Britain is the only G7 country where inequality has got worse this century

The amount of UK wealth controlled by the richest 10% in the population increased to 54.1% this year, a rise from 51.5% in 2000, according to the annual Credit Suisse global wealth report. Most of this rise has actually occurred since the financial crash since in 2007 their share of wealth was 52%. They have become wealthier because financial assets such as shares have risen strongly in value as investors sought higher returns with interest rates at all-time lows. Another factor was the pre-eminence of London with its soaring property prices and its position as the UK’s financial powerhouse unmatched by other European countries, including Germany. As a consequence Britain now has 44 dollar billionaires, a 5-fold increase in just 14 years from 2000 when there were only 8. Similarly the number of people in Britain whose net worth (a market euphemism for often ill-gotten gains) is at least £30 million almost quadrupled to 4,660. If the value of equity in houses is included, Britain now has 2 million dollar millionaires.

This is the same country that has, according to End Child Poverty research, a quarter of all its children living in poverty if housing costs are taken into account (as of course they should be). This figure actually rises above 40% in some of the most expensive parts of London, illustrating how extreme wealth and deep poverty are increasingly found side by side. In the most socially deprived areas of Britain fully 50% of youngsters now live in families struggling below the poverty line set at 60% of the average (median) wage. Altogether there are no less than 2.3 million children in Britain today living below this minimal subsistence standard.

Inequality on this scale will only be resolved by radical measures far beyond the conventional thinking of reformers today. It will certainly not be solved by the promise of minimum pay of £8 an hour postponed till 2020 – unless that is upped to £10 an hour. There are really only three mechanisms which are likely to roll back the mountain of inequality that has built up in the last 30 years. One is a systematic and remorseless purge of tax avoidance by the richest individuals (via tax havens) and multinational companies (via transfer pricing). The second is by establishing the ratio between top and bottom incomes and slowly but relentlessly reducing it over time. On that basis I have sought a debate on the floor of the Commons to advocate this: “that this House calls on the Government to set guideline targets for remuneration which over time reduce the ratio between top and bottom incomes in large organisations to no more than 50:1. The third is by giving a vote on executive pay, not just to shareholders, but to representatives of the workforce who have a right to it as the co-creators of the company’s wealth. Or, perhaps, all three.

Image credit: We are not your slaves (pic by Edinburgh Coalition Against Poverty)