# When small men begin to cast big shadows _Rising inequality is the story being used to justify the next round of tax rises. The data tells a different one – and here it is, charted._ Neil Woodford · 5 August 2026 · 17 min read ![Man looking down a flight of stairs showing an elongated shadow](https://cdn.sanity.io/images/v3acfbvo/production/c5ddf9ab222246f9c143794b3380f6776a5b600b-2954x1970.jpg?w=1600&fit=max&auto=format) --- > “When small men cast big shadows, it means that the sun is about to set.” > > — Lin Yutang, Chinese writer, linguist, and inventor. ## Introduction I was reminded of this quote recently when I read a couple of articles and social media pieces on income and wealth inequality in the UK. Without naming names, a familiar cast of apparently popular fact-free bloggers and ex-football pundits have been busy banging on about what taxes Mr Burnham should increase or introduce to generate the resources he needs to fund the long, and I suspect growing, list of policy commitments and promises he has made. _[Watch: Watch the video version of this story — Britain Doesn't Have an Inequality Problem](https://www.noisecancelling.co/the-show)_ These recommendations for even higher taxes on “those with the broadest shoulders” are in part justified by invoking a series of familiar arguments about wealth and income inequality which many on the left claim has increased in the UK and which some have also said has caused growth to slow. Unsurprisingly, the aforementioned gaggle of Burnham acolytes have been mimicking some of the commentary from the new PM and his proto-rival Wes Streeting, who recently said increasing inequality was “the economic, social and democratic fracture running through modern Britain”. > “The economic, social and democratic fracture running through modern Britain.” > > — [Wes Streeting, The Guardian](https://www.theguardian.com/commentisfree/2026/may/27/tony-blair-labour-wes-streeting-markets-democracy) I am not sure if either of these two politicians or indeed any of their acolytes actually believe in this narrative, or whether they were using it to capture more support in the Labour leadership contest or to drive more subscribers to their podcasts. Either way, it is an increasingly popular storyline on the left, but is it true? Is the UK a fundamentally unequal society in absolute terms and compared with its peers, and has inequality been increasing in recent decades? Is inequality correlated with worse economic outcomes as many have also claimed? Sadly, the inequality debate, like so many others, is all too often devoid of data and facts, which is especially troubling when it’s used to justify the imposition of incentive-crushing redistributive fiscal policies. In this note, as briefly as I can, I aim to set out the data that completely dismantles the idea that inequality in the UK is increasing and that Britain is a fundamentally unequal society. I [wrote about this subject just over a year ago](https://www.noisecancelling.co/read/inequality-isnt-the-problem), but this week bumped into a couple of really interesting charts which prompted me to have another go at dismantling this popular myth so loved by those who appear to believe that there is no acceptable inequality outcome and no law of diminishing returns in respect to punitive taxation. _The piece I wrote a year ago:_ [Inequality Isn’t the Problem](https://www.noisecancelling.co/read/inequality-isnt-the-problem) — The UK tax system is already highly progressive, and the country isn’t getting more unequal, despite what many suggest. Despite the many troubling lessons of history, they appear to cling to the Marxist philosophy that all income and wealth inequality is derived from some kind of unscrupulous exploitation. My own view is that this core belief is fundamentally driven by envy, the denial of basic human instincts that have delivered growing prosperity over centuries and, perhaps most troubling, as Bertrand Russell said, not by “love for the proletariat but by hatred of the bourgeoisie”. In setting out to dismantle these myths, I will start by looking at income inequality and its correlation with growth outcomes globally. That will lead naturally on to an analysis of income and wealth inequality in the UK, how it’s changed over the last twenty-five years and finally how it compares with close economic peers and with more distant ones. ## Growth and Inequality So, first to the relationship between economic growth and inequality. Predictably the evidence here is mixed to say the least. When I last wrote about this subject just over a year ago I could find very little convincing evidence of a causal relationship between income and wealth inequality and growth despite the many high-profile claims of people like Thomas Piketty. Piketty’s widely read work was the [subject of an IMF paper written in 2016](https://www.imf.org/en/publications/wp/issues/2016/12/31/testing-pikettys-hypothesis-on-the-drivers-of-income-inequality-evidence-from-panel-vars-44165), which looked for evidence to support his claims. It looked at 19 advanced economies over 30 years. It found no empirical evidence to support his conclusions that more unequal capital distribution in an economy would inevitably lead to even greater future inequality and the eventual breakdown of democracy. _[Embedded media](https://www.imf.org/en/publications/wp/issues/2016/12/31/testing-pikettys-hypothesis-on-the-drivers-of-income-inequality-evidence-from-panel-vars-44165)_ Indeed, the IMF paper shows that in 75% of the countries it looked at, the long-run evidence directly contradicted the foundational relationship between the return on capital and the output growth rate that Piketty based his theory on. _[Embedded media](https://ourworldindata.org/economic-inequality)_ More recent observations also do not support the widely held contention that high income and wealth inequality leads to lower growth outcomes. For example, the US is the most unequal economy in the G7 and, according to the OECD, one of the most unequal amongst its 38 members along with South Africa and Mexico. Despite this, since 2000, it has been consistently the fastest-growing G7 economy and is right at the top of the OECD growth league table. India has held the title of the fastest-growing major developing economy (it isn’t in the OECD) for the last ten years, and yet, according to Oxfam and the World Inequality Database, it is considered to have amongst the world’s highest wealth and income inequality. Other evidence I uncovered whilst researching for this note was also far from supportive of the popular contention that high levels of inequality are bad for growth. Indeed, one quote I uncovered seems to sum up the body of evidence in this field, albeit that this relates specifically to the UK: Other research goes on to name a number of studies that appear to conclude diametrically different things. For example, an LSE study found evidence that economic inequality is good for growth and evidence that inequality can be detrimental to growth. A [Centre for the Understanding of Sustainable Prosperity study](https://cusp.ac.uk/themes/appg/blog-tj-aetwno2/) also observed that lower growth rates are as likely to be associated with declining inequality in recent UK history. In seeking balance in this argument, I did come across [a very recent paper](https://www.sciencedirect.com/science/article/pii/S0305750X25003365) that asserts a negative and statistically significant relationship between wealth inequality and economic growth. I have my suspicions about this paper however, in part because it repeatedly cites the widely discredited research undertaken by Thomas Piketty. That said, I think it does make some good points about how concentrated wealth in developing economies can stifle economic liberalism and constrain investment in education and entrepreneurship. > There is some evidence of a relationship between economic growth and wealth inequality, though the nature of that relationship is complex and not always straightforward. While some studies suggest a positive correlation – higher growth leading to greater inequality, – note the way the correlation is presented – others find that lower growth rates can be associated with declining inequality. In summary, I could find very little evidence that supports this hypothesis from my observations of the most comprehensive global database on inequality – the [World Inequality Database (WID)](https://wid.world/). I thought that this chart borrowed from that database was particularly interesting in this context. ![Europe's top 10% take the least](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c03-world-income-share-1afedf6a1761-light.png) _Europe's bottom 50% take 18.9% of pre-tax income, against 10.8% in the Middle East and North Africa, 10.1% in sub-Saharan Africa and 8.0% in Latin America. The world figure is 8.4%._ What it shows is the share of national income (not wealth) by world region and income group in 2023. Not surprisingly, given that it has for decades been pursuing redistribution mechanisms in the tax system, Europe is by some margin the “least unequal”, as the report puts it, in the world. What the report doesn’t say is that Europe, for at least the last ten years, has also been the slowest-growing region. ## International Wealth Inequality Comparisons Before moving on to look at the UK in a bit more detail from an inequality perspective, I wanted to show a bit more data on some international comparisons and this time in relation to the Gini coefficient which is a statistical measure of inequality. It focuses on income distribution within a population where zero represents perfect equality where every person or household receives the exact same amount of income and one, or 100%, which represents perfect inequality where a single person earns all the income and everyone else earns nothing. Once again, this chart is sourced from the WID, but it also adds in data from the World Bank. ![Gini coefficient: World Inequality Database vs World Bank 2024](https://cdn.sanity.io/images/v3acfbvo/production/c2a2a615d47c4ccf4d7981c2122b1dc22297722f-3400x3003.png?w=1600&fit=max&auto=format) Whilst the chart broadly reinforces the data shown above, it also highlights how different institutions can present radically different views of inequality. For example, the WID data on India shows a Gini coefficient of 0.62 in 2022; the World Bank measures it at 0.26. I found another interesting anomaly in the World Bank data. It measures the Gini coefficient of the UAE at 0.26, or slightly less unequal than one of Europe’s most equal societies, Norway, at 0.27. Interestingly, other estimates put the UAE’s Gini at over 0.63 or, in other words, at completely the other end of the scale, suggesting that there are some big reliability issues with this comparative data. Before leaving this section on international comparisons, I wanted to include a couple of other charts which show very clearly that the assertions of Burnham and Streeting et al, are just wrong. The first chart, once again sourced from WID shows the distribution of wealth owned by the wealthiest 10% in the UK since 1900. The chart also includes data for the US, France, Germany, China, South Africa, and the World. Interestingly, in 1900, the UK was the most unequal of the group and by 2024 it was the least, having shown a consistent decline over the period and stability in this measure over the last 25 years. ![From the most concentrated to the least](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c05-top10-wealth-share-776374b6da3b-light.png) _In 1900 the UK was the most unequal of this group at 96%. By 2024 it is the least, at 57% – and the last 25 years have barely moved it (56% in 2000)._ Looking at income distribution, the WID data again contradicts the rising income inequality political narrative. The top 10% share of national income in the UK has been stable over the last 25 years at 36% but the share of the bottom 50% has actually grown from 18.8% to 20.4% in 2024, once again putting the UK as the least unequal in this same group by this measure. ![The bottom half's slice of income](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c06-bottom50-income-share-5cf6b92fc9de-light.png) _The UK's bottom 50% took 18.8% of pre-tax income in 2000 and 20.4% in 2024, while the top 10% held steady around 36%. France ends within a rounding error of the UK, at 20.3%._ The WID also conducted a comparison of 169 countries in 2022 based on the sum of all incomes received by individuals. The sum of all incomes includes income from employment and wealth, so the measure is a proxy for a blend of income and wealth inequality. By this measure the most unequal countries in the world are all in Africa, the Middle East and South America. The first G7 country on the list is the US at 71, sandwiched between Iran and Senegal. Interestingly, China is 82, Canada is 99, Korea is 105, Australia is 107, Japan is 119, Germany is 137, New Zealand is 142, and the UK is 146 (out of 169), between Azerbaijan and Belgium. The three most equal countries are Norway, Iceland and the Czech Republic in that order. Before focusing on wealth and income inequality in the UK, I thought it would be helpful to outline what I believe the data shows so far. My conclusions are as follows: - I can find no evidence that points towards a positive correlation between income and wealth inequality and economic growth outcomes. Indeed, if there is any relationship between these two it appears to be inverse. My sense is that the causality runs in the opposite direction – high economic growth leads to higher inequality, and lower growth tends to reduce it. When I reflected on this point it becomes pretty obvious why in most capitalist societies this would be true. Ultimately it’s a product of maths, or more specifically how growth rates affect large and small numbers and the difference between them over time. - The UK is a lot less unequal than it has been historically and certainly less unequal than most of its economic peers. By some measures in the last twenty-five years income inequality has diminished in the UK whilst wealth inequality has been broadly stable. (see more detail below) ## UK Inequality – Wealth and Income When I last wrote about this subject last year, I included some interesting UK data sourced from the ONS and my favourite economist. It was comprehensive but hard to read given that it was contained in a large table with lots of numbers. Recently, I have found a number of new charts which show the same trends as the data did last June but they are a lot easier to consume. Before delving into the detail, it’s worth making a few overall points about inequality data in the UK and the commentary I have been reading associated with it. Understandably, the institutions that are preoccupied with inequality like the Equality Trust, the Joseph Rowntree Foundation and Frame Works UK clearly have a political axe to grind on this issue. As with most things, the selective presentation of data can reinforce a predetermined message and from what I can see that is exactly what these organisations are all doing in the most recent papers they have published on this subject. I suppose it would be odd for organisations that campaign on social justice issues not to do so but I thought it was worth pointing out. _[Embedded media](https://commonslibrary.parliament.uk/research-briefings/cbp-10210/)_ The data I am going to present on wealth and income inequality in the UK is sourced primarily from the ONS and I have focused on aggregate data on both wealth and income distribution including in the final section covering inequality after taxes and benefit payments. First to wealth distribution in the UK. According to a House of Commons [“Wealth in Great Britain” report](https://commonslibrary.parliament.uk/research-briefings/cbp-10210/) published in November last year, median household wealth in Great Britain was £293,700 in the period April 2020 to March 2022, slightly higher in real terms than in the period two years earlier. As the report points out there are four measured components of wealth, namely, net financial wealth, private pension wealth, net property wealth and physical wealth. The report highlights not surprisingly that total household wealth is distributed more unequally than income with the former having a Gini coefficient of 0.59 and the latter a Gini coefficient of 0.35. The Gini coefficients of the four components of wealth are shown in the graphic below. Financial wealth is the most unequally distributed and physical wealth the least, with private pension and property wealth close together and roughly at the mid-point between the other two. ![Wealth inequality is not one thing](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c08-wealth-gini-components-300a23027e83-light.png) One other useful graphic in the paper is the one shown below which shows the percentage breakdown of total wealth by each component. ![What British wealth is made of](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c09-wealth-components-share-c42bd87f0a06-light.png) _Three-quarters of British household wealth is a house and a pension. Financial wealth, the part held most unequally, is 14%. The pension share fell from 42% to 35% between the last two rounds almost entirely because the ONS changed how it values defined-benefit pensions – a measurement change, not a collapse in pension wealth._ The paper goes on to report that UK household wealth has grown rapidly since the 1980s. For example, in 1980, UK household wealth was around 3x total national income and by 2019 it was 7x. Crucially, over this period the share of wealth held by the top 10% was almost exactly the same (56% in 1980 and 57% in 2019) despite this transformation in total wealth, a fact that directly contradicts the popular narrative espoused by Wes Streeting, Andy Burnham and their acolytes. But not only has this measure of wealth inequality not changed over this forty-year period but when compared with the rest of the OECD, Great Britain’s wealth inequality is low and especially so when compared with its direct G7 peers. In fact, in the latest WID data shown below, the UK has moved below France in the wealth inequality league table. ![Where Britain sits on wealth inequality](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c10-oecd-wealth-gini-763214003e7e-light.png) _The UK sits at 0.73 – level with Norway, Iceland and New Zealand, and below France only on the latest WID vintage (UK 0.728, France 0.734); the published briefing figures shown here put France a notch lower._ The WID defines wealth in a different way to that used in the House of Commons Wealth and Assets Survey and hence the significantly higher Gini coefficient. Perhaps it is not surprising that an organisation campaigning on inequality presents the inequality data in the least flattering way. Either way, the comparison with the rest of the OECD is the point of this table. Summarising this section on wealth inequality in Great Britain it is possible to make a number of important points: - Wealth is distributed more unevenly than income in Great Britain as it is in every other country I have looked at. - Whether the wealth Gini coefficient of 0.59 is good bad or indifferent from an inequality perspective I believe depends entirely on predetermined political and economic views. Objectively though, it is clear that Britain is a more fair society than most of its peers from a wealth perspective. - Claims that rising wealth inequality is the “root cause of the economic, social and democratic fracture running through modern Britain” as Wes Streeting has made in recent weeks are just factually not true. Wealth inequality has been stable in the UK over the last forty years despite significant growth in wealth, and it is low in comparison with the rest of the OECD and is now the lowest in the G7. I have touched on income inequality in the UK already in an earlier section of this note when referencing WID data which showed clearly that claims that the UK is seeing rising income inequality are not true by their standardised measure. However, there is a lot more interesting data on this subject available from the ONS which I also wanted to present which sheds even more light on the extent of income inequality in the UK. I want to start this section by looking at headline data on incomes and how they have changed over the last thirty-five years and especially since the pandemic. But first, to get a sense of how fiscal policy in the UK has had a profound influence on how incomes are taxed over the last 35 years, I thought that this chart was especially interesting. ![How national insurance and income tax deductions have changed over time for those on different income levels.](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c11-tax-rates-by-income-929e256c8c84-light.png) _The half-median line falls hardest, from about 18.5% in 1990 to about 10% now. The median line falls from 26% to 19%. Twice the median is flat across thirty-five years. Three times the median is the only line clearly rising, accelerating after 2022 once it crossed £100,000 and the personal-allowance taper began to bite. HMRC publishes no top-1% percentile points before 1999–00, so that line's flat opening is a hold, not a measurement._ There are some really telling conclusions to draw from this data: - The highest earners in the country have seen a consistent and significant increase in the proportion of NI and tax deductions applied to their incomes over this period. So much so that the top 3% of taxpayers now pay 40% of all income tax receipts. That’s 47% more in cash terms than the 30.4mn basic rate taxpayers. - Those earning half the national average salary have seen the NI and tax take on their earnings nearly halve over this period. - Those on average earnings have seen the NI and tax take on their earnings decrease by about a third over the same period. This net income data is telling enough but it doesn’t present the complete inequality picture in the UK. To do that it is necessary to include benefits payments as shown in the graphic below which is also sourced directly from the [ONS](https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/2024) and which presents data from 2024. (This data was compiled before the current Labour government came to power which has since increased benefits payments significantly.) _[Embedded media](https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/2024)_ In the chart below, the data shows that the richest fifth had original before taxes and benefits of £116,600, 12.2 times larger than the poorest fifth (£9,600). After all taxes and benefits, the average equivalised final incomes for the richest fifth and poorest fifth were £85,100 and £25,700 respectively. This reduced the ratio between the richest and poorest fifth to 3.3x. What this data shows very clearly is how tax and benefits payments crush the differential between the highest income quintile and the lowest from 12.2x to 3.3x. ![The gap the tax system closes: taxes and benefits crush differentials.](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c13-income-stages-ratio-b39d79b51c68-light.png) I wonder if Mr Burnham or Mr Streeting is at all aware of the fact that those with the “broadest shoulders”, who the new PM has already hinted darkly will be “asked” to pay a little bit more in tax, are already carrying an enormous share of total income taxation and whose incomes after taxes and benefit payments are only just over 3x those of the poorest quintile. Just to complete the picture, here are three charts that show in a little bit more detail first, how gross and net incomes across all income percentiles in the UK have grown since 2019 and finally how progressive the tax system already is with respect to income tax payments. (The lowest paid are in the 1st percentile and the highest in the 100th) What this chart shows is that since 2019, gross pay has grown fastest amongst the lower paid percentiles of the working population, and fastest of all at around the 30th percentile both before and after tax. ![Pay growth is much higher for lower-paid workers, before and after tax.](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c14-gross-pay-change-2e48651752b2-light.png) _Growth peaks at the 30th percentile at +51.0%, where successive National Living Wage rises bite, then falls away to +33.1% at the 95th. The 5th percentile grew faster than the 80th, 90th, 95th and 99th. PAYE employees only – the self-employed are not in this data._ What is clear is that lower paid workers have seen much faster growth in incomes than those on above average wages, both before and after tax. Once again, the data clean bowls the noisy rhetoric of the politicians, campaigners, ex-footballers and fact-free bloggers who have been droning on about rising income inequality in Britain. It is a myth. In fact, more than that it is a lie. Having said that, the data is even more revealing when looked at after tax and all benefits payments. The chart below shows the income Gini coefficient in the UK at an original income, gross income, post-tax income and post-tax and benefit income levels. What is clear is that after the impact of taxes and benefit payments, the income Gini coefficient falls to a remarkably low 26.8 (0.268). ![Where the redistribution happens](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c16-gini-redistribution-7b098b7e165c-light.png) _Cash benefits −10.3pp; direct taxes −4.4pp; indirect taxes +3.6pp; benefits in kind −9.7pp. Cash benefits and benefits in kind do almost all the work; indirect taxes are the only stage that widens the distribution. On the same table, original-income inequality was 36.8 in 1977 and final income 22.0._ ## Conclusions Clearly when income inequality is assessed by looking at what different households in the UK actually receive in disposable income after taxes have been paid and benefits received, the picture is radically different from that presented by the popular political narrative. I will end on what I think sums this whole debate up. The data below is from a European Commission report on inequality within EU member states. According to the Commission, and I will use their terminology, the “Top Egalitarian Countries” in the EU after taking account of taxes and government benefit payments are as follows with their corresponding Gini coefficients: ![Britain is among Europe's most equal countries.](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.smallmen.c17b-eu-egalitarian-eurostat-10b9daa2f7ec-light.png) When the UK is compared on the same basis with the top “egalitarian” countries in the EU, the picture is very revealing. Far from the picture characterised by politicians like Wes Streeting, the UK is right up there with the most equal countries in the EU, but of course given that Europe is the most equal region globally, this also means that the UK is one of the most equal societies in the world. **You are being lied to.** Great Britain has not seen rising wealth or income inequality. Quite the opposite in fact. Wealth inequality is low in the UK when compared with peer economies and has not increased over the last forty years. Income inequality before and after tax has been falling consistently in the UK for the last 35 years. When looked at after tax and benefits payments, the UK is one of the most egalitarian countries in the world and the most egalitarian large economy. Claims that rising wealth and income inequality in the UK are the root cause of a fractured society are completely false. Ignore them, they are the deceitful rantings of the wilfully ill-informed and ignorant. Albeit that one might think, based on this data, that the UK had moved decisively towards an egalitarian socialist nirvana over the last twenty or thirty years, there will of course be those who will not be satisfied unless and until the UK has a Gini coefficient of 0 for both wealth and income. Of course, in driving to that elusive goal, untold damage would be inflicted on the productive capacity of the economy and to the living standards of its citizens. But then again, I am not at all sure, as Bertrand Russell advised, that those on the more extreme left would care at all about that. One might think that Mr Burnham and his Chancellor should fully inform themselves of the reality of the distribution of income and wealth in modern Britain before deciding what to do in the upcoming budget. Instead of relying on the popular, but wrong inequality narrative, they should both appraise themselves of the facts before deciding to inflict yet more damage on the economy and on incentives by increasing taxes even further on those with the “broadest shoulders”. Failure to do so will not only lead to suboptimal growth and fiscal outcomes for the UK, but I suspect will also consign both of them to the same fate that befell their predecessors.