The gap between rich and poor in the UK is greater now than at anytime in the past 40 years.
Inequality in the UK has reached a shocking level. The poorest andmost vulnerable people in our society are left behind, while a minority benefit hugely from our prosperity. This is not only unjust –
research shows that the growing gap between rich and poor also has a corrosive effect on society as a whole. Inequality is linked to crime,health problems and a host of other social ills.
The Poverty Premium
Fuel poverty is a growing problem: Upwards of 20,000 people die of the cold each winter in the UK, often because they cannot afford to heattheir homes properly.Many people on low incomes have to use prepayment meters for their gas
and electricity. Yet, whilst customers who pay by direct debit receive discounts, those who use prepayment meters are charged apremium for their energy. Essentially, the richer customers are beingsubsidised by the poorer ones.According to the National Housing Federation, energy companies make
£50m a year from the excess cost of prepayment meters – even thoughthese customers have an average household income of just £13,500.
Legal loan sharks
People on low incomes frequently cannot borrow money from mainstreambanks. Instead, they are forced to borrow from doorstep lenders orcompanies offering ‘payday’ loans.
Unlike elsewhere in Europe, there is no limit in the UK to the interest rates that companies can charge. Rates range from 180% to
over 1,000% apr. People therefore become trapped in a cycle of debt,borrowing more and more.
In 2006, the Competition Commission found that the doorstep lendingindustry was making excess profits of £75 million a year – but noaction has been taken as yet to restrict the cost of doorstep loans.
While asylum-seekers are waiting for a decision on their applicationfor asylum, they are not allowed to work. And the benefits they have to live on are a third less than UK citizens on Income Support -around £35 a week.
Most asylum applications are initially refused, but many are
subsequently approved after an appeal. There are serious issues withthe process – people do not get proper access to legal advice or interpreters, and immigration staff often assume that asylum-seekers are lying.
If their application is rejected, asylum-seekers’ benefits are
stopped, they are frequently evicted from their homes, and expected toreturn to their country of origin. Many are too afraid to return, andin many cases the Government acknowledges that it is not safe for them
to do so. They are therefore left completely destitute, with no meansof support and yet are legally barred from working.
A minimum income standard Based on views of members of the public, a single person in Britain
needs to earn at least £13,900 a year before tax in 2009, in order toafford a basic but acceptable standard of living.
Working-age people on benefits remain well below the minimum income standard. And, inspite of the National Minimum Wage, almost half of children in poverty are in a family where someone is in full time work.
A fair society and a fair tax system
Over the past thirty years the UK has got richer – but 40% of the total extra income since 1979 has gone to the richest ten percent of the population. Because they are hit harder by everyday taxes likeVAT, people on low incomes actually pay a higher proportion of their incomes in tax than the highest earners. Many of the wealthiest people
are also able to evade much of the tax they should be paying.