Wealth inequality 'at 40-year high'

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During the past 15 years there has been an increase in the number of households living below the poverty line, with these households accounting for more than half of all families in areas of some cities, according to the Joseph Rowntree Foundation.

At the same time, households in already wealthy areas have tended to become disproportionately wealthier, with many rich people now living in areas segregated from the rest of society.

The group said the widening gap between rich and poor had led to a fall in the number of average households, which were classed as being neither rich nor poor, with these families gradually disappearing from London and the South East.

Since 1970 levels of poverty and wealth in different areas of Britain have changed significantly, with the country now moving back towards levels of inequality last seen more than 40 years ago.

While the number of people who are living in extreme poverty has fallen, the number of people living below the poverty line has increased, with more than one in four households classed as being so-called breadline poor in 2001.

At the same time the number of asset wealthy households rose dramatically between 1999 and 2003 with more than a fifth of families now falling into this category. But the proportion of average households fell from around two-thirds of families in 1980 to just over half by 2000.

The group, which drew up a poverty and wealth map for Britain, said there was evidence of increasing polarisation, with rich and poor now living further apart.

It said urban clustering of poverty had increased, while wealthy households were becoming concentrated in the outskirts and surrounds of major cities.

Minister for Employment and Welfare Reform Caroline Flint said: "Our commitment to ensuring everyone shares the nation's increasing wealth has resulted in the rising trend of inequality recently stabilising. Thanks to reforms of the tax and benefits system, the average household is £1,000 better off than 10 years ago."