Wealth can be defined as the value of one's assets but income is the flow of money one receives as a result of work or investments. Despite them both having different definitions they are often intertwined and combined when talking about the topic of income inequality. It is predicted that in 2024/25, there will be a 1% fall in income for households in the UK with the bottom half of incomes (not including pensioners) and a 1% rise for the top half. This will mean a sharp increase in the Gini coefficient ,in 2024/25, which is a statistical measurement of income inequality.. We can also measure income inequality using the Lorenz curve. Looking at the Lorenz curve below for the UK, the Gini coefficient is demonstrated to be around 0.36 through the small gap between the Lorenz curve and the perfect line of equality. This graph is a good representation of income inequality as income is not distributed equally throughout the economy due to various reasons such as unequal pay and regressive income tax.In the UK around 1% of the country is rich and control most of the wealth in the economy. Income inequality in the UK is not as severe as other countries such as South Africa which has a Gini value of 0.6. There are many policies that the government could implement to reduce the levels of income inequality in the Uk. I will discuss the policies of improving state child care provision and increasing education and training in aiding the reduction of wealth and income inequality.

Currently, in the UK 30 hours per week of childcare is only free for the first two children of a family which I believe discriminates against those with larger families and means that they are unable to be alleviated out of relative poverty thus the income inequality gap instead widens further. In addition, if one is earning over £60,000 they are still eligible for free childcare which I believe is unjust as it means that resources are wasted on those who can afford to pay for childcare and leaves those low income families with the option to not have their additional children looked after for free, placing a financial burden on them.Thus by the government removing this policy it will free up money that could go towards more children being looked after for free and extending the number of hours that are provided for free by the government.Extending the number of hours is beneficial as it means that parents are able to be in work longer which will mean they are able to earn higher income reducing income inequality.If their income increases significantly or they have more income due to them not having to spend on providing childcare for their third or fourth child, then the individual would be able to purchase assets. These would eventually increase in value, increasing their wealth and reducing wealth inequality.

Furthermore, I believe the most effective policy aimed at reducing income inequality in the UK is improvements in the quality of education but also, most importantly, providing equal opportunity in education. Despite the UK providing state education for all children, there are three factors that mean the current education system is not effective: the curriculum, the quality of teaching and the presence of private schools. To begin with, improvements in the curriculum such as teaching students the basics of financial literacy as this will prepare the students for finding jobs in the future. Furthermore, the quality of teaching can be very poor in certain schools with Ofsted reviewing schools as inadequate. Students at these schools may not be taught the curriculum in an effective way, resulting in poor grades which prevents them from progressing into higher education and earning an improved amount of income. Moreover, those who can afford it tend to send their kids to private school as they are more likely to receive higher income after they graduate. In the UK you are still twice as likely to go to university if you are from a wealthier background, compared to the less wealthy and this is due to them sending their children to private schools who have better quality teaching and provide more opportunities for their students. To create equality, equal opportunity is needed. This philosophical term is what I believe is the key to combating income inequality. Labour have attempted to do so by promising to recruit 6,500 more teachers in key subjects which will be paid for by increasing VAT for private school fees. Evidently the government is attempting to prevent more people from sending their children to private schools and has the aim of providing better opportunities for the future generations. I believe the tax may help divert more students to state education but this may not last in the long term as there will be a greater burden on the system with more students. However, the effectiveness of recruiting more teachers may be undermined by the fact that some of these teachers may not be trained constructively, thus the education system may not be improved so I so think that the Labour policy may be flawed.

Overall, the distribution of income and wealth in the UK is greatly unequal and polices do need to be implemented to solve this. Despite most of the above already been implemented in some way possible, income inequality still persists and can be reduced. Yet with all the policies mentioned they will have an effect, no matter the size, on the Lorenz curve and the Gini coefficient. The curve will shift inwards getting closer to the line of equality and the Gini coefficient will decrease showing there has been a reduction in income inequality. I believe the best policy is to improve equal education which increases the prospects of all people in the UK no matter their background which will reduce income inequality.