In UK wealth gap unchanged, says report

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By Emily Cadman

The amount of wealth owned by the top 10 per cent of UK households has barely changed compared to the years before the recession and still stands at 44 per cent, according to official data released yesterday that casts doubt on claims that the inequality gap is widening.

The figures released by the Office for National Statistics run counter to some of the arguments in French economist Thomas Piketty’s influential and widely-discussed new book Capital In The Twenty-First Century, which claims the world is becoming more unequal and returning to a 19th century order where prosperity hinges on inherited wealth.

While the ONS statistics show wealth inequality is broadly the same as in 2006, there has been a generational shift that has benefited older people. Despite a widespread outcry that ultra low interest rates and quantitative easing have hurt pension savers, it is those on the verge of retirement who have been winners.

In 2012, 22 per cent of households aged 55-64 had wealth in excess of £1m, up from 16 per cent before the crisis. Private pension savings now account for the largest proportion of household wealth – 38 per cent compared to 37 per cent for property – as those near retirement gain from generous defined-benefit schemes.

By contrast, 14 per cent of those aged 25-34, a generation which has steadily seen the age at which they can hope to buy a property recede, have assets of less that £12,500. The key question for policy makers will be whether this generation can catch up and accumulate similar levels of wealth to their parents – or whether younger people will be permanently poorer.

Laura Gardiner, senior policy analyst at the Resolution Foundation, said she believed rising house prices and financial markets meant there was still “good reason” to expect the gap between wealthier and poorer households to start widening.

The figures point to the widening wealth gap between London and the rest of the country, with household wealth in the capital rising more than five times faster than the English average in the six years between 2006 and 2012.

The survey of more than 20,000 households also highlights the divergence in property wealth caused by second or buy-to-let homes. A third of households in the UK do not own their home, but 11 per cent own property in addition to their main residence. (FT)

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