Who is wealthy in today’s Britain? Is wealth fairly distributed? Is wealth fairly taxed? These are some of the questions we are asking in this episode.

Whilst those on lower incomes have found it harder and harder to accumulate savings or assets, people who already have assets such as housing are becoming wealthier. For this episode, we are joined by Torsten Bell from the Resolution Foundation. You may have heard Torsten on the Today Programme, or just about any other news programme, commenting on the fiscal and political issues of the day. We are pleased to have him with us to talk about this important issue, and to be partnering with the Resolution Foundation on a project which looks at wealth in the UK. You can find out more about that project here.

Full transcript

Mubin: Welcome to the Financial Fairness Podcast with me, Mubin Haq. Today we are talking about wealth. What does wealth look like in Britain? How has it changed over time? And how might it develop over the next few years, including our taxation of it?

These are some of the questions for today's financial fairness podcast, and I'm delighted to have Torsten Bell joining us. Torsten leads the Resolution Foundation, and he's rarely out of the news, providing detailed economic analysis and insights. In a short space of time, the Resolution Foundation has become a go to source for understanding who the winners and losers are following government decisions. At financial fairness, we've also been working with resolution foundation to undertake a major investigation of wealth in modern day Britain.

So Torsten, welcome, let's take it back to basics. What do we mean by wealth? I mean, it clearly includes housing and savings in the bank, but also possessions such as jewellery or paintings, or more recently, crypto currencies and non fungible tokens if you know what that means. So what does wealth include?

Torsten: The non fungible tokens are optimistically, long term wealth, but maybe we'll maybe we'll find out in the years ahead. I mean, yeah, big picture. That's right, we're talking about household wealth in Britain is around 15 trillion pounds on the most recent survey evidence that's going up again, during the pandemic, and that is basically made up of a third of that coming from property, most of which is our homes, owner occupied housing, pensions, wealth is actually the biggest lump. So we're talking about a bit over 40%. And the remainder is made up of, I think, what is actually a smaller part of wealth than most people realise financial wealth savings, shares, that's only around 13% of overwhelmed. And then physical assets is 9%. That is, yes, cars, but it's also number plates on cars, which make up a surprisingly large share of the physical wealth bucket. So you've got those are the kind of four components of our 15 trillion household wealth.

Mubin: How do they measure that? Because I'm just wondering, how do people calculate how much they've actually got in their house? Like, do they really go down to counting the beans, really,

Torsten: They do not count the beans, you'll be glad to know they're there. So we are we're going to talking to households talking them through how they value what they've got there. And then obviously, the people doing the surveys, doing their best to make sure they get accurate measures. But no, we're not measuring the curtains in the house to get to the housing value move, and you'll be glad to know.

Mubin: Perfect, so it depends on what curtains you've got, obviously – if it’s a tapestry

Torsten: If you’ve got expensive curtains, then you know, well done you - but those are not a big part of our surveys.

Mubin: So look, we know wealth is divided unequally, but have there been times when the UK has been even more unequal than it is today? I mean, is this a sort of normal period? Or is this heightened?

Torsten: Well I think there's two ways it's important to think about how wealth plays a part in society. So there's the scale of it, how much of it there is, and then there's how it's distributed across the population. And both of those things have changed significantly over time. If you go back to the 19th century, we had very unequal wealth in Britain. That's why all of the 19th century novels are all obsessed about who's going to inherit what from which old person who's on their deathbed, for most of the novel. Yeah, that's what loads of Dickens bits of Jane Austen and the rest are about and that's because wealth relative to income was very large and very unequal during the 19th century. So it did really matter what you inherited, and that made a huge job of determining your lifetime living standards, then the 20th century. Most of it is a story of wealth becoming more equal in Britain. And there's big chunks of that some of that's about wars, wars are generally very bad for capital, big falls in the amount of capital and particularly for the top there. And then we also saw as we move away from a kind of aristocratic feudal Britain towards mass homeownership through the second half of the 20th century in particular, that spread wealth pretty evenly, but as you say, we had a higher taxes generally after World Wars. In both cases, including on inheritance tax was also a further leveller of wealth through the 20th century, the big the big declines brought in wealth inequality abroad. The done though by the 1980s

So broadly, the big picture since then is lower levels of wealth inequality. Between people we through the last few decades, there's some signs of some creeping up more recently. But broadly, the picture is staying at these lower levels of wealth inequality than we were used to. The thing that has changed and makes this more complicated, though, is that how wealth inequality interacts with the scale of wealth. So even if wealth inequality hasn't been going up in recent years, what is going on is that because wealth has become a bigger deal, there's more wealth, we've seen big rises, remember, wealth was three times GDP in the 1980s. And it's now approaching eight times, yeah, so huge increases in wealth relative to income, got to become a much bigger part of our lives again, which is why it's starting to creep back into popular culture, references into novels and the rest. And what that means is that you can't save your way to being wealthy, your income isn't going to be what makes you wealthy in that world. And so our ability to move up and down the wealth distribution, from money we save or how well we do in our jobs or anything else, how much we how much we don't spend on other things, has just become a lot less important. And that's why it feels like wealth inequality has got worse, even though inequality as we normally measure it has basically come down from the huge Victorian era highs.

Mubin: So bringing it back to the here and now, what does wealth look like today?

Torsten: The pattern, the pattern looks very unequal, even though it's less unequal than it was in the Victorian era. But remember that wealth is about twice as unequally distributed as income, which obviously what inequality we spend most of our time talking about. I mean, if we look at where we were before, the pandemic 50% of our wealth was hold held by the top 10%. And around 20% was held by just the top 1%. So that's pretty unequal. And obviously, that includes the fact that we're not very good at measuring the wealth of the very top. So the truth is probably more unequal than that. So that is very unequal. Indeed, I mean, that obviously reflects what most people feel in their day to day lives. If you think about I think it is worth reflecting UK household wealth, though generally is much higher than household wealth in other countries that we generally think are doing better than us. So for example, if you look to compare us to say France or Germany, we have significantly higher household wealth. And I think our average is now around 300,000 pounds, the average household, but obviously, then there's very big gaps around that. I mean, if you look at the poorest fifth of households, 65% of them have got less than one month's income in savings. Yeah. So they've got basically no savings. And if you look at different ethnicities, we see really big gaps between different groups, families of Bangladeshi ethnicities have the lowest average family wealth, I think it's now around just about over 80,000. And that compares to around 350,000 of those from a white ethnic background. So these are big differences around that average, but the average is higher than the is the higher than what we see around lots of the rest of Europe.

Mubin: And regionally, what's the picture look like? I mean, I'm imagining lots of this is concentrated in London and the Southeast and places like that.

Torsten: Yeah. So at one level, the picture is exactly as you would expect, which is there, like historically, richer parts of the countries do have much higher wealth. And that obviously, is in areas with high house price in particular. And you see that London and the Southeast, do have significantly higher total wealth in their areas, it's a little bit more complicated when we start digging down within the distribution, because because London is younger, because it's harder to become a homeowner in London, actually, the typical poorer London and may well have less wealth than the poor person in other parts of the country. Because if you were living in the northeast of Wales, you're much more likely to be a homeowner, if you're on low incomes than you will be in in London.

Mubin: Can you tell us a bit more about that intergenerational divide?

Torsten: Yeah, so I think we've got a number of things coming together at once. So as I say, big picture, wealth has just grown a lot in Britain since the 1980s. The big thing that's lying behind that is falling interest rates happening across that periods of being used to interest rates that were averaging around 5%. And now, us looking at interest rates around 1% of thinking those are normal. And that means that wealth is the household wealth, asset values just grow significantly in an era of low interest rates. That's the big thing that's going on. But what that means is big windfalls for the people that already owned assets when those asset price increases happen. So if you're already a homeowner, in the periods of fast house price growth, you did very well. And obviously that is older generations, because a lot of that has now worked its way through the system.

Now the effects of that are one, you can see that in people, big windfalls to those audio and property. Another effect of it on housing in particular is that younger people find it harder to get onto the housing ladder in a world in which the wealth to income ratio has gone up. And that is because because we require a 10% deposit to become a homeowner ie to get a mortgage, even if actually your affordability tests wouldn't be that different to someone who was buying a house in the 80s and 90s, your chances of getting a mortgage for it are down significantly because you will need a higher deposit and you won't be able to because we're constrained by our borrowing rules on lending at four times people's incomes.

What you see is people coming up against the deposit barrier not being able to buy a house now what how has that played out? Well, the first thing is we ignored it for years. So actually, if you look at the data, no one did this until the mid 2000s. But if you look at the data, youth homeownership starts falling in the late 1980s. So it takes about 15 years for the truth of what's going on to young people's homeownership ambitions to become a bit of public policy discussion, as I say, I think I think 2004 2005 is when it first started to rear its head because overall homeownership rates didn't start falling till then, because older generations, we're still seeing their homeownership rates growing right the way through and some of them still are them, whereas young people were falling right the way from the 80s. The effect of that is that we've now haft homeownership rates amongst 30 year olds today compared to their their parents. So it's a huge social change, falling homeownership. Now, some of that, some of that is some evidence that some of that is slightly working its way out in last few years, because what has happened is that banks have got back in the business of wanting to lend to younger homeowners after the financial crisis. But most of that is structural, most of that is not going away, while high high house prices of a claim we're seeing at the moment persist. And that's because this deposit deposit barrier is a big structural one.

Mubin: And over time, this wealth will pass down to those generations, but it's not happening at our age when people necessarily need it.

Torsten: Yeah, so what as we as we move to being a higher wealth society, we become a higher inheritance society, more people inheriting and the amount they inherit being higher compared to previous cohorts, we can definitely see that coming through in the data, , the volume of inheritances has doubled in the last 20 years, they will double over the coming 20 as well. And if you look at when that is going to come, the bad news is Yes, more millennials will inherit from their boomer parents, but on average, they weren't inherit till they're 62. And so you wanted you rely on that inheritance to get the family home and bring the kids up? Well, I'm afraid unless you're in a kind of very unusual age of childbearing, it's not going to do much use to you because you're not going to be, you're not gonna be able to, you're not gonna be able to have the larger house, you need to bring your family up, if you don't have it to your 62, which is why you're seeing obviously, the growth of the Bank of mom and dad, as some money is passed down prior to people passing away. But the vast majority, when we survey boomers and others about their what they plan to do, the vast majority is going to be held until death and then passed down. People are worried about social care costs and the rest.

So it broadly means it will help some millennials in their later years, maybe covering some of their pension gaps, but it's not going to solve Did you own a decent house when you were in your 40s?

Mubin: Yeah, so it might also pay for some of those social care needs, your cruising lifestyle

Torsten: It's only you Mubin going on the cruises - I'm sticking to my camping. It's cheap as chips.

Mubin: Yes, I've not done that yet and I'm not expecting to either. But let's go to the pandemic then - we saw some really significant rises in wealth, which is very unusual for a recession, especially given the economy witnessed the biggest contraction in over three centuries. And a lot of that was because people just couldn't spend. And it led to a big growth in savings. But who were the winners and losers?

Torsten: So that is as a great question. And I think this is actually one of the big things that probably going into the pandemic, like we all knew unemployment was going to be a big risk when we started shutting down bits of our economy. I don't think we probably are including ourselves in this clocked until we were quite, you know, 678 months into the pandemic, how big a deal, wealth was, and the balance sheets of households, we're going to be in terms of where the pandemics effects plays out. So the one everyone talks about, is that we saw a big increase in savings during the pandemic hundreds of millions, hundreds of billions of pounds more savings than we were would normally rack up, as you say, that was disproportionately those savings were made by richer households who are the kind of people that spend a lot on foreign holidays, they were certainly banned from doing they eat out more than the rest. So we saw big increases in savings there. I'd say at the bottom end, you didn't see that anything like the same amount in a low earners, one were much more likely to still be needing to go out to work at lower commuting costs. In general, they don't go on very expensive holidays. So we didn't see large savings at the bottom. In fact, we saw increases in borrowing and debt for some particularly they had children. I have to say the thing that again, that was actually only there were might the savings was only a minority of the increase in wealth during the pandemic, because the big picture is this is the first recession in living memory where the economy got a lot smaller, but our household wealth went up a lot. Normally, our asset prices fall in recessions. This time, asset prices rose a lot. And that's mainly house prices. You've heard all over the news, people moaning they couldn't move out to the country to their to escape the working in the middle of the seas. But overall, we saw wealth increased by a bit about 900 million pounds during the pandemic of that 750 billion was about asset price increases. So not about the savings, which was the minority of the increase, but about assets being more valuable.

Mubin: Yeah, the wealth increases are quite staggering. The bit I remember from the report we did review on this was well fact very top or top 10% increasing by 50,000 pounds. And for the bottom third, increased by 86 pounds, which is quite a contrast really

Torsten: Yeah, and I think that is a good lesson, which is thinking about in the way you've set it out there, which is pounds and pence is important when we come to wealth because we looked at that kind of on a kind of standard inequality measure or said what was the percentage increase in your wealth? Well, actually, it looks kind of fairly even because you know, the bottom have got no wealth. So he'd given 81 pounds increasing wealth, it looks like a large percentage increase. But if you put a bit in pounds and pence terms, as you say the top we're seeing 10s of 1000s of pounds increase in their household wealth in the pandemic and the bottom, basically nothing.

Mubin: Can I ask you a bit more of a sort of philosophical point, which is, why does it matter? Should it really matter? I mean, if you just levelled everyone up at the bottom, and they had a sort of basic standard of living, and we may be quite far from that, would it still matter if there was wealth inequality?

Torsten: That's a great question. And everyone, everyone likes a bit of philosophy in life. So I think there's, there's at least four reasons why I think we should care about what's going on on the wealth front. First of all, they're just the immediate way of having access to you know, money, either as the income from that wealth that you can spend on your higher living standards, or that you can draw down that wealth to, to consume. So it's just the same as income in the sense, it doesn't really matter in terms of who has what the second is that wealth is a big form of insurance. So for lots of things, you can't actually buy insurance from the markets for them, we just have savings in the bank. So a bad things happen, you know, we have a bad prom with our car. Even more basic stuff in terms of the washing machine going, we're able to protect ourselves against big problems emerging, because we haven't got the cash to hand. Thirdly, wealth, is you got to think about it in a more dynamic sense than just how much cash have you got in the bank, which is people with more wealth and more able to take risks, their behaviour is different, they're more likely to take a punt on taking a different job, rather than being on it, they know that if the job goes wrong, well look, there'll be able to fall back on their other sources of, of money to live on. So I think it's not just about, it's not just about actual cash in the bank, it's about the riskiness of how you can overcome some of the things that are risky, but are probably a good thing for you to do, particularly when you are young. And then the last one, which is definitely veering into the philosophies, I think it really does matter for the nature of our country, how the effect of wealth is felt, as I say, this big picture of wealth being a growing relative to income should matter whether you're right or left wing, because what we're saying, If wealth is much bigger relative to income, what we're saying is you can't become wealthy by saving by doing really well your job, you will only become what really wealthy if you're born with that money, or you marry it. So anyone listening that's not married, you know what you need to do pick your partner really carefully. Because if you're not already wealthy, I'm afraid it ain't gonna be a day job that does it unless you're one of the very few people that makes a lot of money. And all of them live in the United States. Anyway, so if you're, if you're left wing, obviously, you already care about high wealth inequality and high wealth, because you're an egalitarian, and you want people to have more or less similar to some degree stakes. I think for the right though, they should also care. Because if you're a meritocratic, and you believe people should get where they can get to by the virtue of their hard work well, in a world where wealth is much bigger relative to income, that is not the country you're going to be living in.

Mubin: I think you make a really good point in relation to risk. And what enables you to do well in terms of taking those risks. But you also make this great point about the right-wing case. And why is that not getting picked up more by thinkers on the right?

Torsten: Well, I think we I think that's, I think what you have got it as always within political parties and political movements, you've got different strands of thinking coexisting at the same time. So obviously at one level the right is made up in Britain of conservative forces wanting to protect what people have already got. And that's the bit that you see being in pro high house prices, not wanting any inheritance, taxes and the rest, and then you've got another, or maybe you think that of traditional conservatism to some degree, and then you've got the kind of more Thatcherite or dynamic change driven aspect of thinking on the right may be coming from an economic perspective, rather than a social perspective that thinks people need to be able to get off on their own back. And that means not having a country where how well off your parents are is what determines how well, you do. And the first of those is just more dominant and conservative thinking at the moment in terms of politics, I'd say actually, I reckon the majority of conservative thinkers are actually very worried about what falling homeownership higher wealth to income ratios means for the country. But in day to day politics, the strongest trend of thinking is the majority of voters are now older voters age is the by far the biggest determinant of people's voting patterns today, it's older generations that have all of this wealth and have all the windfalls from falling interest rates and rising asset prices. And that dominates any worries about meritocracy.

Mubin: Can I just touch on our current system for taxing wealth? And what some of the major problems like you'd if you had to identify, I know you've probably got a whole shopping list.

Torsten: I've got a very long list. We may be here some time. Okay, everybody's got to do all of them. Okay, well, why don't we start a few of them - why don’t we do the big ones? And then I promise you, we won't name the like 99th problem. Okay, let's just let's just start a big picture, right, we've got a property taxation system, that makes it harder for people to move a house or move country with them around the country when their needs or their priorities change can trap some people in properties that aren't suitable for them because of very high rates of stamp duty. But that's that that stamp duty is the only progressive part of the system is the bit that where the rich pay more because when we start come to the main bit, which is the council tax system, the system is a total turkey. It's basically a system brought into budget to replace the poll tax in the early 1990s. With the objective of avoiding a poll tax situation, but the tax has basically, overtime, come to look a lot like the poll tax itself. It bears very little resemblance to property values as they stand today. With no upgrading. We're still using the 1990s property values that we use then. And there's not a lot of variation. So somebody who is in a very expensive property is paying a similar amount to somebody in a very low value property. And obviously, it's charged on the occupiers, not on those that actually own the property, its a complete disaster.

I actually don't know anybody who defends the current system and property taxation. All we can say is what history tells us, which is, we've been through this awful loop before, which is we have a property tax system, it's too politically difficult to do a revaluation to update the tax system on the basis of new values. So politicians put it off, and they put it off, and they put it off, and the system becomes ever more unfair and unfit for purpose. And then about 30 years later, the whole thing gets scrapped, and we start again. And that is just a disastrous way to be running a system.

Then we've got the other big turkey, which is our inheritance tax system, which manages to both be rubbish at raising very much revenue, despite lots of inheritances going on, but also being really unpopular, which is quite impressive. So not many people are actually affected, but it's really unpopular. Why is it really unpopular? I would say, there's two main reasons people think that the headline tax rate of 40% is quite high, they could lose half their inheritance. And then they also think there's loads of loopholes, and the rich will get away without paying it. So why should I on my middle income? Even if even if that involves a family house of a million pounds? Why should I be having to pay this? I actually think there's, you know, there's something in those critiques. In particular, the system has got some ludicrous carve outs and exemptions, which are then are abused by those on with on with higher wealth. Actually, historically, people used to focus on people using trusts to get out of payment, inheritance tax, that isn't the biggest problem anymore, actually, in the 2000s reforms have basically removed most of the ways you can use trusts to completely get out of inheritance tax. But we still got really silly things like agricultural relief

So even if you wanted to allow actual farmers to pass on their actual farms to the next generation of farmers, that is not what the current system is doing. And we also have small business relief, that means you can pass on business assets from generation to generation. But again, it's being abused, left, right and centre. If you've spent time in a Surry Golf Club, you'll be given often a leaflet telling you how to buy certain kinds of shares, where if those are passed on, there'll be no inheritance tax whatsoever, even though it has nothing to do with the family business whatsoever. So we should be fixing all of those loopholes. They've got a capital gain system, which again, has too many exemptions, notionally dressed up usually, to help entrepreneurs but being used by all kinds of people for all kinds of nonsense. And in our pensions tax system, we have reliefs that are heavily focused on benefiting those with the very biggest pension pots. Those include things like tax free lump sum, people can draw down 25% of their pension pot tax free at the beginning of their retirement, there's not a lot of justification for that it's very heavily tax relieving, and it's a very big bung, to those with the very biggest pensions, there's no reason why we haven't kept that over the years.

Mubin: I'm surprised in some ways, we've not seen more movement on wealth taxes, at the expense of income tax. So we've got a system now, which you've really been pushing on for a number of years that resolution, which is income taxes are much higher level in comparison to wealth taxes, you'd think that would be popular on all sides of political divide.

Torsten: I mean, I think we should be clear. So what is the big pattern of the last few decades is when you need to raise taxes, the taxes you raise are national insurance. Yeah, so it's not actually income tax, there's no increase in income tax really going on. It's National Insurance, and then it's VAT. To a lesser extent those are the taxes going up. Not much on the wealth tax side, despite wealth getting much bigger, and income taxes, which again, affect pensioners, but unlike Nash insurance, which only affects those of working age, in general, slightly coming down, not coming down in terms of the overall tax take, but coming down in terms of the marginal tax rates, particularly for the basic rate, overtime and reduce and increasing the person allowance, although not right now, where it's being frozen. So now the question is, why is that happening? And there's a number of things so there's a short term tactical thing which

If you go into a focus group and say to people, how do you want us to pay for the increase in health and social care costs? Then they will say, well, National Insurance is the thing that pays to the NHS, even though that's not remotely true. And the idea of insurance and paying in before you get out, I think has a lot of emotional appeal to it, then, I think there's then there were then real reasons why tax administration for some aspects of wealth is actually more difficult. And that's maybe that's a reverse situation from the, you know, in the olden days, we had inheritance taxes, because it was easier to tax inheritance, and it was to tax income, because we didn't know people's income were Yeah.

Nowadays, we have very good sense of what lots of income is because we use POA to tax you direct at your employer. And so it's easier in some ways than trying to work out how much wealth you've got, and then to tax it and get the cash off you. But the big issue is, in lots of cases, it's hard to tax wealth unless it's at the point of transfer, because there's not free cash lying around. Basically, actually extracting the cash from wealth when people might be high wealth that might be low income can be difficult. And this appears in a number of bits of the tax debate. It's why people are worried about higher council tax or more proportional council tax where they're worried about older people that might have a very valuable property but not have high income to pay the annual tax should they have to sell their property, for example. Now, there are ways around these problems, you can allow people to roll up their tax liability and pay it when they pass on. So it doesn't need to meet the people moving out of their properties. Now, but those kinds of things I think are real, then it's unreasonable to focus on them. All I would say is, we haven't even started with any of the easy stuff like all of the a lot of the exemptions and reliefs we can deal with now they're just being used by those on the very highest incomes. There's no reason why we shouldn't be addressing those, even if we think some of these other challenges are quite significant.

Mubin: I'd like to touch on the super-rich, if that's okay. Last year is Sunday Times Rich List saw its biggest growth in billionaires ever. And we're pretty familiar with people like Elon Musk and Jeff Bezos, who have both been blasting off into the upper stratosphere..

Torsten: there's still time Mubin, It could be you.

Mubin: I really don't think I'll be going on a rocket too soon. Is the magnitude of wealth any different to people are like Carnegie or Rockefeller in the past? I mean, is this something really quite new? You were saying with the super rich? Or is it just, you know, going back to that Victorian period again?

Torsten: So that's a great question, I think we need to be really careful to distinguish between the US and basically everybody else. So the, in the in the US it is true, there are amongst the very, very, very rich, some of these numbers are absolutely staggering. And as you say, the people you've listed are taking us back to the scale of wealth seen by the absolutely, you know, the people that did set up the huge foundations, the people that whose companies had to be broken up by big antitrust movements in the US at the turn of the last century. Those people in broadly, I don't know would have been broadly don't exist in Europe. There's very few people on that kind of scale of wealth. I'm not saying there's none. But I think when people think about often what I hear is people in the UK, talking as if they live in the United States, they talk about wealth taxation options, as if they just tax like five people at the top, via wealth taxes, it will bring in squillions of pounds, because they read some paper about doing that in the US and Jeff Bezos, all I would say is Jeff Bezos does not live in Barnsley. So it's not going to work. We don't have those rich people, we do have very rich people, but we don't have those people. And just the flip side of that, is that I think we are probably missing around 5% of the total total household wealth

metrics, which is what the data I was giving you earlier, our surveys just don't collect data very well for the very top. Unsurprisingly, if you're really really rich, you don't fill in a ons survey. You don't even have people to even you've got lots of people to do things for you, but they're not filling in surveys are probably them. So we've done a bit of work, digging into what we can see in the wealth and asset survey and what we can see in the Sunday Times Rich List data and the rest. And that equate what we think is missing probably equates to something like 800 billion pounds. Now it's hugely uncertain, but that's a lot of money all held by the top 1% In the UK, that would take the top 1% share of total wealth from about 18% to 23%. So you know a lot the super rich in Britain are rich, and wealth is very unequally held but we are not the United States of America and none of Europe is I’m afraid.

Mubin: So just to be clear, if we taxed the super rich more in this country, it's not going to really pay for all of additional things that we need, it's not going to eradicate child poverty or anything like that.

Torsten: So I think I should be clear, taxing the super rich better is a very good idea. It would raise some more money. And it would also persuade people that the wealth taxation system is fairer and build support for it more generally. So we should definitely be doing it. But if you want to answer the question, How is 21st century Britain going to pay for an ageing society and a bigger state that will follow? Then your your answer cannot be I'm just going to tax the naught point 1%, which is what some people like to say, You should do that, you're going to need to do more than that.

Mubin: where do you think the public are in relation to wealth taxation?

Torsten: I think people do understand that wealth has become more important in 21st century Britain than it was for lots of the 20th century. And then that brings with it challenges. I think, if you look at most surveys, the public would like to see wealth playing a bigger role in the tax system relative to income, because in the end, we at the moment, we just keep, we keep putting them more more pressure on the earnings of workers to bear the cost. That's what the chancellor has done in the last few years here in the UK, more pressure on the workers salaries, those salaries haven't been growing at all, in recent decades. Whereas obviously, wealth has been growing fast. So I think people do understand that you can see that in the surveys, I think what we've got to understand is that they don't that they don't go from that general point of view, to be in favour of some of the elements of proposed proposals for wealth taxes that are mean, I don't think anybody if they sat down with the public, in a group would ever in the end come out in favour of the way in which we tax business assets or agricultural assets in the inheritance tax system, nobody could justify the way that differentially treated, if you even just explained to people that if you earn income from a job, then you get one person allowance.. But if you get that your income from capital gains, dividends, rental income, as well as going out to work, you could get four different allowances. And even if you had the same income as somebody that had no wealth, you would pay a much lower tax rate, I don't think anyone would be able to defend that situation.

Mubin: OK, final question, we’re got an aging population who have, in general, accumulated all of this wealth. How are we going to manage this? Are we going to increase taxes or squeeze public services

Well, I think we just need to work out the big a bit of everything is going to happen, because that's how we deal with fiscal pressures over time, but the big picture is the British state is going to grow in the decades ahead. That's the reason why you've got a conservative party that didn't come into politics to grow the state, growing the state at the moment, wanting to provide more protection for people's assets from the cost of social care, wanting to make sure that they put more money into the NHS, and the result of that is higher taxes. And so in the end the politics of the coming decades, not any individual year, but the big picture politics of the coming decades, is how do you fairly pay for a growing state? How is that fair between different kinds of income and different kinds of wealth? How is it fair between different generations? How do we raise those taxes without harming economic growth more generally, and in the end, all of those things point to a greater role for wealth taxation, not a smaller one.

Mubin: Torsten thanks very much for your insights, it's always good speaking to you in listening to you on something which is not radio four. to all of you

Torsten: Diversity is always a good idea Mubin

Mubin: I completely agree. Well, thanks all of you for listening, and we'll be back again soon. Looking at another big issue which affects our financial security and living standards.