Inequality at 40-year-high, report says

LONDON, July 17 (Reuters) The gap between rich and poor has widened to its greatest level for more than 40 years, a survey by the Joseph Rowntree Foundation said today.

The greatest extremes tend to be clustered in the southeast of England, the social policy research charity said in its report ''Poverty, Wealth and Place in Britain 1968 to 2005''.

This has resulted in average households, described as neither poor nor wealthy, being pushed out of some areas.

''Over time it has become clear that there is less and less room in the south for them; they have either moved elsewhere, or become poor,'' said the report's author Danny Dorling.

The disproportionately wealthy are becoming segregated from the rest of society, creating a deep polarisation. Some cities in Britain have areas where more than half of all households are struggling on the poverty line.

While the number of people living in extreme poverty may have fallen, the number of people living below the poverty line has increased, with more than one in four households, 27 percent, classed as ''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, 23 percent, now falling into this category.

The proportion of average households fell from around two-thirds of families in 1980 to just over half by 2000.

A second report published simultaneously found that people felt the gap between rich and poor people had grown too large.

The authors, Michael Orton and Karen Rowlingson, blamed people on higher incomes being overpaid, rather than those on low incomes being underpaid.

Orton said: ''There is widespread acceptance that some occupations should be paid more than others: but the gap between high and low paid occupations is far greater than people think it should be.'' Shadow Home Secretary David Davis said: ''When it comes to opportunities for the least well off, our society is flatlining.'' REUTERS PD PM0950