Rich get richerand poor get poorer

Affluent families able to save more during lockdown than those on lower incomes

THE wealthiest households in the UK spend nearly five times more on “discretionary” goods than those with the lowest income, making it easier for them to tighten their belts during lockdown. Discretionary spending refers to money spent by consumers on things that are not necessary, such as recreation, culture and restaurants.

The latest family spending survey shows the richest 10% of the UK population spent, on average, £730 a week on discretionary goods in the year to March 2020, just before the pandemic.

That is 4.7 times more than the £155 a week spent on average by people whose income falls in the lowest 10% of the country.

According to the Office for National Statistics (ONS), this gap suggests the wealthiest households may have had a greater capacity to cut back on spending while restrictions have been imposed.

During most of the Covid-19 pandemic, non-essential shops, restaurants and other non-essential activities have been shut down, reducing the chances to spend money on discretionary items.

However, that hasn’t helped people who weren’t spending much on unnecessary goods in the first place.

Before coronavirus, those on the highest incomes were spending a much smaller proportion of their income on essentials such as housing, food and transport than those on the lowest incomes.

On average, households in the lowest 10% spent £65 a week on housing, fuel and power, £45 on food and non-alcoholic drinks and £30 on transport, amounting to 53% of their overall spending per week.

Households in the highest 10% spent an average of £112 a week on housing, fuel and power, £80 on food and non-alcoholic drinks, and £155 on transport, or 40% of their total.

Overall, the richest households typically spent almost four times as much as the poorest, with the wealthiest 10% of families spent on average £1,073 a week, compared to £300 a week spent by the poorest 10%.

Meanwhile, households headed by people under the age of 30 also saw a higher proportion of their spending go towards housing and food (41%) than other age groups (between 30% and 36%).

It means younger adults, together with those on lower incomes, were among the groups most affected by labour market shocks associated with the pandemic, the ONS said.

Separate ONS figures show people aged under 30 were 35% more likely to be furloughed than adults overall, while those with household incomes under £10,000 were 60% more likely to be furloughed than the general population.