Show me the money: Inequality in incomes and wealth

Author: Lorna Booth

The top 1% received about 19% of all taxable income in 1918. By 1948 this had dropped to 11%, and the proportion kept falling until the mid-1970s, when the top 1% had about 6% of all income.

The proportion of income going to the top 1% then increased through the 1980s and 1990s, reaching 15% in 2007.

Wealth is, in part, built up out of income, and those with higher incomes will have more income to spare to invest in creating more wealth. All other things being equal, trends in wealth inequality will therefore tend to follow similar trends to income inequality, but will become more pronounced over time.

Wealth inequality as measured by the share of wealth held by the top 1% was very large by the start of the 20th century, having increased as Britain became more industrialised. Around 1912, estimates based on tax records suggest that the top 1% wealthiest had about two-thirds of all non-pension wealth.
Through much of the middle of the 20th century, their proportion of total wealth declined. Falling income inequality, and the increasing ownership of housing by people outside the top 1%, is likely to have contributed to this. A more redistributive tax system may also have had an effect.

More recently, the proportion of wealth held by the top 1% has started to rise again. The growing role of financial assets in wealth generation (such as shares, which are disproportionately held by the rich), has played a role in this.

Today there are twice as many men as women among the very wealthiest group. About half of the very wealthiest are aged between 45 and 64, reflecting the way that people tend to build their wealth over their working life, and then spend it after they retire.

This article is taken from Olympic Britain, a new book from the House of Commons Library. It tells the story of the profound economic and social change in the UK since the two previous London Olympics, in 1908 and 1948, using statistics and expert analysis. Digital copies are freely available on this page of the Parliament website.