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Whose recovery is this? The top 1% are gaining most

As the highest earners have gained, the bottom 90 per cent have seen their share of income shrink.

Most people are familiar with the old adage about the "rich getting richer", but should we just accept that this will be at a much faster rate than for everyone else? The latest statistics on income, since economic growth finally returned, paint a disappointing picture of increasing inequality in Britain; they show that the richest one per cent have increased their share of income while the bottom 90 per cent on middle and lower incomes have seen their share shrink. While unemployment is falling, the continued squeeze on the pay of ordinary workers means that growth has mostly benefited the top.

Here’s how this story emerges from the Treasury’s own data: the latest "Income Tax Liabilities Bulletin" from HM Revenue and Customers, makes projections for the share of total income for percentile groups, setting out the changes affecting the least well-off and the richest in society. After three years of stagnation, growth has begun to gradually return throughout the past year 2013/14. But who has benefited from this growth in the past year?

It turns out the wealthiest one per cent are expected to see their share leap, even after tax has been taken into account, from 8.2 per cent of total UK income to 9.8 per cent of the total. This is a gain of a huge extra £15.4bn of income, shared among less than 300,000 of those at the top. Significantly, 90 per cent of the rest of the country – 27 million taxpayers - have seen their share of total income actually shrink from 71.3 per cent to 70.4 per cent.

What can we conclude from these new figures? First, it appears that we may be experiencing a recovery that is heavily skewed towards those already at the top of the pile – tilting the benefits of growth away from the many and handing them increasingly to the few.

Second, the tax cut for those lucky enough to earn over £150,000 per year in 2013/14 has been of great significance, especially for those receiving executive bonuses that had been held back until the 50p rate had gone.

Third, the shrinking share of income for 90 per cent of the rest of society should set alarm bells ringing; this isn’t just bearing down on the poorest, but a real squeeze on middle-income earners. When the overwhelming majority of the population now see the wealthiest one percent zooming off into the distance, people will rightly ask whether the government are doing enough to build a fair economy that works for working people.

Perhaps people expect David Cameron and George Osborne to fashion an economic recovery which serves the very wealthiest, but we all know this is unbalanced and unsustainable. If the benefits of economic growth are not felt fairly by the vast majority, then the cost of living crisis will persist and divisions will worsen.

George Osborne used to say "we’re all in this together" – but that claim has long since been abandoned. Creating a genuinely One Nation recovery should mean the richest one per cent contribute a fairer share of tax, with a return to the 50p rate for the next Parliament as we get the deficit down. And it should also mean taking action to help the vast majority of working people, with tax cuts targeted at those on lower and middle incomes as a priority and measures to ensure work pays, such as expanding free childcare for parents.

Surely we need the Treasury to step in to ensure the benefits of any growth we get are shared more fairly than this? When 90 per cent of the rest of the country are seeing their share decline then that is a sign something is going badly wrong.

Chris Leslie is the shadow chief secretary to the Treasury

Chris Leslie is chair of Labour’s backbench Treasury Committee and was shadow Chancellor in 2015. 

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How worried are Labour MPs about losing their seats?

Despite their party's abysmal poll ratings, MPs find cause for optimism on the campaign trail. 

Labour enters the general election with subterranean expectations. A "good result", MPs say, would be to retain 180-200 of their 229 MPs. Some fear a worse result than 1935, when the party won just 154 seats. Rather than falling, the Conservatives' poll lead has risen as the prospect of electing a government concentrates minds (last night's YouGov survey, showing the Tories a mere 16 points ahead, was an exception).

Though Conservative strategists insist they could lose the election, in an attempt to incentivise turnout, their decision to target Labour MPs with majorities as high as 8,000 shows the scale of their ambitions (a Commons majority of circa 150 seats). But as well as despair, there is hope to be found in the opposition's ranks.

Though MPs lament that Jeremy Corbyn is an unavoidable drag on their support, they cite four reasons for optimism. The first is their local reputation, which allows them to differentiate themselves from the national party (some quip that the only leaflets on which Corbyn will feature are Tory ones). The second is that since few voters believe the Labour leader can become Prime Minister, there is less risk attached to voting for the party (a point some MPs make explicit) "The problem with Ed Miliband and the SNP in 2015 was that it was a plausible scenario," a shadow minister told me. "It was quite legitimate for voters to ask us the question we didn't want to answer: 'what would you do in a hung parliament?' If voters have a complaint it's usually about Jeremy but it's not the case that he looks like he can become prime minister."

The third reason is the spectre of an omnipotent Tory government. MPs appeal to voters not to give Theresa May a "free hand" and to ensure there is some semblance of an opposition remains. Finally, MPs believe there is an enduring tribal loyalty to Labour, which will assert itself as polling day approaches. Some liken such voters to sports fans, who support their team through thick and thin, regardless of whether they like the manager. Outgoing MP Michael Dugher (who I interviewed this week) was told by an elderly woman: "Don't worry, love, I will still vote Labour. I vote for you even when you're rubbish."

Ben Bradshaw, the long-serving MP for Exter, who has a majority of 7,183, told me: "We're not anything for granted of course. On the current national polling, the Tories would take Exeter. But having covered five polling districts, although the leadership is undoubtedly a big issue on the doorstep, most people say they'll still vote for me as their local MP and we're not detecting any significant shift away from 2015. Which is slightly puzzling given the chasm in the opinion polls." Bradshaw also promotes himself as "the only non-Tory MP in the south-west outside Bristol": a leaflet shows a blue-splattered map with a lone red dot. The Labour MP warns voters not to be left in a "one-party state". 

As in 2010, Labour may yet retain more seats than its vote share suggests (aided by unchanged boundaries). But the fate of the Liberal Democrats in 2015 - when the party was reduced from 56 MPs to eight - shows that local reputations are worth less than many suppose. Theresa May has succeeded in framing herself as a figure above party interests, who needs a "strong hand" in the Brexit negotiations. At the very moment when a vigorous opposition is needed most, Labour has rarely been weaker. And when the public turn resolutely against a party, even the best men and women are not spared.  

George Eaton is political editor of the New Statesman.

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