Chapter

Inequality and poverty under New Labour

Tom Sefton and Holly Sutherland

in A more equal society?

Published by Policy Press

Published in print January 2005 | ISBN: 9781861345783
Published online March 2012 | e-ISBN: 9781447301394 | DOI: http://dx.doi.org/10.1332/policypress/9781861345783.003.0011
Inequality and poverty under New Labour

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One of the legacies of the Thatcher administration was the marked shift towards inequality. Although the average income increased during the 1980s, the benefits were spread unevenly. Between 1979 and 1997, the median income of the richest, which is 10 per cent, rose to over 60 per cent while the median income of the poorest rose only to 11 per cent. While inequality stopped during the recession in the early 1990s, it began to rise again in the mid-1990s. In 1997, when New Labour took the governmental seat, distribution of incomes in the UK became more unequal than ever. This unprecedented rise in inequality was due to: a dramatic rise in the distribution of earnings between low-income and high-skilled workers; increase in the number of workless households; increased importance attributed to other sources of income; and discretionary taxes and benefits policies. This chapter evaluates New Labour's approach to income inequality. It discusses the stand of New Labour on this issue; the changes in the level of inequality since 1997; the policies introduced by Labour which may have impacted on the distribution of income, the drivers of inequality, and the distribution of taxes, benefit systems, and public spending; and the success and failure of these policies in stopping and reversing the trend of inequality. While chapters Seven and Eight focused on poverty among children and pensioners, this chapter looks at overall poverty, including the working-age population. However, the core of the discussion is on inequality and what has happened to incomes across the whole distribution.

Keywords: inequality; workless households; income inequality; inequality; policies; income; taxes; benefits; public spending; poverty

Chapter.  8344 words.  Illustrated.

Subjects: Social Stratification, Inequality, and Mobility

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