Regional inequality increasing, finds IFS

The Institute of Fiscal Studies has found that London is home to more than half of the UK's population of super-rich, earning more than £680,000 a year.

Using data from income tax records, the new research shows the extraordinary scale of the gulf between the merely well off and the very richest. The data shows that more than half of the top one per cent of earners live in London and the South East, with more than a third in London alone. Between 2000-01 and 2014-15, the proportion of the top one per cent living in London grew by a fifth, from 29 per cent to 35 per cent. This proportion of top earners are earning more than £300,000 a year.

In fact, members of the top one per cent now make up more than two in every thousand residents of 17 London constituencies, 11 in the southeast and just two – Aberdeen and Cambridge – elsewhere in the UK.

Furthermore, the disparity in gender has also been highlighted, with men making up 83 per cent of the top one per cent of income tax payers and 89 per cent of the top 0.1 per cent. To be among the top one per cent of men requires an income of £200,000, while to be among the top one per cent of women requires an income of half that.

Robert Joyce, deputy director of the IFS and an author of the report, said: “The highest-income people are very over-represented in the country’s south east corner, most of them are men, and many are in their 40s and 50s. This geographic and demographic concentration may be one reason why many of those on high incomes don’t realise quite how much higher their incomes are than the average. The sheer scale of the gap between the top one per cent and the top 0.1 per cent may also help explain that.

“It is also important to realise that many more than one per cent of the population will at some point in their lives have incomes that will place them in the top one per cent. Very few will be in the top one per cent all their lives. What many people will want to know is how some people have such high incomes. For example, do those earning hundreds of thousands of pounds a year derive such rewards from innovations and activities that benefit all of us, or are they exploiting market power at the expense of workers on lower incomes? These are among the key questions that the IFS Deaton Review of inequalities, which we recently kicked off, will look to address.”

John McDonnell, Labour’s Shadow Chancellor, commented: “A massive proportion of the top one per cent live in London and the South East, and it’s yet another sign of how Tory governments have encouraged the super-rich to concentrate in those regions while the rest of the country is held back.

“It’s shocking that so many of the top one per cent are getting tax advantages, as partners and business owners, and we’re going to get more help for the very wealthiest from this Boris Johnson-led government of bankers. A Labour government will be for the many, not the few – and will tackle regional inequality, introduce a fairer taxation system, and clamp down on tax advantages exploited by the super-rich.”