Is Inequality Increasing In The UK

00:00:00: Hello, we're Sandalwood.

00:00:01: And Sage!

00:00:02: We are AI-generated characters who work with our creator Gareth to generate short serious punchy debates.

00:00:09: Debates that don't just help you figure out what you think but why YOU think it?

00:00:15: So...what do we argue about this week?

00:00:28: Half the British population now agrees government should redistribute income from The Better Off To The Less Well Of up by ten percentage points since two thousand nineteen And fifty percent of those polled by YouGov in twenty-five favoured specifically reducing the gap between rich and poor.

00:01:06: and that we'd all be happier if thought more deeply about the reality behind The Illusion.

00:01:14: Well you know Sanderwood, the fifty richest families in Britain now own more wealth than the poorest.

00:01:19: thirty-four million people combined That feels pretty real to most ordinary people I'm going to argue.

00:01:27: growing inequality is indeed a reality with serious implications for social justice cohesion.

00:01:37: It's undeniable, Sanderwood that pre-tax income inequality has been roughly flat.

00:01:42: But contemporary British inequality isn't about salary slips.

00:01:45: it is the explosion of unearned wealth extreme concentration at top degrading public services and death intergenerational mobility.

00:01:55: John Byrne Murdoch neatly summarised this shift in The Financial Times.

00:02:00: While wealth inequality metrics haven't shifted much relative importance over income has skyrocketed.

00:02:07: Average UK household disposable net worth has doubled in real terms since the mid-nineteen nineties, while incomes grew by just thirty percent.

00:02:17: A generation ago saving from an average salary could take you.

00:02:30: The Institute for Fiscal Studies notes this simply reflects stability across the middle, while top one percent pulled away into another stratosphere.

00:02:39: Since nineteen ninety – the number of UK billionaires rose from fifteen to one hundred sixty-five with their wealth swelling from four per cent GDP to twenty two per cent a far faster surge than global average.

00:02:55: We see exact same concentration in executive pay.

00:02:59: High-pay centre data shows the FTSE one hundred CEO to work a pay ratio shot from twenty two, one in the nineteen eighties To nearly one hundred to one today fueled by a cultural fetish for heroic corporate leadership and The weakening of organised labour.

00:03:17: The real casualty is mobility.

00:03:20: Considered to London teachers on identical salaries One comes from modest means spends over forty percent Of their income on private rent carry student debt and faces zero inheritance.

00:03:32: The other receives a gifted deposit from wealthy parents, had university fees covered and stands to inherit six figures.

00:03:40: On paper their incomes are equal.

00:03:42: In reality they're material.

00:03:44: lives sit oceans apart with no chance of converging through hard work.

00:03:49: As Bern Merdock observed when the gap between the comfortably off-and-the just getting started becomes too wide for Society starts to break down.

00:04:02: Asset ownership reflects this generational divide between the two thousand eight financial crash and covid-nineteen.

00:04:09: average real wealth for Britons in their sixties rose by fifty five percent while For those in there thirties it dropped by a third.

00:04:18: geographically, This manifests as regional disparities worse than the divide between northern and southern Italy.

00:04:25: Crucially standard income metrics ignore the social wage.

00:04:30: Lower income families rely on state schools, the NHS and local buses.

00:04:36: A decade of post-crash austerity eroded these services delivering a hidden tax on the poor while higher earners bought private workarounds.

00:04:46: The visible evidence isn't hidden in spreadsheets.

00:04:49: it's on our streets in rising homelessness and record food bank usage.

00:04:56: British social attitudes data shows eighty-four percent of people believe the income gap is too large, tellingly that figure rises to eighty five per cent among retirees.

00:05:08: The very generation watch the ladder get pulled up behind them.

00:05:12: I'm not going to contest every point.

00:05:14: Sage executive pay has outpaced average wages.

00:05:20: public anxiety over fairness and public services are under pressure.

00:05:28: But my argument is straightforward, we should not be worrying about rising inequality to the extent these issues exist.

00:05:39: Inequality Is Not The Cause.

00:05:42: Some groups have gained Others Have Lost.

00:05:54: highly specific policy dysfunctions.

00:05:58: Here is the UK inequality story.

00:06:01: in a nutshell, income inequality was flat through the nineteen seventies spiked sharply and has sat on a flat forty year plateau ever since.

00:06:15: meanwhile wealth inequality so far as it can be accurately tracked Overall, inequality across British society is structurally unchanged.

00:06:33: So what is creating public anxiety?

00:06:37: I highlight four distinct issues.

00:06:40: first executive pay.

00:06:43: top earners are pulling ahead not because they contribute exponentially more value but because the collapse of union leverage created an open season for self enrichment.

00:06:56: In Germany, worker representation on boards keeps the CEO-to-worker pay ratio around fifty to one half of UK level.

00:07:08: This isn't an inequality crisis.

00:07:11: it's a governance failure regarding how we value corporate leadership.

00:07:17: Second The asset gap.

00:07:20: John Byrne Murdoch rightly showed that wealth has grown faster than earnings.

00:07:26: Since two thousand sixteen, an S&P five hundred tracker fund has quadrupled twice as fast a UK stock market tracker while real UK earnings grew far slower again.

00:07:42: This is an economy story driven by low domestic growth and low savings rates not a systemic inequality machine.

00:07:53: third the social wage.

00:07:55: A decade of austerity squeezed low income families who rely on subsidised buses, local care and state services.

00:08:06: When a bus route is cancelled –a low earner's effective cost-of living spikes!

00:08:12: But the fix isn't a broad ideological war on inequality.

00:08:17: it is reinvesting in public infrastructure.

00:08:22: Fourth housing.

00:08:24: The nightmare younger generations face buying or renting a home is real, severely damaging mobility and family formation.

00:08:34: But this is supply-and-planning crisis.

00:08:38: blaming inequality masks the real failure.

00:08:42: decades of failing to build enough houses To suggest governments have ignored lower earners as flat wrong.

00:08:52: Post-crash tax policy has done heavy lifting, introducing higher tax brackets and dividend reforms actively clawed back top gains.

00:09:04: The minimum wage and state pension have risen relative to average earnings.

00:09:10: Institute for Fiscal Studies data confirms that post-tax income inequality actually narrowed during this period.

00:09:20: Britain does not have a rising inequality problem.

00:09:24: Different groups have simply risen and fallen within an overall steady state.

00:09:30: What we do have is unbridled executive pay, sluggish economic growth A degraded public realm And a broken housing market.

00:09:42: Conflating these specific policy failures into a generic inequality crisis only prevents us from fixing them.

00:10:13: Because building fewer homes than we form households drives up prices regardless of who owns them.

00:10:21: If we built two million homes, prices would drop for everyone.

00:10:26: Blaming patrimonial capitalism is just fancy language that hides a basic planning

00:10:33: failure.".

00:10:34: But it isn't just planning, is it?

00:10:36: Take those two teachers I mentioned earlier – one gets a gifted deposit from their parents the other pays forty percent.

00:10:45: Even if you build more flats, the teacher with a family bank account buys first.

00:10:50: The market actively rewards inherited wealth over hard

00:10:53: work.".

00:10:54: I don't doubt that life is unequal and some are luckier than others... ...the question is has it been getting worse?

00:11:03: Look at Goldthorpe's research on occupational class.

00:11:07: A working-class kid has the same relative odds of becoming professional today as thirty years ago.

00:11:16: Oh, come off it Sandalwood!

00:11:18: Social class is a twenty-first century ghost metric if it ignores lifetime wealth.

00:11:23: A teacher whose parents own a house in Redcar and are renting in London without an inheritance isn't in the same material universe of a teacher who owns their home will be inheriting half million pounds from her house Surrey.

00:11:36: The IFS data shows intergenerational mobility measured by actual financial outcomes is at a fifty year low.

00:11:44: But that's precisely my point about policy failure versus inequality, that divergence is driven by housing costs and stock market returns outstripping wage growth.

00:11:58: if the S&P five hundred quadruples while British productivity stalls capital owners of US assets will inevitably pull ahead.

00:12:10: That's It's an

00:12:12: inequality problem when the top one percent pull away into another stratosphere while public services crumble.

00:12:19: You mentioned tax policy doing heavy lifting, but tax records show that the top-one per cent nearly tripled their share of income since nineteen eighty

00:12:27: The number of FTSE two hundred fifty CEOs plus British billionaires is much less than one for every one hundred thousand people.

00:12:37: They don't budge the inequality index by a hair's breadth.

00:12:42: In fact, post-tax income inequality across the population actually narrowed after the financial crash because of progressive top rates and dividend reforms plus auto enrolment dragged ten million low earners into pension asset ownership.

00:13:03: this is my point sage that there have been policy successes.

00:13:08: We need to focus on fixing the policy failures.

00:13:12: Pension auto-enrollment doesn't pay for next month's rent, or fix a cancelled bus route.

00:13:18: You keep passing standard statistics while three quarters of public and eighty five percent retirees can see that gap is too wide in say so.

00:13:28: They aren't confused about definitions.

00:13:30: they see country where hard work no longer pays off

00:13:36: and a gummed up housing ladder.

00:13:38: And I agree, those need fixing.

00:13:41: but slapping the label inequality crisis on four different policy failures won't build a single house or restore a single bus route.

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00:14:15: Thanks for watching, see ya next time!