believed the Covid-19 pandemic had widened inequality and “increased the gulf between social classes”. 

The pandemic drove down life opportunities for young and already disadvantaged people, say 70 per cent of Brits, as experts warned poverty puts the public’s faith in Boris Johnson at “serious risk”.

More than six of every 10 people (63 per cent) said the Covid-19 crisis widened the gap between rich and poor people, according to a study by charity Turn2us, with redundancies, lost work hours and increased living costs pushing people deeper into hardship.

“The prime minister can be in absolutely no doubt about the momentous task he faces in ‘levelling-up’ left behind areas of the UK,” said Sara Willcocks, head of external affairs for the charity.

“The faith many voters placed in him to deliver improved regional equality seems to be at serious risk.”

For 36 per cent of 18 to 24-year-olds the Covid-19 crisis meant having to put on hold their plans to move out of their parents’ home, the study showed.

Health Foundation researchers found the UK’s poorest areas were facing a “double whammy” of illness and poverty, as the worst-off areas in the UK also saw the highest Covid-19 death rates. Analysts said this was due to a combination of poverty-driven preexisting health conditions, overcrowded housing, difficulty accessing the necessary health care (particularly for BAME communities) and an increased likelihood of working a low-paid public-facing job which could not be done from home during lockdown.

Women and people of colour were more likely to have their hours cut or lose their jobs entirely during the pandemic.

And research showed people from Pakistani, Bangladeshi, Arab and traveller backgrounds had roughly the same health levels of much older white British people during the crisis, according to a University of Manchester study. Participants over 55 from those ethnic groups had a similar level of health to white British people over 75.

It is “essential” the government addresses the ways in which “racial discrimination and economic disadvantage have disproportionally impacted these communities”, Lord Simon Woolley, crossbench peer and former chair of the Race Disparity Unit’s advisory group, told The Big Issue.

People living in poverty, disabled people and those from Black and Asian Ethnic Minority backgrounds are also more likely to suffer during the cost of living crisis. 

More than three quarters of people (76 per cent) responding to an FSA survey said that rising food prices were a “major future concern” for them.

Individuals living with long-term health conditions, women, and people from Black, Asian, and Minority Ethnic backgrounds were more likely to express anxiety about the cost of food, the study found.

According to the charity and National Energy Action the number of disabled people thought to be in fuel poverty in March 2022 was 900,000 – and it is expected to increase to 2.1 million by the end of the year

Almost three million disabled people face an average support shortfall of £367 a year, research from disability equality charity Scope found. This is reportedly due to a failure to increase benefits in line with the rate of inflation.

The inequality someone experiences in the UK is very commonly dictated by their parents’ wealth. People born into rich families were an average six times richer than those from poorer backgrounds by the time they reached their thirties, analysis by the Institute for Fiscal Studies (IFS) showed.

One in five Brits whose parents are in the richest fifth of people have an income of more than £40,000, compared to just one in ten of people whose parents are in the second-wealthiest group. 

The research showed parents’ overall wealth, such as assets and property, was more likely to mean their children would be wealthy compared to the link between parents’ earnings and children’s earnings.

Home ownership made up the largest proportion of wealth in the UK, the IFS research showed, which was likely exacerbated by rising house prices during the Covid-19 crisis.

Parents’ wealth had an impact on the educational attainment of children too, according to analysts. 

The children of the wealthiest group were four times as likely to reach high levels of education, as well as finding it easier to build savings.

How are different kinds of people affected by inequality?

People of Black, Asian and other minority ethnic backgrounds are much more likely than white people to face income, health and social inequality. 

Nearly 36 per cent of ethnic minorities were likely to live in poverty compared to 17.2 per cent of white people, the Equality and Human Rights Commission said. Meanwhile nearly 31 per cent of Pakistani or Bangladeshi people lived in overcrowded housing, a figure dropping to 8.3 per cent for white people.

Around half of working age disabled people in the UK were employed in 2020, according to ONS figures, compared to more than 80 per cent (eight in 10) of non-disabled people, and are more likely to become trapped in poverty.

There are many ways in which a person can be put at risk of feeling the adverse effects of inequality, and reports suggest it is difficult to escape. As many as 40 per cent of people in the UK think it is becoming more difficult for disadvantaged people to increase their income and stability and access more opportunities, while young people are becoming less likely to see themselves as better off than their parents’ generation.

What is the wealthiest place in England and the rest of the UK?

Where you live is one of the main factors which can determine if you experience inequality. Surrey consistently tops wealth lists for England as a result of the high incomes earned by people living in the area as well as the high number of assets such as property owned by people there.

The UK has the worst regional inequality in the developed world, a leading University of Sheffield scientist said, with people in England’s North East worst-off overall. That affects their incomes but also their access to better-paying, more secure jobs.

People in London areas including Croydon and Southwark as well as cities in the north of England like Liverpool, Manchester and Newcastle have high rates of food poverty.

Demand for free school meals is highest in the North East, where around 29.1 per cent of children currently qualify, compared to just 17.6  per cent in the South East. 

The biggest gap between rich and poor is found in London, which is over-represented in both the top incomes and lowest incomes in the country.

After housing costs, nearly 30 per cent of Londoners live in poverty,according to the IFS, compared to 22 per cent across the UK generally. However 16 per cent of people in London receive among the highest 10 per cent of incomes.

What is the government’s race equality strategy?

This year, the government published a new set of recommendations on how it can address racism and discrimination in the UK.

Tony Sewell, the chair of the Commission on Race and Ethnic Disparities (CRED), said in a controversial report: “Put simply, we no longer see a Britain where the system is deliberately rigged against ethnic minorities. The impediments and disparities do exist, they are varied, and ironically very few of them are directly to do with racism.”

The findings of a report from the CRED, which claimed institutional racism didn’t exist in the UK, caused outcry. Critics including the Runnymede Trust said it ignored the reality of people of colour’s experiences in the UK.

Doreen Lawrence, who campaigned for justice for almost two decades after the murder of her son Stephen by racists, warned it risked setting the fight against racism “back 20 years or more” for undermining the existence of structural racism.

In a new strategy named ‘Inclusive Britain’, equalities minister Kemi Badenoch said: “Of course, there is more to do to overcome barriers to opportunity, but that applies beyond ethnic minority groups, as the commission found a huge proportion of white people from deprived backgrounds continue to be left behind by society.”

The new strategy outlines “structural barriers” that “block the way” for underrepresented groups, but it does not address institutional racism in the UK.  Labour claimed that the new set of recommendations “agrees with the original report’s denial of structural racism,” and therefore fails “to deliver meaningful action”.