I am 17, in sixth form at a UK grammar school. The Grammar school part should supposedly weed out the bastards, but it turns out intelligence is not in any way related to being a dick. To cut it short:
I know a fair few kids in the lower school (15 and under), and I would say 30-40% are what one would refer to as "little shits". They have cut in front of me in lines, attempted to rifle through items in my bag, and "accidently" thrown basket balls at my head in the playground. They know I could easily kick their asses, and equally know that I wouldn't dare because the school would call it a disproportionate response and thus I would come out worse off.
Whilst a good proportion of kids are decent, there are far too many that act like they are untouchable. Why? Because they know they ARE untouchable. Past 10 years of age I never needed incentives to be a reasonable person, but apparently that experience does not apply to everyone.
As for reasons why this is happening. It is probably a mixture of parents and lack of discipline at schools. No need to bring back corporal punishment, but change the punishments so they are actually punishing. For example, don't suspend the child in the normal fashion where he just has to do work on his/her own, that is not a deterrent at all. Instead make the child sit doing NOTHING in isolation for at least a few hours each day, and then make them catch up with the work out of school time.