Is a paper's online readership really "good for the ego" but nothing else?

News UK boss Mike Darcey thinks so.

News UK boss Mike Darcey today condemned the vast online readership numbers claimed by the likes of Mail Online and Guardian.co.uk as "good for the ego" and not much else.

He spoke out as his flagship title, The Sun, goes behind an online paywall as of 1 August. Darcey has a point.

The explosion in online readership of UK media titles has coincided with an unprecedentedly severe media slump which is now five years old.

So for the two leading free-to-air national newspapers online – the Mail and Guardian – we won’t know for sure whether they have a digital business until the economy finally picks up. But as it stands, all those online eyeballs have yet to translate into a sustainable business model.

Both Guardian News and Media and Mail Online are believed to make between £40m and £50m from the digital sides of their businesses.

In June, Mail Online attracted 8.2m "unique browsers" per day globally, and The Guardian 4.6m (according to ABC).

For Mail Online the digital income is growing fast, but it is still tiny compared with combined print and digital turnover of around £600m a year.

For Guardian News and Media that digital income needs to be seen in the context of annual costs of around £240m, and a loss in the year to April 2012 of £44.2m.

Both sites currently appear to be wedded to the free online model. If they are going to eschew the paywall, they are going to have to come up with a plan B – and do so pretty quickly.

Dominic Ponsford is editor of Press Gazette. You can follow him on twitter at @domponsford.

Getting your news the traditional way, in a silly hat. Photograph: Getty Images

Dominic Ponsford is editor of Press Gazette

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Taxation without benefits: how our tax system increases inequality

We often hear the progressive income tax used as a proxy for all tax when it actually accounts for just over a quarter of the tax take.

Tax may not be the burning issue on everyone’s minds over the next month, but the Panama Papers leak has proven that the thorny issues of who pays what, and what level of tax is fair, are ones that are never too far away from the public consciousness.

One of the most important annual publications on tax is the Office for National Statistics’ Effects of Taxes and Benefits on Household Income. Published today, it shows, among other things, the proportion of income paid in tax by people at different points on the income spectrum. This may sound like the natural domain of the data nerd, but it actually tells us some rather interesting facts about our system of taxes and benefits.

First, the good news. Our much maligned welfare system is in fact a beacon of progressiveness, drastically reducing the level of income inequality we see in this country. In fact, overall, taxes and benefits are quite substantially redistributive. Without them, the income of the richest 20 per cent of households would be 14 times higher than the poorest 20 per cent. With them, that gap falls to only four times.

The benefit system as a whole decreases the Gini coefficient, the most frequently used measure of inequality, by 14 percentage points. For anyone who sees taxes and benefits as a key component in reducing economic inequality, or boosting the incomes of the poorest, or, frankly, tackling social injustice, this is rather welcome news.

But now for the bad news.

While our welfare system is undoubtedly progressive, the same cannot be said of our tax system when looked at in isolation. The poorest face a disproportionately heavy tax burden compared to the richest, paying 47 per cent of their income in tax, compared to just 34 per cent for the richest. Last year (2013/14) this difference was 45 per cent – 35 per cent, and the year before (2012/13) the gap was 43 per cent – 35 per cent. So while the proportion of income paid in tax has fallen slightly for the richest, it has increased for the poorest.

While some taxes like income tax are substantially progressive, those such as VAT and Council Tax are not. Even after adjusting for rebates and Council Tax Benefit, the poorest 10 per cent pay 7.1 per cent of their income in council tax while the richest 10 per cent pay only 1.5 per cent.

Should this matter, if our system of benefits continues to narrow the gap between rich and poor? Well, yes, not least because that system is under severe pressure from further cuts. But there are other good reasons to focus on the tax system in isolation from the benefit system.

Polling by Ipsos MORI has shown that the public believes that the tax system by itself reduces inequality, and it is often spoken of by politicians as if that is the case. We often hear the progressive income tax used as a proxy for all tax, for example, when it actually accounts for just over a quarter of the tax take.

Understanding why the tax system does not by itself reduce inequality is therefore important for both thinking about how tax revenues could be better raised, and for understanding the importance of the benefit system in narrowing the gap between the richest and the poorest.

John Hood is Acting Director of the Equality Trust