Campaigners say inequality gap is widening as 18,000 people earn more than £1m
The number of taxpayers earning more than £1m a year has almost doubled in the past two years, prompting economists to claim that the highest-earning section of the population has bounced back from the financial crash.
Official figures reveal that 18,000 people now earn at least £1m – the highest number recorded by HM Revenue & Customs. In 2010-11, 10,000 earned more than £1m, and in 1999-2000 there were only 4,000 earning such a salary.
There is also growth further down the salary brackets, with 5,000 more earning £500,000 to £1m in 2012-13 compared with 2010-11, an extra 31,000 earning £200,000 to £500,000, and 7,000 more earning £150,000 to £200,000.
The figures will increase concerns that the trends of the 1990s and early 2000s are continuing, with a growing disparity between the top-earning 1%, many of whom work in finance, and the rest of the workforce. In sectors such as manufacturing, construction and hospitality salaries have been squeezed in recent years. A recent report showed that if low to middle earnings were to rise by the 1.1% a year above inflation achieved in the past, average annual household incomes in this group would take until 2023 to reach £22,000 – the equivalent of where they stood in 2008.
In stark contrast, Charles Shaker, a financial adviser and private wealth manager who was said by one of his employers to be “focused on ultra-high net worth individuals”, was photographed last week spending £330,000 on a 30l bottle of champagne at the Monaco grand prix.
The HMRC figures emerged as Boston Consulting Group also suggested that Britain has just over 1,000 ultra-high net worth households – those with more than $100m (£65m) in private financial wealth, not including property. Matthew Whittaker, senior economist at the Resolution Foundation, said the HMRC figures were a pointer that the super-rich had bounced back from the financial crisis and that a promised rebalancing of the economy had failed to materialise.
“It is a continuation of a trend. Inequality grew massively during the 1980s in particular, and that was what we traditionally think of as inequality. The middle moved away from the bottom and the top moved away from the middle, so we got more stretched as a society,” said Whittaker.
“If you look from the mid-1990s onwards, you don’t see that any more; there is a compression of inequality. You have the minimum wage, so the bottom gained some ground on the middle and, for most people in the bottom three quarters or so, wage growth pretty much stalled from 2003. No one moved away from anyone else. But hidden behind all that is a new phase of inequality, where the top 10% – but more particularly the top 1% – are moving away from the rest of society.”
The figures prompted Dave Prentis, general secretary of Unison, to call for a rethink on the government’s cut in the top rate of tax. The chancellor, George Osborne, has defended the reduction of the tax rate from 50p to 45p for those earning more than £150,000 on the basis that it made little money for the exchequer. However, Unison believes that the rise in the number of wealthy taxpayers suggests that a 50p tax rate could have reaped more than £4bn for the Treasury if applied to thousands now in the top salary brackets.
Prentis said: “We have a government that is completely out of touch with the public mood. These figures show the chancellor diverting a massive amount of money into the pockets of the very rich, at the same time as making massive cuts to welfare and public services – it is immoral.
“There is an alternative to the government’s no-hope policies,” he said. “All that money could have been used to stop the cuts and inject some life into our failing economy.”