Poorest get half income in benefits

MoneyThe poorest fifth of non-retired UK households receive nearly half of their income in benefits, official statistics reveal.

They show that cash from the state represented 47% of gross income among the group, representing millions of families.

On average, the bottom three-fifths of all households received more in benefits than they paid in taxes.

The figures from the Office for National Statistics illustrate the scale of dependence of huge sections of society on welfare payments.
They showed that since the economic downturn in 2008, average disposable incomes had actually risen by 6.9% for the poorest fifth of all households, partly as a result of an average increase in handouts such as tax credits and housing benefits.

During the period, overall disposable incomes fell by £1,200 in real terms, as the economy entered a crisis and gross domestic product plunged.

The richest households saw a 6.8% fall over the period from 2007/8 to 2011/12, while the decrease was 3.1% for the middle fifth.

The data showed that benefits had also helped narrow the gap in income between rich and poor. In 2011/12, the period from which the latest figures were recorded, the richest fifth had gross incomes of £80,700 - six times higher than £12,900 for the poorest fifth. This was a reduction in the seven to one ratio the year before.

But the figures showed that the economic downturn had played a major part in narrowing the gap. Income before benefits were taken into account was £78,300 for the wealthiest fifth compared to £5,400 for the poorest fifth.

This was a ratio of 14 to one, compared to 16 to one the year before, reflecting a fall in earnings for the richest.