Tracking narrative ebbs and flows on wealth inequality

The Sunday Times Rich List was putting forward one view on wealth last week, but an increasingly broad group of voices are making the opposite case

The publication last week of the Sunday Times Rich List was couched in the argument that billionaires are nothing but a positive influence on our society and economy, and that attempts to tax their wealth are misguided. The lack of balance in the coverage was testament to the extraordinary influence that the wealthy have on our media and political debate, as a recent study by the London School of Economics showed. For a fun alternative take, see the Equality Trust’s (Not) the Sunday Times Rich List .

In fact, there's a growing evidence base to show that extreme wealth is profoundly damaging for our economy, our society, our democracy and even our ability to reach net zero (we’ll be publishing an evidence review on the risks of wealth inequality in the autumn). The LSE report published last week, Why Wealth Inequality Matters , was discussed at a seminar on 13 May (you can watch the recording here ), where new research was presented about the negative impacts of wealth inequality on gender and racial equity, social mobility, wellbeing and politics. The report described wealth as the ‘inequality iceberg’:

Icebergs have a much greater mass of ice beneath the ocean surface than is visible from above. In a similar fashion, below the arena of visible inequalities, such as deriving from income, housing, or health, a huge mass of opaque inequalities associated with wealth lurks beneath. And it is the hidden mass of ice which represents the greatest danger to those navigating these waters.

There's plenty of evidence that the public intuitively understand that extreme wealth is unfair, both in terms of how it is acquired and how it affects the rest of us. Polling published last Friday by Tax Justice UK and the Patriotic Millionaires found that 72% of the British public support the introduction of a wealth tax on those with more than ￡10m of assets, a view shared by 66% of people who would be affected by this tax.

Concern about wealth inequality is growing in centre-right circles, too. A recent report from the centre-right think tank Onward, A Conservative Economy , set out “the intellectual basis for a radical shake-up of our country’s economic thinking, putting workers, families and the nation first”. It diagnosed three major challenges facing the British economy: growth, globalisation and fairness. On the third of these, it explicitly called out the importance of growing wealth inequality:

The Fairness Challenge. The UK scores highly on measures of inequality relative to other developed economies, meaning high inequality combines with stagnant income growth. Wealth inequality has grown, with greater prosperity accruing to existing asset-owners. Inadequate housing supply is causing intergenerational unfairness by narrowing home ownership and pushing up rents. Regional divides create an incentive for talent and capital to move towards the South East, with opportunity unevenly distributed. The UK has been successful at redistribution, with the tax burden concentrated on higher earners, but this simply compensates for weak real wage growth in lower income groups.

Michael Gove underlined this point in the foreword to the report:

We must argue for markets properly reformed so they work free of vested interest. Growth from productive investment, and the jobs this creates, are distinct from rentierism or the predatory capitalism of acquisition over production. Conservatives must always be the party of work, home and family – not the speculator, proprietor or rapacious asset manager.

As the New Economy Brief observed , there are signs here of a growing consensus:

One striking thing about the paper is how much it overlaps with the current centre-left economic policy offering. We should keep capitalism, but regulate it. We should watch out for rentierism and prioritise investment. We should do something about living standards. Of course, many on the left would question a lot of the analysis and solutions – particularly the emphasis on immigration and the family unit, where the Onward paper is more strikingly conservative. But on the role of the state and public investment, this paper may point to a shift in the consensus. Certainly the diagnosis and prospectus have more in common with current Starmerism than with the more strident buccaneering, free-trading, deregulatory vision that Truss and her Pop-Con movement are propagating.

Deepening the Opportunity Mission

One of Labour’s five missions is the opportunity mission , which aims to “break down barriers to opportunity”. It's clear from the mission document that Labour understands that breaking down barriers to opportunity requires action outside the school gates as well as within them, to tackle barriers to opportunity such as poverty and poor housing. But there’s a risk that, if they win the general election and start to implement this mission, the messy reality of governing means that the difficult cross-government and cross-sectoral work to tackle these broader barriers to opportunity falls by the wayside, with limited political bandwidth and economic resources focused on the ‘easier’ policy levers that can be pulled within a single government department.

There’s also a risk that the deep underlying causes of the broader barriers to opportunities are left untouched, and that as a result, progress on dismantling those barriers is limited. We argued in Deep Opportunity that we need to tackle three such structural issues in particular: wealth inequality, our unfair tax system and aspects of our democracy. Failure to engage with these issues will make it very hard to make progress on issues such as poverty, poor housing and insecure work that undermine the educational prospects of disadvantaged children.

Next month we will be publishing a short report, Deepening the Opportunity Mission, that aims to demonstrate why the next government needs to tackle inequality before they can make real progress on the opportunity mission, what kinds of policy goals might be useful in orientating government policy towards tackling inequality as a result, and how to work across government to make progress on tackling inequalities as part of a wider shift to mission-driven government and working practices.

We’ll be running a webinar on 18 June to discuss the report’s recommendations, featuring Melanie Field, the report’s author, alongside Hamida Ali at the Future Governance Forum, Emma Norris at the Institute for Government, and James Plunkett at Nesta. You can register for the webinar here .

Register for the webinar

Fair Comment will be taking a break next week for the bank holiday, and will be back on Monday 3 June.