Inequality in the UK

Lesson Objectives I will get the opportunity to develop my

understanding of difference between income and wealth.

I will be able to explain the level of economic inequality in the UK today and predicted trends.

I will take part in a debate on the role of government addressing economic inequality.

Income and Wealth – what is the difference?

Income Wealth Income comes from a number of

sources; Wages and earnings from

work (the main one for the majority of the population)

Benefits e.g. Universal Credit/State Pension

Occupational pensionRent from the ownership of

land and propertyInterest from savings Dividend payments from

shares.

Wealth comes from the following; Ownership of

property and landRights to an

occupational pension

Savings in the bankInvestments in

shares and bonds.

How equal is Britain? Working in pairs complete the following task;

Imagine Britain’s wealth is £100 – how much do you think each group has and how much, in your opinion, should they have?

Group Think they have…

Should have…

Richest 20%

2nd Richest 20%

Middle 20%

2nd Bottom 20%

Bottom 20%

How equal is Britain? Compare your answers to the video clip;

How equal is Britain?

Inequality the Good and the Bad

The Good News The Bad News The Office for National

Statistics reported in July that the Gini index fell from 34% to 32% (in the USA it is 40% - Sweden it is 25%).

The average income for the poorest 20% increased by nearly 7% in the last 3 years.

The income gap between the richest and the poorest has reduced – it was 16 times in 2011 but in 2012 it fell to 14 times.

But the IFS has said by 2016 this trend will be reversed once the impact of the 1% benefit cap has been felt.

However wages have fell by at least £1200 in the last three years – inequality has reduced because incomes have reduced.

The impact of the VAT increase to 20% has hurt the poorest – 29% of the poorest income is spent on indirect tax (VAT, alcohol duty etc.) compared to 14% of the income of the richest 20%.

The Spirit Level1. What do the authors identify as the main problem facing developed

countries?

2. List three problems this issue produces in the UK.

Thatcher’s Final Speech 1990

1. How does Thatcher’s view disagree with the Spirit Level research?

Debate Time What, in your opinion, is the job of government;

To promote economic growth even if the gains are shared unequally?

To promote economic growth only if the gains are shared more equally?

To reduce inequality and promote economic growth?

To reduce inequality at the expense of economic growth?

Possible essay questionTo what extent do social and economic

inequalities continue to exist in the UK? (2007)

Conclusion Inequality has reduced in the UK in the last year –

but this is linked to a fall in living standards.

The Coalition Government’s benefit cap of 1% is likely to increase inequality in the UK.

The Spirit Level research shows that inequality is bad in so many ways – e.g. crime, education and health etc.

Cameron today and Thatcher would argue that economic growth is good for all even if the inequality gap increases.