New report finds inequality corresponds with passive income the rich receive

52 years – a lifetime of work. That’s how long it would take the average UK earner to join the richest 10%. And that’s if the less individual didn’t spend a single penny of their earnings and saved the lot.

Yet the richest 10% rely on average earners to maintain society, especially essential workers. The Resolution Foundation report notes how skyrocketing inequality corresponds with an increase in the amount of passive income the rich are receiving. The amount the rich gain from inflated property prices and rent is the highest driver of passive income. This essentially means the rich are sponging off the working class and gaining money for free. And the way the system is set up means they’ve claimed an everyday individual’s entire lifetime.

The wealth the rich own vastly outpaces the amount workers produce. The Resolution Foundation points out that the total of Britain’s wealth is 7.5 times GDP.

Attlee V Thatcher

The wealth gap is also reflected in intergenerational terms. From 2006/8 to 2020/22, inequality between people of their early 30s and people in their early 60s doubled, the Resolution Foundation notes. Baby boomers benefited largely due to the post war policies of the Clement Attlee government, where he nationalised 20% of the economy, bringing down the cost of living for every individual and businesses.

Housing was readily available and affordable, with home ownership the key driver of the intergenerational wealth gap. Now housing is extremely expensive and key utilities are privatised. The last time housing was as pricey as today, compared to average earnings, was 1876. The ruling class’ neoliberal counter policies, first under Margaret Thatcher from 1979, have taken us 150 years into the past.

“Doubling concerning”

The Resolution Foundation also finds that 76% of people from low income families do not move one decile up or down in wealth over a four year period. This means that the class one is born in largely determines outcome, rather than work.

The thinktank further points out that wealth inequality depends on location. Median wealth per adult is £290,000 in the South East and just £110,000 in the North East.

Molly Broome, Senior Economist at the Resolution Foundation, said:

Wealth gaps in Britain are now so large that a typical full-time employee saving all their earnings across their entire working life would still not be able to reach the top of the wealth ladder. These gaps are doubly concerning as wealth mobility in Britain is low – people that start life wealthy tend to stay wealthy, and vice versa. Rising house prices and changes in the value of pension promises account for most of the growth in wealth gaps since the early 2010s, rather than any active behaviour on the part of individuals, such as buying homes or acquiring new assets.

Soaring wealth and an acute need for more revenue has prompted fresh talk of wealth taxes ahead of the Budget next month. But with property and pensions now representing 80 per cent of the growing bulk of household wealth, we need to be honest that higher wealth taxes are likely to fall on pensioners, Southern homeowners or their families, rather than just being paid by the super-rich.

Featured image via Unsplash/Christopher Bill