Trends in poverty and inequality since Labour came to power in 1997 fall neatly into three stages. In Labour’s first term, there was growth in income of over 3 per cent each year after inflation for the median household. But, unlike a similar boom period of the mid- to late 1980s, income growth among the poor was also robust, because more people were working, and because of overtly redistributive increases in benefits and tax credits for pensioners and families with children. This meant that those on low incomes more than kept up with the average, and relative poverty fell. But at the other end of the income distribution scale, the top incomes raced away. Half a million of the wealthiest people enjoyed annual increases of over 5 per cent per year after inflation, and inequality rose.
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