Scots Wealth

The amount of wealth owned by Scots households has broken through the £1 trillion mark, following increases in property values and pension pots. That's £1,000,000,000,000, or a million million pounds. It is more than five times the value of the nation's economic output in one year.

But  household wealth is very unevenly spread. It is nearly twice as unequal as inequality in income levels. A quarter of Scots have savings of less than £500.

Using figures from 2014 to 2016, the median Scottish household - with half the country more wealthy and one half less so - was found to have £237,000 in wealth. The big difference is in property wealth - a median of £65,000 in Scotland to £95,000 in Britain. This is skewed by high property prices in London and south-east England. The Resolution Foundation estimate is of Scottish household property wealth totalling £285bn.

By far the largest share of wealth - some £543bn - is in pension investments. The median Scottish household is thought to have £70,000 put aside in pensions. Financial wealth, including investment products such as shares and bonds, comes to £100bn in total, and is very unevenly spread. Physical wealth is thought to total £122bn, including other assets people own, from cars and yachts to furniture and artwork.

• Income Gap: It highlights the growth in wealth at a higher pace than the rise in incomes. That means it takes longer to earn and save money with which to become wealthy. In the past decade, Scottish wealth has grown from being five times bigger than total output of the economy (also known as income) to more than seven times.
• Generation Gap: The generational divide on wealth is much greater than the divide on incomes. Taking every five year period since 1965, each successive cohort of Scots has had less wealth than their predecessors at the same age. That divide is clearest for those aged around 43. For those born in the five years up to 1975, at the age of 35 they had median wealth of £52,000. But for those born in the five years after 1975 (now aged 38 to 43), at the age of 35, they had median wealth of £33,000. One reason for this is the big dip in home ownership rates for people in that age group, though it has not dipped as far as Britain as a whole.
• Legacy Gap: While older parents continue to build up wealth, much of it through property values and relatively generous pensions, wealth is transferred when they pass it on to their sons and daughters. "What you inherit, rather than what you earn, is set to become a much more important determinant of your lifetime living standards in the years ahead," according to Torsten Bell, director of the Resolution Foundation and co-researcher on The £1 Trillion Pie. He notes that revenue from inheritance tax paid in Scotland rose by 30% in the two years to 2014-15. A further twist is that those who stand to inherit wealth when their parents die are having to wait longer, because their parents are typically living longer. The peak age at which the average millennial, now aged 20 to 35, will outlive both parents is around 60.
• Tax Gap: The report also notes that taxation on wealth has not kept pace with wealth, when counted as a share of national income. For the past 50 years or so, the payment of wealth-based taxes has amounted to around 2.5% of total economic output in any one year. Co-author Conor d'Arcy said: "While some wealth taxes are set in Westminster, including inheritance tax, the biggest wealth tax, Council Tax, is fully devolved. Recent modest reforms have improved council tax in Scotland, in marked contrast to the lack of progress in England, but the tax could still be much more closely tied to property values."
• Regional Gap: Where wealth is held in property, those who do best and can pass on most to their family have benefited from living in areas where property prices have risen faster than average. The average value of a property in Edinburgh is more than £250,000. There are 11 council areas with average prices at less than half that.