Our work from this project has given us the clear sense that inequality is no longer rising, at least by nowhere near the same degree as that in the 1980s, and indeed on some indicators it appears to be falling. However inequality in the UK is high by historical standards and is unlikely to fall substantially in the near future.

To an extent the government is having to run merely to stand still reforms by Labour since 1997 may have halted the rise in inequality which would have occurred in their absence, but they have not been sufficient to significantly reduce it. The gains from recent economic growth are still being felt more strongly by the very richest and less strongly by the very poorest, although a narrowing of the gap in post-tax incomes over the bulk of the income distribution does reflect policy decisions by the government to target poverty and focus benefit expenditure on key demographic groups.

Expenditure inequality has grown less rapidly than income inequality, reflecting the fact that consumers can smooth expenditure more successfully than income, but even so recent levels of spending inequality are much higher than those observed in the early 1970s.

Government tax and benefit policy does have a significant impact on inequality though the total effect varies over time. Relative to a world in which the Government had merely uprated all tax thresholds and benefits by prices since 1979, reforms up to 2001 appear to have had no cumulative impact on inequality, though this masks some considerable variation over the whole period. However, relative to a world in which the Government had instead continued to uprate benefits by incomes, as was the historical trend before 1979, tax and benefit reforms can explain almost half the rise in inequality up to 2001.