One technical point and a surmise.
The technical point:
Researchers analysed the total wealth accrued by households over a lifetime. The top 10%, led by higher professionals, had amassed wealth of £2.2m, including property and pension assets, by the time they drew close to retirement (aged 55-64), while the bottom 10% of households, led by routine manual workers, had amassed less than £8,000.
This includes housing and pensions as they say. And that latter figure is simply wrong.
For routine manual workers will have accrued a right to a State pension (as does everyone of course). Yes, the right to a State pension is an asset just as much as a private pension plan is. That pension is worth around £5,000 a year or so (ignoring the minimum pension guarantee etc) and life expectancy at age 65 is something like 15 years or so, isn\’t it? Ignoring discounting (simply because I cannot be bothered to work it out) that gives us a capital value of that pension of £75,000 (obviously less if I\’ve over estimated lifespan there).
So, anyone who has reached retirement age after even the most menial of working lives has an asset worth £75,000.
(If we include the minimum guarantee, even after not working all their lives too).
Now I\’m a little hazy on how housing benefit works for pensioners but I asssume that pensioners are eligible. And of course, of that bottom 10% a number will be living in subsidised social housing. Which again means that we\’re not comparing like with like. That £8,000 figure is simply wrong.
We\’re comparing the fully visible cost of housing (as in, it\’s bought and paid for) without looking at the value of housing subsidy on offer for those who have not bought and paid for it.
That latter value is of course the net present value of either the rent subsidy they receive through housing benefit or the housing subsidy they receive through social housing. That they can\’t sell these income flows and go and whoop it up down the pub as those with their own house can doesn\’t mean that they\’re not assets.
So technically the numbers used here are wrong. For they are not including the assets that the poor have.
Now the surmise: council housing produces wealth inequality.
For, as above, a goodly chunk of the wealth inequality as measured is ownership of property. If you cannot purchase housing, which if you live in a council place you cannot, this is going to lead to wealth inequality at the end of life. The one policy which would reduce this inequality most effectively would be….umm, well, to do what Maggie did, sell council housing to tenants.
So, who is up for that? Come on, all you peeps who will no doubt be using this report to bemoan wealth inequality, which of you is willing to argue for the simplest and most obvious policy which will reduce it?