Britain’s richest 1% have accumulated as much wealth as the poorest 55% of the population put together, according to the latest official analysis of who owns the nation’s £9.5tn of property, pensions and financial assets.
In figures that also lay bare the extent of inequality across the north-south divide, the Office for National Statistics said household wealth in the south-east had been rising five times as fast as across the whole country.
The average wealth of households in the southeast had surged to £309,000 at the end of 2012, up 30% since the first wealth report published by the ONS covering 2006-8 – while the average rise in England was only 6%.
But wealth in the north-east had fallen, the only region where it did so, to an average of just under £143,000. In Scotland the figure was £165,500.
Northern regions lost out after a dramatic rise in stock market values that was grabbed mostly by households in the south east, the ONS figures show.
The situation is likely to have worsened following an 18% surge in house prices over the past year in the south-east and even higher at the top end of the market.
A rush to save among richer households as the recession deepened boosted the nation’s total wealth and ensured Britain’s long-established financial inequality remained in place, with the top 10% laying claim to 44% of household wealth – while the poorest half of the country had only 9%.
Rachael Orr, Oxfam‘s head of poverty in the UK said the figures were a “shocking chapter in a tale of two Britains“.
The charity recently reported that five billionaire families controlled the same wealth as 20% of the population. “It is further evidence of increasing inequality at a time when five rich families have the same wealth as 12 million people,” she said.
“We need our politicians to grasp the nettle and make the narrowing gap between the richest and poorest a top priority. It cannot be right that in Britain today a small elite are getting richer and richer while millions are struggling to make ends meet.”
Duncan Exley, director of the Equality Trust, said: “The grotesque concentration of wealth in the hands of a tiny minority is fracturing our society, weakening our economy and giving disproportionate power to the richest. Unless policymakers adopt a clear goal of reducing the gap between the richest and the rest, they will have to govern an increasingly dysfunctional nation.“
The report comes after French economist Thomas Piketty has ignited international debate about inequality by documenting the rapid accumulation of assets by the top 1% over the four decades since the 1970s.
Britain’s top 1% saw their share of wealth increase slightly in the four years before 2012, grabbing the same share as 54.9% of the population, up from 54.2% in 2008/10.
But the Treasury said the report showed that wealth inequality had remained the same throughout the six years up to 2012 while income inequality had declined to levels last seen in 1986. A spokesperson said the government’s efforts to protect the poorest during the recession had worked.
“The effects of the Great Recession are still being felt which is why we have taken continued action to help hardworking people by cutting income tax and freezing fuel duty.
“And we want to help more people to save for their future or own their own home which is why we are giving people more flexibility over their pensions and introducing Help to Buy. At the same time we have introduced new higher rates of stamp duty on the most expensive homes and done more than any previous government to crack down on tax evasion and avoidance in order to ensure that everyone pays their fair share in tax.”
> If the government executed every poor person in the UK, a government spokesman would then be wheeled out to claim that by killing everyone they had in fact improved the victims lot, since they would no longer have to buy food, heating, housing, etc, thereby making everyone better off.
And dead, of course, but you can’t have everything…
Critics of the wealth report said it failed to capture the huge diversion of wealth to offshore tax havens, which account for trillions of pounds worth of savings.
A series of investigations into offshore tax havens have documented the success of their banks in attracting a steady rise in the savings and financial assets of the richest 1%.
There was also a clear disparity between women and men over who owns the most homes, pensions, cars and stocks and shares. The average value of men’s total pension wealth was nearly twice as high as women’s in 2010/12 – £63,000 compared with £34,800.
The power of the grey pound is highlighted in the report by several measures, including one showing that couples without children, where one person is over and the other under the state pension age, have the highest total wealth at £607,800, up from £452,000 in 2006.
Source – The Guardian, 15 May 2014
This article was written by Larry Elliott, economics editor, for The Guardian on Monday 17th March
The scale of Britain’s growing inequality is revealed today by a report from a leading charity showing that the country’s five richest families now own more wealth than the poorest 20% of the population.
Oxfam urged the chancellor George Osborne to use Wednesday’s budget to make a fresh assault on tax avoidance and introduce a living wage in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.
The development charity, which has opened UK programmes to tackle poverty, said the government should explore the possibility of a wealth tax after revealing how income gains and the benefits of rising asset prices had disproportionately helped those at the top.
Although Labour is seeking to make living standards central to the political debate in the run-up to next year’s general election, Osborne is determined not to abandon the deficit-reduction strategy that has been in place since 2010. But he is likely to announce a fresh crackdown on tax avoidance and measures aimed at overseas owners of high-value London property in order to pay for modest tax cuts for working families.
The early stages of the UK’s most severe post-war recession saw a fall in inequality as the least well-off were shielded by tax credits and benefits. But the trend has been reversed in recent years as a result of falling real wages, the rising cost of food and fuel, and by the exclusion of most poor families from home and share ownership.
In a report, a Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.
The most affluent family in Britain, headed by Major General Gerald Grosvenor, owns 77 hectares (190 acres) of prime real estate in Belgravia, London, and has been a beneficiary of the foreign money flooding in to the capital’s soaring property market in recent years. Oxfam said Grosvenor and his family had more wealth (£7.9bn) than the poorest 10% of the UK population (£7.8bn).
Oxfam’s director of campaigns and policy, Ben Phillips, said: “Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, while millions of families are struggling to make ends meet.
“It’s deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline.”
The UK study follows an Oxfam report earlier this year which found that the wealth of 85 global billionaires is equivalent to that of half the world’s population – or 3.5 billion people. The pope and Barack Obama have made tackling inequality a top priority for 2014, while the International Monetary Fund has warned that the growing divide between the haves and have-nots is leading to slower global growth.
Oxfam said the wealth gap in the UK was becoming more entrenched as a result of the ability of the better off to capture the lion’s share of the proceeds of growth. Since the mid-1990s, the incomes of the top 0.1% have grown by £461 a week or £24,000 a year. By contrast, the bottom 90% have seen a real terms increase of only £2.82 a week or £147 a year.
The charity said the trends in income had been made even more adverse by increases in the cost of living over the past decade. “Since 2003 the majority of the British public (95%) have seen a 12% real terms drop in their disposable income after housing costs, while the richest 5% of the population have seen their disposable income increase.”
Osborne will this week announce details of the government’s new cap on the welfare budget and has indicated that he wants up to £12bn a year cut from the benefits bill in order to limit the impact of future rounds of austerity on Whitehall departments.
Oxfam said that for the first time more working households were in poverty than non-working ones, and predicted that the number of children living below the poverty line could increase by 800,000 by 2020. It said cuts to social security and public services were meshing with falling real incomes and a rising cost of living to create a “deeply damaging situation” in which millions were struggling to get by.
The charity said that starting with this week’s budget, the government should balance its books by raising revenues from those that could afford it – “by clamping down on companies and individuals who avoid paying their fair share of tax and starting to explore greater taxation of extreme wealth”.
The IMF recently released research showing that the ever-greater concentration of wealth and income hindered growth and said redistribution would not just reduce inequality but would be economically beneficial.
“On average, across countries and over time, the things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme”, the IMF said in a research paper. “And the resulting narrowing of inequality helped support faster and more durable growth, apart from ethical, political or broader social considerations.”
Phillips said: “Increasing inequality is a sign of economic failure rather than success. It’s far from inevitable – a result of political choices that can be reversed. It’s time for our leaders to stand up and be counted on this issue.”
Landed gentry to self-made millionaires
Duke of Westminster (Wealth: £7.9bn)
Gerald Grosvenor and his family owe the bulk of their wealth to owning 77 hectares (190 acres) of Mayfair and Belgravia, adjacent to Buckingham Palace and prime London real estate.
As the value of land rockets in the capital so too does the personal wealth of Grosvenor, formally the sixth Duke of Westminster and one of seven god parents to the new royal baby, Prince George.
The family also own 39,000 hectares in Scotland and 13,000 hectares in Spain, while their privately owned Grosvenor Estate property group has $20bn (£12bn) worth of assets under managemenSpaint including the Liverpool One shopping mall, according to leading US business magazine Forbes.
Reuben brothers (£6.9bn)
Simon and David Reuben made their early money out of metals. Born in India but brought up in London, they started in local scrap metal but branched out into trading tin and aluminium.
Their biggest break was to move into Russia just after the break-up of the Soviet Union, buying up half the country’s aluminium production facilities and befriending Oleg Deripaska, the oligarch associate of Nat Rothschild and Peter Mandelson.
The Reuben brothers are still involved in mining and metals but control a widely diversified business empire that includes property, 850 British pubs, and luxury yacht-maker Kristal Waters. They are also donors to the Conservative party.
Hinduja brothers (£6bn)
Srichand and Gopichand Hinduja co-chair the Hinduja Group, a multinational conglomerate with a presence in 37 countries and businesses ranging from trucks and lubricants to banking and healthcare.
They began their careers working in their father’s textile and trading businesses in Mumbai and Tehran, Iran but soon branched out by buying truck maker, Ashok Leyland from British Leyland and Gulf Oil from Chevron in the 1980s, while establishing banks in Switzerland and India in the 1990s.
The family’s London home is a mansion on Carlton House Terrace, overlooking St James Park and just along fromclose to Buckingham Palace, which is potentially worth £300m. They have links with the Labour party.
Cadogan family (£4bn)
The wealth of the Cadogans family is built on 90 acres36 hectares of property and land in Chelsea and Knightsbridge, west London.
Eton-educated Charles is the eighth Earl of Cadogan and ran the family business, Cadogan Estates, until 2012 when he handed it over to his son Edward, Viscount Chelsea.
Charles, who is a first cousin to the Aga Khan, started in the Coldstream Guards before going into the City.
He was briefly chairman of Chelsea Football Club in the early 1980s and his family motto is: “He who envies is the lesser man.”
Mike Ashley (£3.3bn)
Ashley owns Newcastle United football club and became a billionaire through his Sports Direct discount clothing chain which he started after leaving school.
He was the sole owner of the fast growing business, which snapped up brands such as Dunlop, Slazenger, Karrimor and Lonsdale, until it floated on the stock market in 2007. He now owns 62%.
Ashley is a regular visitor to London’s swankiest casinos but is famously publicity-averse
Source – Welfare News Service, 17 March 2014