Wealth inequality is even more extreme than income inequality
Sometimes it can be hard to get a handle on just how important wealth is and the difference it makes to have a lot or a little. As union activists, we work for higher pay and those of us whose main political concern is poverty know that the lived reality of poverty is an inadequate income – so worrying about wealth can seem like a distraction.
But wealth is much more important than that. For one thing, wealth and higher incomes, lack of wealth and poverty, tend to go together. Yes, there are (for instance) hill farmers with land worth millions and incomes below benefit rates, but serious wealth usually produces a decent income in itself. Even people with lower levels of wealth can still find it is a useful insurance policy to tide them over difficult times. Or it can just be “fuck you money”, guaranteeing a sense of independence. That’s why the government’s “wheel of well-being” includes household wealth as one of its measures.
The government’s Wealth in Great Britain survey revealed that half of aggregate household wealth is owned by fewer than 13 per cent of households. Meanwhile, the least wealthy half of households combined owned 9 per cent of total aggregate household wealth. In fact, the distribution of wealth is even more unequal than the distribution of income. Another official report, Wealth and Income, 2010-12, reveals that households in the tenth highest percentile of the income distribution (so 90 per cent have lower incomes) have incomes more than seven times as high as those in the tenth lowest. This is bad enough, but those in the tenth highest percentile of the wealth distribution are more than 70 times as wealthy as those in the tenth lowest.
That isn’t the only dimension of inequality; the regional picture is striking:
There are huge inequalities both between and within regions. Median household wealth is more than twice as high in the South East as in the North East and the South West is the only region where the lower boundary of the upper quartile is less than twice the median. The gap between the upper and lower quartiles tends to be a little smaller where median household wealth is higher – but with London as a massive outlier.
There’s a really strong connection between household wealth and not having children:
Median household wealth by household type, Britain, 2010/12 (£)
The “all households” column is the overall average. The household types to the right (i.e., wealthier) mainly have no children; most household types with children are to the left.
The recession accentuated wealth inequalities that already existed. Between 2006/8 and 2010/12, total household wealth rose by 11 per cent in Britain, and in most regions the increase was around this level – with two big exceptions: the North East, where total wealth fell by 10 per cent and London, where it rose by 31 per cent. Analysis by the Trust for London revealed that, by 2010/12 one in ten London households had total wealth worth more than £1 million if you include pension wealth (the value of all non-state pensions).
According to Credit Suisse’s Global Wealth Report 2014, the UK is the only G7 economy where wealth inequality rose between 2000 and 2007 and then again between 2007 and 2014. In March, the Social Market Foundation compared surveys carried out in 2005 and 2012/13, revealing that the downturn had produced clear winners (the rich and homeowners) and losers (the poor and young):
Still, it’s not all bad news: since 2009 the number of billionaires in the UK has more than doubled. Wealth isn’t just about money, it’s about power too and the growth of wealth inequality risks making democracy harder to sustain, especially when sources of countervailing power are so weak. I’d guess that Parliamentary democracy could survive some extra rich people, or it could survive weaker unions and fewer rights for workers. The question is whether it can survive both.