Up, up and away: The rise of the 1%

For those wishing to turn a blind eye to the issue of inequality, the last few weeks have been somewhat of a boon. Official data published within the ONS’ Effects of Taxes and Benefits showed a small drop and Households Below Average Income showed a slight increase, but broadly the figures followed the recent flat trend amongst most of the population.

But there is a missing story here, and that’s the unstoppable rise of the top 1%.  After 40 years increasing their share of the nation’s total income, the recession looked to have paused their inexorable rise. Yesterday’s analysis from the IFS shows this upward trend has resumed, and that’s not all. The IFS concluded that ‘it seems likely that income inequality [across the whole population] will continue to rise’.

In part this is due to Government policy. The IFS’s report shows that whilst income from employment has become more unequal since the recession, the social security system has stopped this from increasing overall inequality. But government changes in recent years look to have removed this protection for those on low incomes. Recent tax and benefits changes will help the wealthiest but hit the poorest hard, according to the IFS.  Increasing the personal allowance to £12,500 and the higher rate income tax threshold to £50,000 will benefit the second richest ten per cent as a proportion of their income more than any other group. Meanwhile, the planned cuts to tax credits will hurt low-income working households far more than a higher minimum wage could mitigate, and a lower benefit cap will make life even harder for those who are out of work.

After the election some commentators suggested a focus on inequality was a misguided campaign strategy, that the public was uninterested in the issue, and that this was indicative of a failure to connect with ‘real issues’ of concern to the electorate. Even if this were true, the extent to which this continues to be the case has to be questioned.

If inequality rises as the IFS predicts, we know the outcomes, and they are severe. Inequality isn’t simply a matter of dry statistics or even just how much money people have. It affects our education, our health, and our trust in others. It sells the next generation short by creating a distorted society of rentier landlords and those struggling to pay the rent, of wealth extractors gaming systems to benefit them while the majority barely treads water.

Over 80% of people believe the gap between rich and poor is too great, and trends in Ipsos Mori’s polling shows that in the last five years, the number of people saying poverty and inequality are within the two most important issues facing the nation has doubled. If this is a broad but shallow concern, it is unlikely to stay that way.

Politicians can hide their heads in the sand and say people don’t care about inequality, but as more and more people experience the consequences, they are going to struggle to blithely bat away public concerns about its effects.

Lucy Shaddock, Policy and Campaigns Officer