Monday, April 25, 2016

Let's not shed a tear for the poor rich

The people on the Sunday Times Rich List now have more wealth than the poorest 40 per cent of families. Those in the wealthiest 1 per cent own as much as all the households in the bottom 57 per cent of the population put together.

Media headlines make it seem the super-rich have fallen on hard times. Lakshmi Mittal, who topped the Sunday Times Rich List in 2008, has apparently lost three-quarters of his wealth, and is now worth a paltry £7.12bn. Oil billionaires Carrie and Fran├žois Perrodo and family have meanwhile lost 42 per cent of their fortune since last year, down to £3.35bn. Some will argue that large losses in wealth, such as those that have hit the Mittals show the dynamic nature of the Rich List – fortunes are won and lost; buccaneering 'risk-takers' and 'wealth-creators' both rewarded and punished. But many more on the list are a semi-permanent fixture.

However, the overall wealth of the richest 1,000 people rose by a staggering £28.5 billion last year – nearly £78 million a day. To put that into context, that increase alone could pay for over 1.8 million jobs, paid at the real Living Wage, for a year. According to the latest data from the Office for National Statistics, the wealthiest 1 per cent has actually seen its share of wealth increase since 2010/12, with overall wealth inequality similarly rising.

The increase in the gap between the richest and the rest isn't simply a matter of soaring wealth at the very top. The poorest 10 per cent have actually seen their average level of wealth fall, while the top 10 per cent have seen a large increase in their average wealth, from £752,900 to £895,400.  This growing inequality is mostly explained by the widening gaps in property wealth, a problem exacerbated by the fact that the main tax on property – council tax – hits poorer households hardest.

This is not a glossy catalogue of rags-to-riches stories. By some measures, we are second only to the US for the lowest levels of mobility. The most recent report from the Social Mobility and Child Poverty Commission shows how we are failing to close the gap between rich and poor. Some of the wealth of those on the Rich List will undoubtedly come from hard work but who’s? Most people work hard, and for a lot less reward.

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