Author Archives: Edward Morello

Take less from the rich

By Edward Morello | Fri 3rd November 2017 - 4:30 pm

According to The Equality Trust the UK has the 7th most unequal distribution of income amongst OECD countries. Earlier this year The Resolution Foundation estimated that the richest 1% of the UK population owns 14% of the nation’s assets (some £11 trillion worth), while the poorest the 15%, or nearly 7.3 million people, own no assets or are in debt.

Understandably given this massive inequality in the distribution of wealth there are often calls for the rich to be taxed more. After all, clearly they can afford it, right? And yet the richest 1% of taxpayers already generate nearly 30% of all the income tax raised, while only 10% comes from the poorer half of the population. Clearly it is only right that those who have more contribute more, but it is also true that simply pursuing the cause of demanding more from them does less for us as individuals than raising more from the rest of the population by increasing household income.

The problem is the real-term stagnation in household income since the 2007 crash. As Mark Carney, Governor of the Bank of England, observed:

Real income growth has not been as weak in the UK since the middle of the 19th century.” In fact average earnings are not forecast to return to their pre-crisis peak of 2007 until 2022, until then average working households will continue to have less disposable income than they did in before the crash.

Research now suggests Millennials will be the first generation to be poorer than their parents, and homeownership has slumped to 63.5%, it’s lowest since 1987.

Based on the government’s own definition some 13 million people in the UK are living in poverty, at a cost to the public purse (according to The Joseph Rowntree Foundation) of around £78bn a year. To paraphrase one wit – It is very difficult to believe in capitalism if you don’t have any capital, or at the very least believe one day you might.