The wealthiest in Britain have assets worth hundreds of times that of the poorest, as wealth inequality throughout the country remains high.
That’s according to the most recent round of the Wealth and Assets Survey from the Office for National Statistics, which measures household financial wellbeing and attitudes towards wealth in the UK, covering the period from April 2018 to March 2020.
The data comes amidst rising concerns that the pandemic – which was not covered by the survey – may exacerbate an already troubling wealth gap.
Before the pandemic, the wealth of the richest 1% of households reached more than £3.6million per household. Meanwhile, the poorest 10% of households had wealth of £15,400 or less.
The ONS used the Gini coefficient to calculate the severity of wealth inequality. The coefficient ranges from 0 to 1—indicating total equality to total inequality.
Although the wealth gap has remained stable for the last 14 years, its Gini coefficient stood at 0.6 in 2020 and still represents a significant degree of inequality.
The survey also revealed stark differences between regions’ median household wealth.
The North East and Scotland – which already had the lowest figures for median household wealth – have seen that decrease by 7% and 12% respectively since 2006, when adjusted for inflation.
Despite a similar decrease of 8% in London, the region still held 15% of all wealth in Great Britain.
Meanwhile, median household wealth grew most in the East and West Midlands, by 14% and 13% respectively.
In all regions examined by the survey, inequality was highest in net financial wealth—which includes savings and investments and excludes liabilities. Inequality was next highest in pensions and property for all regions.
The last 14 years have seen a slight decrease in the proportion of wealth held in property, which currently stands at 36%. The decrease coincides with a widely reported lack of homeownership opportunities for younger generations.
According to the ONS, “people in their mid-30s to mid-40s are three times more likely to rent than they were 20 years ago.”
Meanwhile, pension wealth was the main component of wealth for households in the top 1%, which had pension assets worth around £2m on average.
The survey may underestimate the scale of wealth inequality, as according to the ONS, wealthier households can be under-represented in its surveys. Additionally, the data did not include other sources of wealth, such as that gained from business ownership.
However, the wealth gaps found in the ONS survey may be set to get worse.
The Institute for Fiscal Studies has examined the pandemic’s impact on inequality, finding that significant changes in asset prices and in savings behaviour have generated changes in wealth inequalities.
For many, their most important asset is their home - average UK house prices increased by 9% (when adjusted for inflation) between February 2020 and August 2021.
The pandemic also saw a sharp decline in spending, which outpaced declines in income and resulted in rising savings rates.
However, a quarter of those in households with significant earnings losses drew on savings, and 8% increased borrowing. This behaviour was most common among poorer individuals.
