AN ECONOMIC CRISIS? NOT IF YOU’RE RICH
FIGURES SHOW A WIDENING GAP IN DISPOSABLE INCOME OVER THE LAST TWO DECADES
THE RICHEST households in the UK have seen an increase in disposable income that’s four times greater than the poorest households, new figures show.
Official data released by the Office for National Statistics reveal the income gap between the richest fifth and the poorest fifth has grown by £12,524 a year in the last two decades. A disposable income is the amount of money that households have available for spending and saving after taxes have been deducted. It includes earnings from employment, private pensions and investments as well as government benefits. The figures show that in percentage terms, the poorest households have seen the biggest rises in disposable income. But in absolute terms, the gap between rich and poor has continued to grow rapidly.
In 1996/97, the richest fifth of households had an average disposable income of £48,939.
That has risen by just over a third to £65,542 a year in 2016/17, even once inflation is taken into account.
The poorest fifth, meanwhile, have seen disposable income rise from £8,669 to £12,748.
That means that the increase in disposable income for the richest 20 per cent of households has been more than four times greater than the increase in disposable income for the poorest 20 per cent.
Meanwhile, the richest 10 per cent now have a disposable income that’s nine times greater than the poorest 10 per cent of households.
The national average disposal income stands at £35,117 - but for the poorest 10 per cent it is just £9,558.
In comparison, the richest 10 per cent of households now have a disposal income of £87,711, or £240 a day.
Interestingly, disposable income is also affected by whether or not you have kids - but how it affects you depends on how rich you are.
The poorest 20 per cent of households with children have a disposable income of £15,310, while the poorest 20 per cent of households without children have £11,657.
This means that poorer households have higher incomes if they have children than those that don’t. One reason for this may be that because adults with children receive child benefits, it raises their disposable income. The opposite becomes true, however, as household disposable incomes increase.