The wealth gap between households has widened since the financial crisis within many parts of the country including Wales, the East Midlands and Yorkshire and the Humber, according to new analysis published today (Saturday) by the Resolution Foundation.
Wealth – which includes property, pensions, financial assets and possessions – is a major factor in living standards, allowing people to deal with unexpected expenses, take risks and help the next generation. The analysis compares ‘high-wealth’ households in a region – those who have more wealth than 75 per cent of households – with ‘low-wealth’ households – those who have more wealth than just 25 per cent of households.
Comparing the two groups, the analysis finds that London has the largest gap, with high-wealth Londoners having 24 times more than low-wealth households, who have lower wealth in London than any other region (just £35,000, compared to £61,000 for Great Britain as a whole). But the analysis shows that divides in other regions should not be underestimated as the recent national wealth boom has not fed through to low-wealth families in many parts of the country.
High-wealth households in the East Midlands are 12 times better off than low-wealth groups. While the South West has the smallest gap – 6 times – in relative terms, in cash terms this represents a gap of over half a million pounds (£579,000).
The Foundation cautions that while overall wealth inequality has not risen of late, properly understanding regional trends is crucial. Overall household wealth has boomed in Britain in recent years, up from £10.1 trillion to £12.8 trillion between 2006-8 and 2014-16 after adjusting for inflation. But while that growth has benefitted wealthier households in every region except the North East it has not fed through to lower wealth families in almost half the British regions who are yet to see their wealth recover to pre-crisis levels.
In Wales, the East Midlands, the East of England and Yorkshire and the Humber, high-wealth households are now better off than they were in 2006-08 after inflation, but low-wealth households remain less wealthy. The analysis shows low-wealth households in the East Midlands are 42 per cent less wealthy than in 2006-08 in real terms. This represents a drop in wealth of over £30,000 in 2014-16 terms. In the North East, both groups are worse off, though those in high-wealth households suffered less (a 3 per cent fall since 2006-08 in real terms against a much more significant 17 per cent for low-wealth households).
The analysis does point to areas for optimism. Low-wealth households have seen substantial wealth increases across the South of England and Scotland. In Scotland, the South West, West Midlands, and the South East, both low- and high-wealth households are now better off, with the wealth gap shrinking between 2006-08 and 2014-16, as growth for low-wealth households outpaced that of high-wealth households.
Conor D’Arcy, Senior Policy and Research Analyst at the Resolution Foundation, said:
”When people think of wealth gaps and inequality in Britain, it’s often London that springs to mind. And though the capital is by far the most unequal region, there are big differences in wealth within every region and nation. These gaps matter, since wealth contributes to where families can live, how they deal with income shocks and the risks they can take.
“While household wealth overall has grown strongly in recent years and benefitted wealthier households across Britain, it has not fed through to lower wealth households in every region. In some parts of the country – including the East Midlands, East of England, Wales and Yorkshire – the gap between wealthy and poorer households has widened since the financial crisis.”