Cameron and Inequality II

John Rentoul

ifsgini Cameron and Inequality IIFair to say that there has been some customer resistance to the idea that disposable incomes have become more equally distributed since David Cameron became Prime Minister, which he claimed in the House of Commons yesterday and about which I wrote for Independent Voices and here.

Commenters below the line simply refuse to believe the evidence. Better informed commenters point out that the figures on which the Prime Minister relied, the Office of National Statistics series called “The Effect of Taxes and Benefits on Household Income”, are not the only or even the best figures available.

This is a fair point. My point is only that the Prime Minister is entitled to rely on figures produced by the independent ONS, which say that inequality has gone back to the level of 1986. The series constructed by the Institute for Fiscal Studies (see graph above) seems to be preferred by the people who know about such things: it uses figures for individuals rather than for “equivalised individuals” in households (see page 19 here for an explanation).

However, it shows essentially the same picture, of inequality increasing during the 1980s, being broadly flat for two decades and then falling slightly since 2010. The latest figure (by eye) is comparable to that in 1990 rather than 1986.

The picture does look a little different, however, if we look at the figures for income after housing costs, shown by the red line on this graph via Declan Gaffney. On this basis, the recent reduction in inequality has taken us back only to about 2005-06.

I am not sure which set of figures is best for measuring inequality, so it is hard to say how far back the rise in inequality has been rolled, but what cannot be denied is that income inequality has fallen since 2010.

ahcgini Cameron and Inequality II

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  • chrishaines47

    Eurasia is at war with East Asia. Eurasia has always been at war with East Asia. Cyberspace a tricky thing – it allows us to question and refute.

  • bugedone

    The after housing costs number is interesting because housing costs disproportionately fall upon the poor and the young. Older people with little or no mortgage and a middling salary are much better off than 20-somethings renting with a similar income.

    I wonder also how much of the decline in income inequality is down to a decline in telephone number salaries in the financial services sector rather than any broader trend. The basic rate tax threshold rise may also have helped at the other end.

  • porkfright

    Well-fair to say that if what Cameron avers and you relate is true-it must be down to the workings of “Infinite Monkey Theorem” or some other accident, rather than any touch of absolute genius on the part of the Coalition.

  • Klmfao

    95pc tax rises and only 58 pc spending cuts done – rich got poorer. When all the spending cuts are done and other policies, the poorest will be much poorer whilst the r rich reap the benefits (effective state handouts) of a house boom. Of course, we’ll tell ourselves they’ve earned it. Great political move.

  • Pacificweather

    “This is a fair point. My point is only that the Prime Minister is entitled to rely on figures produced by the independent ONS, which say that inequality has gone back to the level of 1986.”

    It might be if that is what they said but they don’t, they say what the ONS says they say which is the effect of taxes and benefits on family (not single people) incomes. To use these figures for the purposes of demonstrating equality is, in the case of the Prime Minister, a deception. In your case it is merely ignorance.

  • JohnRentoul

    The ONS figures cover all households, including single people.

  • JohnJustice

    I think this decline in inequality can be largely explained by greater numbers in the middle to higher range having their incomes squeezed as a result of the flatlining of
    the economy. There is therefore a more even distribution of deprivation in these ranges compared with those at the bottom leaving the super rich as the true
    beneficiaries of the Cameron years.

    It is this factor that may ultimately do for Cameron however much he ( and JR) uses figures like this to defend his government’s record.

  • ZacMurdoch

    Whatever the rights and wrongs of the current dance on the head of a pin re the figures, the real issue must surely be how we get back to the level that existed before Margaret Thatcher’s government.
    Also, whatever the current levels of inequality, it’s the real incomes of those at and near the bottom of the income distribution that bother me more – and they are certainly going down.

  • Pacificweather

    Which means they will have used an equivalisation scale the reduces the accuracy further. So, not only does it not measure inequality it does not measure what it says on the tin usefully. What is the old saw…

  • Pingback: Boring story: gap between rich and poor unchanged | John Rentoul | Independent Eagle Eye Blogs

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