Squeezed middle most affected by falling incomes, figures show

 
Julian Harris
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THE MIDDLE fifth of households experienced the sharpest drop in average incomes according to a recent year’s data published yesterday by the Office for National Statistics (ONS).

Disposable incomes flopped by an average of 4.3 per cent for the so called squeezed middle between 2009-10 and 2010-11 – a fall of £1,100 per household.

Across all the measured demographics, annual incomes were down by £200 in real terms, the ONS said.

The figures, which also measure the effect of taxes and benefits on household incomes, showed that the wealthiest quintile paid 24 per cent of their gross income (£19,700) in direct taxes such as income tax and National Insurance.

The poorest fifth paid just 10 per cent of gross household income (£1,300) in direct taxes, yet proportionally were hit harder by indirect taxes, largely due to the hike in VAT.

Higher levels of state benefits are claimed by the second poorest quintile, not the poorest ­– largely because the second poorest group includes more pensioners.

The stats also demonstrate the degree to which taxes and benefits slash income inequality (see right).