The Rich Don’t Get Richer

John Rentoul

rich 300x225 The Rich Dont Get RicherI once wrote a book called The Rich Get Richer, which was about a period, the 1980s, when it was true.

Since then, I have spent much of my time trying to point out that, despite what everybody knows, the degree of inequality in Britain has stayed about the same since the sharp increase during the Great Thatcher Divisiveness. In particular, I have pointed out that it was a remarkable achievement for the New Labour governments to have avoided any significant increase in inequality in an open economy such as Britain’s.

One problem with this defence of Labour’s record is that, while information on the distribution of incomes is of high quality, the only consistent and comprehensive data series on the distribution of wealth was abandoned in 2003 because officials at HM Revenue & Customs decided it was “not suitable” for estimating the distribution of wealth. I reported this at the time.* The reasons are explained more fully in the HMRC’s UK Personal Wealth Statistics 2008-10, which refers us instead to the Office for National Statistics’ Wealth and Assets Survey, the first of which was conducted in 2006-08. I had ignored it because, as the first survey of its kind, it did not tell us anything about trends over time.

However, in July this year the results of the second wave of the Wealth and Assets Survey were published, covering 2008-10. A summary is here, but the interesting bit is Chapter 2, which includes this table:

ATT00001 The Rich Dont Get Richer

_______This shows that the distribution of wealth did not change significantly over the period, and that, if it did, it became more equal: the Gini score for total wealth fell from 62 per cent to 61 per cent.

Three egalitarian cheers then for Gordon Brown, whose government is covered, more or less, by these figures. Or possibly for the recession, in which, contrary to popular belief about bankers and the rich getting richer while the poor got poorer, the opposite happened (slightly).

This may seem no big deal, but it is consistent with my assumption that the distribution of wealth did not change much during the Labour years, contrary to the easy anti-politics, Guardian-Mail Molotov-Ribbentrop slur about New Labour’s being soft on the rich.

It is what happens next that gets interesting, of course. Unfortunately, we have a long wait before the Wealth and Assets Survey wave three.

*My old blog post has been erased by the sea of internet data, but I reproduce it here (most of the links are now dead, though):

Saturday, 05 January 2008

HMRC loses more data

By John Rentoul
Well, not loses exactly, it is just that the figures are “clearly anomalous” and therefore not suitable for publication. And HM Revenue and Customs is unable to tell us (click here to view delay table) when this problem will be resolved.
The statistics are the official estimates for the distribution of wealth, derived from inheritance tax data. This is an important source of information about how unequal a society the UK is. I am interested in them partly because they provide a way of judging the record of the Blair Government in promoting social justice.
The last available figures were for 2003, and cover the period from 1976. They were published, after a delay, in March 2006. Since then, the data for 2004 have been delayed and then scrapped altogether, and now the figures for 2005 have been delayed twice.
This time, HMRC says that “considerable further work will be required to identify the contributing factors before we can start to address the problems”. In other words, the whole series has probably bitten the dust.
For what it is worth, the data showed a sharp increase in inequality during the 1990s, with no significant change since 1997. Everyone assumes that inequality has increased over the past 10 years, but the evidence of the distribution of income (table A3: the Gini coefficient is the statistical measure of overall inequality) is that, after an increase in the late Thatcher period, there has been no significant change. The evidence about the distribution of wealth is now limited and questionable. Conspiracy theorists will no doubt assume that the latest figures showed a huge increase in inequality, and were too embarrassing for a Labour Government to publish. I doubt it, but would like to know more.

Posted at 11:53 AM in John Rentoul

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  • Toocleverbyhalf

    Labour’s success in slowing or, if your figures are correct, stopping the rise in the gap between the incomes of the “able easily to afford school fees” section of the population and the rest was remarkable. Alas, like many other of its achievements, it’s been largely forgotten.

    This must in a large part be because British media is controlled and operated primarily by people in the “able easily to afford school fees” section who, despite what the more leftie-leaning ones of them might say in public, really don’t want the process to go too far the other way.

    So we’ll have to go on enduring a situation in which about half a million children have parents who can afford to shell out for the education of their brats more than most people take home in total each year.

    It’s a mean old world…

  • Pacificweather

    You have hit upon and interesting statistic. The rich did not get richer under labour. Well done. Just what should happen under a labour goverment. However, unlike under the Wilson government, the poor got poorer. At the end of the Labour goverment, below inflation pay rises were the norm whereas, under Wilson, working class wages get pace with inflation.

  • John Rentoul

    I am pleased to say that is not right. The poor became better off under Labour. The gap between the poor and the rich did not change. (It is my fault, because my headline is misleading. Of course, the rich became richer; but so did the poor, at the same rate. Society did not become more unequal.)

  • Pacificweather

    I think pensioners might dispute that. Despite his promise to do so, Mr. Brown never did link pensions to the wages index and then there was the infamous 70p increase. It took a Conservative government to implement the wage index link. But as wages are not keeping place with inflation I guess that was an easier decision to make.

    At a person level, the gap between the income of the average worker’s salary and the average CEO’s salary definitely increased so I think you will have difficulty selling your statistics to the majority of people.

    It also begs the question why weren’t the rich getting richer if, as Mr. Brown claimed, the economy was booming. Surely, that is a good indicator that the boom was all smoke and mirrors.

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