statistics and lies

The press made head-lines of this report :
The Organisation for Economic Co-operation and Development (OECD) Growing Unequal? report published on 21st October 2008 found that “since 2000, income inequality and poverty have fallen faster in the UK than in any other OECD country”

However , not much was reported on this report Poverty and inequality in the UK: 2008 by the Institute for Fiscal Studies (IFS) published in June this year, which found that in the UK “income inequality has risen for its second successive year and is now equal to its highest-ever level (at least since comparable records began in 1961)”.

The OECD report covers the period from 2000 to 2005, whereas the IFS report covers data up until 2007. The IFS report notes an increase in poverty in the last two years which includes an extra 300,000 children living in poverty between 2005 and 2007, and nearly a half a million pensioners entering poverty in the same period. Overall relative poverty increased by 400,000 in 2006/07 alone. Therefore it could be that 2000 to 2005 was the halcyon period of UK poverty reduction (OECD), but this has been reversed in the subsequent two years (IFS).

even so , the positive spin placed on the OECD report couldn't disguise its other findings , that the “the gap between rich and poor is still greater in the UK than in three quarters of OECD countries”. It also states that “the wage gap has widened by 20% since 1985”, and that “child poverty rates are still above the levels recorded in the mid-1980s”

Neither report studied actual wealth distribution which shows that wealth inequality has expanded most aggressively in the years between 1996 to 2003 – the period of Labour in government.

Not considered was that personal debt ballooned in the UK from 102% of personal income in 1997 to 160% of personal income by the end of 2005 and now with the credit crunch unraveling insolvency and re-possessions loom ahead .

From LEAP

More on Child Poverty Levels

Research by the Campaign to End Child Poverty found that in 174 of the 646 parliamentary constituencies across the UK, more than half the children live in poverty or are in families struggling on low incomes. An estimated 98% of children living in two zones in Glasgow Baillieston - Central Easterhouse and North Barlarnark and Easterhouse South - are either in poverty or in working families that are "struggling to get by".

Of the 13,233,320 children in the UK, 5,559,000 - more than a third - live in low-income families or families in poverty.

"A child in poverty is 10 times more likely to die in infancy, and five times more likely to die in an accident. Adults who lived in poverty as a child are 50 times more likely to develop a restrictive illness such diabetes or bronchitis." Campaign director Hilary Fisher said

The research was compiled from Government statistics and also includes the numbers of children in families on Working Families Tax Credit.The campaign classes households as being in poverty if they are living on under £10 per person per day.

The Hong Kong Dream

Mr Li says he is growing increasingly uneasy about the widening gap between rich and poor in Hong Kong.
According to a recent Gini co-efficient - a measure that gauges the divide between rich and poor - the gap between the haves and have nots in Hong Kong is the widest in the world. Mr Li says the divide has the potential to hit Hong Kong's competitiveness and social stability.
"If achieving the Hong Kong dream becomes a vanishing hope, then our society will suffer. What would the Hong Kong dream be? It's no different from the American dream whereby an everyday man on the street who works hard, would be able to make good savings and use those savings as equity for their future small business," he explains.

Mr Li is the younger son of Li ka-Shing, Asia's wealthiest man and started by building a media empire with a multi-million dollar investment from his father. His father indirectly bailed him out of a tangled financial transaction involving attempts to sell his stake in PCCW in 2006.

Dubbed "Superboy" by the Hong Kong press for being the son of "Superman" Li .

Yup , a little bit of hard work , and save a little and you too can become a billionaire - just as long as your father is a billionaire and gives you a helping hand of a few million , eh ? Super.

The reality of the real world

From the Guardian ;

The top 10% of income earners get 27.3% of the cake, while the bottom 10% get just 2.6%

Twenty years ago the average chief executive of a FTSE 100 company earned 17 times the average employee's pay; now it is more than 75 times

Since Labour came to power in 1997 the proportion of personal wealth held by the top 10% has swelled from 47% to 54%.

Tax consultants Grant Thornton estimated that in 2006 at least 32 of the UK's 54 billionaires paid no income tax at all.

"We now live in a separate economy, we live on a separate level to the vast majority of people in the country. We don't send our kids to the same schools, we have more choice over schools, we have more choice over health, we have more choice over where we live, we have more choice over where we go on holiday and what we do for our jobs. And we live in a completely different world to the people we live next door to."

The Affluent Society ?

A single person living in Britain needs to earn at least £13,400 a year before tax to afford a basic but acceptable standard of living, research claimed

The "minimum income" is enough to cover needs like food and warmth, as well as the occasional film ticket and simple meal out.

The study found that a single person without children needed to spend £158 a week, while a couple with two children needed £370 a week, excluding rent or mortgage.To afford this budget on top of rent on a modest council home, a single person would need to earn £13,400 a year before tax and the couple with two children £26,800.

The report said families without a working adult received about two thirds of the minimum budget in state benefits.Single people without work received less than half of the minimum budget in benefits. The basic state pension gives a retired couple about three quarters of the minimum income, but claiming the means-tested Pension Credit could top their income up to just above the minimum standard, the report said.

Jonathan Bradshaw, professor of social policy at the University of York, said: "Based on these public assessments, almost everyone defined as living below the official poverty line falls short of what people judge to be adequate for their fellow citizens – sometimes by quite a long way."

Indian wealth

According to the BBC , UK developers are heading to India in search of wealthy new customers for their luxury flats. But why would anyone invest in London's wobbly property markets? Because the super-rich still have plenty of cash to spend.

One of the world's most expensive homes is currently being built in Mumbai for Reliance head Mukesh Ambani. His personal skyscraper will boast six storeys just for parking cars, and is expected to cost nearly $2 billion by the time it is complete.

Nick Candy, one half of the design and development firm Candy & Candy, is in Mumbai to drum up interest for his own super-luxury project, One Hyde Park. The central London project is offering apartments - to the right kind of customer - for an average of £20m. Mr Candy is a man used to dealing with the fabulously rich. But he says, "I'm flabbergasted by the amount of wealth in India. It's staggering."
Candy & Candy specialises in strictly top-end property. Its customer base is a roll-call of the super rich: royals, entrepreneurs, private company bosses. It's now looking to open an office in India. India now has more billionaires than any other country in Asia - 36 at the last count. Together they are worth nearly $200bn. India's top three richest people are all successful businessmen, but have made their money in old-economy industries, such as oil and property.
And while they have thrived in India's new economy, they have all built their wealth on fortunes inherited from their parents.

Many of those super-rich are now keen to invest their wealth around the globe. But why would Indian investors want to put money into London's property market now the boom is over?
"It's going to be very tough in America, and I think the UK will probably mirror it six months later," admits Mr Candy. But, he says, this applies only to properties under £2m where buyers need to borrow the money. There, you can expect "serious reductions in prices", according to Mr Candy - "and you're looking at a lot more than 10%." For top-end property - costing more than £5m - he thinks prices will be stable. There are not many people who can afford that level of luxury - and in London, there are still very few properties for them to buy.

Besides, says Mr Candy, "they've still got huge amounts of wealth. Maybe it's come down from $1bn to $500m - or if they've been very unlucky, it's $50m. But it's still huge amounts of wealth."

And of course they are the economic migrants that the government want .

British Inequality

According to this BBC report , after 30 years of unprecedented economic growth, the British are richer, healthier - but no happier than in 1973. The main reason for the rise in wealth has been the increase in house prices. But the growing wealth has not led to greater happiness.

In 1973, 86% of people said they were satisfied with their standard of living, while in 2006 85% were satisfied. And one in six UK adults reported that they suffered from a variety of mental health problems in the latest survey, of which the largest category was "mild anxiety and depression."

The amount of goods and services purchased by UK households has risen by two and half times in thirty years.

But that increase in spending was not evenly distributed among the whole population, with the income of those in the top 10% of the income distribution going up much faster than that of households of the bottom 10%. In 1979, the real disposable income of the top 10% was three times greater than the real income of those in the bottom 10%, but by 2006 that had grown to four times greater.

And social mobility also appears to have declined, according to studies cited in the report. Children born in 1958 to poor parents coming to adulthood in the 1970s, were more likely to have moved to a higher part of the income distribution than those born in 1970, who came of age in the new millennium.

And child poverty has remained stubbornly high, with 22% of children living in relative poverty in 2005/6, compared to 27% in 1990/91.

The reward for failure

We read Northern Rock's former boss Adam Applegarth received a £750,000 pay-off when he left last December. Applegarth, who is 46, is also entitled to draw on a pension pot of £2.5m at the age of 55 . Experts say that could bring him retirement benefits of up to £200,000 a year.

As we all have read Northern Rock collapsed and bad management was a factor in this bank's demise . So is this a capitalism's reward for failure ?

Many of us facing attacks on our final salary pension schemes will also be wondering why we have to work longer for less while the rich can dip into a retirement pot of gold .

Council Leaders Fat Cats

The number of "fat cat" council bosses being paid more than £100,000 a year has risen by 25%, new figures show.

A town hall "rich list" revealed that 818 local authority bosses now earn more than £100,000. In 2005-06 it was 645.

The average pay package for those on the list was more than £120,000 - nearly five times the starting wage of a police constable. Fourteen earned more than the prime minister's £188,000 annual salary, while six received more than £200,000 from the public purse.

Despite Gordon Brown's demand for an inflation-guarding 2% cap on public sector wage settlements, top council bosses enjoyed an average rise of 4.6% - more than double that of last year.

"Too often, council executives are rewarded handsomely even when they fail," said the chief executive of the pressure group TaxPayers' Alliance .

The top 10 best-paid council officials, 2006-07
1. Northamptonshire: Peter Gould, chief executive, £215,000
2. City of Kingston-upon-Hull: Kim Ryley, chief executive, £213,162
3. Kensington and Chelsea: Derek Myers, town clerk and chief executive, £205,000
4. Northampton: Mairi Mclean, chief executive, £205,000
5. Bexley: Nick Johnson, chief executive, £203,000
6. Hertfordshire: Caroline Tapster, chief executive, £201,485
7. Ealing: Darra Singh, chief executive, £195,456
8. Surrey: Dr Richard Shaw, chief executive, £195,330
9. Cambridgeshire: Ian Stewart, chief executive, £195,000
10. Westminster: Peter Rogers, chief executive, £195,000

The big gamblers

Despite the turmoil in the markets, bank failures and write-offs amounting to £60.5 billion City bonuses will top £6 billion this year.

Dozens of bankers at Goldman Sachs, for example, were awarded bonuses of at least £5m each at Christmas, with one lucky trader pocketing more than £10m in cash and shares. The average bonus at Goldman Sachs last year, one of the more extravagant payers, was £300,000. Staff are thought to be dreading the possibility that the average this year will be a mere £200,000 – And , of course , that is all on top of salaries and other emoluments.
Professor Stigliz said "Even if they lose their jobs, they walk away with large sums..."

Professor Stiglitz, a former chairman of the President's Council of Economic Advisers, under Bill Clinton explained ."...When things turned out well, they walked away with huge bonuses. When things turn out badly – as now – they do not share in the losses...The system was designed to encourage risk taking – but it encouraged excessive risk taking. In effect, it paid them to gamble...It is one thing to gamble with one's own money – but these bankers were gambling with other people's money – and with the government backstopping any losses. This is unconscionable."

Lest we forget - Hung out to Dry

The richest 10 per cent of the UK population increased their share of the nation's marketable wealth (excluding housing) from 57 per cent in 1976 to 71 per cent in 2003.

Over the same period, the speculative capital that could be deployed or invested by the bottom 50 per cent of the British population fell from 12 per cent to just 1 per cent.

The wealthiest 1 per cent of the population, on current government figures, now control more than a third of all the marketable wealth – and this ignores the vast sums held in offshore tax havens.

The New Economics Foundation has shown that global growth has not aided the poor. In the 1980s, for every $100 of world growth, the poorest 20 per cent received $2.20; by 2001, they received only 60 cents. Clearly , growth disproportionately benefits the rich and further impoverishes the poor.

Real wage increases in the top 13 countries of the Organisation for Economic Cooperation and Development have been below the rate of inflation since about 1970 – a situation compounded in Britain as the measure of inflation massively underestimates the real cost of living.

Thus wage earners – rather than asset owners – have faced a 35-year downward pressure on their standard of living. Indeed, the golden age for the salaried worker, as a share of GDP, was between 1945 and 1973 – and not this vaunted age of liberalisation.

From The Independent

Poor Energy Bills

The big six energy companies are charging the poorest customers up to £330 a year more for gas and electricity, it emerged last night.

Tariffs for prepayment meters, used typically by pensioners and the less well-off, are up to 45 per cent higher than for internet customers. The industry watchdog branded the practice a £400 million rip-off. The gap between the tariffs has grown after a round of inflation-beating price rises across the sector . Figures compiled by Energy-watch, the watchdog, show that on average prepayment customers are charged £255 a year more than online customers for power, compared with £190 before Christmas. E.ON’s prepayment charge is an average of £1,097 – 45 per cent higher than its internet tariff of £769. British Gas charges its prepayment customers 30 per cent more.

Graham Kerr, of Energywatch, said:

“We have hard evidence of £400 million of excess profits being taken off the poorest members of society just at a time when fuel poverty is continuing to rise. Instead of taking from the rich to give to the poor, it seems that energy companies are taking from the poor to give to the rich.”

More than 4.5 million people are in fuel poverty – spending more than 10 per cent of income on heating their home. One in five prepayment customers is classified as fuel-poor. A third of single parents with dependent children use gas prepayment meters.

1957 and 2006 - Are we better off ?

What difference does 50 years make for the working class . Are we all better off . Well , it certainly appears that way . UK household income has doubled in real terms over the last fifty years. And the pattern of family spending has also changed dramatically. Basic necessities including food accounting for a smaller proportion of our family budget, while spending is up on leisure activities, travel and motoring. Income going to housing makes up a greater share.

According to the BBC and the Office of National Statistics

In 1957, spending on food, fuel and rent , the basic three items , made up nearly half of all household expenditure. Taken together with clothing and travel, basics made up nearly two-thirds of family spending. The main luxuries for the ordinary family were tobacco and alcohol, which combined made up just under 10% of spending. The biggest other luxury item was meals eaten out making up 3% of spending. Four of the top ten spending items were food or drink, with spending on meat, fruit, vegetables and beer all in the top twenty.
Overall, the average family spent a total of £14.30 per week in 1957, out of a gross income of £16. In today's money, spending was £243 per week.

In 2006 the average household spent £456 out of a gross income of £642 before taxes.

In five decades, spending on most basics has declined sharply, with food making up only half as much of the average household budget as it did in 1957. And half of that food budget now consists of meals and takeaways - a new category introduced in the l970s.

But the cost of housing, including mortgage interest payments or rent, has more than doubled since 1957. Mortgage interest payments or rent accounted for 19% of spending in 2006, up from 9% in 1957Using a slightly broader measure of housing costs, which includes council tax, insurance and home improvements, UK households spent an average of £143 a week on housing-related costs in 2006 - or 22%.

Motoring and travel costs have doubled from 8% of spending in 1957 to 16% in 2006, mostly because of rising car ownership .

There are big social divisions in the ownership of some popular consumer goods, and the greater affluence is at least partly a result of more families having two incomes - both parents going out to work .

And But there are big differences in consumption between rich and poor.
Nearly every household in the richest tenth of the population had a computer and an internet connection. In contrast, among the poorest tenth, only 31% have computers and 21% have an internet connection. And 56% of that group have mobile phones, compared to 92% of the richest tenth. The pattern of car ownership also varies sharply by income, with less than a third of the poorest tenth of households owning a car, compared to 94% of the richest tenth of families.

Nor are we happier it is claimed .

According to economist Richard Layard of the London School of Economics, once people can afford the basics, happiness does not increase with income when comparing happiness among rich and poor countries. And looking at surveys of happiness over time, he says levels of happiness have not changed across either the UK - or US - in the last 30 years, despite the doubling of living standards in both. Moreover, the availability of new goods can just make people more jealous of what they are unable to afford, especially for the less well-off.

Other studies show that what we have lost in the last 50 years is time. Strikingly, most families now talk more in the car than at home.

Paradoxically , while we spend more on leisure goods than half a century ago, we have less time to enjoy our free time - increasing numbers of households need two earners as earlier said and working hours have increased even if there has been an official reduction , since doing overtime has climbed .

The Gap Widens ( 4 )

And From the BBC

The rapidly rising incomes of the richest 10% of the population are the major factor contributing to growing inequality in Britain.
According to the Institute for Fiscal Studies (IFS), an independent think tank, the incomes of the top 10% have risen faster than those of the population as a whole since Labour came to power in 1997. And that increase has been particularly concentrated at the very top of the income distribution - among the half million individuals in the top 1% of the income scale.

Between the 1996-97 tax year and 2004-05, the income of the richest 1% grew at an annual rate of 3.1%, compared to 2.3% for the population as a whole, and the income of the top 0.1% grew by 4.4%. The stock market boom has boosted the income of the rich
The growth was particularly strong in the Labour's first term, where the income of the super-rich grew by 8% per year. The IFS suggests that the rising stock market between 2005 and 2007 may have further boosted the income of the rich - a view confirmed by the 20% increase in the wealth of those in the Sunday Times rich list in 2007.

In contrast, those at the bottom of the income distribution - and especially the poorest 15% of households - saw their income go up at below-average rates, and in some cases even fell.

"It seems there are two interesting phenomena, at either end of the income scale, that are driving trends in overall income inequality" said IFS's Mike Brewer

Overall, the gap between the bottom 10% and the top 10% has widened. The top 10% of individuals in the UK now receive 40% of all personal income, while the bottom 90% receive 60%. The top 0.1% get 4.3% of all income - the highest figure in the UK since the 1930s, and three times as much as they received as a share of income in 1979.

The report says that "income inequality is at its highest level since the late 1940s".

The average income of the top tenth, of £49,950, was double the average income of all taxpayers (£24,769) and triple that of all households (£15,000), one-third of whom pay no tax.
To get into the top 1%, an individual needed an income of £100,000, and to get into the top 0.1%, £350,000. The average income of £155,000, while the top 0.1% of taxpayers had an average income of £780,000.

WHO ARE THE VERY RICH?
Male: 90%
Middle-aged: 80%
Live in London/SE: 70%
Work in finance, property, accountancy, law: 60%
Average income: £785,000
Source: IFS, top 0.1% of GB taxpayers, 2004/5

Northern on the Rocks

Northern Rock , the bank that is in crisis , has been paying a number of its senior managers secret bonuses according to a report in the Independent .

The bank has sanctioned millions of pounds in confidential "retention bonuses" to managers and management board directors deemed "essential to its continuing excellent operational performance". Some 173 staff out of a workforce of more than 6,000 have been paid the bonuses. An outlay of more than £2 million a month on bonuses to this select band of employees.

As the saying goes "The Devil protects his own"

bankers

So some of the banks took a beating with the sub-prime mortgage crisis but it didn't stop some bank executives from taking their slice of their cake .

Lynn Peacock, chief executive the Clydesdale bank pay almost doubled to £2.1m. , compared with £1.1m in the preceding year. She also became entitled to an undisclosed number of shares under an incentive scheme operated by the parent company, National Australia group .

Gilbert and riches

Martin Gilbert, chief executive of Aberdeen Asset Management, saw the value of his overall remuneration tumble in the latest year despite bumper profits for the fund manager, but remained one of corporate Scotland's best-paid executives.The annual report of Aberdeen Asset Management, published yesterday, shows that Gilbert received total pay and benefits of £3,096,000 in the year to September, down from £3,951,000 in the preceding year . The fall in remuneration was due to the fact that Gilbert elected for employer contributions to his defined contribution pension scheme with the firm to cease. Aberdeen said following changes to UK pensions law on April 6, 2006, other employees had elected to follow suit. The A-day changes included the introduction of a £1.5m limit on individual pension funds.

Even at the reduced level, Gilbert's package makes him one of Scotland Plc's biggest earners. In 2006, Sir Fred Goodwin, chief executive of Royal Bank of Scotland, earned a basic salary of nearly £1.2m and a performance bonus of £2.8m, boosting his total package by over £1m on 2005 to just under £4m.Sandy Crombie, chief executive of Standard Life, earned a pay, bonus and benefits package worth £1.6m in 2006.

Stewart Milne of the building company took home more than £7.5m in salary, benefits and dividends in the year to June

Branson Virgin Rail - Just the ticket

While the Virgin Rail passengers face nine per cent fare increases ( an average of 4.8 per cent from Jan 6, with first class passengers facing rises of nine per cent) and some of the worst delays in the country (In its worst performing year in 2002, just 73.6 per cent of West Coast trains ,London to Glasgow, and 62.5 per cent of Cross-Country trains , Cornwall to Aberdeen, arrived within 10 minutes of the scheduled arrival time) , Richard Branson pocketed a £24 million dividend from Virgin Rail . The West Coast and Cross Country lines, have received more than £1 billion in subsidies from the Government since he took over the route in 1997.

Richard Murphy, the director of Tax Research, an independent consultancy firm, said: "He's stripping the company of cash while saying at the same time, 'I need more public subsidy'."

Minimum Wages - Maximum Exploitation

Thousands of workers are being short-changed by firms who refuse to pay the national minimum wage, the TUC found .

Around 150,000 staff are being denied rate of £5.52 an hour for adults and £4.60 for 18 to 21-year-olds, it says. Those in restaurants, hotels, cleaning, hairdressing and childcare were said to be the most likely to be underpaid.
TUC general secretary Brendan Barber said: "There should be no hiding place for bosses who are deliberately cheating their workers out of the minimum wage."

Socialist Courier will go further and say all wages and wage labour is theft . That it is slavery . Within capitalism , the fight to improve wages is indispensible but workers should take the next step - campaign to abolish wages .

The Price of Learning

The principal of Glasgow University accepted a £23,000 pay rise in the past year - an increase of more than five times the rate of inflation. The 11% increase brings Sir Muir Russell's salary and pensions benefits to some £234,000 a year at a time when the rest of the university's staff have been given increases of just 4%. Last year's university accounts show the level of Sir Muir's remuneration package jumped from £184,000 in 2004-05 to £211,000 in the last financial year - a 15% rise. As part of his pension arrangements from his career in the civil service, Sir Muir, 59, will pocket a one-off payment of £215,000 when he turns 60.
He can also expect to have an annual pension of £65,000 waiting for him at age 65.

The latest increase is likely to make Sir Muir one of the highest-paid principals in the country, depending on the increases enjoyed by other university leaders which have not yet been revealed. Last year, the highest-paid principals in Scotland were Professor Duncan Rice from Aberdeen University (£215,000), Dr Brian Lang from St Andrews (£209,000), and Sir Alan Langlands from Dundee (£202,000).

"There is a growing feeling that universities are being turned into businesses in which the collegiality on which their past successes have depended is abandoned and senior managers are paid inflated salaries to get as much as possible out of their junior employees for as little reward as possible." - Terry Brotherstone, who is president of the lecturers' union UCU Scotland