Live updates

Income inequality set to increase, IFS warns

Income inequality will return to near the levels seen before the recession as welfare cuts bite, a respected economic think tank has said.

The difference between rich and poor will be more visible with benefits cuts Credit: Lynne Cameron/PA Wire

The gap between rich and poor had narrowed as middle and high earners faced a wage squeeze between 2009 and 2012, the Institute for Fiscal Studies (IFS) said.

But inequality will almost reach its pre-recession levels by 2015/16 as poorer parts of society feel the effects of cuts to benefits and tax credits, according to the IFS.


The Personal Independence Payment scheme

  • The personal independence payment scheme is being introduced for people with a health condition or disability aged 16 to 64.
  • From today, it will be introduced for new claims in Merseyside, North West England, Cumbria, Cheshire and North East England. It will be rolled out nationally from June.
  • Currently, there are no current plans to replace Disability Living Allowance (DLA) for children under 16 and people aged 65 and over who are already receiving it.
  • Some people may require an assessment to work out the level of help needed.
  • Most people currently getting DLA will not by affected by the change until 2015, according to the government.