Andrew Grice: People of Middle England, beware being burnt by politicians' hot air

Out of each £100 of GDP, only £12 goes in wages to the bottom half of earners – down from £16 in 1977

Related Topics

David Cameron calls them the "doers and grafters", Ed Miliband dubs them the "squeezed middle", while for Nick Clegg they are "alarm-clock Britain".

The estimated 11 million people on low and middle incomes are a key target group for all politicians. But according to a report published today, they may prove harder to woo than the parties reckon.

The landmark study lays bare the stark differences in how those at the top and ordinary workers have fared in the past 30 years. It finds that the share of national income going to those on the bottom half of the earnings ladder has fallen by a quarter, while the slice going to the top 1 per cent has increased by half.

According to the Resolution Foundation think tank, out of each £100 of gross domestic product, only £12 now goes in wages to the bottom half of earners, down from £16 in 1977. About £14 goes to the top 10 per cent of earners alone, and £3 to the top 1 per cent. When bonuses are included, the gap is even wider: the top 1 per cent take home almost £5 of each £100 of GDP while the bottom half receive only £10.

The study turns on its head Margaret Thatcher's "trickle down" theory that a rising economic tide lifts all sections of society.

Although part of the change between 1977 to 2010 is due to higher company profits and social-security payments, the largest factor is the growing gap between the best and worst paid.

The foundation, which defines low and middle-income families as those on between £12,000 and £48,500 a year, warns that the current squeeze in living standards could make the divide even wider. Even when the economy starts to grow, the less well-off could miss out.

Gavin Kelly, its chief executive, says: "All the main party leaders will be battling to show they empathise with ordinary workers. But with long-term changes like these going on in our economy, soundbites will only get them so far. Before long they will need to set out what they plan to do – and that must mean tackling the steady decline in GDP going to low-to-middle earners."

Matthew Whittaker, the author of today's report, Missing Out, said: "The declining fortune of low-to-middle earners is in stark contrast to those at the top, and if you take into account bonuses, the picture looks even worse. This is not just about the finance sector racing away – wage inequality across all sectors of the economy seems to be the driving factor, including in retail, which is the largest employer of those on low-to-middle incomes."

The growth in the divide slowed after 1996, reflecting changes introduced by Labour such as the national minimum wage and tax credits. With the economy bound to be the central battleground at the next election, this is a reminder that voters should beware politicians bearing promises.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Packaging Operatives

£7 - £8 per hour: Recruitment Genius: An opportunity has arisen for two indivi...

Ashdown Group: Trainee / Graduate Helpdesk Analyst

£20000 per annum: Ashdown Group: A highly reputable business is looking to rec...

Recruitment Genius: Estimator

£28000 per annum: Recruitment Genius: This company is a major supplier of buil...

Recruitment Genius: Software Developer

£28000 - £40000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Read Next
Ukip MEP Janice Atkinson (left) with party leader Nigel Farage  

Hey, Nigel Farage and Kerry Smith – my family are East Enders too and never use that word

Victoria Richards
A screenshot from the trailer for Hatred  

I love violent video games, but you'll never catch me playing Hatred

Alex White
Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas