GDP may have risen, but the poorest fifth still lose out on £2,000 a year because of rising inequality

What would Britain be like if the income distribution was the same as in 1977?

GDP figures released today have shown a slight increase of 0.3 per cent over the past three months. But what will this mean for those at the lower end of the income scale, or even those in the middle?

We know that income inequality in the UK has been rising since around 1980, and has offset the benefits of economic growth for most people. But how has it actually changed incomes? Who has gained, who has lost, and by how much?

Figures published by the Resolution Foundation Commission on Living Standards found that in 1977, of every £100 of value generated by the economy, £16 went to the bottom half of workers in wages. By 2010 that figure had declined by 26 per cent, to just £12.

To find out what's going on in a bit more detail, we used figures from the Office of National Statistics to calculate what income levels would have been in 2010/11 if the distribution of income had remained as it was in 1977. We’ve then compared this to the actual income levels in 2010/11.

These figures are household income after taxes and benefits, adjusted for the number of people in each household.

The bottom fifth of households are getting almost £2,000 less than they would if total household income was still distributed as in 1977, while the top fifth are getting over £8,000 more. The pay ratio between the top fifth and the bottom fifth also climbed from 4 in 1977 to 5.5 in 2010/11.

If you are in your 30s and 40s and grew up in the UK then you spent your childhood in a society that was significantly more equal than the one we live in now. In the post-war years inequality decreased, reaching its lowest point in the 1970s. The 1980s, however, saw the steepest increase in inequality on record in the UK, with the gap between the top fifth and the bottom fifth increasing by 60% in just a decade, leaving Britain out on a limb (alongside the US) as one of the most unequal countries in the developed world. Since then, successive governments have used the rhetoric of decreasing inequality but failed to reverse this trend.

This rise in inequality is not just affecting the very poor and the very rich. Increasing inequality has meant less income for all households in the bottom four-fifths of the population. Although the pie got larger between 1977 and 2010/11, we can see that the bottom four fifths are all getting a much smaller portion of that pie.

In absolute terms, those losing out the most are not the poorest but those in the middle, who are getting £2,500 less than they would be without the rise in inequality since the 70s. However, it is the poorest that are losing out on the highest proportion of their income. Households in the bottom fifth are living on an average of £10,693 per year, and an extra £1,948 would be an 18% increase on their incomes. With wages lagging behind inflation, a food and fuel poverty crisis and cuts starting to bite, that extra income could be life changing for many of the UK’s poorest families.

Photograph: Getty Images

Annie Quick is a researcher at York University.

Photo: Getty
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The New Statesman 2016 local and devolved elections liveblog

Results and analysis from elections across the United Kingdom. 

Welcome to the New Statesman's elections liveblog. Results will be coming in from the devolved legislatures in Scotland and Wales, local elections in England, and the mayoral contests in London, Salford, Bristol and Liverpool. Hit refresh for updates!

23:48: How about that Liberal Democrat fightback, huh? The Liberal Democrats have won a seat in Sunderland from Labour. 

23:47: The knives are already out for Kezia Dugdale in Scotland, where Labour may come third. 

23:42: Bad news for Labour from Wales. Clywd South is in play and the Tories may well win it. Cardiff North, which is Conservative-held at Westminster, looks likely to go the same way in the Assembly having been Labour-held since 2011. Newport West and Llanelli are worth looking out for too. 

23:39: Good news for Labour - they've held the first seat to declare out of Newcastle, and the Liberal Democrats, their main opposition, have privately conceded that Labour will remain large and in charge in Newcastle. 

23:35: Speaking of the Liberal Democrats, they are feeling cautiously optimistic about winning a seat in Edinburgh Western from the SNP, while they expect to recover a bit from 2015. (Things could hardly get worse, I suppose.)

23:32: The first Labour gain of the night, as a Liberal Democrat councilor in Stockport defects. 

23:30: Labour sources are gloomy about their chances of holding onto Exeter Council, where Ben Bradshaw is the party's only remaining MP in the South West. Looks like it will slip into no overall control. Party is also nervous about holding Derby. 

23:25: Tory mole in Wales tells me that things look bad for them - potentially worse than the losses shown in YouGov's poll. The election has become "a referendum on steel", apparently. 

23:20: Early results from Sunderland show Labour doing fairly badly (you know, for Sunderland) and Ukip doing very well. But one swallow doesn't make a summer and we need more data before we know anything. 

23:15: We should get our first result from Scotland in 45 minutes or so. Rutherglen, Labour-held since the Scottish Parliament's creation in 1999, and highly likely to go to the SNP. 

23:13: And what the results mean so far, according to ace numbercruncher Matt Singh:

23:07: Those numbers from Sunderland, where Labour have held in St Anne's ward. Labour down 15 points on 2012, when these seats were last fought, Tories down 3. It's Ukip who are making the headway (they didn't stand last time and expect them do post performances like this throughout the United Kingdom tonight and as results roll in over the weekend). 

23:04: Back to Wales - YouGov's poll "looks about right" according to my Plaid Cymru source. What does that mean? Labour could go it alone and do deals on a vote-by-vote basis - they govern alone now with just 30 seats. If the poll is even a little out - let's say either Labour or the Liberal Democrats get one more seat - they might do a deal if they can get a majority with the Welsh Liberal Democrats. 

23:01: Pallion Ward in Sunderland is the first to declare, and it's a Labour hold! More on percentages as I get them. 

22:58: Why isn't it an exit poll, I hear you ask? Well, an exit poll measures swing - not vote share, but the change from one election to the next. People are asked how they've voted as they leave polling stations. This is then projected to form a national picture. Tonight's two polls are just regular polls taken on the day of the election. 

22:57: The Sun's poll - again, not an exit poll, I'm not kidding around here - of Scotland has the SNP winning by a landslide. (I know, I'm as shocked as all of you) But more importantly, it shows the Conservatives beating Labour into second place. The Tories believe they may hold onto Ettrick as well. 

22:55: What news from Scotland? Labour looks to have been wiped out in Glasgow. Liberal Democrats think they might hold at least one of Orkney or Shetland, while the seats in Edinburgh are anyone's game. 

22:52: Hearing that turnout is low in Waltham Forest, Lewisham, Hackney and my birthplace of Tower Hamlets (the borough's best export unless you count Dizzie Rascal, Tinchy Stryder or Harry Redknapp, that's me). Bad news for Labour unless turnout is similarly low in the Tory-friendly outer boroughs. 

22:47: YouGov have done a poll (note: not an exit poll, it should not be taken as seriously as an exit poll and if you call it an exit poll I swear to god I will find you and kill you) of the Welsh Assembly. Scores on the door:

Labour 27

Plaid Cymru 12 

Conservatives 11

Ukip 8

Liberal Democrat 2

There are 60 seats in the Assembly, so you need 30 seats for a majority of one. 

22:40: In case you're wondering, how would closing a seven point deficit to say, six, compare to previous Labour oppositions, I've done some number-crunching. In 1984, Neil Kinnock's Labour turned a Tory lead of 15 per cent at the general election to a Conservative lead of just one per cent. In 1988, one of 12 per cent went down to one per cent. (He did, of course, go on to lose in both the 1987 and 1992 elections). In 1993, John Smith's Labour party turned a deficit of eight points at the general to a Labour lead of eight points in the local elections. William Hague turned a Labour lead of 13 points to one of just six in 1998, while Iain Duncan Smith got a Tory lead of just one point - from a Labour lead of nine. In 2006, new Tory leader David Cameron turned a 3 point Labour lead to a 13 point Tory one. Ed Miliband - remember him? - got from a Tory lead of seven points to a two point Labour one. 

22:35: John McDonnell is setting out what would be a good night as far as the party leadership is concerned - any improvement on the 2015 defeat, when the party trailed by close to seven points. Corbyn's critics say he needs to make around 400 gains.

I've written about what would be good at length before, but here's an extract:

"Instead of worrying overmuch about numbers, worry about places. Although winning seats and taking control of councils is not a guarantee of winning control of the parliamentary seat – look at Harlow, Nuneaton, and Ipswich, all of which have Labour representation at a local level but send a Conservative MP to Westminster – good performances, both in terms of increasing votes and seats, are a positive sign. So look at how Labour does in its own marginals and in places that are Conservative at a Westminster level, rather than worrying about an exact figure either way."

22:31: Oh god, the BBC's election night music is starting. Getting trauma flashbacks to the general election. 

22:22: A few of you have been in touch about our exit poll. Most of you have been wondering about that one vote for George Galloway but the rest are wondering what happens - under the rules of the London mayoral race (and indeed the contests in Salford, Bristol and Liverpool), 2 votes would not be enough for Sadiq. (He needs 2.5). However, all the other candidates are tied - which makes it through to the second round. What happens then is the second preferences are used as a tie-break. Of the tied candidates, Sian Berry has the most second preferences so she goes through to face Sadiq Khan in the final round. Final round is as follows:

Sadiq Khan: 3

Sian Berry: 2

3 votes is above the quota so he is duly elected. An early omen? 

22:19: Burnham latest. A spokesperson for Andy Burnham says:

"Approaches have been made to Andy Burnham to give consideration to this role. It is early days and no decision as been taken. Whatever the decision, he will continue to serve the leader of the party and stay in the shadow cabinet."

22:17: Anyway, exit poll of the office. We've got:

Sadiq Khan: 2

George Galloway: 1

Caroline Pidgeon: 1

Sian Berry: 1

22:15: Update on Andy Burnham. He has been asked to consider running. More as we get it. 

22:13: People are asking if there's an exit poll tonight. Afraid not (you can't really do an exit poll in elections without national swing). But there is a YouGov poll from Wales and I am conducting an exit poll of the four remaining members of staff in the NS building. 

22:11: It's true! Andy Burnham is considering running for Greater Manchester mayor. Right, that's it, I'm quitting the liveblog. Nothing I say tonight can top that. 

22:09: Rumours that professional Scouser Andy Burnham is considering a bid for Greater Manchester mayor according to Sky News. Not sure if this is a) a typo for Merseyside or b) a rumour or c) honestly I don't know. More as I find out. 

22:06: Conservatives are feeling good about Trafford, one of the few councils they run in the North West.

22:03: Polls have closed. Turnout looks to be low in London. What that means is anyone's guess to be honest. There isn't really a particular benefit to Labour if turnout is high although that is a well-worn myth. In the capital in particular, turnout isn't quite as simple a zero-sum game as all that. Labour are buoyant, but so are the Tories. In Scotland, well, the only questions are whether or not the SNP will win every single first past the post seat or just the overwhelming majority. Both Labour and Tory sources are downplaying their chances of prevailing in the battle for second place at Holyrood, so make of that what you will. And in Wales, Labour look certain to lose seats but remain in power in some kind of coalition deal. 

22:00: Good evening. I'm your host, Stephen Bush, and I'll be with you throughout the night as results come in from throughout the country. The TV screens are on, I've just eaten, and now it's time to get cracking. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.