Rich House, Poor House and rising wealth inequality

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 by the Institute for Public Policy Research (IPPR). 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 per cent of households have five times the wealth of the bottom 50 per cent. 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 per cent 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 per cent of people think 18-24 year olds will have more debt than older generations, 74 per cent think they will have less in savings and investments than previous generations and 72 per cent 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 per cent (from £70,400 to £85,700) despite household income only rising 10.3 per cent. This will include a 39.8 per cent 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. 

The report further highlights:

• An unequal society:  Wealth inequality is twice as great as income inequality with the wealthiest 10 per cent of households owning 45 per cent of the nation’s wealth, while the least wealthy 50 per cent of all households own just 9 per cent.
• Another lost decade: 48 per cent of people think that wealth inequality has become more of an important issue in the last 10 years and only four per cent 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 per cent of total disposable income, up from 147 per cent.
• Desire for action from the Government: The new polling in the report has found that 57 per cent of people think the government should do more to reduce wealth inequality, and only five per cent think less should be done.
• Impact on family: The YouGov polling found that 30 per cent 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.”

* 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 per cent, the other is from the poorest 10 per cent.http://www.channel5.com/show/rich-house-poor-house/

* IPPR https://www.ippr.org/

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