Labour has accused the government of encouraging regional wealth inequality after new data reveals that more than half of the UK’s very highest earners now live in London and the south-east.
A report by the highly-respected independent economics think tank, the Institute for Fiscal Studies (IFS), found that the top 1% of UK earners now have a pre-tax income of at least £160,000, with those taking home £650,000 before tax making up the top 0.1%.
But this group is increasingly focused in London and the south-east, researchers found. Between 2000/01 and 2014/15, the proportion of the top 1% living in the capital rose from 29% to 35%.
This regional disparity in wealth means that while a 50-year-old man in London taking home £160,000 would be in the top 1% of earners in the UK as a whole, he would not even be in the top 5% of men in his age group in the capital. Instead, he would need an income of more than £700,000 to make the cut.
Shadow chancellor John McDonnell said it was “yet another sign of how Tory governments have encouraged the super-rich to concentrate in those regions while the rest of the country is held back”.
But it is not just regional inequality that IFS researchers uncovered by analysing HMRC data – they revealed that men make up 83% of the top 1% of income tax payers and 89% of the top 0.1%.
Meanwhile, around one in three of the top 1% were found to be business owners, who pay less tax than employees.
McDonnell said it was “shocking” that so many of the top 1% were getting tax advantages, adding: “We’re going to get more help for the very wealthiest from this Boris Johnson-led government of bankers.”
Robert Joyce, deputy director of the IFS, said there were questions to be answered about how some of the highest paid earn their money.
“The highest-income people are very over-represented in the country’s south-east corner, most of them are men, and many are in their 40s and 50s,” he 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.”
He added: “What many people will want to know is how some people have such high incomes.
“For example, do those earning hundreds of thousands of pounds a year derive such rewards from innovations and activities that benefit all of us, or are they exploiting market power at the expense of workers on lower incomes?”
A Treasury spokesperson told HuffPost UK: “As the PM has made clear, we believe it is time we unleashed the productive power not just of London and the South East but of every corner of England, Scotland, Wales and Northern Ireland.
“We also want to unlock the full potential of women as part of our strategy to increase productivity and deliver higher living standards. In 2017, the UK became one of the first countries in the world to introduce gender pay gap reporting, and in July we outlined our plans to promote gender equality and economic empowerment.”