The top 1% of high earners in the UK have enjoyed a 7.6% real terms pay increase over the last two years, while the average worker’s pay rose by just 2p an hour.
A TUC analysis of government hourly pay data between 2016 and 2018 shows thatpay among the very top earners increased at a faster rate than any other group.
People in the top bracket saw their pay increase by an average of 7.6% from £58.73 in 2016 to £63.18 in 2018, according to the Office for National Statistics (ONS) annual survey of hours and earnings. Over the same period, the real terms pay of average workers rose by just 0.1% or 2p to from £12.71 to £12.73.
The TUC said that average pay in real terms, when adjusted for inflation, was still worth less in real terms than before the financial crisis continuing the biggest squeeze on wages since the end of the Napoleonic Wars.
Frances O’Grady, general secretary of the TUC, warned that the gap between the richest and everyone else will continue to widen under the prime minister, Boris Johnson’s planned tax cut for high earners, which will cost the Treasury £9.6bn a year, according to the Institute for Fiscal Studies (IFS).
“While millions struggle with Britain’s cost of living crisis, pay for those at top is back in the fast lane,” O’Grady said. “We need an economy that works for everyone, not just the richest 1%. Boris Johnson’s promised tax giveaway to high earners would only make things worse. The prime minister is focused on helping his wealthy mates and donors, not working people.”
During his campaign to become Tory leader and prime minister, Johnson said he would raise the 40p tax rate threshold from those earning £50,000-a-year to £80,000. “We should be raising thresholds of income tax – so that we help the huge numbers that have been captured in the higher rate by fiscal drag,” Johnson said in a Telegraph column.
The IFS said that if Johnson’s plan were implemented it would cost about £9bn and benefit the 4 million taxpayers with the highest incomes. “Most of the gain goes to those in the top 10% of the income distribution who would gain an average of nearly £2,500 a year,” the IFS said.
“The biggest gainers will actually be high-income pensioners as they won’t be affected by the accompanying increase in the National Insurance ceiling.”
The Resolution Foundation calculated that under Johnson’s plan someone earning £80,000 a year would see their tax bill fall by £3,000 a year. “That might not be £350m a week, but it’s not bad going at £57 a week – exactly what a young unemployed person is expected to live on via Jobseeker’s Allowance at present,” said Torsten Bell, director of the foundation.
“But obviously only a very specific group would benefit at all. The typical income in this country is £26,400. Only one in seven people will earn enough to get any benefit from this policy – and the biggest winners are those on the very highest incomes. In fact, 83% of the gains go to the top 10% of households. Someone on say an MPs salary of £79,468 gains £2,946. One Nation it is not.”
