The sun rises over the City of London. Photograph: Getty Images.
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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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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.