Today’s statistics from the Department
for Work and Pensions finally provide us with a picture
of what happened to household incomes and inequality over the two
years of the pandemic. They cover the period up to March 2022,
after restrictions had eased and just as inflation was beginning
to take off. These numbers offer both good and bad news for
households and policymakers.
Despite the economic disruption of the pandemic, poverty rates
were below their 2019–20 level in 2020-21, and roughly similar to
their 2019–20 level in 2021–22. Inequality was also lower in
2021–22 compared to 2019–20, as in general poorer households’
incomes were protected during the pandemic, so they fared better
than richer households.
On the other hand, median household income fell 1.2% between
2019–20 and 2021–22. This means that even before the cost of
living crisis began, the average household had seen their income
fall over the two previous years. For low-income households, the
growth in income they experienced over the pandemic is unlikely
to continue. The expiry of the £20 per week universal credit
uplift, the falling real value of benefits, and rise in energy
prices will hit these households particularly hard.
Sam Ray-Chaudhuri, a Research Economist at IFS
said, “The first two years of the pandemic saw
average incomes fall, and a decline in income inequality, with
falls in incomes for middle- and higher-income households and
growth for poorer households. Since then, households have had to
grapple with double-digit inflation, meaning 2022–23 will likely
represent a third straight year without significant income growth
for many.”
Read the briefing in
full here.
ENDS
Notes to editor
'Inequality fell in the first two years of the pandemic as
middle- and high-income households became worse off' is an
IFS comment by Sam Ray-Chaudhuri, Tom Waters and Thomas Wernham.
The comment can be read on the IFS website: https://ifs.org.uk/articles/inequality-fell-first-two-years-pandemic-middle-and-high-income-households-became-worse
