Has the United Kingdom started to reduce inequality? Spoiler: Not yet.

Dr Koldo Casla
Just Fair

Inequality in the UK is projected to rise in the coming years. A historically low unemployment rate means that more households are earning a living from the labour market. At the same time, tax changes and social security cuts introduced since 2012 have had a particularly severe effect on people on lower incomes. Black and ethnic minority households, families with at least one disabled member, and lone parents (who are overwhelmingly women) have suffered disproportionately. The UK is well known for its strong legislation on equalities. The Equality Act 2010 was a significant contribution in this regard. However, eight years since its adoption, the Act has not yet been implemented in full. Successive governments have failed to bring into effect the socio-economic duty, which requires public authorities to have due regard to the desirability of reducing material inequality.

Is inequality going up, down or does it remain the same?

The assessment of Britain’s material inequalities is a contentious issue; it depends on the source and therefore it also depends on who is measuring.1 According to the Households Below Average Income (HBAI) report, the standard used by the UK Government’s Department of Work and Pensions (DWP), income inequality both before and after housing costs has remained approximately stable since 2010.2 The percentage of individuals in the low income category, measured as 60 percent of the median, has barely changed. Absolute low income, based on an annual update of the income threshold of 2010-2011, fell slightly as a result of the low inflation levels during the austerity years.

Between 2015 and 2017, incomes of those in the top half of the distribution experienced a more modest growth than those in the bottom half. However, inequality is projected to rise in the next four years.3 According to the research group Resolution Foundation, “unlike the rise in inequality of the 1980s, when incomes at the top moved away from those in the middle and the middle moved away from the bottom, the coming period is set to be characterized by sluggish growth across much of the distribution and a ‘leaving behind’ of those at the bottom”.4

Inequality is even more marked in the distribution of wealth. Together, the richest 1,000 people are wealthier than the poorest 40 percent of households, and the wealthiest 1,000 saw their worth grow by £2,615 for every second of 2016.5 Wealth inequality contracted in the decade prior to the financial crisis, but is now rising as a result of the decreasing accessibility of home ownership and the decoupling of land value and economic growth.6

The food basket, poverty and welfare reforms

The Living Costs and Food Survey of the Office for National Statistics (ONS) shows that lower income households assign a greater share of their food budget to basic groceries while higher income households have relatively more money available for vegetables; similarly, the lowest income group spends approximately three times as much in electricity, gas and other fuels than those with highest income.7

The percentage of people in households at risk of poverty (below 50% of median UK household income) increased from 9 to 9.9 percent between 2013 and 2016 (latest available data), with a half a point higher risk for women and with an increase in all age brackets.8

The UK currently enjoys a very low unemployment rate at 4.2 percent.9 The ONS reports a steady labour share of GDP at around 50 percent since 2000.10 However, the tax and welfare cuts since 2012 have had a regressive effect in terms of social protection. There has also been an increase in inequality for retired households in recent years due to the growing gap between households covered by a private pension and those without it.11 The top 10 percent paid a little bit extra through indirect taxes and the introduction of the National Living Wage had a positive impact across the board, more so for the bottom half of society. However, according to the cumulative impact assessment of the Equality and Human Rights Commission (EHRC), the national human rights institution in England and Wales, the largest cash gains from changes to income tax and national insurance contributions were enjoyed by the wealthiest 30 percent.12 As a result of benefit and tax credit changes and universal credit, households in the second and third decile have lost more than twice as much as those in the top 20 percent. It has also been estimated that, at this pace, in four years from now 1.5 million more children will live in poverty, the child poverty rate for lone parent households (85% of whom are women) will increase from 37 to 62 percent, and households with at least one disabled adult and a disabled child will lose 13 percent of their income. Lone mothers will lose almost one fifth of their annual income.

The Equality Act 2010 and the ‘socio-economic duty’

The Equality Act 2010 provides protection against direct and indirect discrimination in public services and harassment in the private sphere (such as the workplace) under nine protected characteristics: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation. UK authorities gather and report useful disaggregated data based on the protected characteristics. It is concerning that the number of hate crimes reported to the police increased by 29 percent (80,393 offences) in England and Wales between 2015-2016 and 2016-2017, the largest increase since the series began in 2011-2012.13 On the other hand, this increase may partly respond to an improved identification of hate crime by the police, greater empowerment of victims to come forward and an overall improvement of recording of crime, all of which would be good news.

The ‘socio-economic duty’ was one of the most significant contributions of the Equality Act 2010 (Sections 1-3). This duty required public authorities to have due regard to the desirability of reducing inequalities of outcome that derive from socio-economic disadvantage.14 Successive UK governments have failed to implement the duty to this day, however. The Scottish Government agreed to implement it from April 2018, which means it is now binding for Scottish councils too. The duty is being considered in Wales and it is commendable that some councils have voluntarily implemented the duty in their equality impact assessments, budgets and other strategic decisions.15 It is also encouraging that 78 MPs (to 26 June 2018) from five different parties have expressed their support for the Early Day Motion 591 to call on the Government to bring the socio-economic duty into effect.

Conclusion and recommendations

Official statistical data shows that low-income families have to spend relatively more on basic groceries, electricity, gas and fuels. This is why SDG 10 on reducing inequality is crucial for achieving other sustainable development goals and targets. Relative poverty (SDG 1) and food insecurity (SDG 2) depend on the distribution of income and wealth in society. The enjoyment of the right to health and the goal of ensuring healthy lives (SDG 3) are also determined by unequal access to public services. Research indicates that lone parents, mostly women, will lose almost one-fifth of their annual income, which once again confirms that unfair tax structure and social services necessarily hamper the fulfilment of greater gender equality (SDG 5).

A significant change of course is required to meet SDG 10 and internationally recognized socio-economic rights and to turn the UK into a fair society that does not leave anyone behind.

The Government should review the Welfare Reform Act 2012 and the Welfare Reform and Work Act 2016 to restore the link between social security entitlements and the costs of living.

The Government should also design and implement a comprehensive child poverty strategy and reinstate the targets and reporting duties on child poverty.

The review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 should ensure that access that people on low incomes do not have to choose between access to justice and an adequate standard of living.

The Treasury should extend the analysis of the distributional impact of tax and public spending to look at the aggregate impact in light of the protected characteristics as well as income and wealth disparities.

The UK Government should commence all the outstanding clauses of the Equality Act 2010 and in particular the socio-economic duty. The Welsh Government should contemplate doing so as envisioned in the Wales Act 2017. English and Welsh councils should consider incorporating socio-economic status in their integrated equality impact assessments, budgets and other strategic decisions.

All public authorities should have due regard to the 2016 Concluding Observations of the UN Committee on Economic, Social and Cultural Rights (CESCR).16

This text has been adapted from one of the chapters of the first stakeholder-led review of the UK’s compliance with the SDGs. With tens of contributors, the process has been coordinated by the UK network of stakeholders for sustainable development (UKSSD). Just Fair led the drafting of the chapter on SDG10 on the reduction of inequality at the national level.

Notes:

1 Resolution Foundation, Unequal results: Improving and reconciling the UK’s household income statistics, 3 December 2017; available at:
http://www.resolutionfoundation.org/publications/unequal-results-improving-and-reconciling-the-uks-household-income-statistics/

2 DWP, Households Below Average Income: An analysis of the UK income distribution: 1994/95-2016/17, 22 March 2018; available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/691917/households-below-average-income-1994-1995-2016-2017.pdf

3 Institute for Fiscal Studies, Living standards, poverty and inequality in the UK: 2017-18 to 2021-22, 2 November 2017; available at: https://www.ifs.org.uk/publications/10028

4 Resolution Foundation, The Living Standards Outlook, 22 February 2018, p. 65, available at:
http://www.resolutionfoundation.org/publications/the-living-standards-outlook-2018/

5 The Equality Trust, Wealth Tracker, May 2017, available at: https://www.equalitytrust.org.uk/wealth-tracker-2017-0

6 Resolution Foundation, Britain’s increasingly unevenly shared property wealth is driving up inequality after a decade-long fall, 18 June 2017, available at:
 http://www.resolutionfoundation.org/media/press-releases/ IPPR, Capital gains: Broadening company ownership in the UK economy, 21 December 2017; available at: https://www.ippr.org/research/publications/CEJ-capital-gains

7 ONS, Family spending in the UK: Financial year ending 2017, 18 January 2018; available at:
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/

8 Eurostat, “Income and Living Conditions data”; available at: http://ec.europa.eu/eurostat/web/microdata/european-union-statistics-on-income-and-living-conditions

9 ONS, “Unemployment rate”, updated on 12 June 2018; available at: https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment

10 ONS, “National Reporting Framework on SDGs: SDG10”; available at: https://sustainabledevelopment-uk.github.io/reduced-inequalities/

11 Family spending in the UK, 18 January 2018.

12 EHRC, Cumulative impact of tax and welfare reforms, 14 March 2018; available at: https://www.equalityhumanrights.com/en/publication-download/cumulative-impact-tax-and-welfare-reforms

13 Home Office, Hate Crime, England and Wales, 2016/17, 17 October 2017; available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/

14 About the jurisprudential meaning of due regard, see Equality and Diversity Forum, The public sector equality duty and “due regard”, June 2015; available at: http://www.edf.org.uk/wp-content/uploads/2015/06/DueRegardJune2015.pdf

15 Just Fair is working on a study of good practices by local authorities. The report will be presented in June and it will be available at: http://justfair.org.uk/research/

16 UN CESCR, Concluding Observations: UK, 14 July 2016; available at: http://docstore.ohchr.org/

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