This article by Will Snell, Chief Executive of the Fairness Foundation, and Mike Lewis, Director of TaxWatch, was originally published on LabourList. You can read it on LabourList here.

In his Conference speech last month, the Prime Minister told us that his theory of growth includes “retaking control of the essentials that make a place work or not”. Among those essentials, few things could be more important than the buildings and assets our public services depend on, from school buildings to bin lorries, care homes and emergency services vehicles.

Yet a growing share of these public sector assets are owned by wealthy investors who own the building or equipment and collect the rent, while the public sector delivers the service and pays the bill.

New polling released today by TaxWatch and the Fairness Foundation shows that the public wants that to change, a view that crosses party lines:

• Six in ten people say buildings used by public services should generally be publicly owned, a view that has majority support among voters of every party. Just 6% would allow private owners to make uncapped profits from them.

• When asked about nine specific assets, including hospital buildings, council housing, emergency services vehicles and buses, more than a third (35%) ruled out private ownership of all of them.

• No public asset got more than 18% support for private ownership, and that was for care homes, of which over four in five are already privately owned.

Yet this isn’t just an issue of pragmatism and value-for-money. We put lease-back deals to people with promises of value for money or discounts for the Government. Even then, 40% of people said schools and hospitals should not be privately owned, whatever the terms. No more than 13% found leaseback deals acceptable under any scenario we tested. Though it often carries a tangible long-term cost, people’s opposition to selling of the state’s public realm is principled.

Support is strongest among older voters, but young people largely agree too. Even among 18-34-year-olds, the most common view (48%) is that these buildings generally belong in public hands. Nevertheless, more research would usefully explore why attitudes differ between generations, with young people apparently seeming more relaxed about the role of private ownership.

Read the research in full

In all, it’s clear that the centre ground of British politics is that most voters want both public services and public assets to be publicly owned and provided. The strength of this cross-party and cross-demographic backing gives the Government a chance to build support across a broad coalition of voters for public, non-profit or community forms of ownership.

The findings also indicate an appetite for real change to Britain’s economy. Over decades, the state has been unable, or unwilling, to invest or borrow for the capital investment public services need. That has left councils and NHS bodies leasing buildings and other assets back from private owners, often at greater cost to taxpayers in the long run.

The tax system also rewards these high levels of private ownership. Forthcoming TaxWatch research shows that tax reliefs which were originally designed to help businesses raise foreign investment are now being used to siphon publicly funded rental income from care homes into offshore tax havens.

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The Times, meanwhile, recently reported on an investment fund that is financing fleets of ambulances and CT scanners which it rents back to the NHS, whose lease payments also qualify as an inheritance tax shield for its wealthy individual investors, using a tax break originally meant to protect family businesses being broken up when an owner dies.

Tax policies intended to support enterprise are instead subsidising a double extraction from the public purse. The Budget is an opportunity to start delivering on the public’s desire for change. The Government should close or tighten these reliefs to prevent their unintended use. It should also set clear conditions on private ownership of public-sector assets. Over time, it should invest to bring public-service buildings and equipment back into public ownership.

These are questions of ownership and profit that the Prime Minister has spoken about at length. On this, the public is ahead of Westminster. A clear majority, drawn from every party, wants the buildings that serve them to belong to them, and is opposed to the broken status quo. A Government willing to make a decisive break with that status quo would find broad support and would demonstrate that “retaking control” is more than a slogan.

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REMINDER: ‘THE FAIR NECESSITIES’ LAUNCH EVENTS

Will’s book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, is out and there are two more launch events coming up:

York: Wed 4 Nov, 19.00 - 20.30

Bristol: Wed 11 Nov, 18.00 - 19.30

You can also listen to Will discuss the book on the ‘It’s Bloody Complicated’ podcast:

For anyone growing up in Northern Ireland, credit unions are woven into the fabric of community life. The one I joined as a child began on a dark, cold night in December 1963, in a local community hall. Eighteen founding members each deposited £1 to set up an organisation that would lend to people shut out of mainstream finance.

Sixty-three years later, that credit union has more than 27,000 members, savings and shares worth over £71m, and a loan book of more than £21m. Over that time, it has helped thousands of people get credit that would otherwise have been out of reach. It has also become part of the furniture of local life, financial infrastructure that is rooted in the community and built to last.

That story is common in Northern Ireland, and it isn’t unusual internationally. Credit union membership stands at 40% of the population in Northern Ireland, 28% in Canada, 20% in Australia and 64% in the Republic of Ireland. Yet only 2% of Britons are members of a credit union.

That’s not to diminish the work of credit unions in Britain, which help people often under-served by mainstream banks every day. But it does show how much further they could go.

Today, the Fairness Foundation has published Banking on local places. Drawing on interviews with nearly 20 credit union leaders and experts, it looks at the role that credit unions play in financial inclusion, and how regional policy could make better use of them to strengthen local economies. We’re grateful to Gareth Thomas MP and Irene Campbell MP, two leading champions of this agenda in Parliament, for contributing forewords.

In the report we discuss the value of credit unions in an economy where financial insecurity is widespread. Evidence from the Money and Pensions Service suggests that in 2022, one in six UK adults had no savings at all, and another five million had less than £100 in savings. Our own research has found that nearly a third of 25-to-34-year-olds have zero or negative wealth, a picture which varies sharply across the country.

Credit unions step into that gap. They offer fair, affordable loans and a safe place to save, which gives people an alternative to high-cost lenders and loan sharks. Because credit unions are owned by their members, any surplus stays within the membership. And because they lend to members who share a common bond, often a local area, members’ savings are recycled as loans within the same community. Credit unions are also shedding the outdated “poor man’s bank” label. As bank branches close, more people are choosing institutions that stay on the high street and keep money in the local economy.

“Credit unions belong in any conversation about good growth in every postcode. As the Government seeks to devolve more power and resources to communities, credit unions are natural trusted, local and accountable partners.”

Irene Campbell MP, writing in the report’s foreword

It’s clear that further investment in credit unions could pay off, a claim supported by evidence from on the ground. Through the Big Local programme, communities decided for themselves how to spend National Lottery Community Fund money. Where they chose to invest in credit unions, the results exceeded expectations, with more local saving and greater financial confidence.

The Government has recognised the value of credit unions to some extent, through reforms to the common bond and the launch of a new £30m fund to support their transformation. Yet it could go further, and while the Government is right to be considering higher taxes on mainstream bank profits, it should also choose to invest more in the community alternative.

Our report calls for a new set of interventions to be put in place to back credit unions. As we outline, there is a role for economic development policy to be better informed by the potential of credit unions in local places, including through programmes like Pride in Place, which reference credit unions and other forms of community finance in the list of indicative interventions for funding. Another set of Neighbourhood Boards are due to finalise their spending plans in the next month; credit unions would be an appropriate and worthwhile investment for them.

The report also joins calls for a Fair Banking Act. Among the provisions of such legislation would be a requirement for banks to cooperate with credit unions, supporting them to grow and expand. One way they might do that is through opening up access to banking hubs, ensuring that everyone has access to the financial architecture that is right for them.

“A Fair Banking Act should form part of a new national commitment to affordable finance that is raised locally and benefits communities. Legislating for it would build on the Government’s progress so far, giving credit unions and CDFIs the support they need to grow, and helping to build fairer local economies across the country.”

Gareth Thomas MP, writing in the report’s foreword

Britain now has its first Labour and Co-operative Prime Minister, one who understands credit unions, having championed the SoundPound group as Mayor of Greater Manchester. In today’s report, we suggest that his Government has a real opportunity to help people to build wealth that is held and controlled by their local communities, by expanding credit unions and making them the cornerstone of a fairer economy in communities across Britain.

Read the full report here

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REMINDER: ‘THE FAIR NECESSITIES’ LAUNCH EVENTS

Will’s book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, is out and there are three more launch events coming up, including one this Thursday at the Blavatnik School of Government in Oxford.

Oxford: Thu 22 Oct, 18.00 - 19.00

York: Wed 4 Nov, 19.00 - 20.30

Bristol: Wed 11 Nov, 18.00 - 19.30

You can also listen to Will discuss the book on the ‘It’s Bloody Complicated’ podcast:

Today we’ve published Holding the purse strings, a new report by Karan Kalsi, one of our 2026 Policy Associates. In the report, Karan asks who controls the capital in workers’ pensions, and whether the people whose money it is have enough of a say. He suggests four routes to improving members’ representation so that ordinary people have more control over how their money is invested.

Through recent reforms, most notably the Pension Schemes Act 2026, the Government is pushing to merge pension schemes into fewer and larger funds. That seems sensible, since scale can improve investment capability and value for the members. Yet it can also put more economic power in the hands of a small group of trustees, financial providers and intermediaries.

In fact, research by Lane Clark & Peacock (LCP) has found that fewer than 50 people oversee more than half of all assets in trust-based defined contribution (DC) schemes, where pension pots depend on contributions and investment returns. More than £160 billion is concentrated in the seven largest master trusts, schemes that serve many unrelated employers at once. By Karan’s count, 23 of the 30 authorised master trusts have no member-nominated trustees. That is a tiny number of people controlling an enormously large amount of capital. The report makes the case that while recent reforms are welcome, they largely leave the control of this huge pool of capital unaddressed while increasing the consolidation of pension savings in DC funds.

Read the full report

Most trust-based workplace schemes must ensure that at least one-third of their trustees are nominated by members. These member-nominated trustees act as ‘caring insiders’. They often have their own savings in the scheme, hold intermediaries to account, and help to prevent groupthink on boards made up of people from similar financial services backgrounds.

However, master trusts are exempt from this rule and contract-based schemes have no equivalent route at all. So as more savings take place within these vehicles, member representation could be quietly disappearing. As Catherine Howarth recently outlined in Whose Capital?: “the governance of pension capital has not evolved alongside its growing scale and influence”, with savers bearing the risk of investment, but without a commensurate say in its direction.

Other countries show that member representation can work alongside scale and professional management. Australia’s large employer-sponsored funds operate on an equal-representation model. Meanwhile, in Finland, a third of board seats are reserved for representatives of insured employees.

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So the UK faces an important choice about how workers’ pension wealth is governed, and whether it can catch up with these other countries. The UK has the third largest pensions market in the OECD and its decisions shape who owns British companies and how housing, infrastructure and clean energy are financed. Savers increasingly care how their money is used, with 40% saying they would increase their contributions if their pension was invested in line with their values. And, as AI and automation threaten to shift a greater share of economic returns from labour to capital, meaningful member representation will matter more than ever.

Pensions are one of the main ways in which working people own assets. In an economy where wealth increasingly matters more than income, there is a stronger case than ever for considering how the interests of ordinary workers are represented in those pension schemes.

In this report, Karan sets out a step-by-step route to a universal statutory floor of at least one-third member representation across all categories of pension schemes. As a practical first step, the Government could consult on reforming the relevant 2006 Regulations for existing master trusts, while ensuring that new consolidated schemes currently being developed also have this requirement.

Ultimately, any reform would be designed to give workers greater say, ensuring that pension schemes are accountable to the members they serve and to their interests.

Debates about economic fairness tend to focus on how we tax and redistribute the gains from wealth. Karan’s report is a reminder that how capital is governed also matters. Making sure that pension schemes answer to their members would be a good place to start.

Read the full report

Download the PDF

REMINDER: ‘THE FAIR NECESSITIES’ LAUNCH EVENTS

Will’s book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, is out and there are four more launch events coming up. The first is this Wednesday in London, and livestream tickets are available as well as in-person; the other three are in-person only. We’re also planning an event in Manchester in early December - watch this space!

London (LSE): Wed 14 Oct, 18.30 - 20.00

Oxford: Thu 22 Oct, 18.00 - 19.00

York: Wed 4 Nov, 19.00 - 20.30

Bristol: Wed 11 Nov, 18.00 - 19.30

Today we’ve co-published The Missing Half with the Campaign for Compulsory Voting. This report argues that the political inequality created by economic inequality can only be addressed by fundamental democratic reform, including the introduction of compulsory voting. Addressing the influence of billionaires on politics is critical, but is not in itself enough; we must also tackle the mechanisms by which politics favours the interests of the ‘ordinarily’ wealthy over those without wealth.

And there is a strong link between wealth and turnout at elections. Analysis of House of Commons data shows that in England’s most deprived fifth of seats, turnout was 50.7% against 67.8% in the least deprived fifth, a gap of 17 points. Comparing evidence on child poverty and electoral turnout, we can also see that those who do not vote are disproportionately poorer and more housing-insecure. Between 2019 and 2024 the largest decline in voter turnout was in East Ham, where it fell by more than 18 percentage points. East Ham sits within the borough of Newham, where almost 45% of children live in poverty. In fact, deprivation in Newham increased between 2019 and 2024, just as voter turnout decreased, according to the 2025 Indices of Multiple Deprivation (IMD).

This relationship between wealth and turnout is changing political incentives. It skews interests in the favour of wealthier citizens, and discourages politicians from responding to the needs of those facing the worst effects of the UK’s unfair distribution of wealth and income. Unequal turnout also becomes a vicious cycle, since the more disillusioned voters become, the less likely they are to vote.

Compulsory voting could help to break that link by bringing everyone into the political process, so that politicians finally have to listen to the vast majority of people. International evidence shows that compulsory voting is the most reliable policy for delivering broad and sustained electoral participation. Australia, for example, consistently has turnout rates of around 90%. Research also tells us that countries with compulsory voting have lower income inequality and less political corruption than countries where voting is optional. They are also more responsive to citizens’ needs, resulting in a fairer distribution of income.

Today’s report follows calls from former Labour leader Neil Kinnock and former Home Secretary David Blunkett. Recent reports from ThinkLabour and the IPPR have also backed compulsory voting, and several MPs spoke in favour of it during the recent debate on the Representation of the People Bill.

We also call for a ‘None of the Above’ option on ballot papers, so that popular discontent can be formally recorded. This might sound novel, but the Netherlands and Spain already count the ‘blank vote’ at each election, and it is recognised in different ways in Sweden, Greece and Switzerland.

This report could hardly have come at a more opportune time. At Labour Party Conference last week, the Prime Minister pledged to amend the triple lock on the state pension. For too long, that policy has been protected by the interests of those who can be counted on to turn out in droves, namely older voters. In the foreword to our report, Baroness Polly Neate, former Chief Executive of Shelter, argues:

“Now the Prime Minister has touched the third rail of British politics by daring to fix this unfairness, he needs voters on side. Compulsory voting would give Burnham the political cover and popular support to deliver. The people most likely to back reform, including younger voters, would be at the ballot box to reward a government that took on intergenerational inequality.”

In other words, compulsory voting helps to address the fact that the policies most needed to improve fairness are often the hardest to defend at the ballot box, because the people who would gain most from them are the least likely to turn up and vote.

Levelling the playing field in this way could also help counter the corrosive influence of big money in our politics, in a way that the Representation of the People Bill did not fully tackle.

The Prime Minister also promised last week to launch a National Commission on Electoral Reform, and to make a manifesto commitment to overhaul Westminster’s voting system. If that Commission is serious about increasing participation, compulsory voting should be part of its remit.

Of course, introducing compulsory voting and a ‘None of the Above’ option will not solve political inequality overnight, and breaking the link between economic and political inequality through democratic reform entirely will not be easy. But this paper shows how making our political system fairer, by increasing turnout, can in turn make our economy fairer and help to tackle economic inequality.

Failing to introduce compulsory voting would be a missed opportunity to finally make our politics a fair fight, and to give everyone a say over the decisions made in their name. If the Prime Minister wants to rewire politics in the interests of everyone, bringing everyone into the process through compulsory voting is essential.

Read the report

Download a PDF

With thanks to the report’s author, Charles White, Director of the Campaign for Compulsory Voting.

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The UK lacks consensus on how to address wealth inequality. As economist Paul Johnson outlines in Challenging Inequalities (2026):

“Anyone can come up with suggestions to tax the rich or give greater benefits to the poor. Equally, anyone can construct persuasive arguments against such policies. We are not lacking for policy ideas… we are lacking a much more fundamental sense of direction and consensus over what matters, what the effect of different policies would be, and what trade-offs we need to make.”

A report that we are publishing today, Hidden Wiring, argues that this lack of consensus is partly a consequence of how wealth inequality is framed. Rather than treating “wealth inequality” as a single policy problem, it proposes understanding its harms through three distinct but mutually reinforcing aspects: extreme wealth concentration; lack of wealth; and the wealth gap across the distribution. Each aspect has different drivers, consequences and policy levers. When policymakers and advocates conflate them, proposed solutions can target different challenges, fuelling political gridlock. This problem is compounded by the absence of a dedicated UK government institution responsible for monitoring wealth inequality, developing the evidence base and assessing policy responses.

The report outlines this policy problem, and introduces a framework to disaggregate wealth inequality into the three aspects. The purpose is to establish a common starting point for meaningful policy deliberation. As a case study, the framework is tested against the harms evidenced in the Fairness Foundation’s Wealth Gap Risk Register. The report then critically examines the framework, drawing on informal consultation with experts to identify areas of convergence and divergence.

The report was researched and written by Florence Guyomar, who recently completed a Masters in Public Policy at the Blavatnik School of Government at the University of Oxford that included a two month policy placement with the Fairness Foundation. It is the first in a series of planned Fairness Foundation outputs in 2026/27 looking in detail at different aspects of wealth inequality, their consequences and the potential policy responses.

For anyone at Labour Party Conference today, we’re running an event on this topic at 3pm at the Museum of Liverpool in partnership with the Joseph Rowntree Foundation, with Liam Byrne MP, Will Hutton and Sarah Kerr - find out more and sign up here.

Read the report online | Download the PDF

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On Monday 28 September from 3 - 4pm at the Museum of Liverpool, we’ll be joined by Will Hutton, the Rt Hon Liam Byrne MP alongside Sarah Kerr and Will Snell to discuss Britain’s Wealth Gap: How inequality is reshaping Britain, and what to do about it.

​At a time when wealth is shaping our lives more than ever, and the growing wealth gap is fuelling political fragmentation and volatility, we’ll bring together leading voices to set out a bolder agenda.

Register here

Following that event, we’ll host Good Growth in Towns from 4:15 - 5:15pm in the same room, in partnership with the Labour Towns Group. This event will explore how the Government’s agenda of good growth can reach every part of our country, including our town economies.

We’re very fortunate to be joined at this event by the Rt Hon Lisa Nandy MP, Secretary of State for Digital, Culture, Media and Sport, alongside Chair of the Labour Towns Group & MP for Stafford, Eccleshall & The Villages Leigh Ingham MP, Professor Will Jennings, Katie Schumecker from JRF and Cllr Eamonn O’Brien, Chair of the Local Government Association & Bury Councillor.

Register here

Finally, we’d also like to extend an invitation to join us for the next event promoting Will Snell’s new book: ‘The Fair Necessities: Why we need a fairer Britain and how to get there’, taking place at 6:30pm on Wednesday 14 October, in-person at LSE and online.

Register here

We hope to see you at one of our events soon! In the meantime, please do stay up to date with our new publications, and share this Substack with someone you think might enjoy our work.

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You’ll be sick of hearing that my book, The Fair Necessities, launched last week. I’ve written in recent posts about some of the key arguments (how fairness is definable, necessary and achievable, and how to make it happen), so I won’t rehearse them again here.

The launch event on Tuesday was hosted by the Policy Institute at King’s College London, and I’m very grateful to Bobby Duffy and the team. You can watch a recording below.

Today I want to focus on the discussion at the event itself, which threw up lots of interesting ideas and challenges. I’m deeply grateful to the three panellists at the event - Polly Neate (crossbench peer and former CEO of Shelter), Will Hutton (the economist and journalist) and Siobhan Aarons (chair of the Tory Reform Group) - as well as to the audience for their questions.

I’m going to look at three challenges that came up during the panel discussion that struck me as particularly interesting and important, and respond briefly to each of them, with the benefit of more time and thinking space than I had at the event.

The first came from Polly Neate. Fairness is emotionally powerful, which is exactly what makes it dangerous. “It’s not fair” is the cry of the child: not rational, utterly solipsistic, and built on the assumption that someone else’s gain is your loss. That instinct, she argued, is how men have cast themselves as victims of feminism and how immigrants get blamed for the housing crisis. And she has seen both claims up close. As CEO of Women’s Aid she ran the campaign to end the presumption of child contact in domestic abuse cases, backed by research showing that children were being harmed and killed by court-mandated contact. The fathers’ lobby responded by claiming that they were the victims of unfairness. The campaign took a decade - the Courts and Tribunals Bill will finally address the issue - and in the meantime her house was egged repeatedly and her tyres slashed. What broke the deadlock was not a better statistic but a story: Claire Throssell, whose two sons were murdered by their father during court-ordered contact. “Fighting fire with fire”, as Polly put it.

It’s true that fairness, or its absence, can be used to appeal to all sorts of instincts, and can be a double-edged sword. In my view this is why it’s so important to promote a more positive and unifying version of fairness. Not the grievance-based, zero-sum version that is about the loss that one person suffered because someone else gained - but the better-for-all-of-us version that is based on removing or reducing unearned advantage and ensuring that contribution is rewarded and capabilities enhanced.

The second challenge, from Will Hutton, was that my focus on lobbying as the main barrier to change in my talk was too narrow a diagnosis. He argued that, over the last four decades of so, the idea of a social contract has been deliberately undermined by the neoliberal revolution began in the US that unravelled the Keynesian focus on fairness, public purpose and public intervention to make markets work in favour of untrammelled free markets, and replaced the collectivist “we” with the individualist “I” - an argument that he picked up in his Observer column yesterday. As a result, thirty postwar years of fair settlements and broad growth across the West were followed by forty-five years since of declining growth and declining productivity. And yet, despite the increasingly obvious failure of neoliberal economics to deliver growth and good living standards, the culture war had been won by the individualists.

Will is right - the power of lobbying is only part of the answer, as the book makes clear. The power of individualism makes a fair settlement unachievable in the first place, whereas organised money makes specific reforms undeliverable even where the public clearly supports them. Putting ‘guardrails’ in place like lobbying reforms and caps on political donations is important, because it helps to reduce the conversion of wealth inequality into political inequality, but it is insufficient by itself without a broader shift in our values and culture, a rediscovering of our collective “we” and, as part of that, an abandonment of the collective pretence that we live in a meritocracy when we clearly don’t.

Finally, Siobhan Aarons argued against my assertion that wealth inequality sits underneath all the other barriers to opportunity. Material circumstances matter enormously, because poverty restricts choices around housing, health and education. But human capability cannot be reduced to material circumstances: family, culture, expectations, confidence, discipline, relationships, social capital, individual character and choices all matter. Some of these are affected by wealth, but they aren’t all explained by it. Money can change circumstances without creating capability. She illustrated the point with the image of Ginger Rogers, who did everything that Fred Astaire did, but backwards and in heels. The same outcome tells you nothing about what help or hindrance someone had on the way.

It’s absolutely true that wealth doesn’t provide all of these components of capability, and neither does an absence of wealth deny them. However, while wealth doesn’t explain every advantage, it compounds, transmits and converts - it grows over time, it passes down largely intact through families and generations, and it turns into the political power that undermines the ability of the state to provide everyone with decent life chances and living standards (and the ability of parents to provide the same things for their children). Wealth makes advantage hereditary.

Thanks again to all three panellists and to the audience for the discussion on Tuesday. Please share your thoughts and questions, and if you are or can be in London on 14 October, Oxford on 22 October, York on 4 November or Bristol on 11 November, do sign up for one of the remaining launch events!

QUICK MESSAGE FROM WILL

My new book (The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen) is out tomorrow, 8 September, so today is a great time to pre-order a copy from your favourite bookseller, whether that’s Amazon, Waterstones, Foyles, Blackwell’s, Bookshop.org or anywhere else. And there are a few in-person places left at tomorrow evening’s launch event, or you can watch the livestream.

Last week, Parliament debated the Representation of the People Bill and considered the case for a domestic cap on political donations. As we’ve described previously, our levels of economic inequality are matched only by a political inequality that runs throughout the system, whereby money buys access, prestige and influence, and where democracy comes with a price tag attached. Over recent months, we’ve been supporting organisations working on this issue to make the case that a cap on political donations is needed to clean up our politics and unrig our democracy.

Unfortunately, that opportunity was missed by the Government last week, and as a result, progress on this issue will be slower than it might have been otherwise. However, thanks to the work of Stella Creasy MP and others, there was the welcome news that a new task force will examine the role of big money in British politics. Now, politicians are being urged to ensure that any changes introduced as a result are in place before the next election.

Whether we like it or not, obscene wealth is increasingly dictating who is heard, what issues are being prioritised and whose interests shape policy decisions.

Stella Creasy, 02.09.26

The case for a cap on political donations is well-evidenced and long-established, backed by the independent Hayden Phillips Review of party funding and by the Committee on Standards in Public Life. In introducing one, the UK would be joining Australia, France, Ireland and Canada, all of which limit political donations to stop democracy being skewed towards the interests of the very wealthy.

The principle was also accepted last week. It is right that the Rycroft Review prompted a new annual cap of £100,000 on overseas donations. But if we accept that the super-rich should not be able to buy influence over our politics from abroad, why do we accept it at home? Which passport someone holds should not determine whether the cap applies.

So why hasn’t it happened? Academic research has concluded that two blockages are particularly damaging: the inability to agree on how to handle party funding from trade unions, and a lack of public support for increased state funding for political parties. In many ways, the wider failure is a textbook case of what our CEO Will Snell described recently when he set out the four reasons that policies to dismantle inequality stall. Two of them conspire to frustrate progress directly here: the power of vested interests, and short-termism.

There can be little doubt of the level of public support for change. Polling from Transparency International UK showed that 84% believe that wealthy individuals use political donations to advance their personal interests. Our own research at the Fairness Foundation has revealed that 75% of people think the very rich have too much political sway, while polling by 38 Degrees last year found that 57% of people support a cap on donations, with only 7% against. There is a strong, cross-party popular mandate for action on this issue, which organisations are rightly mobilising to agitate for change.

Vested interests are the harder problem. Politicians are understandably reticent to legislate against what they may see as their own parties’ financial interests. But as Transparency International UK has demonstrated (including with the help of their modelling tool), a sensible cap would still allow parties to be able to fund competitive election campaigns without additional public money.

Short-termism means that the cost of delay is rising. As TIUK has outlined, in 2015, just one per cent of private donations came from individuals and companies giving £1 million or more. By 2024, this had risen to 35 per cent. This problem compounds with each election cycle and is only likely to increase, but each Parliament has left the problem to its successors to grapple with. And as the wealth gap continues to widen, the ability of a very small number of people to shape the outcome of elections will only grow.

The new Prime Minister is committed to a fairer democracy, and he understands the link between the economic inequality that he has campaigned against and the political inequality that sustains it. He supported a cap on donations in correspondence with campaigner Shaun Bowler. It sits squarely within his agenda of political reform and his stated desire to do politics differently.

A donations cap is a test of that commitment. If the Prime Minister wants to introduce a circuit breaker not just for our economy, but for our democracy as well, he must show that our politics is not for sale – that it still belongs to ordinary people, and that we can have hope for a system in which everyone has an equal say. That demands a domestic cap on political donations.

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Why is no one asking billionaires difficult questions?

The month opened with our Chief Executive Will Snell asking why billionaires so rarely face a serious challenge to their wealth. His starting point was BBC Three’s Are Billionaires Bad?, in which comedian Shabaz Ali puts the case against extreme wealth to philanthropist John Caudwell, only to be waved away with the unevidenced claim that rich people are able to influence politicians simply because they have “good ideas”. Will argues that critics of inequality keep losing these exchanges not because the evidence is thin, but because it’s rarely marshalled, while a sympathetic media, deep lobbying firepower and the enduring myth of meritocracy all tilt the playing field toward defenders of the status quo.

Yet the evidence, he writes, increasingly shows that inequality is actively harmful, not just unfair. Researchers have likened inequality to cholesterol: the kind caused by barriers to opportunity is bad for growth, while the kind arising from effort can be good for it, and most inequality in Britain today falls firmly into the first category. Will argues that we need to be precise about which harms flow from the concentration of wealth at the top, which from the gap between rich and poor, and which from the absence of wealth at the bottom, to make the case for the right remedies. The piece also previewed Will’s forthcoming book (more on that below).

Read Will's full piece

Three ways to skin a cat

The following week, Will set out the policy response in three parts: redistribution, predistribution and guardrails, making the case that taxation is only one way to address rising wealth inequality.

On redistribution, Will revisited our arguments from autumn 2025, when we set out how taxing wealth better could make the tax system and our economy as a whole fairer. Will references the case for a wealth tax proposed by campaigners including Gary Stevenson, as well as Gabriel Zucman’s proposal for a global 2% minimum tax on fortunes above $100 million, and a wider menu of reforms to capital gains, inheritance and property taxes. The arguments for taxing wealth better can resonate with those on the right as well as on the left, as Will recently set out for Bright Blue.

But Will also argues that taxation alone won’t fix a system that concentrates wealth at source. ‘Predistribution’ addresses this through measures such as stronger trade unions, worker representation on boards, and revisiting Liam Byrne’s idea of ‘universal basic capital’.

And because we may never agree on the ‘right’ level of inequality, we also need guardrails: strong public services and a generous safety net that, as in the Nordic countries, stop low levels of private wealth from wrecking people’s life chances and outcomes, alongside limits on the political power that concentrated wealth can buy. Drawing on the sociologist Jens Beckert, Will notes that wealth brings six distinct ‘capacities’: security, opportunity, income, bequest, status and power, and that while public services can substitute for the first four, status and power are inherently positional: one person’s gain is another’s loss, which is exactly why guardrails against their concentration matter so much.

Read Will's full piece

Four locked doors

Next, Will turned to why governments keep failing to act with enough ambition to tackle wealth inequality, identifying four barriers that any serious reform has to unlock: vested interests, the assumption that the public won’t wear it, our failure to treat inequality as a strategic risk, and short-termism. Together, these four locked doors represent structural barriers that have stymied the efforts of previous governments to address wealth inequality through more meaningful policy.

We’ll soon see whether the Burnham government is prepared to open these doors. Chancellor John Healey has confirmed the Autumn Budget for 28 October, and while the Prime Minister has previously expressed support for shifting the tax burden from income toward wealth, property and land, no detailed proposals have yet been published. Will’s piece is a timely reminder of just how easily that ambition can be watered down (as we’ve seen in recent days in respect to caps on political donations).

Read Will's full piece

We can’t have fairness without the nation-state

In a provocative opinion piece, Jack Jeffrey argued that “the nation state is the only means through which we can actually have a fairer society”, and that we need to revitalise a ‘politics of national preference’ in which we ask the fundamental political questions about nationhood - most importantly, where are we going, and to whom are we bound?

In the 1980s, under a Thatcher government that cynically embraced nationalist rhetoric, British firms were sold off to foreign owners at a scale unmatched in comparable economies; international ownership of UK listed companies increased from less than 5% in the early 1980s to more than 50% in 2022. As this vassalisation continues (brilliantly outlined in Angus Hanton’s Vassal State, 2024, a book about which we ran a roundtable with the author a few weeks ago), and the post-war decades are forgotten or misremembered, Britain, as a result, is more unstable, angry and unequal because its institutions have been made subordinate.

Read Jack's full piece

The Fair Necessities

Several of this month’s pieces previewed arguments from Will’s forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, published by Policy Press on 8 September. We’re marking the launch with a panel discussion the same evening at King’s College London’s Bush House, chaired by Professor Bobby Duffy (Policy Institute) and featuring Will alongside crossbench peer and former Shelter chief executive Polly Neate, political economist Will Hutton, and Siobhan Aarons, Chair of the Tory Reform Group. You can register to attend in person or watch via livestream. We’d love to see you there.

Policy Associates

This month also saw the conclusion of our Policy Associate programme with six graduate students from the Blavatnik School of Government at Oxford University. Over the summer, each of our Policy Associate team has been exploring a different aspect of the UK’s uneven distribution of wealth, helping to develop policy solutions and shape ideas for a fairer economy. We’re looking forward to sharing their outputs in the months ahead.

With party conferences around the corner and the Budget less than two months away, September will be a busy month for us. If you are at any of the party conferences this year and would like to connect, don’t hesitate to reach out. And as ever, if you’d like to support our work or collaborate on upcoming projects, please do get in touch.

British politics is preoccupied with lots of tangential and asinine issues that no one seems to know how to talk about, but perhaps the most infuriating is the strained topic of what it means to be patriotic. That is, what it means to have some kind of attachment to a country. The discourse follows a predictable route. Right-wingers advertise their love for Britain by doing or saying something ostentatious like putting up Union Jack and St George’s flags everywhere. Left-wingers then react by accusing them of being nativists or racists, but stop short of rejecting patriotism or national feeling entirely, and instead tie themselves in mental knots by coming up with completely meaningless buzzwords like progressive patriotism, and talking about so-called British values. Rinse and repeat.

These arguments and confrontations never go anywhere because they misunderstand the purpose of national attachment, and why the conditions that informed that bond have mostly disappeared. As I’ve written elsewhere, national attachment addresses fundamental political questions: most importantly, where are we going, and to whom are we bound? Whereas once that feeling corresponded with institutions capable of command and control, Britain now finds itself in the unenviable but not unique position of having very little control over its future direction. This is in large part a consequence of embracing an economic model characterised by what David Edgerton in The Rise and Fall of the British Nation (2018) calls denationalisation. In the 1980s, under a Thatcher government that cynically embraced nationalist rhetoric, British firms were sold off to foreign owners at a scale unmatched in comparable economies; international ownership of UK listed companies increased from less than 5% in the early 1980s to more than 50% in 2022.

As this vassalisation continues (brilliantly outlined in Angus Hanton’s Vassal State, 2024), and the post-war decades are forgotten or misremembered, Britain, as a result, is more unstable, angry and unequal because its institutions have been made subordinate. And whilst the right performatively wave their plastic flags, the left, as Jonny Ball recently pointed out, conveniently forget that it was emphatically not a coincidence that the period that saw the biggest contraction in wealth inequality in modern British history was the same period in which the British state pursued a clear politics of national preference. The contemporary debate about taxing wealth does not always recognise that the post-war period was one of capital controls, very high taxes on capital gains and high incomes, and significant public ownership of key industries, even if there was no standalone ‘wealth tax’ on unrealised gains.

As Wolfgang Streeck argued in Taking Back Control? States and State Systems After Globalism (2024), “the nation-state is the only institution capable of asserting the primacy of politics over the economy, or, indeed, the political primacy of society over capitalism in the face of hyperglobalization” (p324). The postwar settlement worked because firms and money were largely trapped within national jurisdictions. The sooner both sides of the political spectrum accept this, the sooner we can start the difficult and arduous task of rebuilding what was carelessly destroyed, namely a nationalist social democracy with comparatively low levels of inequality, high levels of cohesion and fellow-feeling, and a genuine sense that we are bound together by a common fate.

Such an agenda is not without its obstacles and adversaries. Despite it being increasingly clear that market liberalism is in retreat, British political elites, with some honourable exceptions, are still mostly committed to a failed orthodoxy of openness. Some put this down to intransigence. To embrace what Philip Cunliffe calls the national interest would contradict liberal cosmopolitan assumptions that operate less as a coherent governing philosophy and more as a status good. Admittedly though, the problem is more complicated. Streeck and others have been accused of nostalgia for a world that no longer exists, underestimating just how difficult it would be to disentangle transnational production chains and global financial markets, and reestablish a more bordered political economy.

This applies even more so in Britain, which went further than almost any other country in opening itself up to globalisation. This historic misstep has produced a vicious circle wherein our national institutions feel more aloof and impotent, and in turn people feel less and less attached to them. A recent poll by The Times found that as well as pride in Britain dropping from 74% in 2011 to 45%, British citizens are the least emotionally attached to their country in the OECD.

Despite the precarious situation in which Britian now finds itself, there is every opportunity to begin to develop a better politics capable of action and allegiance. But only if we acknowledge that, as Jonathan Hinder MP put it, “the nation state is the only means through which we can actually have a fairer society”.

This article is by Jack Jeffrey, Head of Research and Policy at the Fairness Foundation.

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Last week I wrote about the three types of policy responses to wealth inequality – redistribution, predistribution and putting guardrails in place to reduce its spillover impacts on our economy, society and democracy. But how can the Burnham administration overcome some of the barriers to change that have stymied previous attempts to tackle inequality, in some cases before they have even been drawn up?

In this post I’ll look at four such barriers – four locked doors – and discuss where governments can find the keys that open them. In doing so I’ll be previewing some of the arguments in the final section of my forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen.

On his first day in Downing Street, Andy Burnham gestured at the famous black door behind him and said that his first instruction as Prime Minister would be to end rough sleeping. That was canny. It was concrete, it was human, it was achievable yet also sounded ambitious. But of course rough sleeping is the visible tip of the much bigger problem of homelessness, and homelessness itself is a symptom of a society marked by huge levels of economic inequality in which what you own matters more than what you earn. Tackling these more systemic problems is a much bigger challenge, not because we don’t know what to do (see previous post), but because of a set of structural barriers to making progress on inequality that have repeatedly stymied attempts made by recent governments to do anything even remotely meaningful.

The first barrier is vested interests. Let’s take one example. Labour’s 2024 manifesto promised to close the carried interest loophole, which allows some private equity fund managers to pay lower rates of tax than their cleaners. Under pressure from the private equity industry in the period leading up to the 2024 budget, ministers blinked, and a few thousand fund managers kept around £500 million a year between them. “I don’t often drink these days but a few of us did go out for drinks to celebrate,” one private equity boss said afterwards. Vested interests rarely self-describe as such, presenting themselves instead as apparently reasonable and deeply well-informed concerns about unintended consequences for efficiency or growth, or the difficulty of implementation. But history often shows us that those concerns were misplaced, wilfully or otherwise. Much of the panic about capital flight that greeted non-dom reform was overblown and contradicted by the evidence. Britain has the third-largest lobbying industry in the world and one of the most opaque. Introducing a statutory register with teeth and tackling the revolving door between politics and industry would make a big difference. So would a cap on political donations, in a country where nearly a quarter of party nominations for peerages between 2013 and 2023 went to people who had collectively given over £58 million to those same political parties.

The second barrier to change is that ministers are waiting for permission from the public that will never arrive. When I spoke to Sir Vince Cable about the mansion tax that the Lib Dems tried and failed to get past its Conservative coalition partners, he was clear that the decisive obstacle was not so much pushback from wealthy donors as concerns over the depth of public feeling about taxing property. Even though most people will never own a £2 million home, many still saw the proposed mansion tax as an attack on their own aspirations to become wealthy and to attain financial security. But this is a constraint on how a policy is designed and communicated, not on taking action. Sam Freedman described to me the feedback loop by which politicians, fed an image of the conservative average voter by the right-wing press, pander to it, harden it, and then treat the result as proof that they were right. Tony Blair was willing to sell policies to voters and argue with them when necessary; the Starmer government preferred to ask them what they wanted. Research by Sarah Kerr and Michael Vaughan at LSE suggests that people are more supportive of redistribution when the very wealthy are seen to behave anti-socially, through tax avoidance, or buying political influence, or profiteering. Politicians can call out this wealth extraction, naming the behaviours rather than necessarily blaming the wealth.

The third barrier is that we do not treat inequality and other big structural problems as a strategic risk to the UK. On the morning of 7 July 2005 I was two weeks into a civil service job working on emergency preparedness when the bombs went off, and I spent the following three days in COBRA collating casualty numbers. What I took from those years of working on national resilience is that we are fairly good at planning for acute risks, but hopeless at thinking about chronic ones. Wealth inequality is a chronic risk in its own right and, worse, a risk driver: it increases the likelihood and impact of social unrest, climate inaction, economic stagnation and democratic decay, while corroding the societal resilience that we need to respond to each of those risks. The government’s recent Chronic Risks Analysis is a step forward, but even it mentions inequality only obliquely. Even KPMG stated in 2022 that social inequality can destabilise supply chains, trigger political instability and jeopardise a company’s social licence to operate. What would it look like to join up work across government on inequality with work on risk and resilience and on strategic policymaking?

The fourth and final barrier is short-termism. Burnham has promised a ten-year national plan, which is more ambition than we have seen in a while, leaving aside Starmer’s missions. However, even ten years is little more than an extension of the present, a time horizon that stop at a point when today’s leaders might theoretically still be in office. Wales passed its Wellbeing of Future Generations Act in 2015, and former First Minister Mark Drakeford told me that the legal duty to weigh every Welsh government decision against its impact on future generations has changed both the culture and the practice of politics there, and that the effect would be greater still in Westminster, where ministers change jobs more frequently and the pressure to prioritise short-term needs is even greater. A Future Generations Commissioner, reporting to a parliamentary committee for future generations, would be a sensible first step with a long reach.

We’ll get a sense of how seriously this new government is thinking about tackling these barriers when the next budget is unveiled on 28 October. Burnham’s signals so far have been mixed. On taxing wealth, for example, he is open to revisiting capital gains tax, has seemingly ruled out reforming stamp duty, and isn’t prioritising a wealth tax. And the new Chancellor John Healey has been playing his cards close to his chest. Let’s hope that they choose to act, and to tackle the barriers to progress, remembering Thomas Piketty’s line that inequality “is neither economic nor technological; it is ideological and political”. Tackling inequality will ask something of more than just the top 1%: many of us in the wealth-owning half of Britain, myself included, have done nicely out of rising asset prices and will have to give something back. It would be better for our political leaders to say as much, and to make a compelling argument, than to pretend that the bill will fall entirely on someone else. Our leaders need to show real political courage; our job is to hold their feet to the fire.

This article previews the final section of my forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, which is out on 8 September with Policy Press; you can pre-order a copy and sign up to a launch event using the link.

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Last week I wrote about the harms caused by wealth inequality, arguing that we need to distinguish between the harms that arise mostly from the concentration of wealth at the very top of the distribution, those that have more to do with the absence of wealth at the bottom, and those that stem from the size and shape of the gap between rich and poor. This is important not least because it helps us to work out what policies we need to address those harms:

Answering these questions is crucial in helping us to better understand and communicate the evidence about the negative impacts of inequality (of wealth in particular), and to win the argument about both the need for change and the effectiveness and feasibility of some of the most promising policy solutions, from better taxes on wealth to ways to share wealth more broadly in the first place, as well as stronger ‘guardrails’ to protect against the worst harms caused by both extreme wealth and zero wealth.

Today I’m going to dive into some of those policy solutions in more detail, looking at these three ‘buckets’ – redistribution (taxes on wealth), predistribution (sharing wealth more broadly at source), and guardrails (protecting against the spillover harms).

Let’s start with taxes on wealth. We wrote about this in autumn 2025, arguing that taxing wealth better would make both the tax system and our economy as a whole fairer, while raising useful amounts of revenue and boosting growth (rather than undermining it, as some suggest).

The debate about a wealth tax (i.e. a new one-off or annual tax on wealth holdings above a threshold, like £10m) continues to rage, with Gary Stevenson’s recent Channel 4 documentary helping to bring the arguments to a wider audience and provoking plenty of impassioned debate on both sides. Gabriel Zucman has made a separate proposal for a global minimum 2% tax rate for those with more than $100m, which is really about ensuring that the extremely wealth pay the same rates of income tax as the rest of us. And there are a whole range of other ways to tax wealth better by reforming existing taxes, on capital gains, inheritance and property, among others, which we explored in our 2025 report. I’ve written for Bright Blue recently on making an argument for taxing wealth that resonates with those on the right as well as on the left.

A key question to consider is why we want more and better taxes on wealth. The fact that there are so many arguments for taxing wealth more is a mixed blessing for campaigners, because they need to find a simple message that cuts through as effectively as ‘stop the boats’ or ‘take back control’. It’s not surprising, then, that they have settled on a wealth tax as the key ask, with the twin aims of making the tax system (and economy) fairer and raising revenues (ideally for public services). Critics will inevitably argue that a wealth tax is being inaccurately presented as a magic bullet, and that it’s populism rather than serious policy. But it’s not clear whether or how campaigners can avoid some of these elephant traps in a media, online and political climate that is not conducive to nuanced and detailed debate.

As well as raising revenues and redistributing income and wealth, taxes can also ‘reprice’ goods and services to encourage desirable behaviours by companies or individuals and discourage undesirable ones. More electric vehicles, fewer sugary drinks. And better taxes on wealth can help here too, for example by incentivising genuine wealth creation while disincentivising wealth extraction.

But we also know (and tax campaigners would agree) that it’s not all about tax. As well as redistributing income and wealth after the fact, we need to find ways to spread them more fairly in the first place (predistribution).

In part this means finding ways to ensure that workers pocket a greater percentage of company profits, through stronger trades unions and other approaches like mandating worker representation on boards, as well as scaling up alternative business models like social enterprises and employee-owned companies. But not everyone is able to work as much as they would like, and we are staring into the abyss of massive AI-driven disruption to the labour market, so we need to look again at how we might design and implement a universal basic income.

Equally, it’s not all about income – spreading wealth is important too. We need to revisit what Liam Byrne has referred to as universal basic capital (perhaps funded by taxes on wealth), which he suggests could comprise a universal savings account alongside a one-off young peoples’ dividend paid from a bigger version of the existing national wealth fund.

Investment is key, but smarter regulation can play a key role here, without incurring enormous expense for the taxpayer. In particular we need regulation to promote wealth creation over wealth extraction, helping to protect free markets and boost growth at the same time as keeping more money in people’s pockets, rather than allowing it to be siphoned off through profiteering by monopolists, rent-seekers and private equity barons.

Finally, we should acknowledge that reducing wealth inequality to a desired level might never be achievable, in part because we might never be able to agree on what the ideal level is. So the third bucket in our armoury (if armouries use buckets) is putting in place ‘guardrails’ around wealth inequality to reduce its spillover effects on our economy, society and democracy. In other words, we can and should be thinking about making wealth inequality less harmful by reducing the importance of both owning wealth and not owning wealth. Think of it as adaptation rather than mitigation, if you find that more useful than confusing (recognising that, as with climate breakdown, we need both).

This is a trick that has been used to good effect by our Scandinavian neighbours, many of which have high levels of wealth inequality, but offset by low levels of income inequality, almost no poverty, and a healthier democracy. How do they pull this off? In part by ensuring that low levels of private wealth do not unduly damage people’s life chances and outcomes, through strong, universal and far-reaching public services (including free childcare, affordable social care and more widespread social housing) and a generous social safety net. Then they tend to have more effective measures in place to reduce the influence that the very wealthy have on politics, from public funding for political parties to rules about lobbying and media ownership.

The German sociologist Jens Becket writes about six ‘capacities’ that wealth brings – security, opportunity, income, bequest (inheritance), status and power. The first four of these can to some extent be provided by the state through public services, using public wealth to compensate for a lack of private wealth. The last two, however, are inherently relative or positional concepts – one person’s status or power is gained over, and so at the expense of, another’s. Researchers looking into the harms of extreme wealth point out that the hoarding of status and power by a few ultra-wealthy individuals also tends to undermine the ability of the state to provide its citizens with security, opportunity, income and a chance to pass on wealth to their children. The wealth of some is undermining the ability of others to generate wealth for themselves, or even to enjoy the benefits of public wealth. And the problem is not just the billionaires; witness the ways in which the ‘ordinarily’ wealthy hoard opportunities for their own at the expense of others, even while feeling uncomfortably off relative to the super-rich.

When it comes to the solutions to wealth inequality, we need to be thinking about how to interrupt some of the transmission mechanisms by which wealth inequality both reproduces itself and harms all of us. We need to identify policy levers that will prevent the very wealthy from blocking routes to ‘necessary’ wealth for everyone else. If we don’t figure this out soon, we might not still have a democratic system that can bring these vital changes about.

My forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, looks at the harms of inequality and the potential policy solutions in more detail. It’s out on 8 September with Policy Press; you can pre-order a copy and sign up to a launch event using the link. Next week I’ll publish a final article previewing the book’s arguments about how to overcome the barriers to change. And we’ll be publishing more on wealth-inequality-specific problems and solutions later this year, building on our Wealth Gap Risk Register.

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In Are Billionaires Bad? (BBC Three, 28 July), the comedian Shabaz Ali embarks on a funny and thought-provoking exploration of extreme wealth that takes him from the luxury handbag shops of Knightsbridge to the Colorado lair of British billionaire and philanthropist John Caudwell. There are some revealing insights, but Ali finds, like so many before him, that his basic challenge – that billionaires are bad and shouldn’t exist – is far too easily rebuffed by the people he meets, almost all of whom (in the name of good old BBC balance) are on the side of, well, the billionaires.

Take Caudwell as an example. He seems like a genuinely good person, and he’s undeniably an impressive philanthropist (who says that he’s not that keen on most of his fellow billionaires). But when Ali suggests that billionaires have too much influence on politics, Caudwell waves the idea aside with the eyebrow-raising suggestion that rich people have influence because they have good ideas, so politicians should listen to them. Maybe Ali’s comeback didn’t survive the edit, but it would have been nice to see him pushing back on this evidence-light assertion rather than giving Caudwell an open goal.

Many critics of inequality have found it challenging to respond robustly to the inevitable backlash that they provoke, despite the fact that public opinion is generally, and increasingly, more on their side than not. This is partly because people with an enormous amount of wealth - and those who represent them, work for them, sell things to them or aspire to be them – have a largely sympathetic media on their side, as well as a set of stubborn cultural beliefs (not least the myth of meritocracy) that serve to justify the status quo. Their enormous lobbying firepower doesn’t hurt, and neither does their largesse towards political parties (see previous paragraph). There’s also an insidious sense that the technical expertise is on the side of inequality defenders (and a bigger group that we could call ‘change sceptics’), who are bravely defending the truth against an ill-informed rabble of activists and dreamers.

However, the notion that the evidence favours those who defend the existing system over those who seek to change it doesn’t hold up to scrutiny. In fact, there’s a rapidly growing and increasingly convincing body of research to show that inequality isn’t just unfair, it’s actively harmful for all of us, not just those at the sharp end. Given that this evidence exists, it should no longer be possible for an inequality defender to accuse a critic of simply being jealous of other people’s wealth without being hit with a volley of arguments about how and why inequality is bad for everyone.

At the Fairness Foundation we’ve spent years compiling and communicating the evidence base about the negative effects of wealth inequality in particular, looking at how it harms our society, economy, democracy and environment. You can read up on these impacts – and what we can do about them – on our online Wealth Gap Risk Register.

One of the key findings is that many of the negative consequences of inequality come about as a result of its fundamental unfairness. In other words, inequalities that arise from unfair causes tend to have negative consequences. Let’s take economic growth as an example. Researchers have compared inequality to cholesterol, arguing that inequality caused by barriers to opportunity is bad for economic growth, whereas inequality arising from individual effort can be good for growth. It turns out that most inequality today in Britain and other advanced economies is caused by barriers to opportunity rather than different levels of effort. This means that, far from being an inevitable side-effect of growth or even a precondition to it, inequality is a barrier to economic growth. We’ve argued that inequality undermines growth through five distinct mechanisms – reducing demand, wasting talent, extracting wealth, skewing investment and undermining competition.

However, even inequalities that some might see as arising from unobjectionable causes can have negative consequences. The increasing influence of extreme wealth on politics is an obvious example. We do not need to object in principle to the idea that someone deserves to become a billionaire to worry in practice about the outsized influence that they exert on political decisions and priorities.

And this is where it can be useful to distinguish between different aspects of inequality, to think in a more nuanced way about exactly what is driving some of these broader harms to our society, economy, democracy and environment, and what this means for how we should respond. Which harms arise mostly because of the existence of a small class of billionaires, i.e. from the extreme concentration of wealth at the top of society? Which come about more as a result of the gap between richer and poorer households? And which are primarily a consequence of the lack of wealth among those at the bottom of the distribution? Finally, how do these three different aspects of wealth inequality interact with each other?

Answering these questions is crucial in helping us to better understand and communicate the evidence about the negative impacts of inequality (of wealth in particular), and to win the argument about both the need for change and the effectiveness and feasibility of some of the most promising policy solutions, from better taxes on wealth to ways to share wealth more broadly in the first place, as well as stronger ‘guardrails’ to protect against the worst harms caused by both extreme wealth and zero wealth.

We’ll be doing more of this work at the Fairness Foundation over the coming months and years, so please follow us to find out more. In the meantime, my forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen (out on 8 September with Policy Press – you can pre-order a copy and sign up to a launch event using the link) digs into the broader fairness arguments. I published an article recently with HopeWorks setting out some of the ideas in the book about how to get the public behind a vision of a fairer Britain; in the coming weeks I’ll write here about some of the suggested policy fixes set out in the book, followed by a final article previewing the book’s arguments about how to overcome the barriers to change.

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Ordinary wealth in every postcode

This month saw a new Prime Minister take office and a new Government take shape. In response, our Head of Politics & Advocacy Jason Bunting set out why tackling extreme economic inequality should be the defining test of Andy Burnham’s government, and how he might go about meeting it.

We outlined how wealth now plays a bigger role in shaping life chances than at any point in living memory, and how the inability of people across the UK to build ordinary levels of wealth is frustrating growth, cohesion and faith in democracy.

In fact, the new Prime Minister’s own diagnosis, that Britain has concentrated political power in London while privatising and deregulating the economy, matches our research on a widening wealth gap caused by the extraction of value from our economy, and an economic model where too many don’t share in the same proceeds.

Britain took a series of wrong turns in the 1980s. Political power was centralised and economic power was privatised. The country surrendered control of the essentials – housing, water, energy, transport - and left people exposed to higher costs. That in turn led to the concentration of more wealth and power in the hands of fewer people and fewer places.

Andy Burnham, on becoming Labour Party Leader

To address these challenges, we argue that redistribution alone won’t be enough. Instead, the new Prime Minister needs a programme that reshapes how wealth is created, shared and governed, including through more effective fiscal devolution, improvements to the taxation of wealth, and the creation of more guardrails between money and political power - including by capping political donations.

Read the full piece

The Billionaire Factory

In the next instalment of our monthly interview series, our Head of Policy & Research Jack Jeffrey spoke with award-winning author Hettie O’Brien, author of The Asset Class, about how private equity became one of the most powerful forces reshaping the UK economy. O’Brien traces the industry’s roots to a reaction against managerial capitalism, explains how Britain became PE’s “experimental laboratory” thanks to its aggressive privatisation agenda. She also unpacks how firms have loaded unsustainable debt onto companies, as in the case of Thames Water, to enrich a small group of financiers rather than to invest in productive capacity. O’Brien is sceptical of the industry’s pitch that channelling pension savings into private markets “democratises” returns, arguing that it looks more like creating powerful coalitions against reform.

She also called attention to the “explosive political potential” for mobilisation posed by the sectors now infiltrated by private equity, including water, housing and care. She highlighted the example of local campaigners like Becky Malby in Yorkshire, who has led a campaign to hold the environmental regulator in the water system accountable. Given the deep dissatisfaction with the cost and quality of public services in Britain, it’s not hard to see how a powerful coalition could be built in opposition to value being siphoned away from them by damaging forms of private equity.

In the context of a new government which is explicitly seeking to challenge the power of vested and private interests in our economy, the role of private equity in our public services will become ever more important over the coming months.

Read the full interview

AI will kill off the lingering myth of meritocracy

This month, we released a new piece from our Chief Executive Will Snell, who argues that AI won’t just automate some jobs or create labour market displacement, but could help to finish off the idea that reward tracks merit.

Where the existing critique of meritocracy rests on unequal starting points (talent, family wealth, geography), AI removes something that survived even that critique: the ability to infer effort and skill from what someone produces. When anyone can generate a competent strategy document or piece of code in minutes, the signal that work sends about the worker starts to dissolve, and reward shifts instead toward whoever owns the model, the data and the compute.

His conclusion is that if we can no longer credibly claim people’s place in society reflects their merit, we need a different basis for deciding how resources and status are distributed.

Will’s analysis links to our founder Julian Richer’s comments on why acknowledging our own good fortune would make the world a better place. In that piece, Julian argued that many people under-estimate the role that luck has played in our lives, and that a greater admission on the part of successful people of the role of luck in that success would help policymakers to act on inequality.

Read Will's full piece

The right should not tax work more than wealth with Bright Blue’s Centre Write

While taxing wealth is sometimes seen as the preserve of the left, in this piece for Bright Blue’s Centre Write magazine, Will makes a case aimed squarely at a centre-right audience. In it, he argues that action to rebalance Britain’s 4% average tax rate on wealth versus 33% on work should be as much their cause as anyone else’s.

Will explains how taxing work in this way more than wealth bends incentives away from genuine graft and enterprise and toward rent-seeking, distorting competition by unfairly rewarding incumbents over challengers.

Reforms like equalising Capital Gains Tax with Income Tax (last attempted by Nigel Lawson) would raise an estimated £11.3 billion a year. Yet beyond arguments for revenue raising, the real centre-right case is that rewarding work more than wealth properly rewards opportunity, freedom and market competition, all values at the heart of a centre-right case for a fairer economy.

Read the Bright Blue piece here

How to get Britain behind Burnham’s new vision

Finally, we were pleased to be featured on the HopeWorks blog this month, as Will asked what it will take to convert the new Prime Minister’s bold rhetoric on wealth and power into public support for action. His answer is to frame reform around fairness rather than equality: the “fair necessities” of fair essentials, opportunities, rewards, exchange and treatment. That framing can help transform the strong public support for tackling inequality (our polling suggests 85% of Britons are worried about inequality) into a powerful mandate for change, anchored in the shared principle of fairness. It can present a nuanced and concrete way of thinking and talking about fairness, helping the Prime Minister to deliver on his bold political vision in a way that brings the country with him.

Will’s argument previews arguments from his upcoming book The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, which is out on 8 September with Policy Press. The launch event is on 8 September at King’s College London (register in person or online).

Read the HopeWorks article here

In the coming months, we’ll continue to explore these issues and more. As ever, if you’d like to support our work or collaborate on upcoming projects, please do get in touch.

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It’s telling that the new Prime Minister’s chief criticism of his predecessor Tony Blair’s contribution to Labour’s recent internal debate was that he ignored inequality.

The conviction that Westminster has long overlooked the distributional consequences of its decisions sits at the heart of Burnham’s own diagnosis, and it’s likely to be a defining feature of his governing agenda in the months ahead. As the new Labour leader said in Friday’s victory speech:

Britain took a series of wrong turns in the 1980s. Political power was centralised and economic power was privatised. The country surrendered control of the essentials – housing, water, energy, transport - and left people exposed to higher costs. That in turn led to the concentration of more wealth and power in the hands of fewer people and fewer places.

He takes office at a moment when the evidence on this could hardly be clearer. Our research has shown that the wealth gap has widened dramatically over recent decades, driven by rising asset inequality, and that wealth now plays a bigger role in shaping life chances than at any point in living memory. The consequences extend well beyond fairness: extreme wealth inequality is frustrating economic growth, undermining community cohesion and eroding faith and trust in democracy.

Burnham is right that successive governments failed to confront the scale of this challenge. The result is an economy in which, as the incoming Prime Minister has outlined, wealth, opportunity and power have become concentrated among a small number of people and in one corner of the country.

This concentration is no accident. Over recent decades, governments have centralised power in London, while privatising and deregulating swathes of the economy. Their decisions have built an economy that rewards ownership over work, and the extraction of value from existing wealth over the creation of new wealth.

Along the way, Britain has lost sight of the distinction between economic activity that raises living standards and activity that simply drains wealth from others. Too often, the latter is effectively given a free pass in our economy. This has created an unfair playing field, with too few people able to share in the proceeds of growth.

Redistribution of wealth will not be enough to reverse this trend. Instead, we must demand a programme that reshapes how wealth is created, shared and governed. That means a serious programme to tackle both the causes and the consequences of extreme wealth inequality. It means giving more communities a fairer share of economic opportunity, and building a policy agenda around broader and fairer access to wealth. And it means confronting the extraction built into today’s economy while backing Britain’s productive sectors. This could include an agenda that introduces new measures to reform private equity, helps young innovative firms to scale, and ensures that work is rewarded more fairly by taxing unearned wealth more effectively.

It also means sharing wealth more broadly. New wealth funds could ensure that income-generating assets are held more equitably, so more people benefit as the economy grows. Effective fiscal devolution could strengthen the inclusivity of regional economies, while renewed investment in public services will become even more important, particularly as AI reshapes the economy.

Finally, it also means building guardrails between money and power. Rebuilding trust in democracy requires urgent political reform, including through capping political donations in the Elections Bill and delivering on Burnham’s promise of long-term politics through a new Committee for the Future in Parliament.

If Andy Burnham is serious about building a fairer Britain that delivers good growth in every postcode, then tackling extreme economic inequality must be a central tenet of his agenda. That means providing everyone with the opportunity to build ordinary wealth, guaranteeing a basic floor of security on which we can all rely, and giving everyone a fair chance to contribute to, and benefit from, our economy. The incoming Prime Minister has already recognised this in his diagnosis. The challenge now is to build the policy agenda capable of delivering it.

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A year ago, I wrote a piece for the RSA about myths of merit in an unequal society, in which I argued that the meritocratic narrative both masks and justifies economic inequality. What looks like merit is mostly luck: the luck of being born to the right parents, in the right place, with the right start. If we paid more attention to how much our life trajectories are influenced by this broad conception of luck, we would take bolder action as a society to reduce the inequalities that underpin it.

In the intervening twelve months, the capabilities of large language models have developed enormously. I don’t know about you, but I have shifted rapidly, and recently, from being sceptical about the impacts of AI to being pretty convinced that it will drastically reconfigure our economy over the next few - and I mean few - years. I’m far from alone in thinking this (although I do think that many people have their heads in the sand), and the British public is also concerned. A few recent articles worth reading on this include those by Rutger Bregman, Martin Wolf in the FT, Simon Johnson (chair of the UK’s new AI Economics Institute), Roa Powell, Matthew Harvey Sanders, and Pope Leo XIV.

And some of the projections are sobering. Sanders quotes Mustafa Suleyman, CEO of Microsoft AI, predicting that most white-collar work will be “fully automated by an AI within the next twelve to eighteen months.” He cites estimates of a 50% chance that artificial general intelligence is with us by 2030 - within four years - leading to one person doing the work of hundreds. And he quotes Demis Hassabis, CEO of Google DeepMind, who said last summer that “AI will be ten times bigger than the Industrial Revolution and perhaps ten times faster, unfolding over a decade rather than a century”.

We’re not paying nearly enough attention to the tsunami that is headed our way, and to the drastic steps that we need to take now to prepare for it. As Martin Wolf said in the FT, “there is a good chance that AI will in time devastate the labour market, increase inequality and create an extraordinary concentration of economic - and so political - power in the hands of a tiny number of businesses and people… A good part of the increased income and wealth must be shared. The time to prepare for this is now. If we do not act, it will be far too late”.

However, in this post I want to focus on one even more neglected aspect, that has important implications for how we think about ourselves and each other. If the myth of meritocracy is already wobbling on shaky foundations, I suspect that the AI revolution will finally shatter it - with implications both good and bad.

The existing critique of meritocracy largely rests on the fact that life chances and outcomes owe as much to luck as to merit (talent + effort). This is exacerbated by the fact that both our society and the labour market values cognitive skills more than manual labour or care work, as David Goodhart argued in Head Hand Heart. But the rapid adoption of AI is completely undermining our ability to measure cognitive talent and effort in the first place.

Before AI, we would look at what someone produces, whether it was a report, a strategy, a diagnosis, or an elegant piece of code, and would be able to infer fairly accurately the level of both effort and talent that must have gone into it. In theory, the person who produced this output would be rewarded accordingly - with money, but also with status, respect, and the unspoken assumption that these rewards were fully deserved.

Critics of meritocracy, including myself, would argue that the ‘inputs’ into this process were unequally shared out, and were not ‘earned’. People were born with different talents, into families with different amounts of wealth, in poorer or richer parts of the country, into very different social networks, and so on. So the outputs could not be judged against a fairly distributed set of inputs.

However, what was at least relatively safe (bar cheating) in the pre-AI era was the assumption that the outputs belonged to the person. The fairness was upstream of the task. This is no longer the case. When anyone with a monthly subscription to an LLM can produce a competent strategy, marketing plan or web prototype in minutes, it is no longer possible to judge the ‘merit’, however deserved or not, of the person who submitted it. The signal that work normally sends about the worker has dissolved into noise. The myth of meritocracy depended on legible proof of desert, but AI has made the proof illegible.

Luck undermined meritocracy because the race was rigged, but at least the times on the clock were real. AI destroys meritocracy because we can no longer trust the results of the race at all.

Some might read this as an uncomplicated good news story, that capability is democratised, that everyone’s talent is unlocked. And that might be true to an extent in a future economy in which AI is mostly used to augment workers. But, as the articles cited above suggest, the more likely scenario is the rapid use of AI to replace workers. And in this scenario, an increasing share of the rewards goes not to the individuals who nominally produce the work, but to the people and organisations who own the model that did much of the actual work, the data it was trained on, the compute that it runs on, and the platform that distributes it. Reward is detached from merit, and from labour, and re-attached to ownership of the infrastructure.

Unfortunately, this is a trend that has been accelerating in our economy over recent decades anyway, quite apart from the impacts of AI. As Piketty observed in 2014, capital is attracting higher returns than labour, in a self-reinforcing cycle. Increasing amounts of wealth are extracted rather than created, in particular by companies who own a scarce asset and charge excessive amounts of ‘rent’ to access it, from housing to land and infrastructure. AI looks poised to supercharge our already-advanced transition to a rentier economy, except that this time the rent is also being extracted from cognitive labour. Talented and hardworking knowledge workers face being rapidly ejected from the top of the meritocratic pyramid, and being turned into tenants, digital serfs, paying for the tools that do the real thinking while the companies that own the real means of production reap the rewards.

To those who object that technological advances have always changed working habits - that the calculator did not undermine mathematical talent, that the internet did not destroy the job market for researchers - the AI revolution looks different. Unlike its predecessors, it doesn’t just automate the periphery of knowledge work; instead, it can take over the core components, the thinking, the reasoning, the writing. This reduces the role of human judgement to knowing what to ask and how to check the answer - hardly the basis for a functioning system of reward based on meritocracy.

If we collectively recognised this state of affairs, it could unlock a consensus for making some of the radical changes to our society and economy that the AI era demands. If we can no longer credibly tell people that their place in society reflects their merit, we need a different basis for deciding how both economic resources and intangibles such as social status are distributed. We cannot keep on distributing money and respect based on a metric that has no meaning. And we need to recognise that the coming ruptures to the labour market will threaten not only people’s livelihoods but also their sense of purpose and meaning, unless we take radical steps to rethink how we organise our society.

That means taking seriously the ideas that the myth of meritocracy was designed to keep off the table - reducing inequality, distributing resources more fairly at source rather than relying on the tax system to do what it can to redistribute them, spreading ownership of tech stocks so that its returns are widely shared rather than privately captured, and decoupling human dignity from a merit metric that no longer works. It means, ultimately, a new social contract, grounded not in the fiction that we get what we deserve, but in the question of what we owe each other. The myth of meritocracy allowed us to spend decades collecting gaslighting ourselves into believing that this question was already answered, but it never was. Now we no longer have the excuse of pretending otherwise.

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In The Asset Class (2026), Hettie O’Brien charts how private equity (PE) became one of the most powerful forces reshaping our economies. In this conversation, she discusses the intellectual origins of the leveraged buyout, why Britain became PE’s experimental laboratory, the mortgaged futures of companies like Thames Water, the push to ‘democratise’ private markets through pension savings, and what alternatives might look like.

Note: The title of this post comes from a 2020 paper, An Inconvenient Fact: Private Equity Returns & The Billionaire Factory, by Ludovic Phalippou at the University of Oxford’s Said Business School.

Jack Jeffrey (JJ): In the introduction to The Asset Class, you reference Richard Hofstadter’s essay The Paranoid Style in American Politics (1964). In that he describes the paranoid style as “a style of mind that is far from new and not necessarily right wing... no other word adequately evokes the sense of heated exaggeration, suspiciousness and conspiratorial fantasy that I have in mind.” As you write in the book, there has been a lot of interest in private equity from the MAGA right, which portrays the industry as a conspiratorial plot to dispossess Americans of their assets. But as you also outline, PE has fundamentally transformed countries and not for the better. I’m interested in how you negotiated that tension between conspiratorial paranoia and justified suspicion when researching the book?

Hettie O’Brien (HOB): It’s something I frankly struggled with. I found it epistemologically challenging to figure out what I thought about arguments coming from a political perspective that I find pretty loathsome. But spending time on online forums, watching YouTube videos, listening to MAGA discourse about private equity, there were aspects of what they were saying that were true, even if the facts were often wrong.

There was a MAGA-adjacent influencer who had a particular line about how the industry had invested in “the things we cared about most [...] the things you will pay for, no matter what”. When I first heard that, I thought it was too convenient and simple as a narrative. But actually, it’s true. The motivations behind PE aren’t necessarily conspiratorial. They have to do with a confluence of different economic factors and trends. The low interest rate, post-2008 climate, prodigious access to debt, the retreat of the state, the sell-off of public assets. Taken individually, there is no Bond villain stroking a white cat in a secret room designing all of this. The reasons are largely economic. But the result can look and feel like a conspiracy because PE is so powerful.

I initially felt this had all the hallmarks of a great conspiracy story. But as a journalist, I care about being accurate and faithfully representing reality. I think anyone with a vested interest in the idea that truth corresponds to some shared factual reality tends to struggle with the idea of conspiracy because it seems so premodern and inattentive to those facts. There’s that Naomi Klein line I quote in the book: “conspiracy culture gets the facts wrong, but the feeling is right.” In much the same way, I don’t think it’s paranoid to want to resist PE. People are justified in feeling that things are unfair, and that this industry plays an outsized role in shaping everyday life. That makes it incumbent on people who want to tell the truth to both uncover what is happening and for politicians to make a case that it needs to change.

JJ: One of the things the book does really well is lay out the intellectual scaffolding of the PE model which, as you say, was a response to the perceived problems of managerial capitalism. That was really clarifying. But I’m interested in where you locate the failure. Is it in the ideas themselves, their selective application, or the post-2008 political conditions that have allowed private equity to colonise specific sectors?

HOB: I kept asking myself this while writing the book. Is the government to blame, or a series of pernicious academic ideas? I think it’s both. There were real policy failures and missed opportunities, such as the decision, in Britain, not to borrow when money was really cheap after the financial crisis and instead to embrace a devastating programme of austerity. That has meant that British people now live with both an immiserated public realm and a generalised acceptance of the idea that the government can’t afford things that would improve peoples’ lives, and instead needs private capital to do the things the state won’t. That’s a political failure, both of action and inaction.

But I also think ideas are important. I was interested in the origin story – partly the hangover from the post-war corporate consensus in America, the idea of managerial capitalism, and the pushback mounted by a renegade group of financiers against the Chandler idea1 of what a corporation is supposed to be about. And when you drill down into the actual mechanics of PE, the central technique is the leveraged buyout. There was always this idea that in heaping debt upon companies you’d make them leaner, meaner, more efficient. But there was never really any empirical evidence cited for that.

I look at the work of Michael Jensen2, who wrote papers on both the principal agent problem - the idea that public corporations had an intrinsic issue with managers rather than owners being in charge and therefore not producing enough value for shareholders – and a follow-up paper3 suggesting that debt was a way to resolve this tension. If you heap debt upon a company, it would force managers to take decisions resulting in more efficient companies. Yet again, he cited no empirical evidence. Whilst in the first wave of leveraged buyouts in the 1980s you could argue it worked to some extent, from the 1990s onwards, what PE has really contributed to is a sustained increase in leverage.

That raises the question of who benefits. It looks like a form of legalised arbitrage where a small group of financial insiders use the corporate form to borrow in order to enrich themselves, rather than doing what postwar corporations did which was borrow to build things, to expand, to do capital-intensive productive things (I’m not idealising here about midcentury corporations, or public companies - Enron was a public company, after all). Instead, you see an abuse of the corporate form: borrowing to enrich the owners rather than improve the company, and rerouting money away from the taxman through interest deductibility.

JJ: Just to follow up on whether PE is context specific. To what extent was the austerity decade of the 2010s a pivotal moment in this story? And now that those conditions have disappeared, i.e. that interest rates have ticked up, will PE be as pernicious and dominant as it has been?

HOB: This can look like a post-2008 phenomenon – catapulted by extremely low interest rates, quantitative easing, specific opportunities that emerged particularly in land and property. When the real estate bubbles popped in America and Spain, for example, there were opportunities to buy up housing, which is how thousands of people who had never previously heard of Blackstone first learned about the firm. But in reality the story goes back much further than this.

Britain specifically was almost like an experimental laboratory for PE; as Sadek Wahba, the founder of an infrastructure investment fund, put it in his book, Build: Investing in America’s Infrastructure, the UK has served as "a model to the world" in terms of infrastructure privatisation4. That has to do with the sale of public assets at an aggressive pace. Speaking to people who used to work at Macquarie - the Australian investment bank and infrastructure fund manager that began as the Australian subsidiary of British merchant bank Hill Samuel - there was a sense that when those Australians were sent back to Britain to buy up assets from sleepy local councils, Britain had created an incredible opportunity for PE’s encroachment into public services. That goes back to Thatcherism and its tail end, and then to PFI (the Private Finance Initiative), which started under John Major but became a hallmark of the New Labour era.

And if you want to go back even further, PE can really be read as a reaction against the social democratic and corporate consensus that emerged in the New Deal era in the US. It was an attempt to restore power to company owners and resembled an attempt to take the economy back to something resembling what it looked like during the Gilded Age, before Roosevelt regulated Wall Street and before the SEC (the US Securities and Exchange Commission) was created. There’s a brilliant line I quote from Henry R. Kravis: “Where have the Carnegies and the Mellons and the Rockefellers gone?” So yes, it took off post-2008 on one level, but on another it’s part of something much bigger – the dismantling of the twentieth century compact between social democracy and capitalism, and the concentration of power, decision-making and wealth among a small group of financial insiders.

As for whether it will continue. I started out thinking the wheels were falling off. PE took $1.5 trillion more from its investors than it generated in returns between 2017 and 2023. When you account for the steep fees charged, there’s a good argument that private markets have not really managed to outperform the stock market. And funds are sitting on companies they’re struggling to exit, resorting to Byzantine instruments like net asset value loans and payment-in-kind loans.

But I think that assuming this will have some existential bearing on the fortunes of PE is a little optimistic. The success of PE has less to do with actually generating returns than with its closeness to government and its ability to manufacture consent amongst its investors. For a long time, institutional investors such as pension funds were happy to pay proportionally more for private equity because having money locked up in private markets buffers you from the ups and downs of the stock market. And now there is an attempt to push further into the finances of everyday people through pension savings. The industry’s ability to access new pools of capital is largely determined by its political relationships. Both in the UK and US, governments are making the argument that more of our retirement savings should go into private markets – an argument very favourable to the industry. That’s ultimately why, even though the wheels look to be falling off in some respects, the success of the industry arguably has more to do with accessing new inflows of capital than with value creation.

JJ: The book focuses a lot on the US, but Britain is unusual, as you reference, in being a kind of experimental laboratory for PE. It has an unusually permissive takeover regime. Successive governments have refused to introduce public interest tests that are commonplace in other countries, which means that UK companies and infrastructure are perpetually available for acquisition. Why has that been so politically durable across governments?

HOB: I’m reluctant to reduce this to American PE funds preying on British assets, because I think it’s more complex. PE is an American invention in an important sense. It would have been impossible to imagine it emerging as it did outside the context of 1970s America. But now the model has been copied and mimicked by everyone from sovereign wealth funds to pension funds. As I put it in the book: one country’s pension provider is another country’s financial predator.

There are specific reasons why Britain has remained attractive. You’re right that there is a very permissive takeover regime. When I was a reporter covering competition policy it frustrated me enormously that a public interest test would be applied far more readily in France than in Britain, where its scope has been narrowly restricted. You can see this more broadly in how the Monopolies Commission (1973) quietly removed the word ‘monopoly’, arriving eventually at the Competition and Markets Authority (2013). Britain has really adopted the legal and economic principles born in America, which shifted competition law from intervening to protect genuine competition against entrenched power, to seeing law as a tool for insulating markets from democracy. That’s a missed opportunity, though there have been exceptions. And yet alongside that sits this narrative that a lighter touch on competition enforcement will boost economic growth – a completely credulous view that plays to the interests of entrenched power.

Another factor is that there are a lot of undervalued companies that have struggled to access capital because of a declining stock market and the drift away from any sense that pension funds ought to invest in UK equities5. That has left many companies either listing elsewhere or being snapped up and taken private. Ensuring companies can access capital to invest in productive activity would make them less undervalued and less attractive to buyout. It’s more complex than simply a vassal state story, though I agree with aspects of that framing.

JJ: I want to talk about the significance of debt. PE borrows to acquire, it loads debt onto companies, and those companies’ future earnings service that debt. What’s the significance of that process?

HOB: When you look at a company like Thames Water, we’re now living in that future that was mortgaged. The company is effectively insolvent because of all the debt taken out not to invest in productive capacity but to enrich a small group of shareholders and financiers. It raises very difficult questions about who deals with the problems that creates, because it becomes extremely expensive to untangle an asset from all those claims on its future.

It’s highly political. There’s a brilliant paper by Carolyn Sissoko6 that traces this really effectively - the way this uses a company’s debt-servicing capacity with no bearing on the broader benefit to society, and how different that is from what the managerial corporations of the postwar era were doing when they raised money to reinvest in the corporation itself. It amounts to a gigantic wealth transfer. Which is why the financial academic Ludovic Phalippou rightly calls PE a “billionaire factory”.

JJ: Circling back a bit, I wanted to ask about the push to direct pension savings into PE funds. The industry frames this as broadening access to returns, but it’s also an attempt to neutralise opposition by converting critics into participants. The parallel with Right to Buy comes to mind, and the way Thatcher converted renters and working-class people into a political project through council house sales. ‘Democratising’ PE seems to be doing something similar, i.e. converting workers into notional co-investors and making the political question of who owns what, and on what terms, harder to define. Is that too cynical?

HOB: When I hear the word ‘democratisation’ used in this context, it almost invariably refers to something that has nothing to do with democracy. It’s a fancy way of saying a group of people have found a new way of harvesting an even greater share of society’s wealth for themselves. The effect is also like buying an insurance policy for the industry itself. The more entwined you are with the finances of a nation, the more likely you are to be afforded a bailout if something bad should happen. So no, I don’t think it’s too cynical. The intention might not be to modify opposition, but the effect is to create coalitions that are difficult to untangle, at least rhetorically. You hear it constantly: you can’t do this, because what about people’s pensions?

If you drill into the actual numbers, the returns from PE really aren’t as good as they’re cracked up to be. Despite this, pension funds historically kept queuing up to invest. I think there are a few factors to explain this. Some pension funds are now asking questions and putting pressure on PE firms to release them from various agreements. But there’s also a set of behavioural biases at work. It’s more fun to invest in PE - as an investor in a PE fund, you hear about all these different companies and industries you’re ostensibly helping to improve; you get wined and dined at swanky conferences; and you can tell your investment committee things went really well, because you never have to take markdowns on assets that aren’t listed and therefore never really subjected to a market test. Those factors combine to produce a kind of behavioural failure at the level of individual incentives.

JJ: Is there any realistic alternative to PE? The story of what’s happened in Manchester is exciting, but it’s more complicated than just nationalising buses - and think tanks like Common Wealth have done valuable work proposing solutions. But I’m more interested in the transition. How do we get from where we are to something different? You can’t simply say you don’t like PE if PE is the only vehicle capable of mobilising capital at scale.

HOB: The sectors that PE has found its way into in the UK have explosive political potential to mobilise people, e.g. water, housing, care. These are things that people really care about regardless of their politics, things they depend on in everyday life. Not just thinking about PE specifically, but more generally: how do you build a progressive politics aimed at improving people’s lives? It starts with public services at the level that people experience them, and thinking about genuine affordability. There’s a book called When Nothing Works7 that looks at the portion of household income spent on services that are being massively commodified and therefore increasingly expensive, really exacerbating the cost-of-living crisis. I think that’s a good starting point - not just for resolving the issues I document in the book, but for more generally thinking about how you improve people’s lives and build a politics of progress and hope.

There are also more technical questions to do with law. There are a set of questions about limited liability, and about whether a PE fund should be held responsible for the debts it loads onto other companies, though that would be difficult to administer specifically around PE. But there are important questions to ask about the way this industry is a form of legal arbitrage that looks for loopholes and exploits them.

What I think is inadequate is to segment off one aspect of these problems as just being about PE, because what I write about in the book touches on a much bigger political failure and a broader set of issues around the model that has brought us to a point of public austerity on the one hand and private extravagance on the other. You need a politics much more concerned with holistic questions of improving people’s lives.

It’s about making people active participants in that project rather than passive recipients of things done to them. I wrote about Becky Malby, an organiser in Yorkshire who led an incredible campaign to hold the environmental regulator in the water system to account. She told me that you have to find ways for people to be “active participants in their future,” not just tell them stuff and dictate to them. I think that’s really important. And there is so much explosive potential there, given the public anger around the depletion and expense of basic services in Britain.

In the month where the world’s first trillionaire consolidated a fortune that defies comprehension, we published new research on how wealth inequality is shaping the world around us, and considered how a new Government might meet the challenges of wealth inequality.

Growing up in the Unequal Kingdom

This month, we published new research that brings the consequences of wealth inequality into perhaps its sharpest relief: namely, what it means for children growing up in it.

Growing Up in the Unequal Kingdom, authored by Anita Sangha, draws on a rapid review of 21 peer-reviewed empirical studies to examine what children understand about economic inequality, how they respond to it, and how those responses change with age. We find that older children, drawing on more sophisticated moral reasoning, are more likely to perceive both advantageous and disadvantageous inequalities as unfair, and are more likely to support redistributive strategies.

Meanwhile, some research suggests that children from poorer backgrounds are more critical of the rich, while other studies find that those from wealthier backgrounds are more likely to express concerns about violations of social hierarchies. When people are placed in situations where resources are distributed unequally, they tend to behave in a less generous way, donating less to those in need. Older children are less likely than younger children to act selfishly when inequality benefits them, suggesting that moral development can partially offset this effect.

All in all, the evidence suggests that economic inequality shapes moral development from an early age, and does so unequally.

Read Anita's report

Wealth and power: A view from the Resolution Foundation

This month, Will sat down for an engaging conversation with Mike Brewer, Deputy Chief Executive at the Resolution Foundation, on what we should actually be worried about when it comes to wealth inequality, and why conventional measures tell only part of the story.

For decades, relative wealth inequality in the UK has barely moved, a fact that leads some commentators to conclude there is no problem to solve. Mike’s view is that this reading misses the bigger picture: at the same time as relative inequality has been broadly static, the total amount of wealth in the economy has grown rapidly, producing a growing absolute wealth gap that definitely is a problem.

“An extremely unequal society with hardly any wealth might pose no problem at all. But a society with a lot of wealth that’s badly distributed should worry you, because the sheer size of wealth, in pounds, that rich people hold lets them do things others can’t. Wealth is only useful when you use it, so the gap that matters is the gap in spending power".

At the extreme end, Mike’s concern shifts from the distributional to the democratic. With extreme wealth comes extreme power. If your wealth is meaningful as a fraction of the economy, you can intervene in ways no one else can, through economic as well as political power. That includes the capacity to bend markets, shape competition law, and lock in the returns from rent and monopoly. AI, Mike argues, is likely to make this worse, placing even more transformative capability in the hands of those who already hold most of the assets.

Read the full interview

Breaking the link between wealth and health

Running alongside these conversations about the concentration of wealth is the well-documented problem that where you end up in the wealth distribution has a profound effect on how long you live, and how well.

In early June, Jason wrote about why the Fairness Foundation is backing the Health Equals campaign for a strengthened Health Bill. It follows the publication of research from the Health Foundation in April revealing a fall in healthy life expectancy in the UK of about two years between 2012–14 and 2022–24. People in the poorest areas of England live around 18 fewer years in good health than those in the wealthiest areas.

These are not separate phenomena. Our Wealth Gap Risk Register documents more than 40 impacts of the wealth gap on society and the economy, the majority of which affect health directly or indirectly. For those at the bottom end of the wealth distribution, the absence of assets and the presence of poverty have acute impacts on mental and physical health through stress, poor living conditions, and exposure to financial shocks such as ill-health or redundancy. Unlike wealthier households, those with little or no wealth have no buffer, and bear the full weight of the consequences.

Our previous polling reinforces the public mandate for action: 58% of people say wealth inequality has a negative impact on physical health. The case for tackling the social determinants of health, and for doing so through a Health Bill with genuine teeth, has never been stronger.

Read the full piece here

The world’s first trillionaire

The backdrop to all of this was difficult to ignore. This month, Elon Musk became the world’s first trillionaire, a number so large that, as Will wrote for Transforming Society, is almost impossible to imagine - a trillion seconds is more than 31,000 years.

The temptation is to treat it as a curiosity, a story about one unusually driven man. Will’s argument is that it is anything but. Billionaires in the 1980s owned the equivalent of 3% of global GDP; today’s billionaires own 17%, and this share is still growing rapidly. The problem is not simply that fortunes have grown so large, but that so much of this wealth is, on examination, unearned.

A great deal of wealth accumulation in recent years has come from passive gains such as property and pension revaluations, rather than from active saving or asset acquisition. An increasing share is extracted rather than created, accruing not from adding value, but from capturing it through rent-seeking, land price inflation, and market power, trends that we have explored in recent research.

The consequences compound across every domain, from the health of our economy to the functioning of our democracy. Will’s piece sets out three types of policy response (redistribution, pre-distribution, and guardrails), and makes the case that we have no shortage of options if we truly want to tackle these challenges.

Read Will's blog post

And in case you missed it…

Our Head of Politics and Advocacy Jason recently joined Vanessa Feltz on LBC to talk about Musk’s new trillionaire status and how Government can back the wealth creators while reducing inequality:

Where does inequality fit in the Burnham programme?

Finally, it’s impossible to discuss this month without touching on the Prime Minister’s resignation, and the likely arrival of Andy Burnham MP as Prime Minister. It’s encouraging that the new MP for Makerfield has put inequality at the heart of his critiques of other current assessments. There is little doubt that the next Prime Minister will want to go beyond the fact that inequality is getting worse, and grapple with why exactly that has been allowed to be the case. Our recent work explored some of the factors driving that inequality in the form of asset inflation, rentierism and the privatisation of public wealth. As we have explained, those factors are not only driving acute inequality, but also holding back growth in our economy.

Burnham’s commitment to deeper regional devolution, his desire to invest in productive capacity and make the tax system fairer, and his instincts towards the public and civic ownership of utilities, transport, and key infrastructure all have the potential to address some of the deep structural challenges facing our economy. What is needed now is a policy programme that is bold enough for the scale of those challenges, and that can be implemented with the necessary urgency. We wait with interest to see what he says on the economy in his speech today…

For more reflections from Andy Burnham MP on a fairer economy, you can also catch up with our interview from March here:

If you’d like to discuss any of this month’s work, collaborate on future projects, or share your reflections, do get in touch.

For several decades, the standard measures of wealth inequality in Britain have barely moved, which has led some to conclude that wealth inequality isn’t a problem worth worrying about. Mike Brewer, Deputy Chief Executive at the Resolution Foundation, thinks that this reading of events misses the bigger picture. I sat down with him to talk through what we should actually be worried about, from the absence of wealth at the bottom of the distribution to the billionaires at the top, and how to persuade policymakers of all political persuasions of the urgent need for action.

Should we worry more about the relative gap in wealth, or the absolute one?

Our view at the Resolution Foundation started from the particular circumstances of the UK, not from a philosophical position. The striking observation is that for 30 or 40 years, relative wealth inequality has barely budged. It fell for most of the 20th century, bottomed out in about the late 1970s, and has stayed flat since. People conclude that if it isn’t going up, maybe it isn’t a problem.

But at the same time as relative inequality has been broadly static, the total amount of wealth in the economy grew almost continuously from the 1980s to at least the financial crisis — and that produces growing absolute wealth gaps, which definitely are a problem. So you need both lenses at once; either on its own doesn’t tell you enough.

An extremely unequal society with hardly any wealth might pose no problem at all. But a society with a lot of wealth that’s badly distributed should worry you, because the sheer size of wealth, in pounds, that rich people hold lets them do things others can’t. Wealth is only useful when you use it, so the gap that matters is the gap in spending power. A trick we borrow from the late Sir John Hills is to express wealth gaps as a multiple of typical earnings or household spending: it captures just how much more the wealthy can do than everyone else, and how long it would take someone to work their way up the wealth distribution. The wealth gap between the top wealth decile and the fifth wealth decile increased from 38 times typical full-time earnings to 52 times between 2006-08 and 2020-22.

And at the very extreme — the billionaire end?

That’s a different kind of concern from our traditional worry at the Resolution Foundation about the top 10 or 20 per cent. With extreme wealth comes extreme power. If your wealth is meaningful as a fraction of the economy, you can intervene in ways no one else can. I don’t just mean political power; I mean economic power too. You can see it with some tech billionaires: if they decide something should happen, it happens, almost regardless of the underlying economics. In a capitalist economy, that much wealth lets you bend the rules or ignore the constraints that the market would otherwise place on you.

It’s possible that the highly disruptive power of AI, combined with extreme wealth inequality, means that very wealthy people will have the power to do even more; it’s not so much that AI is the problem here, but such disruptive (but also expensive-to-develop) technology could make the problem of wealth inequality even worse. And in a more uncertain, more disruptive world, financial resilience matters more, and wealth is the best form of resilience. So an unequal wealth distribution plus lots of disruption is likely to mean that people will feel the shocks from any future technological revolution very unequally.

Is the core problem inequality of outcome, or unfairness?

It’s both. There’s a well-established argument — Joe Stiglitz made it powerfully for the US — that very high incomes and wealth distort the economy: when the prizes are huge, people spend their energy protecting their gains rather than creating value, and then use their money to buy political clout to lock those gains in, by shaping competition law or protecting the rents they extract.

But that’s a problem confined to the very top — the top half a per cent or so. I’m also concerned about inequality across the whole distribution, not just the top half a per cent, because of the way it affects social mobility. People who accumulate wealth tend to use it to help their children — that’s human nature. Whether through bequests, or private tuition, or moving to the right catchment area, or buying your adult child a flat in London, wealth gets transmitted between generations and stacks the odds for the next one. The more wealth there is, the more it matters who your parents are. This isn’t just Piketty’s worry about trust-fund kids at the very top; I’m just as concerned about someone at the 80th or 90th percentile of the UK wealth distribution using their wealth to give their children a leg-up in ways that are unaffordable for someone in the bottom half.

On fairness, the public’s instincts don’t always match an economist’s. People do tend to think income from work is fair — high salaries are justified if you’ve earned them. And they’re deeply attached to passing on wealth: the strong opposition to inheritance tax comes from a feeling that it’s your right to leave what you’ve accumulated to your children, and they see no unfairness in it, despite how much it skews the odds. The public may accept that the very extremes look unfair, but they seem fairly relaxed about millionaires if the money was earned.

Where does relative poverty fit into the picture?

There’s an old criticism that relative poverty is just income inequality by another name — mathematically that’s roughly true, and I actually don’t have a problem with such a characterisation. I’m very happy to accept that poverty is a relative concept; that goes back to Adam Smith — what people expect as a reasonable standard of living depends on society’s overall resources. So I have no problem with relative poverty being a measure of bottom-half income inequality by another name.

The same logic applies to wealth. In the UK we have a real problem in the bottom-half of the wealth distribution: far too many people have no wealth, or negative wealth. The difference between having nothing and having even one or two thousand pounds is enormous — far bigger than the difference between £10,000 and £20,000. With no cushion, you’re acutely vulnerable to any shock, and that insecurity shapes the choices you make at work and at home. Median wealth in the bottom half is close to zero, so I do think relative wealth poverty – or some focus on the bottom half of the wealth distribution, and not just the top - is a sensible thing to measure.

Which is why you support a Citizen’s Inheritance?

Yes. Too many young people have no wealth at all. The jump from nothing to £10,000 gives you a cushion: it lets you make different choices about education, brings you a couple of years closer to being able to put down a deposit on a home, maybe lets you feel able to start a family earlier. Even if it’s not transformative, even if it doesn’t let you buy a house the second you turn 18 or 25, it brings you closer.

And if you’re serious about wealth inequality, you have to face a hard truth. Taxing wealth only brings down the top; encouraging saving does little to boost wealth, because people don’t save much. If you actually want to lift up the bottom of the wealth distribution, you have to give some money away. The Resolution Foundation’s proposal from our original Intergenerational Commission — funding a Citizen’s Inheritance by replacing inheritance tax with a lifetime gifts tax — is a double hit: it taxes large inheritances as they’re received, and boosts those with nothing. It’s might also be more politically acceptable than simply raising income tax.

Is there an optimal level of wealth inequality that recognises both the need to incentivise and reward effort and the harms causes by the current wealth gap?

On income, there’s no strong link between a country’s overall inequality and its affluence or growth; the UK just happens to sit in the high-inequality, not-great-living-standards corner. Should we or could we try to put a ceiling on inequality? At the top end, capping incomes risks people or firms simply moving abroad. But there must be a point where most of us would agree no one needs more — and I’d locate it where an individual’s wealth becomes large enough to have a noticeable effect on the economy or on democracy. And I feel that danger point is far, far higher than any level at which we’d actually blunt someone’s incentive to work or save.

I’m wary of prescribing an ideal shape for the wealth distribution, because wealth is bound up with age and inheritances — you would have to age-standardise before comparing anything, and even then, the wealth distribution reflects the accumulated inequalities of several generations. But on top of reducing the level of wealth inequality, countries concerned about its impact could take a different approach: to make wealth matter less. Scandinavian countries aren’t necessarily more equal in wealth than the UK, but they soften the impacts of wealth inequality with strong public services and a better social safety net, as well as limits on how the wealthy can influence politics. We could go further, for example through lotteries for school or university places, to limit how far parents can buy advantage. It shouldn’t be either/or: we should be thinking about reducing the extremes of wealth inequality at both ends of the distribution, as well as taking action to reduce the harms caused by it.

How much does the thinner evidence base on wealth inequality hold us back?

We have better data on income than on wealth, so researchers tend to reach for income data, especially if their theory is vague about whether they are talking about income or wealth. That should spur us to collect better wealth data. That said, income and wealth tend to move together, so even if you have great data, it’s tough to tease apart separate impacts.

But when it comes to making the case for action, I suspect we can be a bit more relaxed. When people come up with theories for why inequality might be damaging, I don’t think they have in mind something precise — and I mean that in a good way. The theories about why inequality is damaging rarely specify income or wealth — they’re really about inequality in command over economic resources. So whatever is linked to income inequality is almost bound to be linked to wealth inequality too, and the public treats the two as much the same thing.

What about the lack of causal evidence for the impacts of wealth inequality?

I think the evidential pluralism approach (where you set out the hypothesised mechanisms and study each link in the chain) ought to be enough. We’re never going to run an experiment to see how the UK would have turned out without the Thatcher revolution of the 1980s, which let income inequality rise massively. So we’re never going to have fantastic causal evidence at the country level. The best we can do is some descriptive evidence, or evidence about associations, at a high level, and then ideas about mechanisms — some of which we can study in detail and be more causal about, perhaps not at the national level but at the level of a town, a firm, or sometimes a more artificial environment where we get solid results. We can’t run experiments on countries; we’re never going to throw enough control factors into the regression for a quantitative social scientist to say, yes, that’s causal. But it’s not enough to rely on small-scale experimental evidence, but if that’s the only way to show causality, and you’ve also got lots of descriptive, associative and highly suggestive real-world data, then to me that’s the best chance you’ve got of making the case.

Taking a step back, there’s always going to be difficulty getting rich and powerful people to accept that there’s a link between being rich and being powerful, and that it can have damaging impacts. The quality of the evidence isn’t going to persuade those people, and when they can influence the political debate or the public narrative to the degree that they can today, maybe that’s where we should focus our attention instead.

Mike Brewer is Deputy Chief Executive at the Resolution Foundation. He was talking to Will Snell, Chief Executive of the Fairness Foundation.

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Economic inequality is unfair on everyone, but there’s little doubt that it bears down hardest on children.

As our Wealth Gap Risk Register has documented, the absolute wealth gap in the UK grew by 54% between 2011 and 2021, and wealth plays a bigger role than ever in shaping life chances and outcomes. Many have argued that the consequences of that wealth gap has a disproportionate, and particularly harmful effect on children, particularly given the context that 1 in 3 children in the UK grow up in poverty while the amount of wealth climbs ever higher.

The evidence on what the wealth gap means for uneven opportunities between children in their development is stark. Research suggests that higher levels of parental housing wealth are associated with fewer emotional and behavioural problems in children, and healthier psychological development, even after accounting for income, socioeconomic status, and family characteristics. There is also a strong positive correlation between parental wealth and children’s educational attainment, even after controlling for parental income and education levels. It’s well documented that wealthier parents can provide more educational resources and opportunities, private tutoring, extracurricular activities, the ability to fund higher education without loans, and are more likely to afford private schooling altogether. Policies that directly cut the incomes of families with children compound this further. The two-child limit was one of the starkest examples as a policy choice that concentrated its effects on some of the most disadvantaged children in the country.

Despite this impact of inequality on children, most academic research into beliefs and perceptions about economic inequality has focused on adults. Less attention has been paid to children and young people, or to how their views change as they develop morally and socially. A short report that we are publishing today, Growing up in the Unequal Kingdom, begins to address that gap. Drawing on a rapid review of 21 peer-reviewed empirical studies, it examines what children understand about economic inequality, how they respond to it, and how those responses change with age.

Read the report

The report, authored by Anita Sangha, builds on other work that examines the perceptions of young people. For example, the National Youth Strategy acknowledges the importance of economic inequalities, and the Big Ask survey by the Children’s Commissioner suggests that children want to see a fairer society. Meanwhile, a survey of 18–24-year-olds by the Sutton Trust and More in Common found that more young adults are concerned about the impact of inequality on education, work, health, and social mobility than the general adult population. A majority believed the government should do more to tackle inequalities, and that coming from a wealthy family was important for getting ahead in life.

Four findings from our rapid review of the evidence stand out:

• First, children’s understanding of inequality develops with age. Younger children tend to judge inequality as unfair mainly when it disadvantages them personally. According to Chao et al. (2025), older children, perhaps drawing on more sophisticated moral reasoning, are more likely to perceive both advantageous and disadvantageous inequalities as unfair. Meanwhile, Essler and Paulus (2021) found that older children were more likely than younger children to support “Robin Hood” strategies i.e. taking from the rich to give to the poor. Notably, Rizzo et al. (2020) found that older children asked to evaluate a resource allocation strategy that perpetuated inequalities as more unfair than younger children, even when it benefitted them personally

• Second, children’s own experiences of inequality shape their reasoning. Young people from poorer backgrounds are more critical of the rich (Mistry and Yassine, 2022), while adolescents from lower socioeconomic backgrounds are more likely than their peers to view social exclusion of the poor as unfair (Gonul et al., 2024). Conversely, children from wealthier backgrounds are more likely to frame cross-class friendships in terms of violations of social hierarchy (according to Grutter et al. 2021), reflecting how lived experience can colour moral judgement from an early age.

• Third, several studies have found that when people are placed in situations where resources are distributed unequally, they tend to behave in a less generous way, for example, donating less to children in need (Kirkland et al., 2020, 2021). This is consistent with findings from adult research: a meta-analysis of 100 studies by Yang and Konrath (2023) found a significant, if small, negative effect of inequality on prosocial behaviour. Older children were less likely than younger children to act selfishly when inequality benefitted them, perhaps suggesting that moral development can partially offset this effect, but the underlying dynamic is a concern (McGuire et al. 2019, Chao et al. 2025).

• Finally, social exclusion based on economic status provokes negative emotions in children. Older children report more negative emotions than younger children when witnessing a poor child being excluded (Dys et al., 2019). Children also expect those who are excluded to feel sadness and loneliness (Acar and Sivis, 2023). These findings suggest that children are not passive observers of inequality, they respond emotionally to it, and those responses intensify as they grow older.

Taken together, these findings suggest that the views of children on inequality should be considered more fully in the development of policies to tackle inequality. Several mechanisms exist to do this by considering the role of future generations and young people and overcome the chronic short-termism that remains endemic in our politics. For example, Wales’ Future Generations Act requires leaders across policy domains to consider the interests of future generations. Commitments to lower the voting age to 16 would give young people a more direct stake in democratic decisions. Proposals for a Parliamentary Committee on the Future, focused on long-term and intergenerational policy, would provide a formal space in which the perspectives of children and young people could inform legislative debate.

As wealth inequality looks set to deepen, the research reviewed in our new report is a reminder that children are moral agents who perceive unfairness, feel its emotional weight, and, as they grow older, increasingly believe something should be done about it. The question is whether the adults making policy are listening.

Read the report