According to a think tank report, the wealth gap in Britain widened during the pandemic with the richest 10 per cent gaining £50,000 on average, minimising increases for the poorest third of the population. The Resolution Foundation (TRF) said wealth had increased during lockdown as a result of a lack of spending opportunities and rising house prices, but the benefits remained with the richest by a ratio of more than 500 to 1.
Senior economist at the think tank, Jack Leslie said it was rare for wealth to increase during a recession but the impact of events during 2020 and 2021 had been to “turbo-charge” the gap between rich and poor. “The Covid-19 crisis has seen a highly unusual combination of a sharp reduction in economic activity, and a sharp increase in household wealth. Many families have been forced to save rather than spend during lockdowns, while house prices have continued to soar even while working hours have plummeted,” Leslie said.
TRF said the findings of the report should cause the government to rethink its decision to scrap the £20 a week increase to universal credit in September. The report, produced in partnership with the Standard Life Foundation, found that the average household had enjoyed a windfall of £7,800 per adult during the crisis – the first time wealth has increased during a recession since the mid-1940s.
TRF's report said total UK wealth had increased by £900bn to £16.5tn during the course of the pandemic, but the poorest households were more likely to have run down rather than increase their savings, and had not shared in the house price boom because they were less likely to own a home in the first place.
“As a result, the rising wealth gaps that marked pre-pandemic Britain have been turbo-charged by the crisis. “With policymakers facing many tough decisions in the autumn – from protecting households as unemployment rises to paying for a decent system of social care – they can no longer afford to ignore the dominant role wealth is playing in 21st-century Britain,” Leslie said.
According to the report, adults in the richest 10 per cent of households now have wealth of £1.4m each following the £50,000 increase during the crisis, while the poorest 30 per cent gained an average of just £86 per adult in additional wealth.