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Revealed: inequality at heart of Scotland

THE richest 10% of households in Scotland have 900 times the accumulated wealth of the poorest 10%, according to a new Scottish Government analysis showing the scale of the country's "wealth gap".

The study also found that 30% of Scotland's children live in households which between them own less than 2% of the nation's private worth.

First Minister Alex Salmond said yesterday it was "alarming" that almost one-third of children were not getting the start in life they deserved. He also claimed the report supported the case for independence as Scotland needed the extra powers to tackle inequality.

The most recent figures show total household wealth in Scotland was £811 billion, of which almost half - £402bn - was attributable to private pensions. Property accounted for £230bn (28%), financial wealth such as savings, stocks and shares covered £90bn, and physical wealth such as cars and jewellery £89bn (both accounting for 11%).

Published by the Scottish Government later this week, the analysis used data collected by the UK Office for National Statistics for its Wealth and Asset surveys conducted between 2006 and 2010 - the most up-to-date information available.

It confirms the old saying that money goes to money, with those who have a large slice of one form of wealth having other kinds too, while the poorest have little wealth of any sort, making it hugely difficult for them to accumulate some.

Some 2000 Scottish households were surveyed in detail about their assets. The wealthiest 30% of households had 76% of all private wealth in Scotland: 84% of pension wealth, 81% of financial wealth, 70% of property wealth, and 54% of physical wealth.

In stark contrast, the poorest 30% of households accounted for just 11% of physical wealth and less than 1% of private pensions, property and financial wealth.

The middle 40% of households held 22% of total wealth, but 35% of physical wealth, 29% of property wealth, 18% of financial wealth and 15% of private pension wealth.

The report concludes: "The wealth gap at the extremes of the wealth distribution is substantial … the wealthiest 10% had 900 times the wealth of the least wealthy 10%.

"Individuals and households need sufficient income to be able to accumulate wealth and analysis suggests that the least wealthy face particular challenges in doing so."

Written by government analysts, the report was commissioned by ministers to inform their anti-poverty strategy and policymaking, including targeting resources at those most in need.

Salmond said: "These alarming figures highlight that almost one-third of our children are not getting the start in life they deserve.

"There is an urgent need for Scotland to have the powers of independence so we can tackle inequality and ensure everyone benefits from Scotland's national wealth.

"Scotland is a rich and wealthy nation. As an independent country we would be the 14th wealthiest nation in the OECD [Organisation for Economic Co-operation and Development states], yet under the current system too many people in our communities have too little."

Claiming independence could break the age-old cycle of poverty, the First Minister added: "Our poorest households do not have the income needed to gain the wealth - and security - that comes from owning property or having a private pension. Unless action is taken soon, this cycle of deprivation will continue, with more children continuing to be born into poverty.

"Tackling and reversing this inequality requires key economic and social policy levers being in the hands of the Scottish Government and can only be truly achieved through independence."

The report also found that household income was slightly more evenly distributed than wealth, and that there was "little difference in the level of wealth inequality in Scotland compared with Great Britain as a whole".

The analysis comes amid the current debate about the stifling effect of wealth on social progress sparked by French economist Thomas Piketty's book, Capital In The Twenty-First Century.

Hailed as the modern equivalent of Karl Marx's Das Kapital, the book pulls together decades of statistics to argue that free-market capitalism inevitably concentrates wealth in the hands of a tiny elite, leaving the rest of society behind. Piketty's solution is a progressive global wealth tax, which he concedes is unlikely to be implemented.

A spokesman for the pro-Union Better Together movement said: "The independent, impartial Institute for Fiscal Studies says that if we leave the UK we would have to make drastic spending cuts in order to balance the books.

"The Nationalists cannot continue to claim that if we vote for them then money will rain from the skies and every problem will instantly be solved. It simply isn't credible."

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