Income of the poorest fell 6% in Eighties

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Andrew Feinberg

White House Correspondent

THE LEAST well-off saw their living standards fall in the decade to 1989, Government figures published yesterday show - and that before the recession took effect.

While the average household, after housing costs, saw real disposable income rise by 30 per cent from 1979, the poorest 10 per cent saw theirs fall by 6 per cent.

The figures do not even cover those living rough, or the homeless in bed-and-breakfast accommodation. Their numbers have both risen. Michael Meacher, Labour's social security spokesman, said last night that the figures 'explode the Tories' trickle- down myth' - the theory that the least well-off gain automatically as the better-off do better.

The Households Below Average Income statistics show that the share of total income enjoyed by the poorest 10 per cent of households dropped by well over a third - from 4 per cent in 1979 to 2.5 per cent in 1988/89.

The statistics do not compare how the top 10 per cent fared; but as the bottom half saw their income share fall from 32 to 27 per cent, those at the top plainly did far better.

The statistics also reveal the changing nature of the bottom 10 per cent. They now contain fewer pensioners but many more unemployed families.

Peter Lilley, the Secretary of State for Social Security, said the figures showed 'the success of Government economic policies in increasing prosperity for the population as a whole'. Overall, income rose 30 per cent on average, while unemployment increased by 15 per cent.

Mr Lilley attributed part of the fall for the bottom 10 per cent to the growth in the self-employed, many of whom declare nil or negative incomes in the early stages. They 'dragged down' the figures. DSS figures show, however, that the proportion of the self-employed in that group rose only from 12 to 17 per cent.

Mr Meacher said the figures 'refute the Conservative claim that everyone gained in the 1980s', showing instead that inequality had widened. The proportion of households on below half the average income jumped from 9 to 22 per cent, up from five million to 12 million people.

'The Conservative strategy of helping the poor by letting the rich help themselves has utterly failed,' Mr Meacher said, adding that the recession would make the picture even bleaker.

Mr Lilley pointed to significantly higher ownership of videos, fridge-freezers and central heating among the bottom 10 per cent.

Audit HBAI; HMSO; pounds 9.95