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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.

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An unmatched font of knowledge

Edinburgh’s global reputation as a knowledge economy is rooted in the performance and international outlook of its four universities.

As sociologist-turned US Senator Daniel Patrick Moynihan recognised when asked how to create a world-class city, a strong academic offering is pivotal to any forward-looking, ambitious city. “Build a university,” he said, “and wait 200 years.” He recognised the long-term return such an investment can deliver; how a renowned academic institution can help attract the world. However, in today’s increasingly globalised higher education sector, world-class universities no longer rely on the world coming to come to them – their outlook is increasingly international.

Boasting four world-class universities, Edinburgh not only attracts and retains students from around the world, but also increasingly exports its own distinctively Scottish brand of academic excellence. In fact, 53.9% of the city’s working age population is educated to degree level.

In the most recent QS World University Rankings, the University of Edinburgh was named as the 21st best university in the world, reflecting its reputation for research and teaching. It’s a fact reflected in the latest UK Research Exercise Framework (REF), conducted in 2014, which judged 96% of its academic departments to be producing world-leading research.

Innovation engine

Measured across the UK, annual Gross Value Added (GVA) by University of Edinburgh start-ups contributes more than £164m to the UK economy. In fact, of 262 companies to emerge from the university since the 1960s, 81% remain active today, employing more than 2,700 staff globally. That performance places the University of Edinburgh ahead of institutions such as MIT in terms of the number of start-ups it generates; an innovation hothouse that underlines why one in four graduates remain in Edinburgh and why blue chip brands such as Amazon, IBM and Microsoft all have R&D facilities in the city.

One such spin out making its mark is PureLiFi, founded by Professor Harald Haas to commercialise his groundbreaking research on data transmission using the visible light spectrum. With data transfer speeds 10,000 times faster than radio waves, LiFi not only enables bandwidths of 1 Gigabit/sec but is also far more secure.

Edinburgh’s universities play a pivotal role in the local economy. Through its core operations, knowledge transfer activities and world-class research the University generated £4.9bn in GVA and 44,500 jobs globally, when accounting for international alumni.

With £1.4bn earmarked for estate development over the next 10 years, the University of Edinburgh remains the city’s largest property developer. Its extensive programme of investment includes the soon-to-open Higgs Centre for Innovation. A partnership with the UK Astronomy Technology Centre, the new centre will open next year and will supply business incubation support for potential big data and space technology applications, enabling start-ups to realise the commercial potential of applied research in subjects such as particle physics.

It’s a story of innovation that is mirrored across Edinburgh’s academic landscape. Each university has carved its own areas of academic excellence and research expertise, such as the University of Edinburgh’s renowned School of Informatics, ranked among the world’s elite institutions for Computer Science. 

The future of energy

Research conducted into the economic impact of Heriot-Watt University demonstrated that it generates £278m in annual GVA for the Scottish economy and directly supports more than 6,000 jobs.

Set in 380-acres of picturesque parkland, Heriot-Watt University incorporates the Edinburgh Research Park, the first science park of its kind in the UK and now home to more than 40 companies.

Consistently ranked in the top 25% of UK universities, Heriot-Watt University enjoys an increasingly international reputation underpinned by a strong track record in research. 82% of the institution’s research is considered world-class (REF) – a fact reflected in a record breaking year for the university, attracting £40.6m in research funding in 2015. With an expanding campus in Dubai and last year’s opening of a £35m campus in Malaysia, Heriot-Watt is now among the UK’s top five universities in terms of international presence and numbers of international students.

"In 2015, Heriot-Watt University was ranked 34th overall in the QS ‘Top 50 under 50’ world rankings." 

Its established strengths in industry-related research will be further boosted with the imminent opening of the £20m Lyell Centre. It will become the Scottish headquarters of the British Geological Survey, and research will focus on global issues such as energy supply, environmental impact and climate change. As well as providing laboratory facilities, the new centre will feature a 50,000 litre climate change research aquarium, the UK Natural Environment Research Council Centre for Doctoral Training (CDT) in Oil and Gas, and the Shell Centre for Exploration Geoscience.

International appeal

An increasingly global outlook, supported by a bold international strategy, is helping to drive Edinburgh Napier University’s growth. The university now has more than 4,500 students studying its overseas programmes, through partnerships with institutions in Hong Kong, Singapore, China, Sri Lanka and India.

Edinburgh Napier has been present in Hong Kong for more than 20 years and its impact grows year-on-year. Already the UK’s largest higher education provider in the territory, more than 1,500 students graduated in 2015 alone.

In terms of world-leading research, Edinburgh Napier continues to make its mark, with the REF judging 54% of its research to be either world-class or internationally excellent in 2014. The assessment singled out particular strengths in Earth Systems and Environmental Sciences, where it was rated the top UK modern university for research impact. Taking into account research, knowledge exchange, as well as student and staff spending, Edinburgh Napier University generates in excess of £201.9m GVA and supports 2,897 jobs in the city economy.

On the south-east side of Edinburgh, Queen Margaret University is Scotland’s first university to have an on-campus Business Gateway, highlighting the emphasis placed on business creation and innovation.

QMU moved up 49 places overall in the 2014 REF, taking it to 80th place in The Times’ rankings for research excellence in the UK. The Framework scored 58% of Queen Margaret’s research as either world-leading or internationally excellent, especially in relation to Speech and Language Sciences, where the University is ranked 2nd in the UK.

In terms of its international appeal, one in five of Queen Margaret’s students now comes from outside the EU, and it is also expanding its overseas programme offer, which already sees courses delivered in Greece, India, Nepal, Saudi Arabia and Singapore.

With 820 years of collective academic excellence to export to the world, Edinburgh enjoys a truly privileged position in the evolving story of academic globalisation and the commercialisation of world-class research and innovation. If he were still around today, Senator Moynihan would no doubt agree – a world-class city indeed.

For further information www.investinedinburgh.com