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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.

A second referendum? Photo: Getty
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Will there be a second EU referendum? Petition passes 1.75 million signatures

Updated: An official petition for a second EU referendum has passed 1.75m signatures - but does it have any chance of happening?

A petition calling for another EU referendum has passed 1.75 million signatures

"We the undersigned call upon HM Government to implement a rule that if the remain or leave vote is less than 60% based a turnout less than 75% there should be another referendum," the petition reads. Overall, the turnout in the EU referendum on 23 June was 73 per cent, and 51.8 per cent of voters went for Leave.

The petition has been so popular it briefly crashed the government website, and is now the biggest petition in the site's history.

After 10,000 signatures, the government has to respond to an official petition. After 100,000 signatures, it must be considered for a debate in parliament. 

Nigel Farage has previously said he would have asked for a second referendum based on a 52-48 result in favour of Remain.

However, what the petition is asking for would be, in effect, for Britain to stay as a member of the EU. Turnout of 75 per cent is far higher than recent general elections, and a margin of victory of 20 points is also ambitious. In the 2014 independence referendum in Scotland, the split was 55-45 in favour of remaining in the union. 

Unfortunately for those dismayed by the referendum result, even if the petition is debated in parliament, there will be no vote and it will have no legal weight. 

Another petition has been set up for London to declare independence, which has attracted 130,000 signatures.