UK's Inequality

To be in the top 1% of earners in Britain today, a couple with no children would need a minimum income of £160,000. A single person can enter the 1% with a little less, while a couple with children would need more. If the national minimum wage had kept pace with FTSE 100 CEO salaries since 1999, it would now be £18.89 per hour instead of £6.50.

Per head, there are more so-called ultra-high net-worth individuals (UHNWI) in London than anywhere else on the planet. These are defined as people with $30m (£21m) or more in assets apart from their main home. The estate agents Frank Knight recently reported that 4,224 “Ultra” families were living in London, with the number expected to reach 5,000 by 2024.

 A study from Princeton University in which MRI scans were taken of several university students’ active brains while they viewed images of different people. Researchers saw that photographs of homeless people and drug addicts failed to stimulate areas of the brain that usually activate whenever people think about other people, or themselves. Instead, the more affluent students reacted to the images as if they “had stumbled on a pile of trash”. Social psychologists from Berkeley and Amsterdam have studied strangers in situations where one told the other of a difficult personal experience, such as a death in the family. The larger the social gap, the less compassion was shown. Such behaviour, and the acceptance of it as normal, becomes much more prevalent in those places where the 1% have taken the most.

The UK coalition government has already reduced the top rate of tax to 45%. Now it plans tougher benefit cuts for the poor. Under current financial plans, it will reward the top 1% even more in future, by cutting income taxes further. The rest of the top 20% can expect slight increases in their net income in the years up to 2016, while everyone else is impoverished. These figures are based on the Office for Budget Responsibility’s own projections. The tax, benefit and spending changes now underway will hit households with children hardest. These make up a third of households, according to the children’s commissioner for England, but will suffer around two thirds of the cuts. On average, couples with no children will lose 4%, couples with children 9%, and lone parents 14% of their net income. Yet the 1% with children face no net cuts. Their loss of child benefit is more than outweighed by what they gain from tax cuts.

In spring this year, Oxfam revealed that some 85 of the world’s richest people now had as much wealth as the poorest half of all humanity. A few weeks later, Forbes magazine updated that estimate  to just 66 people.

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