POLICIES TO REDUCE RICH AND POOR GAP

CONTRIBUTORY 

e.g pensions, job seekers' allowance 

Individuals have a contribution into National Insurance Fund. 

NON-CONTRIBUTORY 

e.g housing benefits, income/child support 

Don't require a previous contribution 

These benefits are means tested or universal 

MEANS TESTED- tested to see if individual actuall needs the beneifts 

UNIVERSAL- avaliable to all. 

Individuals on low incomes pay no income tax 

-tax free 'personal' allowance in 2010 as £10,000

-income earners pay tax at 'basic rate' which is 20% 

-those on 'higher incomes' have tax rates of 40%

-earnings of over £150,00 tax rate at 45%

Services such as healthcare and education that are provided free or heavily discounted at point of consumption 

These benefit can make a huge impact on final income 

increasing it conisiderably for poor 

narrowing gap between rich and poor

The long term aim of minimum wage is to remove the problem of poverty pay.

Exists when the earnings from paid work don't result in a living wage and fail to push people out of poverty 

1.  Government sponsored job creatio schemes 

2. Active labour market policies to increase employability such as re-training schemes 

3. welfare-to-work schemes whihv encourage labour market particpation