Typical wealth across Britain increased by 13 per cent in real terms in the two years to 2014-16, but wealth inequality remains unacceptably high, the Resolution Foundation said in response to the ONS Wealth and Assets Survey today (Thursday).
Over a period in which typical household incomes have grown by just 5 per cent, today’s figures show that Britain has continued to excel at generating wealth – growing more than twice as fast as incomes – and reaching a record high of £12.8 trillion.
However, Britain has largely failed to distribute this wealth across the country, with lower-income households missing out. Typical wealth among the poorest fifth of households fell in real-terms between 2012-14 and 2014-16.
Wealth inequality remains nearly twice as high as income inequality (the gini coefficients are 0.62 and 0.35 respectively). The Foundation notes that while total wealth inequality has been static over the last decade, falling home ownership has driven up housing wealth inequality, while the growth of private pension coverage, accelerated by auto-enrolment, has lowered inequality.
Age inequalities have also growth in past decades with recent Resolution Foundation research finding that the baby boomer generation hold around half of the nation’s wealth, while millennials account for just 2 per cent of it.
The Foundation adds that the sheer level of wealth across Britain shows that we need to do a far better job of taxing it. Recent RF analysis has found that revenues from wealth taxation have remained flat as a share of GDP for half a century, while wealth has more than doubled compared to national income.
Conor D’Arcy, Senior Policy Analyst at the Resolution Foundation, said:
“Britain is very good at generating wealth, but terrible it spreading it around the country and even worse at taxing it properly. As a result, we have unacceptably high levels of wealth inequality.
“Young people in particular are feeling the effects of Britain’s wealth divide. Our large millennial generation own just 2 per cent of the nation’s wealth. This stems from their struggle get on the housing ladder, boosting other’s people wealth in the private rented sector, rather than build assets of their own.
“Given the huge fiscal pressures Britain will face in the coming years and decades, it is vital we do a better job of distributing and taxing wealth. Otherwise we will simply put more and more pressure on working households.”