Thread by @MattWhittakerRF

Lots of debate this week, following the IFS Deaton Review launch, about whether UK income inequality is on the rise or not. Here's a quick thread based on a selection of slides I've presented in the last year.

1/ It's certainly true that public concern has never been higher

2/ At first glance, that increase in concern looks a bit surprising given the headline (gini) measure of income inequality hasn't changed very much since the end of the 1980s.

I've got four thoughts on why it's become such a hot topic...

3/ First, UK inequality is high. It might not have shifted very much over the last 25 years, but there's no escaping the fact it's high by international standards and we shouldn't be surprised that people want to talk about it

4/ Second, inequality *has* been rising if we measure incomes after accounting for housing costs. Given this is much closer to the lived experience of people (what's left after I've put a roof over my head?), this measure is much more relevant to how people feel about inequality

5/ Third, some important differences don't get picked up by the headline gini. Consider the differing experiences of pensioner and working-age households this century. It's great news that pensioners have been getting richer (on average), but working-age progress has stalled

6/ And finally, the biggest factor I think, already-high inequality matters more when the pie stops growing. That's why we need to focus not just on more equally sharing the economic gains of the country, but also restarting growth itself

7/ Bringing all that together (focusing on the working-age, income after housing costs, and the combo of inequality and absolute growth) it's interesting to compare four recent 'episodes' of income change.

First the classic inequality explosion of the 1980s

8/ Then a period of strong income growth shared across the distribution - the product of economic (and employment) growth allied with a deliberate public policy focus on raising wages at the bottom (min wage) and supporting lower income households (tax credits)

9/ The pre-crisis period was marked by a generalised slowdown in income growth and actual declines across a significant part of the distribution - driven by rapidly rising housing costs and largely unnoticed at the time

10/ And then the post-crisis period when, in this regard at least, we really have all been in it together. Income growth has basically disappeared across the distribution. It means growth at the bottom has been lower in both of the last two periods than it was in the *awful* '80s

11/ Add in austerity fatigue, the rise of other issues (like social inequality and the link between wealth and opportunity), tragic events like Grenfell, and the wider political divide opened up by the Brexit debate and today's inequality focus becomes much easier to explain

12/ Given we appear to be in a period in of low growth for most and actual income falls at the bottom, it's also a focus that remains hugely important. The truth might be more nuanced than some headlines suggest (hence a 12-tweet thread!). but inequality *is* a massive deal