Britain’s richest households have pulled further ahead of the rest of the population as house prices have accelerated, with the top 10% now owning almost half of the country’s £11.1tn total private wealth.
Since the previous survey two years earlier, the top tenth of households had seen a 21% increase in their wealth, including property and shares. That was three times as fast as the increase over the same period for the poorest half of households, who saw their wealth rise by 7%.
It left the top tenth of households owning 45% of total wealth, while the bottom half were left to share just 9%. The poorest 1%, meanwhile, owned just 0.05% of wealth.
Inequality of wealth tends to be exacerbated when the prices of assets such as property and shares are rising rapidly, and has become an increasingly controversial political issue. Labour advocated a “mansion tax” on the most valuable homes in its 2015 manifesto.
The TUC general secretary drew the contrast between the sharp increase in wealth for the richest households and the squeeze in earned income in recent years as wage growth remained weak after the financial crisis.
“The government must reshape the economy to address the UK’s over-reliance on property and financial investments,” Frances O’Grady said. “Future growth must be built on the firm foundation of higher wages in both the public and private sectors, and investment in skills and industry.”
The shadow Treasury minister, Rebecca Long-Bailey, said: “This Tory government has done nothing substantive to tackle the growing problem of wealth inequality in our country, in fact by cutting inheritance tax for a wealthy few at the same time as cutting universal credit for working families they are only making matters worse.”
Shadow chancellor John McDonnell has recruited the French economist Thomas Piketty – who advocates taxing wealth more heavily to prevent inequality running out of control – to his panel of economic advisers.
The ONS asked Britain’s families about their savings, shared portfolios and housing wealth. They found that the top 10% owned at least £1,048,500 in assets while the bottom 10% owned £12,600 or less.
Duncan Exley, director of the Equality Trust, said: “When such a huge chunk of the country’s wealth is found in the hands of so few people, it is clear something has gone terribly wrong. Aside from the disproportionate power this provides the richest, we know this vast inequality also weakens our economy and damages our society.”
The ONS found that private pension portfolios accounted for 40% of households’ total wealth, with the richest 10% of households having a £749,000 pension pot, compared with just £2,800 for households in the least wealthy half of the population.
It said the rising value of pension portfolios had been an important cause of the 18% increase in aggregate wealth over the two-year period between its surveys.
Asset prices have recovered strongly in recent years, helped by the continuing low level of global interest rates. The Bank of England is yet to increase borrowing costs from the record low of 0.5% they reached in March 2009.
Inequality of wealth in Britain has a clear regional dimension, the ONS data showed, with wealth heavily concentrated in London and the south-east, where the housing market has bounced back strongly since the slump that followed the global financial crisis.
Average household wealth in the north-east, at £150,000, was less than half of that in the south-east, where it was £342,400.
In total, property wealth in Britain, net of mortgages, increased by almost £400bn over the two years between its latest wealth surveys, the ONS found.
Mark Posniak, managing director of Dragonfly Property Finance, said: “In 2014, Finland’s GDP was £184bn, which means Britain’s property market is effectively an economy in itself. UK homeowners have been able to sit back while their properties, collectively, generate more cash than entire countries.”
This article was written by Heather Stewart, for theguardian.com on Friday 18th December 2015 11.20 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010