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Savings, debt and assets
Wealth, funding and investment practice

For richer, for poorer: A JRF series on insecurity in an age of wealth

Tom Clark introduces his run of four essays about the role of assets in social injustice – and progressive ideas to spread ownership.

Written by:
Tom Clark
Date published:
Reading time:
4 minutes

One of the deepest tides of social change over the last 40 years has been the ballooning of wealth relative to income. The value of a home or a decent pension raced far ahead of any progress in earnings. This created a sharp divide between those who enjoyed such assets, and all the others who saw them move out of reach.

More recently, we have witnessed a new schism in ready 'liquid' assets. The pandemic catalysed additional saving specifically by the better-off, who passed lockdown economising on holidays and meals out, and then had more enduring reductions in commuting costs via the enduring trend for more working from home. By contrast, the subsequent rocketing in the costs of heating and food has hit cash-strapped families hardest, creating a growing debt problem at the bottom of the income distribution – and leaving a huge chunk of households with no meaningful buffer for dealing with the inevitable emergencies of life.

As JRF sharpens its focus on economic insecurity, it was the plight of those with no savings that prompted us to take a fresh look at the question of assets. Many of the millions of Britons who lack them may not be in poverty on the conventional income-based definition, but they are nonetheless stood on a trapdoor to serious hardship: just one car breakdown, redundancy notice or illness away from debt or even destitution. There can be no security while living like that.

'Balance sheet poverty'

We decided to look back and see what we could learn from the significant turn-of-the-millennium interest, on both sides of the Atlantic, in tackling 'balance sheet poverty', through subsidised savings and direct provision of assets through schemes like the child trust fund. As we dived into the subject, however, it became clear that policies concerned with providing more people with a modest rainy-day fund inevitably buffed up against the wider 'rise of wealth'. For example, the long trend for higher house prices may have doomed policies like the child trust fund, rendering them almost irrelevant to the quest for a mortgage deposit, which had been a big part of their justification.

Even in the few months during which we’ve been researching the subject, that big picture on wealth started to shift. Sudden increases in interest rates have reduced the value of pension promises, various financial securities and – potentially – property. While observing that the future path of rates is uncertain, the Resolution Foundation has just concluded that if they remain raised for long, that 40-year-old tide of rising wealth could head into reverse.

This potential flux gives the broad question of wealth new urgency, and but so too does the certainty that nothing yet in prospect looks likely to fix the acute problem of 'asset poverty' at the bottom end of our society. Meanwhile, climate change and social problems like the housing crisis give us new reason to interrogate the nature of wealth, and distinguish assets that truly enrich us from those that, on a broader view, look more like part of the problem.

In this context, I hope that these four essays – and particularly the many embedded links through to the evidence and academic literature that they contain – will be a useful resource to anyone grappling with the question of assets. If we’re serious about an economy which provides security for all, many people will soon be tasked with doing exactly that.

I should close by thanking the many scholars and policy practitioners I spoke to for the series. Many are named in the first piece below, but many other conversations were only sparked as it got going. In particular, I’d like to add a note of thanks to Dan Goss at Demos and Ian Mulheirn of the Resolution Foundation, both of whose insight I’ve benefited from as the work rolled on.

The full set of essays are:

  • Capital idea? A look back at the energetic turn-of-the-millennium 'asset-based welfare' impulse – and why it petered out.
  • Wealth of evidence: What are the main trends in ownership? And what do we really know about 'asset effects' on social outcomes?
  • Depleted assets: What worked – and what didn’t – in past experiments to build 'wealth for all'.
  • Own goal: Disentangling the many questions conflated by political rhetoric around wealth. Distinguishing between socially beneficial and socially harmful forms of wealth. And understanding why any progressive agenda for assets must fit the bigger picture – or self-defeat.
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