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The average UK worker would need to save their earnings for 52 years in order to move to the top of the wealth ladder, new research suggests.
It would take just over half a century of saving with no outgoings for the average Brit to raise £1.3 million, the amount needed to move from the move from the middle to the top brackets of the nation’s richest, according to the Resolution Foundation.
The think tank’s Before the fall report, which examines the scale and distribution of household wealth across Britain , said intergenerational inequality had “worsened” between 2006-08 and 2020-22, warning of “entrenched wealth gaps” that “reflect the growing importance of who your parents are, rather than how hard you work, in shaping lifetime living standards”.
Using data from the Office for National Statistics’ Wealth and Assets Survey, analysts found that while Britain’s stock of wealth continued to grow during the pandemic, reaching a new record high of 7.5 times GDP, wealth gaps between rich and poor families have grown “sharply”.
Molly Broome, senior economist at the Resolution Foundation, said wealth gaps between the richest and poorest in the country were “doubly concerning” because of low rates of wealth mobility across the country.
“Wealth gaps in Britain are now so large that a typical full-time employee saving all their earnings across their entire working life would still not be able to reach the top of the wealth ladder,” she explained.
“These gaps are doubly concerning as wealth mobility in Britain is low – people that start life wealthy tend to stay wealthy, and vice versa.”
Factors including existing wealth, age, and location also had a huge impact on how rich Britons are, according to analysts. Their research showed the wealth gap between people in their early 30s and people in their early 60s has more than doubled between 2006-08 and 2020-22 – from £135,000 to £310,000 (in real cash terms).
Researchers added 53 per cent of household income growth since the early 2010s had come through “passive” earnings such as rising house prices, rather than “active behaviour”, which primarily benefitted the already-wealthy.
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Those in the South East were also found to have a median wealth of £290,000 – substantially higher than those in the North East, who had £110,000.
Ms Broome blamed soaring house prices and changes in the value of pensions for growth in wealth gaps, adding it was external factors “rather than any active behaviour on the part of individuals, such as buying homes or acquiring new assets” that widened the gulf.
Some economists have suggested chancellor Rachel Reeves may introduce a wealth tax in a bid to plug a £50bn hole at the next Budget, despite Labour’s manifesto promise not to raise taxes.
But Ms Broome warned any future wealth taxes introduced by the government could fall on pensioners or homeowners instead of being paid by the nation’s richest.
“Soaring wealth and an acute need for more revenue has prompted fresh talk of wealth taxes ahead of the Budget next month,” she said.
“But with property and pensions now representing 80 per cent of the growing bulk of household wealth, we need to be honest that higher wealth taxes are likely to fall on pensioners, Southern homeowners or their families, rather than just being paid by the super-rich.”
An HM Treasury spokesperson said: “The UK’s income tax system is highly progressive, with an internationally high Personal Allowance.
“We are also taxing wealth by getting rid of the non-domicile status in the tax system, we put VAT on private school fees and we increased taxes on private jets.”
