Wealth ‘concentrated in London and the south east’

6 Aug 19

More than half the top 1% of UK income taxpayers live in London and the south east and are “overwhelmingly male and middle aged”, according to analysis by the Institute for Fiscal Studies. 

This half of the top 1% earners were from just 65 parliamentary constituencies in 2014-15 – down from 78 in 2000-01, the think-tank also concluded.  

The research, which used HMRC data, found that between 2000-01 and 2014-15, the proportion of the top 1% living in London grew by a fifth from 29% to 35%.

The IFS also found a “huge gender disparity” at the top of the income distribution as men make up 83% of the top 1% of income tax payers and 89% of the top 0.1%. To be among the top 1% of male earners requires an income of £200,000 but to reach the top 1% requires half of that.

Robert Joyce, deputy director of the IFS and author of the report, said: “This geographic and demographic concentration may be one reason why many of those on high incomes don’t realise quite how much higher their incomes are than the average.

“What many people will want to know is how some people have such high incomes.”

Separate analysis from the Resolution Foundation think-tank found that those on the other end of the economic spectrum – on low and middle incomes – were more vulnerable to recession than they were in 2008, when the financial crash occurred.

It comes after the group warned that Britain is facing the highest risk of recession since 2007 and the Bank of England indicated the chances of recession were now one in three.

A decade of weak income growth has left low-income families in a worse financial position than when the last financial crisis hit, as they have less scope to reduce their spending on non-essentials and a higher proportion have less savings, the foundation said.

The report A problem shared? analysed consumption patterns over the last decade and found that lower income households were forced to retrench more than others.

Average decrease in spending between 2009-14 was £20 per week but those in the bottom quarter of income distribution cut back by £61 per week.

On savings, the research found that 60% of low and middle-income families now have nothing to put aside – up by quarter since 2008, the foundation said.

James Smith, research director at the Resolution Foundation, said: “The deep income squeeze that followed the last financial crisis may have been more equally shared than previous recessions.

“But its depth and length has had a disproportionate impact on the resilience of lower income households, who now have less scope to reduce non-essential spending or draw down on savings to weather a further recession than they did after the 2008 crisis.

“The global slowdown and continued Brexit uncertainty are making recession preparedness even more urgent. In its response, the government should consider policies that limit and mitigate the effects of the recession, particularly for the most vulnerable in society.”

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