Executive Leader Cllr Kieran Quinn

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Councillor Kieran Quinn, Executive Leader of Tameside Council

Mind the (Wealth) Gap

Wednesday, 21 June 2017

It’s time we had a conversation about wealth.

For as long as I can remember the main arguments over who has what in society have focused on income instead of wealth. The two might sound similar, but there are some important differences. While income is measured in terms of what you earn, wealth is measured in terms of everything you own, including properties, vehicles and suchlike. It’s very possible for somebody to have no income but still be incredibly wealthy, or have a high income but little or no wealth.

That distinction matters, especially when we confront the twin spectres of inequality and generational fairness. 1% of people in Britain, or around 488,000 people, own 14% or £11 trillion of the nation’s total assets. On the other end of the scale, 15% (7.3 million) either own no assets at all or are actively in debt. Since most people’s biggest source of wealth is housing the rise in house prices and the corresponding fall in home ownership, particularly among the young, is also having a serious impact on wealth inequality. A report by the Resolution Foundation has found that 82% of housing wealth increases between 1993 and 2012 were due to a boom in house prices rather than any kind of active behaviour. At its height in 2003, one in six of all working property-owning adults were earning more from the rising value of their home than they were from their job. This is wealth that young people have found themselves locked out from, to the extent that an adult born between the years 1981-85 had half as much total net wealth aged 30 than a typical adult at the same age five years before them.

Putting it bluntly, if you’re a young person in Britain today you already have less wealth than your parents did at your age, and it’s only going to get worse as things stand.

That’s a situation that can’t be allowed to continue, but as with everything when it comes to generational inequality, we need to be careful with how we go about it. It’s all too easy, as I’ve said in the past, to see it as a “zero sum game” where things can only be made better for one age group by making things worse for another one. I’ll stand by my belief that setting generations up against each other in the ways we’ve seen happen since 2010 is no way to run a society. The best way to solve generational inequality is to bring young people up instead of dragging older people down.

One way in which this could be done that I think is worthy of discussion is introducing a tax on wealth with the purpose of funding an all-out programme of both public and private housebuilding. Even as wealth has risen significantly as a share of national income, the amount of taxation raised from it has not increased since the 1980s. A tax on wealth above £1 million, with allowances made for primary residences or pensions could raise billions. Indeed, a wealth tax of between 0.5% and 1.5% in France, which has been collected since the 1980s, raised 4 billion Euros last year. That would let us double the funding already allocated to the government’s Home Building Fund, opening up the financing to build almost half a million new homes in the long-term.

Some may call it unworkable, but I’d argue the only thing that’s unworkable at the moment is keeping on going the way we’re going. If Brexit and the General Election have shown us anything, it’s that business as usual is no longer an option. Let’s start making a future that works for everyone.

Posted by: Executive Leader

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