Usually a recession makes people poorer. The Covid-19 induced recession hasn’t. Because people have been saving, and because house prices have continued to grow, wealth has increased even as economic growth took a dunking. As households have saved money, many of them will come out of the pandemic with lower debts.
However, the distribution of this wealth increase is not very even. In fact, it is spectacularly tilted towards the wealthiest.
That’s the headline from the Resolution Foundation’s latest report into Britain’s wealth gap. They report that the median family comes out of the pandemic £7,800 better off, though it won’t necessarily feel like that if it’s many house values that are the contributing factor. However, the richest 10% have gained an average of £50,000 over the course of the pandemic, and the poorest 30% gained just £86.
For those that rent their homes, there has been no windfall rise in wealth. Many poorer households have had to dip into savings to get them through lockdown, having lost work or being furloughed on a reduced income that isn’t enough to cover the basics. With many white colour jobs able to adapt seamlessly to working from home, it is lower income households that have been the most likely to lose work and come out of the pandemic poorer.
With housing playing such a big role, wealth increases have been largest in areas where house prices were already high. That adds a geographical dimension to this inequality, with gains in London and the South-East double what they were in Scotland, Wales, the North-East or the Midlands. The pandemic has exacerbated existing trends here, with material consequences for health and wellbeing, and for democracy and the state of the union.
As the foundation warns, “the enduring legacy of the pandemic is likely to be widening wealth gaps”.
As a side note, in the news today is the finding that the Conservative party receives a disproportionate number of donations from the property development sector, and that lobbyist reporting rules are failing to detail meetings between the sector and politicians. While there is no evidence of anything technically illegal, these links do build a picture of successive governments unwilling to seriously address the injustices of rising house prices.