New figures from the Office for National Statistics (ONS) reveal that wealth inequality is rising, for the first time since the ONS started its current wealth survey in 2006. The gap is widening between the top 1% and the rest, between the very poorest and the very richest, and between regions. Our nation is already dangerously divided, so this news should be a warning we are moving in completely the wrong direction.
The latest data covering the years 2012-2014 show that the top 1% has seen its share of wealth increase from 12.5% to 12.6%, meaning those people now have as much wealth as all the households in the bottom 57% of the population put together.
But it’s not just a case of concentration of wealth in the top 1%; wealth inequality as a whole is going up. Households with low incomes (the bottom 10%) have actually seen their average level of wealth fall from £54,900 to £34,000, whilst the middle have seen a modest increase, and the households with the largest incomes (top 10%) have seen a large increase in their average wealth, from £752,900 to £895,400.
We all know wealth is partly a postcode lottery, and today’s data shows a widening gulf between regions. The average household in the South East of England now has over twice the wealth of its counterpart in the North East, and households in three regions (Yorkshire and the Humber, the East Midlands and the West Midlands) have all seen their average household wealth fall.
This growing inequality is mostly explained by the widening gaps in property wealth. This rising inequality should be at the top of the Government’s priorities. As its own watchdog showed yesterday, rising inequality is stunting social mobility. If the Government wants to tackle wealth inequality, especially in property, then it needs to look at how it taxes it. At the moment the main tax on property is council tax, which is regressive: hitting poorer households harder than richer households. The first step in tackling wealth inequality should be to reform council tax to tackle the richest who hoard property wealth, instead of making life difficult for those who have least.
Tim Stacey, Senior Policy and Research Advisor