This graph shows measures of household income adjusted for inflation to be in 2014-15 prices.

In 2014-15, the median income was £24,900, which means that half of households had more than this income, and half had less. In a similar way we can talk of deciles so that 30% of households have an income below the 3rd decile and 70% below the 7th decile. The data is drawn from annual surveys and adjusted according to the make-up of individual houses (a process called equivalisation).

Incomes rose in real terms until 2009-10. Compared to 1994-95 values, the 3rd decile increased by 47%, the median by 41% and the 7th decile by 40%. Although these percentages appear to suggest that inequality lessened over this time, it is also true that inequality increased in absolute terms with the gap between the 7th decile and 3rd decile widening from £10,600 in 1994-95 to £14,000 in 2009-10. Income inequality has decreased slightly since the pre-recession peak with the 3rd decile rising by 1% and the 7th decile falling by 1%.

These data include the effects of taxation and benefits. Both serve to considerably reduce income inequality. Even without digging into the numbers this can be appreciated from the fact that those above the 7th decile pay tax at a rate of 40% (or more) on any increase in income, whereas much of the income for those below the 3rd decile comes from state benefits.

The effect of housing costs on inequality is not included here but can be appreciated in this data showing how poverty varies across UK regions and countries.

Statistics on wealth inequality are much more uncertain because there are few wealth taxes, and this is also the main reason why wealth inequality is much larger than income inequality.


These data are taken from the Scottish Government publication Poverty and Income Inequality in Scotland 2014/15 (Table A10) which draws on the UK Department of Work & Pensions Households Below Average Income (HBAI) analysis of the Family Resources Survey.

This graph was published in A Nation Changed? The SNP and Scotland ten years on. A book with contributions from various authors edited by Gerry Hassan and Simon Barrow.

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