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Fairness? With an earnings ratio of 450 to 1?

At least they know how unfair it all is, judging by the prohibition on drinking champagne at receptions at the Tory party conference while the rest of the country burns.   Yet it’s breathtaking that the Coalition can let the phrase ‘social justice’ pass their lips when the facts undeniably demonstrate the reverse, though the Treasury papers have been spun to give a very different and misleading impression to bolster the politicians’ case.

They claim that the richest tenth will pay more in cash terms, and as a proportion of income, than the poorest tenth.   This sleight-of-hand is achieved, as Left Futures reported last week, by including in the graphs on p.98 of the Treasury’s Spending Review 2010 the tax and benefit changes made not only “in the Spending Review and the June Budget, but also pre-announced measures in Labour’s March 2010 Budget or earlier”.   In other words, the hits imposed on the poor came from the Tories and almost all the hits imposed on the rich came from Labour.   So much for fairness and honesty.   But the full picture is a lot more revealing, and worse, than that.

Even if the Tory pretence that the rich were harder hit than the poor were true, which patently it is not, that still misses a key point.   Take a person with £100,000 and another person with £10,000.   If both are subject to a 10% cut, the former ends up with £90,000 and the latter with £9,000.   It is far easier (considering prices remain the same for everyone) for the former to absorb the bigger absolute cut in income because s/he still has £90,000 left, which is nearly 4 times the median national income.    On the other hand, a loss of £1,000 on a very low income – roughly a cut in income from £200 a week to £180 a week – is a much more testing and troublesome penalty.

But even that does not begin to tell the real truth about Britain today.   The minimum wage was just been raised from £5.80 an hour to (don’t hold your breath) £5.93 an hour – a 13p rise, so don’t spend it all at once.    For a 37 hour week, that works out at £219 a week.   The median wage in Britain today is about £24,000 a year, or about £480 a week (about £13 an hour).   In other words there are 3.4 million people today, two-thirds of them women, living (or subsisting) on less than half the national average wage.

At the other end of the scale, according to a parliamentary question of mine answered in Hansard on 13 October, there are now over 3 million persons in the top tenth getting an average income of £100,000 a year.   The top 1%, of whom there are 305,000, get an average of £356,000 a year (£6,846 per week).   The top 0.1%, 31,000 people, get over a million a year, an average of £1,370,000 to be precise (£26,346 a week).   The top 0.01% – still 3,000 people – now today get an average of £5,130,000 a year (£98,654 a week).   That’s £2,666 per hour.   Fairness?   Social justice?


  1. badger says:

    Whilst not questioning the general tone of the article, some of the statistics used simply do not ring true and I am increasingly frustrated by all sides misusing statistics to justify arguments that really rest on political belief, ideology, moral conviction etc. Your statement that one tenth of earners – 3m people – receive above £100,000 a year is dramatic but untrue. IFS analyses for 2008 show that the mean income before tax of the 95th percentile was £65,000. HMRC analyses for the same year show that there were 716,100 employed and self employed individuals with a gross income of £100,000 or above. Not enough has changed since 2008 nor have new statistics yet been produced to justify anything like your 3m claim. If you are going to quote statistics as the main support for an argument please tell us exactly what basis the statistics have been prepared on so that we can all evaluate their relevance.

  2. Jon Lansman says:

    The figures are compiled by the government and appear in the parliamentary answer referenced. This states: “Estimates are based upon the 2007-08 Survey of Personal Incomes and are uprated to 2010-11 using June 2010 Budget economic assumptions. Estimates are subject to increasing statistical margins of error as group size declines.”

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