Inequality is widening in the UK and family wealth is the driving factor

Family wealth growing at a much faster rate than income is at the heart of UK inequality, a wide-reaching new study has found. 

The Institute for Fiscal Studies documented how economic inequalities have changed in the UK over the last 60 years, finding that household wealth is increasingly becoming the number one factor driving the rich/poor divide.

Researchers found that those who already had wealth have seen it rapidly rise, whereas a long-term stagnation in wages means those without it can no longer expect to see their living standards greatly improve as they age. 

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“The fact that we can no longer be sure that the young will grow up with living standards that match their predecessors is a remarkable social change”, said Robert Joyce, deputy director of IFS.

“A generation of Britons has ridden a wave of growing asset prices, pushing up the value of their houses and investments. Meanwhile, more than a decade of stagnant earnings has held back younger generations for whom earning their own economic success has become increasingly difficult”, he continued. 

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People born in the 1980s have had lower rates of homeownership than those born in the previous four decades. The collapsing rates of homeownership mean that half of middle-income adults are living in rented accommodation so their living standards are now closer to those on the lowest incomes than those on the highest.

In 2008 it took a typical family 10 years working full time to save enough money to move from the middle to the top cohort of wealth distribution. By 2018, this had increased to almost 16 years.

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Widening UK inequality “not only presents a barrier to social mobility but also increases the risk of divisions within society,” warned Alex Beer, welfare programme head at the Nuffield Foundation, which funded the research. 

Beer said to improve inequality, the UK must develop a holistic approach to address wealth inequalities as well as stagnant wages and the increasing pressures on household spending. 

Big Issue Group this month launched the Big Futures campaign calling for long-term solutions to break the cycle of poverty, including an end to the low-wage economy. Sign our open letter here.