Wealth for the many not the few??

Wealth for the many not the few??

by Ewen Stewart
article from Thursday 12, December, 2019

JUST RELEASED this week, the Office of National Statistics (ONS) report examining wealth in the UK is extraordinary and shows an unprecedented cascade of wealth for the vast majority of the population. It really is the many, not the few, who are quietly doing rather well.

As a country, however, we seem to operate in two parallel worlds. The Westminster and broadcast media one is one where the talk is predominantly of inequality, poverty and despair. Of course the reasons behind poverty need examined with every sensible and credible attempt to eradicate it, but the alternative is a reality where wealth for the vast majority of families is increasing and in an unprecedented way. 

The ONS report captures this change in great detail by age, region and decile. Politicians should take note, as only by understanding the real drivers of wealth can it be preserved and built on for the benefit of the vast majority. Destroying wealth, as Labour’s tax, spend, command and control approach will do, hits hardest those people finding existence challenging as tax receipts wither.

Britain has never been richer. The ONS survey has shown that average private household wealth in the UK increased by 13% since 2016 with the median household’s wealth of a staggering £286,000. This is some £48,000 more than when the Conservatives came to power in 2010 and £24,000 more than just before the EU referendum in 2016. Significant gains indeed.

Moreover, the report found that wealth inequality was stable and unchanged over a decade. In other words this is not about just a few people getting richer at the expense of others but the fruits of prosperity being shared relatively fairly for the many not the few.

The ONS survey looks at all forms of private wealth including property, financial, physical (chattels, gold etc) and pension wealth to give a rounded snapshot of the state of the nation. Some of the findings are staggering. 

The top 20% of households have total net wealth of over £1m with 40% of household’s worth over £500,000. Top decile wealth now averages £2.5m. Contrary to what Labour argues all deciles have positive net wealth in aggregate, something that was not the case under the last Labour Government. 

As would be expected wealth is correlated to age. This should not come as a surprise as wealth is generally earned and accumulated over time, a factor some on the Left often seem to overlook. Amazingly the most common wealth bracket for those aged between 55-64 is to be worth over £1m with an amazing 31% of that age cohort joining what is now a not-so-exclusive millionaire club.

This report is timely. It is a wake up to our politicians to remember that Britain is an immensely successful and wealthy nation. In our growing and indeed unprecedented affluence we seem to be forgetting how it was achieved. Wealth is created through innovation, investment, employment and hard work – not through state intervention, taxation and confiscation – which would soon risk this prosperity. Pretty obvious stuff, but too seldom remembered.

In a globalised world, however, wealth is highly fragile. Tax it too high and as Arthur Laffer explained it will leave and the opposite of what was intended happens as tax receipts fall. Offer so called free broadband, or even a free lunch and it will be wasted and abused, confiscate 10% of company shares, as Labour propose into a common fund and all that will happen is savings and pension funds will be destroyed. 

Corbyn’s Labour has missed the point. Our system is creating unprecedented levels of affluence for more and more people. In almost every respect the many are doing way better than any previous generation and that applies, as the ONS shows, to every decile of the population. Perhaps in our prosperity we forget how it was achieved but judging Labour’s manifesto we will get a very rude reminder of prosperity’s fragility should Corbyn and MacDonnell gain office.

Excerpt of a cartoon by Christian Adams in The Evening Standard via the Political Cartoon Gallery 16 Lower Richmond Road, London SW15 1JP. Twitter: @Cartoon4sale

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