Wealth and Assets in Scotland 2006 - 2012

7. Conclusions

Scotland has substantial wealth

This report has set out the substantial and increasing level of wealth in Scotland. The value of total wealth increased in 2010/12, although the growth rate has slowed since 2008/10.

But wealth ownership shows considerable inequality

The report has also emphasised that Scotland - like the rest of Great Britain - faces stark inequalities in wealth, with the wealthiest 10 per cent owning nearly half of all financial, property, pension and physical wealth in Scotland. In comparison, the least wealthy 30 per cent of the population owned no financial or pension wealth, and only 6 per cent of property wealth and 7 per cent of physical wealth.

While wealth ownership did become slightly more equal in 2010/12 , this was mainly due to a fall in the value of assets owned by the wealthiest 10 per cent of households, rather than any significant improvement for the least wealthy households.

Particular household types are at risk of low wealth

Wealth accumulation is a process that occurs over an individual's lifetime. Younger households are less likely to have accumulated wealth as they tend to be at the beginning of their careers, earning lower wages, and, regardless of their earnings, have had less time to accumulate wealth. Pensioners, especially those in couples, have a lower risk of low wealth than other household types. This reflects properties that have their mortgages repaid, accumulated increases in property values over long periods, and accumulated pension wealth.

In comparison, single adult and single parent households have a high risk of low wealth and the associated propensity for household bill arrears, borrowing, and low levels of savings. Single adult households, both with and without children, tend to rely on only one source of income, which makes it more difficult to accumulate wealth, especially for households with children. These low wealth groups own very little in assets, with no financial or pension wealth, and are significantly less likely to own property (either outright or with a mortgage).

A number of socio-economic factors contribute a significant risk of low wealth, many of which are interlinked. Unemployed and economically inactive households have a high risk of low wealth. However, nearly half of low wealth households are in employment or self-employment. This suggests employment is no longer a protection against low income and low wealth. Households need sufficient income to be able to accumulate wealth. Those in low wealth households in employment are more likely to be headed by someone without qualifications, in routine or manual occupations. Often this employment is low paid, and can be temporary, and the experience of low pay can be long lasting. This increases the risks of low income, meaning households do not have the capacity to accumulate wealth.

Movement between wealth bands has slowed in the latest year

In 2010/12, around half of households remained in the same wealth decile, but of those that did move equal proportions moved up as moved down wealth deciles. This is less movement than in 2008/10. Middle wealth households are more likely to increase their wealth, with the wealthiest and least wealthy households least likely to change their wealth.

For the least wealthy households, this can mean a lifetime of low wealth, despite being in employment. In the medium term, this can mean little or no financial resilience to be able to cope with shocks. In the long term, low income and low wealth can mean poverty continuing into pensioner years.

Next steps

This analysis will be updated for the period 2012/14, following the release of the next wave of WAS data at the end of 2015.