How pay inequality has soared

Over the last 25 years, the top one per cent have seen their pay increase by a massive 117 per cent.

The Office for National Statistics released a report today detailing increases in real wages across the pay distribution. It chose to lead on the fact that real wages have, on average, increased by 62 per cent over the 25 years from 1986 to 2011 (an annual rate of increase of 1.9 per cent).

What is more interesting though is the pattern of increases in real wages across the pay distribution. The very lowest paid – those in the bottom one per cent of the pay distribution did a little better than the average, seeing their real wages increase by 70 per cent, in no small part due to the introduction of the national minimum wage. But the biggest gains are to be found among those with the highest pay. Someone at the 90th percentile of the pay distribution (i.e. just in the top 10 per cent or earners) saw their real pay increase by 81 per cent, while for the top one per cent real pay increased by a massive 117 per cent - over 3.1 per cent a year.

In fact, apart from the bottom seven per cent of the pay distribution, the further up the pay distribution a person is, the greater has been the increase in their real pay. Apart from the bottom seven per cent, pay inequality has increased, particularly at the very top of the scale.

The report also looks at what happened between 1986 and 1998 – before the introduction of the National Minimum Wage – and between 1998 and 2011. The contrast between the two periods is perhaps the most interesting finding of the report.

In the first period, real pay gains were larger the further up the pay scale you were, and those at the very top – especially the highest one per cent of earners did exceptionally well. Remember also that these figures are all for pay before tax and national insurance contributions. The cut in the top rate of tax from 60 per cent to 40 per cent in 1988 means that in after tax terms, the gap between the gains of those at the top and the rest of the distribution will have been even greater.

Between 1998 and 2011, however, the biggest gains in real pay went to those in the very bottom 2% of the pay distribution – those who benefited directly from the introduction of the national minimum wage. For much of the rest of the pay distribution, the increase in real pay over the period was much the same. Only the top few percent did better.

For 90 per cent of the pay distribution, wage inequality was unchanged between 1998 and 2011. But those at the very top of the pay scale still managed to secure bigger gains than everyone else.

This suggests any attempt to tackle inequality in pay needs to start by halting, and then reversing this tendency for pay at the very top to increase faster than pay for the rest of the workforce.

Tony Dolphin is chief economist at IPPR

The City of London sprawls out, as seen from the under construction 20 Fenchurch Street. Photograph: Getty Images.

Tony Dolphin is chief economist at IPPR

Photo: Getty
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Jeremy Corbyn sat down on train he claimed was full, Virgin says

The train company has pushed back against a viral video starring the Labour leader, in which he sat on the floor.

Seats were available on the train where Jeremy Corbyn was filmed sitting on the floor, Virgin Trains has said.

On 16 August, a freelance film-maker who has been following the Labour leader released a video which showed Corbyn talking about the problems of overcrowded trains.

“This is a problem that many passengers face every day, commuters and long-distance travellers. Today this train is completely ram-packed,” he said. Is it fair that I should upgrade my ticket whilst others who might not be able to afford such a luxury should have to sit on the floor? It’s their money I would be spending after all.”

Commentators quickly pointed out that he would not have been able to claim for a first-class upgrade, as expenses rules only permit standard-class travel. Also, campaign expenses cannot be claimed back from the taxpayer. 

Today, Virgin Trains released footage of the Labour leader walking past empty unreserved seats to film his video, which took half an hour, before walking back to take another unreserved seat.

"CCTV footage taken from the train on August 11 shows Mr Corbyn and his team walked past empty, unreserved seats in coach H before walking through the rest of the train to the far end, where his team sat on the floor and started filming.

"The same footage then shows Mr Corbyn returning to coach H and taking a seat there, with the help of the onboard crew, around 45 minutes into the journey and over two hours before the train reached Newcastle.

"Mr Corbyn’s team carried out their filming around 30 minutes into the journey. There were also additional empty seats on the train (the 11am departure from King’s Cross) which appear from CCTV to have been reserved but not taken, so they were also available for other passengers to sit on."

A Virgin spokesperson commented: “We have to take issue with the idea that Mr Corbyn wasn’t able to be seated on the service, as this clearly wasn’t the case.

A spokesman for the Corbyn campaign told BuzzFeed News that the footage was a “lie”, and that Corbyn had given up his seat for a woman to take his place, and that “other people” had also sat in the aisles.

Owen Smith, Corbyn's leadership rival, tried a joke:

But a passenger on the train supported Corbyn's version of events.

Both Virgin Trains and the Corbyn campaign have been contacted for further comment.

UPDATE 17:07

A spokesperson for the Jeremy for Labour campaign commented:

“When Jeremy boarded the train he was unable to find unreserved seats, so he sat with other passengers in the corridor who were also unable to find a seat. 

"Later in the journey, seats became available after a family were upgraded to first class, and Jeremy and the team he was travelling with were offered the seats by a very helpful member of staff.

"Passengers across Britain will have been in similar situations on overcrowded, expensive trains. That is why our policy to bring the trains back into public ownership, as part of a plan to rebuild and transform Britain, is so popular with passengers and rail workers.”

A few testimonies from passengers who had their photos taken with Corbyn on the floor can be found here