Public spending on health, education, social services and housing in the past 20 years has been of most benefit to the poorest families and individuals. But it has achieved only a modest reduction in the deepening divide between rich and poor, according to a study supported by the Joseph Rowntree Foundation.
The research into changes in the income 'in kind' that families and individuals receive from welfare services - known as the social wage - finds that its value increased by 30 per cent between 1979 and 1993. This was slightly less than growth in the economy as a whole.
Spending on social housing and personal social services especially favoured the least well-off households, but the distribution of spending on schools, further education and health care also revealed a modest 'pro-poor' bias . By contrast, public spending on higher education mostly benefited those who were relatively prosperous.
The report shows that the benefit to poorer people from welfare spending is largely explained by the fact that school children and older people needing health and social services are disproportionately found in low income households. When age and gender differences were taken into account, the value of the social wage to the poorest fifth of the population was only 20 per cent greater than for the richest fifth.
Viewed another way, the proportion of the social wage benefiting the poorer half of the population grew by 4 percentage points between 1979 and 1993 to reach 60 per cent. But after controlling for age and gender changes, the shift in favour of the poorer half was less than one percentage point to 54 per cent.
The study concludes that even allowing for the value of welfare services, the gap between the richest and poorest households in Britain grew significantly wider between 1979 and 1993. The cash incomes of the poorest fifth of the population grew by just 6 per cent between 1979 and 1993. Including the social wage in the calculation, incomes grew by between 6 and 13 per cent - compared with over 60 per cent for the richest fifth of the population. According to one commonly used measure, the social wage served to reduce the increase in inequality by around one fifth.
John Hills, of the London School of Economics who supervised the study said: "This research shows that the welfare state delivers benefits to the general population, but that its relative importance is greatest to the poor. Those who fear that public services have been hijacked by the middle classes may be reassured that this is not the case.
"On the other hand, it is clear that the widening gap in cash incomes over the past 20 years has not been substantially offset by growth in the social wage - trickle down through this route has been limited. Welfare spending has risen in line with the economy as a whole, but only in the case of social housing has there been a clear shift in the distribution in favour of the poorest individuals and families."
