New research shows 10% of us now have assets worth around £1 million!
One in ten households in the UK are millionaires, on paper at least, new research from the London School of Economics (LSE) has shown.
This wealth includes a household’s entire assets, including property, personal possessions and non-state pension plans.
This works out at a total wealth of £5.5 trillion, excluding private pensions.
The research also showed the huge disparity between household wealth across the country. The richest top 10% of households own 850 times as much as the bottom 10%. And the top 1% of the population owns 14% of the UK’s wealth – an average of more than £5 million each.
Household wealth
The total figure of household wealth is four times higher that of the national income, says Professor John Hills, who headed up the research team at LSE.
Specific factors have contributed to household wealth in the past decade. Between 1995 and 2005 the housing boom helped certain people – mainly those who already had a mortgage and were middle aged.
Homeowners in 2005 saw the biggest increase in wealth, by an average rise of £186,000, for those who were outright owners.
Wealthy parents were also a major factor in providing better education, employment and health, which then led to further wealth.
Inheritance
The amount people inherit makes up 4% of the national income, with one in 40 of us set to receive an inheritance. People who will be left a sum after a loved one dies are also more likely to already be better off, therefore widening differences in wealth.
[SPOTLIGHT]The amount of inheritance left also varies widely across the country. Half of the total amount between 1996 and 2005 went to the top tenth of inheritors – which is just 2% of the population.
Unequal distribution
Over the past 20 years the gap between the comfortably off and super rich has grown substantially. There is also no clear consistent pattern in tax and social policies, such as social security, housing, education and care.
Professor Hills explains that it would now take many more years of saving for someone with a middle income to move up the wealth range than in the past.
He also points out that there is not enough being done for those with low assets and in debt.
“Our research shows that there are very sharp differences in treatment between people. Some are strongly encouraged and helped by the tax system to accumulate wealth in particular forms, while others face strong disincentives from means-testing to do so.
“People can even face both at the same time. These systems often reinforce wealth inequalities, rather than narrow them,” he said.
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