Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Wealth — Question

– in the House of Lords at 2:48 pm on 5th July 2010.

Alert me about debates like this

Photo of Lord Sheldon Lord Sheldon Labour 2:48 pm, 5th July 2010

To ask Her Majesty's Government what proportion of wealth is held by the richest 10 per cent of the population.

Photo of Lord Sassoon Lord Sassoon Conservative

My Lords, there are different methods of calculating wealth. HMRC personal wealth statistics estimate that, in 2005, the latest year for which data are available, the top 10 per cent of individuals owned 54 per cent of total wealth. The wealth and asset survey, a new survey measuring wealth across Great Britain, estimates that, between 2006 and 2008, the top 10 per cent of households owned 44 per cent of wealth. However, the wealth and assets survey uses a different methodology from the HMRC statistics.

Photo of Lord Sheldon Lord Sheldon Labour

That does not take into account the period from 2000, which was my original question, and how the population varied during the period of the Labour Government. The richest 10 per cent must have been rather wealthier than the Minister said. What action has been taken to reduce the level of wealth?

Photo of Lord Sassoon Lord Sassoon Conservative

I am grateful to the noble Lord for asking what action was taken during the period of the Labour Government to reduce wealth inequality, because I can give him the statistics. The HMRC survey showed that the top 10 per cent of households in 1997 owned 54 per cent of the wealth; in 2005, they still owned 54 per cent of the wealth. The Gini coefficient, which your Lordships will be aware measures the dispersal of wealth, had risen marginally from 69 per cent in 1997 to 70 per cent in 2005. That probably shows that whatever action was taken had no appreciable effect.

Photo of Lord Bilimoria Lord Bilimoria Crossbench

My Lords, does the Minister agree that the question should be not how much wealth does the richest 10 per cent hold, but how much wealth does the richest 10 per cent generate for this economy? What are the Government doing about the worry of driving away some of the most talented people through the 50 per cent rate of tax, the non-dom levy and increased CGT? Surely we should be attracting more wealth creation. On the other hand, with regard to the question before about the previous Government and reducing child poverty, is it not shocking that we should have child poverty in one of the wealthiest nations in the world?

Photo of Lord Sassoon Lord Sassoon Conservative

My Lords, I am grateful to the noble Lord, Lord Bilimoria, because he enables me to say yet again how important it is that wealth generation is created and that the balance of the economy is switched from overdependence on the public sector and debt to dependence on the private sector and equity. That is why he did not mention-but I will-the reduction in corporation tax, the fact that CGT did not go up anything like as much as people had feared and a number of other measures in the Budget. He is right to draw attention to child poverty because the previous Government failed to meet their target of halving it by 2010.

Photo of Lord Roberts of Conwy Lord Roberts of Conwy Conservative

My Lords, is it not true that the gap between the richest 10 per cent and the poorest 10 per cent is actually at its greatest for 40 years? The party opposite were in Government for the best part-no, not quite the best part, but for 18 years, or almost half-of that 40 years. If we were in the blame game should they not take responsibility?

Photo of Lord Sassoon Lord Sassoon Conservative

My Lords, I completely agree with my noble friend. The policy of this Government is to increase wealth across the wealth distribution for everybody.

Photo of Lord Eatwell Lord Eatwell Labour

My Lords, does the Minister agree that one of the most important political ideas of the past 50 years is that of a property-owning democracy? Conservative thinkers must get due credit for the development of that idea. Why, then, have the Government abolished child trust funds, the first measure in the history of this country to give every child a stake in the wealth of the nation?

Photo of Lord Sassoon Lord Sassoon Conservative

My Lords, there are simply some measures that, in the present fiscal position, are unaffordable. The child trust fund, regrettably, falls into that category. However, to ensure that children at greatest risk are protected, we have introduced above-indexation rises in child tax credit. If noble Lords look at the new tables set out in the Budget document on pages 64 to 70, they will see that the effect is progressive across all income bands.

Photo of Lord Newby Lord Newby Liberal Democrat

My Lords, does the Minister accept that one way to stop disparities in wealth growing disproportionately is for the wealthy to pay their taxes? The Government have at long last announced a review looking at the possibility of introducing a general anti-avoidance rule. Will the Minister assure the House that this review will be finished in time for legislation on this matter to be introduced in the next finance Bill?

Photo of Lord Sassoon Lord Sassoon Conservative

My Lords, the coalition agreement indeed commits the Government to make every effort to tackle tax avoidance. There was a Budget press notice on eight initiatives that we are taking. One is to examine whether the option of a general anti-avoidance rule should form one element of strengthened defences against avoidance. I assure my noble friend that there will be informal consultations on this possible anti-avoidance rule over the summer.

Photo of Lord Foulkes of Cumnock Lord Foulkes of Cumnock Labour

My Lords, may I ask the Minister a very simple question? What proportion of wealth is held by members of the Cabinet?

Photo of Lord Sassoon Lord Sassoon Conservative

I suspect that it would not register significantly on the data.

Photo of Lord Pearson of Rannoch Lord Pearson of Rannoch UKIP

My Lords, whatever the views of the Benches beside me and opposite me, does the Minister not agree that in socialist societies the differential is very much sharper than in democratic and capitalist societies? Does he, for instance, recall that in the Soviet Union some 95 per cent of the wealth and influence was controlled by less than 2 per cent of the population?

Photo of Lord Sassoon Lord Sassoon Conservative

My Lords, I have been looking for international comparison data, which are very hard to come by. I certainly do not know of any reliable statistics for the former Soviet Union. In the latest data of which I am aware, which is an Economic Policy Research Institute survey in 2000, the USA has the top 10 per cent of households earning 69.8 per cent of wealth, France is on 61 per cent, the UK on 56 per cent, Germany on 44 per cent and Japan on 39.3 per cent.