IFS: Brown “mitigated” income inequality

The Institute for Fiscal Studies this morning gave its verdict on Labour’s inequality record. In a spoof of the Conservative party poster depicting a grinning Gordon Brown and the caption, “I increased the gap between rich and poor – vote for me”, the IFS suggested that the former Labour Prime Minister had “mitigated” the rise in income inequality.

Presenting a slide show with key findings on the Labour government’s record including the latest data from 2008/09, Senior Research Economist Ali Muriel outlined that – although inequality was now at its second highest level ever – it would have been “even higher without changes to the tax and benefit system since 1996-97”. Simulations by the IFS for the Mirrlees Review found that the Gini coefficient measure of inequality “would be 0.03 higher if the tax and benefit system had simply been uprated in line with RPI”.

Published today, “Poverty and Inequality in the UK: 2010“, concluded that:

• living standards have surprisingly risen despite the recession due to discretionary increases in the tax and benefits system, and modest rises in earnings;

• Income inequality is largely unchanged although there is some evidence that income growth at the very top of the distribution was low or negative;

• As outlined by Kayte Lawton on Left Foot Forward yesterday, relative poverty fell 100,000 to 2.8 million on the Government’s preferred before housing costs measure while pensioner poverty fell 200,000; and

• Poverty amongst working-age adults without dependent children is at its highest level since the start of our comparable series in 1961.

Mr Muriel concluded by projecting that the interim child poverty target to halve child poverty by 2010 was likely to be missed by 0.6 million. Under current trends it is expected to rise again to 3.1 million by 2020. The report also found that poverty has fallen most under Labour in Scotland and the North East but risen in the Midlands.

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