The divide between rich and poor in Britain is widening dramatically, according to, well, all of the reports. Analysis published yesterday has shown that Britain’s wealthiest have fared much better through the economic downtown than the worst-off, with median financial wealth amongst the top income group having increased by 64 per cent between 2005 and 2012-2013, while median financial wealth amongst the lowest income group has fallen by 57 per cent during the same period. The report Wealth in the Downturn: Winners and losers, published by the Social Market Foundation (SMF), demonstrates how richer households have made use of record-low interest rates to pay off debts and subsequently bolster savings, while poorer households now have an average of less than a week’s wages set aside and are more often in the red than before the recession.
The report also signals a widening of the intergenerational gap in income and wealth, with wages for 26-35 year olds falling at a greater rate than the average in light of the financial crisis, and people in this age group now significantly less likely to own a home now than ten years ago.
The findings follow a report published by the Fabian Society last month which said the earnings of high income households will rise 11 times faster than the earnings of low income households in Britain in the course of the next 15 years. These projections, based on figures from the Office for Budget Responsibility (OBR) and the Office for National Statistics (ONS), see the number of people in poverty rising from 10.2 million in 2015 to 13.8 million in 2030, an increase of 3.6 million. For children the increase will be 1.2 million, from 2.5 million to 3.7 million.
And, in the place of building much needed social protection floors, the Coalition Government has instead overseen an expansion of randomly distributed trap doors. Analysis published last week by the Institute for Fiscal Studies (IFS) showed that Government spending cuts have been higher in the most deprived areas of England. This was a conclusion corroborated by the House of Commons Public Accounts Committee report into the financial sustainability of local authorities, which found funding reductions made by the Department for Communities and Local Government ranged from five per cent and 40 per cent between local authorities, with the most deprived authorities being handed the largest cuts.
Beyond the plain inexcusability that Britain could become the richest country in the G7 by the 2030s while leaving behind 13.8 million people, the fact that inequality oozes economic sluggishness does not look good for anyone. More must be done.
But the tired rhetoric that growth alone is what is needed to bridge the chasm between rich and poor is as boring and impotent as those who advocate for it. Indeed, Government forecasts of GDP growth in the next Parliament rely on growth in consumer spending holding strong. But for a demonstrably growing number of people the goal will not be to increase their spending but to rebuild their finances.
The search for innovative, inclusive, and sustainable frameworks which fully break down the structures that keep people poor must be at the heart of the General Election campaign.
