Ministers should consider higher taxes on wealth such as inheritance tax as its value has far outstripped the growth in wages, a report has said.
Another means of tackling the unfairness of “Big Wealth” would be to provide a better safety net for the least well-off, such as more affordable homes and adult social care, according to the Institute for Public Policy Research (IPPR).
Tom Clark, author of the progressive think tank’s latest report, said attempts by the Labour Government to address wealth inequality had already run “into an almighty backlash”.
But he said ministers should continue this work as it could help those who do not have family wealth to succeed in their careers, get on the property ladder and earn more money.
The reality is that a lot more still needs to be done
Mr Clark, a journalist specialising in social sciences, said: “Wealth begets wealth, and the children of the very wealthy don’t just inherit more, but thanks to gold-plated education, introductions to the right social circles and financial cushioning that enables them to take more chances in their careers, they will also earn more and have better life chances to spend their time as they wish.”
Ministers have been criticised over plans announced at the Budget which will bring farmers into paying inheritance tax on property worth more than £1 million, when they previously benefitted from a tax break.
Plans to charge VAT on the fees of private schools have also come under fire from the Government’s political opponents.
Mr Clark added: “The first budget of the new Labour Government took a few extremely tentative steps to address some of the issues associated with ‘Big Wealth’, and even that is running into an almighty backlash. However the reality is that a lot more still needs to be done.”
The IPPR report says earnings from wealth – storing value in things like property, stocks and shares – is fast outstripping the value of earning cash from a job.
The wealthiest 10% own 57% of wealth in the UK, while the bottom 30% own little more than £1 in every £100, according to the think tank’s analysis.
If not addressed, the IPPR warns the divide between “have-a-lots” and “have-nots” will grow and block opportunities for millions.
A decrease in homeownership among younger generations is an example of this widening divide, the report said.
Alongside a suggestion to make “Big Wealth pay its way”, or provide a better safety net, the think tank’s report says ministers could take further steps to differentiate between “good wealth” and “bad wealth”.
This would require the Government to take steps to support wealth derived from productive and sustainable assets instead of wealth accumulated through inflationary gains on property and finance.
