This is the first of three pieces exploring wealth distribution in Britain. It sits within our Democratic Wealth debate, in partnership with Politics in Spires. See the second, on wealth distribution and Occupy, 'Unpacking the 99%' by Craig Berry. A defence of the 1 / 99 slogan, from Kerry-Anne Mendoza of Occupy, is published here.
The University of Birmingham established a Policy Commission on the Distribution of Wealth in September of last year to bring leading figures from the public, private and third sectors together with Birmingham academics to generate new thinking on this issue. We published Wealth inequality: key facts in December to stimulate debate and then identified a number of key questions about the nature of any ‘problem’ of wealth inequality. As one of those working on this project, I would like to set out the questions it is raising, put the call out for responses and invite readers to attend the two public debates we are holding after our evidence-gathering phase, which runs until the end of March. We plan to launch the findings of the Commission in October in the House of Lords. Details on how to get in touch are at the end of this piece.
I believe the Commission’s work is vitally important because inequalities in wealth in Britain are greater even than inequalities in income. During the current global financial crisis, and through the Occupy movement, public attention has increasingly turned to the top 1 per cent who now own approximately one fifth of all personal wealth in the UK. But while the top 1 per cent has received most attention in recent years, the top 10 per cent are also a particularly wealthy group. They now own 100 times more wealth than the bottom 10 per cent.
The distribution of income and wealth in Britain in 2006/8 by decile, based on data from the Wealth and Assets Survey
Growing interest in the distribution of wealth has been accompanied by the availability of new data, with the 2006-8 Wealth and Assets Survey providing the most rigorous data ever to be collected on the distribution of wealth in the UK. It's important to note that the very wealthiest groups in society are much less likely to take part in surveys and so their wealth is under-reported and alternative sources of data need to be analysed, such as HMRC personal wealth statistics.
Recent policy debate on the mansion tax, and a ‘temporary wealth tax’ also suggests that this is an opportune time to consider wealth inequalities and what might be done about them. Our Policy Commission on the Distribution of Wealth seeks to take advantage of this opportunity.
The first stage of the Commission involved a review of existing knowledge about the distribution of personal wealth across different groups in society, for example by gender, age, occupation, income, ethnicity, faith and so on. It considered three particular kinds of personal wealth: pensions; housing/property; and financial savings/investments. Much of this work had already been carried out by the Office for National Statistics and the National Equality Panel. The job of the Commission was therefore to summarise the evidence in order to set the scene for the second and third stages of its work. The Commission published the resulting paper, Wealth inequality: key facts in December of last year.
The second stage is currently considering the extent to which, and the ways in which, the unequal distribution of wealth may be a problem. In particular, we are considering whether there are equal or similar opportunities to accumulate wealth in the UK as well as whether the outcomes of wealth inequality cause socio-economic problems. Arguments from political theory on distributive justice will also be considered here. A key issue will be whether the distribution of wealth is a distinct issue, separate from the distribution of income, or whether the two are part of a broader issue around the overall distribution of material resources. During this stage of the Commission’s work, we are also considering whether there are advantages to enabling people to accumulate large amounts of wealth, for example, in creating incentives for entrepreneurs or others to the overall benefit of the economy.
As part of this stage, we have identified a number of key questions about the nature of any ‘problem’ of wealth inequality and are currently gathering evidence on this. We are keen to receive any responses to these questions before March 31st.
The final, though arguably most important, stage of the Commission’s work will be to consider policy options. These will depend on the nature of the problem identified in the second stage but we have already established three key policy-related questions that we are keen to seek evidence/views on. These are:
- - How can we spread opportunities to accumulate different kinds of wealth?
- - How can we help those with moderate amounts of different kinds of wealth to maximise the benefits from wealth-holding?
- - Can the practical challenges presented by certain kinds of wealth taxes (e.g. a lifetime transfer tax or land tax) be overcome?
The Commission is chaired by the Right Reverend David Urquhart, Lord Bishop of Birmingham and led by Andy Mullineux, Professor of Global Finance and I. Others involved in the project are Phillip Blond, Director, ResPublica; Paul Cox, Senior Lecturer of Finance, Birmingham Business School; Rt Hon Frank Field, Labour MP for Birkenhead; Paul Johnson, Director of the Institute for Fiscal Studies; Baroness Ruth Lister of Burtersett CBE, Emeritus Professor of Social Policy, Loughborough University; Andy Lymer, Professor of Accounting and Taxation, Birmingham Business School; Ed Mayo, Secretary General of Co-operatives UK; Stephen McKay, Professor of Social Research, University of Birmingham; Sir Brian Pomeroy CBE, Non-executive FSA Board Member; and Susan Smith, Honorary Professor of Geography and Mistress of Girton College, Cambridge.
We are keen to recieve input from a wide range of voices. To register your interest and/or submit evidence, please email us on [email protected]. You can also attend our public debates, to be be hosted in Birmingham on Saturday May 11th and in London on Thursday May 16th. We will place further details of these events on our website and on twitter @BhamPolicyIV nearer the time.