The wealth gap between the richest and poorest in the UK soared by nearly 50 per cent in less than a decade, as stalling wages and rising asset values fuelled inequality at the height of austerity, new analysis suggests.
In a new report examining the “profound systemic impacts” of this rising inequality, researchers with the Fairness Foundation warn that it “seriously exacerbates a wide range of arguably existential risks” to the UK, such as social unrest, failure to act on the climate crisis, economic stagnation and the decline of democracy.
As new polling for the charity found that three in four voters are concerned about the impact of wealth inequality in Britain, Sir Keir Starmer was urged to act to mitigate these risks, in an open letter signed by dozens of academics, charity and business leaders.
The wealth gap has now reached a level where it “actively undermines growth and productivity” and is harming the new Labour government’s prospects for achieving its five key missions on the economy, NHS, crime, clean energy and education, the letter to the prime minister warns.
Urging “bold action”, the signatories – who include the leaders of Age UK and Disability Rights UK – called for the Budget to better tax wealth by raising capital gains tax and scrapping the “non-dom” regime, and for a looming review of national resilience to examine the strategic risks posed by wealth inequality.
“The huge and growing wealth gap between the richest and poorest households in the UK isn’t just a moral outrage, it’s also a clear and present danger to our society, our economy, our democracy and our environment,” said Fairness Foundation chief executive Will Snell.
Warning that wealth inequality in Britain is now second only to the United States among OECD countries, the charity’s new report finds that the absolute gap in wealth in the UK increased by 48 per cent between 2011 and 2019.
In 2011, the richest 10 per cent had wealth of £7.5 trillion while the poorest 10 per cent was £12bn in arrears, according to analysis of Office for National Statistics data by King’s College London academic Ben Tippet. By 2019, that had increased to £11 trillion and £11bn of debt respectively.
There was a similar increase of 49 per cent in the absolute gap between the wealthiest and middle 10 per cent, whose wealth rose from £7.3bn to £10.8bn over the same period.
While the richest 10 per cent of households have consistently owned around half of the total wealth in the UK for several decades, vast disparities in asset ownership have now resulted in these families’ absolute wealth rising from around £900,000 more per adult than an average household in 2006 to more than £1.2m.
With the poorest half of the population owning just 9 per cent of the UK’s wealth, many people lack a vital financial safety net, to the extent that nearly a quarter of Britons are either devoid of assets or grappling with debt, according to the report.
Differences in wealth between generations are also at unprecedented levels, as the transformation of the UK economy away from productive enterprise and wealth creation and towards wealth extraction – via asset control and rent-seeking – consolidating resources into fewer hands, the report states.
Warning that the strategic risks posed by this inequality are currently “seriously underpriced” by politicians and the private sector, the report warns that they are not “just hypothetical future risks, but rather impacts that have already been realised” and which could “snowball” in the years ahead without swift action.
Polling of more than 2,000 people by Focaldata in July found that 78 per cent were worried about wealth inequality in Britain, with the greatest levels of concern centred on the impacts on crime, the cost of living, housing and health.
But the report also sets out the risks to public services, the economy, democracy and action on reaching net zero.
“Most people have an intuitive understanding that the increasing wealth gap is unfair in terms of both its causes and its consequences,” the report states.
“The growing level of popular disengagement and distrust with politics is in part driven by this awareness, and is already damaging our democracy and social cohesion, with a real risk of much worse to come in the future.”
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