The richest 1% of households in the UK each have fortunes of at least £3.6m, according to new official figures that show the inequality gap was yawning even before the pandemic struck.
At the other end of the scale, the poorest 10% of households have just £15,400 or less, with almost half burdened with more debts than they had in assets, according to figures released on Friday by the Office for National Statistics (ONS).
It means the gap between rich and poor has widened to the largest in more than a decade. The ONS said the income inequality gap as measured by the Gini coefficient had “steadily increased to 36.3%”, which was “the highest level of income inequality since 2010”.
A Gini coefficient of 0% represents total equality where everyone has the same and 100% represents total inequality, where one person owns all the wealth.
“The gap between the richest in society and the rest of the population has widened over the 10-year period,” the ONS said. “The wealthiest 10% of households held 43% of all the wealth in Great Britain in the latest period; in comparison, the bottom 50% held only 9%.”
There are an estimated 27.8m households in the UK. In Great Britain there are just 263,000 in the top 1%.
The ONS figures released on Friday cover the financial year to the end of March 2020, and economists said the gap between rich and poor is likely to have increased further during the pandemic as the already wealthy benefited from soaring stock markets.
More than 258,000 British people became millionaires last year, according to research by investment bank Credit Suisse, taking the total number in the UK to a record 2.5m.
Robert Palmer, executive director of lobbying group Tax Justice UK, said: “Even before the pandemic it was clear that wealth inequality was entrenched. Since Covid hit the wealthy have seen their riches grow, while those with less have struggled.”
Krishan Shah, researcher at the Resolution Foundation, said: “With limited financial resources to protect them from economic shocks, the poorest households were undoubtedly in the worst position heading in to the pandemic. Policymakers need to help those worst-affected build financial resilience ahead of future shocks.”
The median average household wealth across the UK was £302,500, only a marginal increase on previous years. However, the report revealed stark divisions between the old versus the young, the south compared with the north, and the gulf between white people and those of other ethnicities.
In families where the head of the household was aged 55 or over and still in work, the average household wealth was £553,400. “The wealth of this group was 25 times higher than those aged 16 to 24 years,” the ONS said.
In the south-east, median household wealth was £503,400, up 43% since 2006 when adjusting for inflation. While in north-east England median wealth was £168,500, which the ONS said was lower than in 2006.
Arun Advani, an assistant professor at the University of Warwick’s economics department, said the data revealed “stark” differences between different ethnic groups. “Households whose ‘household reference person’ is of white ethnicity are four times more likely to have wealth in excess of £500,000 than households with a black African HRP,” he said.
Advani also said ONS data was likely to vastly underestimate the share of wealth going to the richest households because the data does not include business wealth, and because “the very wealthy do not tend to respond to such surveys”.