Unequal opps

Posted by: Jules Birch

27/01/2010

It’s hard to get much past that startling stat about the median household wealth of social housing tenants (£15,000) and outright home owners (£411,000) but today’s National Equality Panel has some others that are just as eye-catching.

Income inequality has actually improved slightly over the last ten years - though with minimal impact on the deterioration that happened between the late 1970s and late 1990s. The median income of council tenants was 68% of the overall median between 2005/06 and 2007/08 compared to 67% 1996/97 and 1998/99.

That’s presumably the result of policies like the minimum wage and tax credits but it’s a real achievement given that allocations policy and the right to buy have encouraged greater concentrations of low and non-earners in social housing.

Although home ownership explains the greater part of the wealth inequality it’s not all about bricks and mortar. Even when property wealth is discounted, the disparity is still stark: social tenants still have £15,000 median financial and non-property wealth, or £18,000 when non-state pension rights are included; outright owners have median financial and non-housing wealth of £85,000, or £201,000 including private pension rights.

That inequality starts in childhood and carries on until death. A study of people aged over 50 found that 90% of men and 95% of women in the wealthiest fifth of the population survived over a six-year period. The equivalent figures for people in the poorest fifth were 75% of men and 81% of women.   

And it is then passed on down the generations. By 2005 almost half of first-time buyers got help from family or friends with their deposit. Those receiving assistance were able to pay an average deposit of £34,000, those who didn’t paid an average £7,000.

That factor has become even more important since the credit crunch prompted the banks to demand much bigger deposits.

All the money invested in area regeneration has had little impact on inequality between areas. In 2001 the government’s vision was that ‘in 10 to 20 years, no-one should be seriously disadvantaged by where they live’. The panel concludes that ‘we are still a very long way from achieving this goal’ and argues that ‘the neighbourhood renewal agenda itself needs renewal’.

But there’s another big disparity too: the number of mentions housing gets in the panel’s report (244) and in the government’s response to it (12). Most of those are to do with what the government has done to address the problem so far. Helping people on to the housing ladder through Homebuy and tackling poor housing conditions through Decent Homes may have been laudable enough in their own right but they’ve clearly not done much to reduce inequality overall.

As to what should happen next, the panel chaired by John Hills of the LSE has some suggestions. First, in an echo of the other Hills report, it says ‘we need to be more successful in using the advantages of security and work incentives that social housing can offer to support tenants in moving towards and into employment’.

Second, it points out that most social tenants have very low levels of assets of any kind and ‘measures to support saving and asset-building by tenants are needed to address this.’

The government may have made limited progress on reducing inequality but by commissioning and publishing the report it has at least ensured that the issues continue to be debated.

Which is important because there is the looming issue of what happens in the wake of the recession. Will our response to it end up making inequality even worse? ‘A fundamental question is now whether the costs of recovery will be borne by those who gained least in the period before the crisis, or by those who gained most, and are in the strongest position to bear them.’