Last Updated on August 3, 2023 by Karl Thompson
The wealthiest 10% of households in the UK are 133 times richer than the poorest 10% of households (1).
The disposable income of the richest 20% of households is 4.5 times greater than the poorest 20% (2).
Wealth Inequalities in the UK
In 2018-2022:
- The richest 1% of households had a median wealth of more than £3.6 million.
- The richest 10% of households had a median wealth of £1.9 million.
- The poorest 10% of households had a median wealth of just £15,400.
This means the wealthiest 10% of households were 130 times richer than the poorest 10% of households. The wealthiest 10% were 233 times richer.
Components of wealth
As measured by the ONS wealth is made up of four main components:
- Pensions
- Property
- Other physical assets
- Cash savings
For the wealthiest households, private pensions make up a more significant portion of wealth. Pensions as a proportion of wealth becomes less significant the poorer the household is.
In middle-wealth households, property is the most significant proportion of wealth.
This probably means that for the ‘middle wealthy’ they are not as affluent as may appear. Most of these people will live in those households, no income is derived from that portion of their wealth. In contrast, pension wealth, which wealthier households have a lot more of, yields an income.
Trends in wealth distribution
The wealth of the richest 10% of households has decreased in the very long term. In 1900, the top 10% controlled over 50% of wealth. This declined to a low of 26.5% in 1970, but then increased to 38.7% in 2013. The proportion of wealth controlled by the top 10% has declined slightly over the last decade (3)
In 2021 the top 10% controlled 35.7% of wealth, compared to the bottom 50% who controlled only 20.4% of wealth.
According the Equality Trust, by 2023, the richest 50 families in the UK held more wealth than half of the UK population, comprising 33.5 million people.
Income inequalities in the UK 2022
Median equivalized disposable income for the richest 20% of households was £66002 in 2022, compared to £14508 for the poorest 20% of households (2).
This means the richest 20% of households had an income 4.5 times greater than the poorest 20% of households.
Disposable income is income after taxes and benefits. Equivalized means income is adjusted to take account of household composition because costs are different for single people, couples and families.
Income inequality and poverty
The government’s own measurement of households in poverty is set at 60% of median income, which was £32349 in 2022.
60% of this median income is £19409 which means that every single one of those households in the bottom quintile is in poverty, as are around half of the households in the second quintile.
It should be no surprise based on the above distribution that 13.4 million people or 20% of the population were living in poverty in 2020/2021.
The Joseph Rowntree Foundation also has measures of deep poverty, set at 50% of median income at £16174 a year and very deep poverty, at 40% or just under £13 000 a year.
Poverty has deepened in recent years, with more people falling into deep and very deep poverty. Based on the above distribution for example every household in the bottom quintile is in deep poverty, some will be in very deep poverty!
A more detailed income distribution
The Institute for Fiscal Studies has developed an online calculator where you can enter your income to see where you fit in to the distribution in the UK.
If you enter your income and costs you will show up as a red bar. (My screen capture below doesn’t show a red bar as I entered a fake high income, so my bar is off the scale to the right!).
What the graphic below shows is how many millions of people earn roughly what weekly income. Each bar represents an increase in income of around £7.
I put two arrows in to demonstrate that most people receive between £200 and £550 per week.
You can also see from the above bar chart that there are more people clustered towards the middle-left. Relatively few people have very high incomes!
The different shades of green are just to make the graphic easier to read.
All of the people in the first light shade of green to the left will classify as being in very deep poverty, with incomes of less than £190 a week.
Trends in income inequality
Disposable income inequality has increased considerably since 1977. As measured by the Gini Coefficient, income inequality has increased from 24.5% in 1977 to 34.7% in 2022 (4).
The Gini coefficient takes values between 0% and 100%, with higher values representing an increase in the level of inequality. A value of 0% indicates complete equality, a value of 100% complete inequality. A 100% score would mean one person (or household) has all the income.
Signposting and related posts
Poverty is a concept that is often linked with wealth (you might crudely say that poverty is the opposite of wealth).
Wealth and income inequalities are closely correlated with social class, although economic measurements are just one indicator of social class, which is a broader concept, also encompassing social and cultural capital (if we are going to use the latest social class survey – see here for an introduction to the concept of social class.
Have a look at evaluating the usefulness of official statistics and consider which strengths and limitations apply here.
Sources
(1) Office for National Statistics (ONS), released 2 January 2022, ONS website, Household total wealth in Great Britain: April 2018 to March 2020
(2) Office for National Statistics (ONS), released 25 January 2023, ONS website, statistical bulletin, Household income inequality, UK: financial year ending 2022
(3) The Equality Trust (accessed August 2023) The Scale of Economic Inequality in the UK
(4) Office for National Statistics (ONS), released 25 January 2023, ONS website, statistical bulletin, Household income inequality, UK: financial year ending 2022
