We need to spread capital ownership to build an economy that works for everyoneby Carys Roberts / October 26, 2017 / Leave a comment
Labour and the Conservatives are currently searching for an answer to different questions: how to transform the economy on the one hand, and restore support among the under-45s on the other. Surprisingly perhaps, part of the answer to both lies in the same approach: to get serious about reshaping the distribution of capital and wealth in the economy.
In a discussion paper for the IPPR’s Commission on Economic Justice, we have looked at the dimensions and drivers of increasing wealth inequality in the UK today. Our research shows that the wealthiest ten percent of households have in aggregate five times the wealth of the bottom half of households. What’s more, the share of total wealth of the top 10 per cent has been rising—from 46.7 per cent in 1984, to 51.9 per cent in 2013.
Understanding these inequalities and why they’re increasing requires looking at three different components of wealth: financial wealth, property wealth and pension wealth (we exclude other physical wealth as it is relatively evenly distributed, and data on its value is incomplete.)
The first of these is the most unequally distributed. One third of adults in the poorest fifth of households have no savings at all held for a ‘rainy day’ or unexpected expenses, and half of adults in this group have debts that are at least 83 per cent of their annual income. Household debt—negative financial wealth—is also rising. If recent trends in unsecured debt continue, the average household in ten years will have 39.8 per cent more unsecured debt than…