Top 10% of households nearly 900 times wealthier than poorest 10%
Only 4% of people think the distribution of wealth in the UK will become fairer in the next 10 years
Wealth inequality in the UK has been rising for the last 10 years and is set to continue growing over the next decade, with young people particularly hard hit, according to a new report published today by IPPR, the progressive policy think tank. New YouGov polling for the report shows that the public are deeply pessimistic about the future, and believe the government should do more to counter wealth inequality.
The report, commissioned by Channel 5 to mark the launch of the second series of Rich House, Poor House, finds that the wealthiest 10% of households have five times the wealth of the bottom 50%. Half of households in Britain now have just an average of just £3,200 in net property, pension and financial wealth, while the top 10% hold an average of £1.32 million. The report shows that every generation since the post-war ‘baby boomers’ has accumulated less wealth than the generation before them had at the same age, with people born in the 1980s having just a third of the property wealth at age 28 of those born in the 1970s.
The Chancellor has already hinted that young people may be a priority in the Budget next month. The new YouGov polling shows that Philip Hammond is right to prioritise this issue: 80% of people think 18-24 year olds will have more debt than older generations, 74% think they will have less in savings and investments than previous generations and 72% think they will have less housing wealth.
With wealth inequality having risen since the financial crisis, the report shows that the UK is facing a “second lost decade” to 2027. On current trends fewer than half of ‘millennials’ (the generation born between 1982 and 2002) are expected to own their own home by the age of 45. If current trends continue household debt (negative wealth) is set to increase in real terms by 2027 by 21.8% (from £70,400 to £85,700) despite household income only rising 10.3%. This will include a 39.8% increase in unsecured debt, from £20,300 today to £28,400 in 2027. (All figures are in 2017 prices). On current trends London property prices in 2027 (per metre squared) will be over 10 times the price of property in the North East.
Rich House, Poor House is an observational documentary that sees two families from opposite ends of the wealth divide switch places and finances for a week to see how they fare. One family is from the richest 10%, the other is from the poorest 10%.
The report further highlights:
- An unequal society: Wealth inequality is twice as great as income inequality with the wealthiest 10% of households owning 45% of the nation’s wealth, while the least wealthy 50% of all households own just 9%.
- Another lost decade: 48% of people think that wealth inequality has become more of an important issue in the last 10 years and only 4% of people think the distribution of wealth in the UK will become fairer in the next 10 years. This is matched by the report’s findings, showing that by Q4 2027 private households will hold debt worth 162% of total disposable income, up from 147%.
- Desire for action from the Government: The new polling in the report has found that 57% of people think the government should do more to reduce wealth inequality, and only 5% think less should be done.
- Impact on family: The YouGov polling found that 30% of people think that wealth inequality has had a negative impact on their family.
- Regional divide: The total value of housing stock in London is now greater than the housing stock of all of Wales, Scotland, Northern Ireland and the North combined. London and the South East hold much more of the country’s wealth than other regions. The average adult in the South East has almost four times the wealth (£150,000) of the average adult in the North East (£40,000).
- Property inequality getting worse: As the Government has identified, property is a key driver of current and future inequality. Average property prices per square metre are projected to be 10.9 times higher in London than in the North East (they are currently 5.2 times higher) by 2027.
Carys Roberts, Research Fellow on the IPPR Commission on Economic Justice, said:
“The old social contract in which each generation could expect more wealth than the last is broken. Our work has found that the vast majority of people now expect young people today to have less than the previous generation in housing wealth and savings, and more debt.
“The Chancellor has indicated he is looking at options to improve the financial position of young people in his Autumn Budget. Our polling shows that the majority of people would support new measures to equalise wealth. These could include giving young people better access to housing and fairer taxation.”
Guy Davies, Commissioning Editor, Factual, Channel 5, who commissioned the series commented: “Rich House Poor House is a compelling social experiment that aims to shed new light on the wealth divide in Britain. We commissioned the IPPR to explore the extent of the gap between the richest and poorest in society and the report suggests that wealth inequality is going to get worse rather than better.”
Sofie Jenkinson, 07981023031, firstname.lastname@example.org
The IPPR Commission on Economic Justice report Wealth in the twenty-first century: Inequalities and drivers, is available at https://www.ippr.org/research/publications/wealth-in-the-twenty-first-century
Projected house prices per square metre are from IPPR analysis based on the average rate of growth between 2009, the first year of growth following the financial crisis, and 2016, the last year for which data is available. All figures are presented in 2017 prices and all increases are in real terms, calculated using the OBR’s Consumer Price Index (CPI) projections. Source: ONS 2017
Projected average debt levels are calculated using disposable income and liability projections in the OBR’s Economic and Fiscal Outlook: March 2017. Projected figures are given in 2017 prices using the OBR’s CPI projections. We assume average number of people per household will remain constant up to 2027. ‘Average’ disposable income is a mean average.
The wealthiest 10% of households increased their wealth in aggregate by 21% between 2012-2012 and 2012-2014, compared to an increase of 7% for the least wealthy 50% of households. This is equivalent to over half of the increase in Great Britain’s wealth over that time period going to the top 10% of households. This time period refers to the two waves of the ONS Wealth and Assets Survey. Data was collected between July 2010 and June 2012 in wave 3, and July 2012 and June 2014 in wave 4.
All polling figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,727 adults. Fieldwork was undertaken between 11th - 12th October 2017. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
YouGov is registered with the Information Commissioner. YouGov is a member of the British Polling Council
Channel 5 commissioned the independent report from the IPPR to mark the launch of Rich House, Poor House on Channel 5, an observational documentary that sees two families from opposite ends of the wealth divide switch places and finances for a week to see how they fare. One family is from the richest 10%, the other is from the poorest 10%.
Rich House, Poor House airs 9pm Thursdays on Channel 5.
IPPR aims to influence policy in the present and reinvent progressive politics in the future, and is dedicated to the better country that Britain can be through progressive policy and politics. With nearly 60 staff across four offices throughout the UK, IPPR is Britain’s only national think tank with a truly national presence. Our independent research covers the economy, work, skills, transport, democracy, the environment, education, energy, migration and healthcare among many other areas.
The IPPR Commission on Economic Justice is a landmark initiative to rethink economic policy for post-Brexit Britain. The Commission brings together leading figures from across society to examine the challenges facing the UK economy and make practical recommendations for reform. Its Interim Report, Time for Change: A New Vision for the British Economy, was published in September 2017.