- IFS analysis suggests that poorer working age households have been hit most by changes to the tax and benefit system since 2010.
- But this does not reflect the overall impact of government policies on household income, largely because of the major increase in employment.
- The bigger picture shows that the final incomes of the poorest households have – despite or because of the tax and benefit reforms – grown faster than the richest.
- From 2010-2014, the final incomes of the poorest 40% of households increased by 11%, while those of the richest 20% fell by 4.5%.
- As a result, UK income inequality has fallen over this period. The Gini coefficient is down from 33.7 to 32.4.
- However, wealth inequality is on the up. Rapid growth in asset prices has increased the richest quintile’s wealth by 14% in two years, according to the ONS.
