Poverty gap 'widest in 40 years'

from the Times Online

Clare Francis

British society is becoming increasingly divided. The gap between rich and poor is at its widest for 40 years, research from the Joseph Rowntree Foundation has revealed.

The wealthy have become disproportionately more well-off while an increasing number of families find themselves below the bread line. The disparity is leading to a schism as rich, poor and average households are now less likely to live next door to one another than they were in the 1970s.

The wealthy have moved to the suburbs while poorer households remain in the inner cities. The wealthiest families are concentrated in the south east. This is likely to be a result of local economies with many of the highest paid working in the capital. Rising house prices are also a contributing factor.

The average house price in London is £292,409, compared with £134,523 according to Nationwide’s latest figures. Not only does the house price divide have an impact on where people can afford to live, but it has also meant that the richest people have benefited most, and had their wealth boosted, by the property boom.

Danny Dorling at the Joseph Rowntree Foundation said: “Over time it has become clear that there is less and less room in the south for those who are neither rich nor poor; they have either moved elsewhere or become poor.”

However, the Joseph Rowntree report also found that the number of very poor is declining, because of initiatives such as tax credits. The less well-off are more likely to use loans and credit cards to smooth out the effects of fluctuations in their incomes. The level of debt relative to income for the poor tends to be 20 per cent to 25 per cent higher than for the population as a whole.

Those caught in the debt trap are also more likely to struggle with rising interest rates. The Bank of England has hiked rates five times since last August, and while figures out today reveal that inflation slipped back slightly to 2.4 per cent last month, most economists doubt this will be enough to stave off another rate increase. The situation for those already facing financial difficulties therefore looks set to get worse rather than better in the near term.