As Christmas approaches, in true Dickensian fashion, many of us turn our thoughts to the gap between the wealthy and those at the bottom of our economy, whose struggle to make ends meet is more keenly felt at this time of year.
So it is worrying to read the latest figures released on Friday by the Office of National Statistics (ONS) from its Wealth and Assets Survey (WAS). The survey revealed that wealth is becoming ever more concentrated at the top of the income scale.
The UK, long known to be one of the most unequal of industrialised nations, has seen a widening inequality gap during the period of Conservative-led government since 2010. The ONS figures show that the wealthiest 10 per cent of households owned 45 per cent of total wealth – equivalent to £5tr – while the least wealthy half owned just 9 per cent.
Inequality is even more pronounced when considering the super-wealthy. Those in the top 1 per cent have a minimum of £2.9m of wealth, whereas the bottom 10 per cent have wealth totalling just £12,600 or less.
For the wealthiest 10 per cent of households, wealth increased by 21 per cent between July 2010 and June 2014. The bottom half saw an increase in wealth of just 9 per cent over the same period.
Rising wealth inequality has been created mainly by climbing house prices, especially at the top of the market and in the south-east, and by the widening gap in the value of pensions. Government policies, especially cuts in the top rate of tax and inheritance tax, are also contributors to the inequality gap.
Wealth is increasingly concentrated in London and the south-east, which owns 40 per cent of the UK’s total wealth. Wealth is less concentrated in the Midlands and the north of England with the north-east region, holding just 2 per cent, the least wealthy.
The survey also underlines the massive wealth of the UK – at £11.1tr – providing considerable scope for redistribution given the political will and voter understanding of the negative effects of inequality on the UK economy.
While the right-wing press may argue that the top 10 per cent are the ‘wealth creators’ and that their growing wealth benefits the whole economy, new research illustrates that the opposite is true.
Professor Andrew Sayer of the London School of Economics challenges the myth that the rich are specially-talented wealth creators. He contends that they constitute a ‘rentier class’ living on unearned income with an active stake in asset bubbles. As Sayer concludes:
“There are other reasons why we can’t afford the rich: their undemocratic and indeed antidemocratic influence in politics, their excessive and wasteful consumption, their bloated carbon footprints and the fact that many are in effect betting on unsustainable economic growth in the rich countries and have interests in continued fossil fuel use….above all, we need to challenge the myth that the rich are specially-talented wealth creators…
“It is time to halt the flood of unearned income that goes to the top and reassert democracy in facing the challenge of organising economies that stop rather than accelerate global warming.”