Evidence of Britain’s rapidly growing wealth gap was revealed by the Social Market Foundation (SMF), which analysed the changing incomes and savings of thousands of people. The gap between richest and poorest has dramatically widened in the past decade as wealthy households paid off their debts and piled up savings following the financial crisis, a report warns today. By contrast, the worst-off families are far less financially secure than before the recession triggered by the near- collapse of several major banks. They have an average of less than a week’s pay set aside and are more often in the red.
It found that the average wealth of the best-off one-fifth of families rose by 64 per cent between 2005 and 2012-13 as they put more money aside as a buffer against future shocks. They have average savings and investments of around £10,000 compared with £6,000 seven years earlier. The proportion of people in this group with debts (apart from mortgages) dropped from 43 per cent to less than one-third.
However, the SMF found the poorest 20 per cent are less financially secure than they were in 2005, with their net wealth falling by 57 per cent and levels of debt and use of overdrafts increasing.
The wages of those aged 26 to 35 fell steeply. On average, they have less than a week’s income in savings, owe 45 per cent more money than they did in 2005 and are increasingly running up overdrafts to pay their bills.
Nida Broughton, the SMF’s chief economist and the report’s co-author, said: “The economic uncertainty... prompted many to pay their debts and build up their savings. But the young and those on low incomes missed out.”
Missing out on free school meals for just one week at half term is tipping some families into acute food poverty, according to charity workers familiar with demand patterns at food banks. Food bank charities have for some time come to expect higher demand during the long summer holidays when children do not attend school for weeks and parents have to buy more food. But food banks are now facing spikes in referrals of families with children over half term – when youngsters miss out of just five child-sized portions from school.
“Over half-term we had more families than usual, but that’s to be expected as children aren’t having school meals,” Southchurch warehouse coordinator Cass Francis told local newspaper the Southend Echo.
“During the school holidays we do see an increase in those referred to our foodbanks from the various organisations with partner with, because parents obviously struggle to provide that extra meal with the children and pay the bills,” Adrian Curtis, the foodbank director of the charity the Trussell Trust, which set up the food bank, told the Independent. “I think for some families that’s enough to trip them into a crisis, where they’re referred to our foodbanks.” He then added “Many of our foodbanks have begun to develop breakfast clubs and work with other organisations who provide meals during the school holidays to address exactly this issue.”