Aviva's family finances report is getting savings and investments badly wrong
This year's edition of Aviva's annual report into family finances is still getting something badly, badly, wrong:
Low income families in Britain hold an average of just £95 in savings and investments, compared to a mean £62,885 that higher income families have, according to new research, which highlights the widening gap between rich and poor.
This is not true, it is not even remotely close to being true.
So, let us imagine what happens in a society where you have £95 in savings and investments and then you lose your job. That £95 will be pretty soon exhausted and then you will start to starve. Or, of course, you can hope to find another job before that happens.
Now let us think about what happens in our own society when you lose your job and you have only £ 95 in immediate cash resources.
Someone else stands there ready and willing to pay for any medical care you may require. Your children still do to a school paid for by someone else. Arrangements will be made for your housing costs to be paid. Even contributions to your future pension will be made on your behalf and there will be a modest amount of cash provided as well to cover food and other bills.
This is of course wealth, a form of savings, and just because we call it the welfare state not ready cash doesn't change the fact that it is indeed wealth, a form of savings.
Thus there is just no one at all in the country with £95 in savings, investments or wealth. Nor of course is the gap as stark as it looks between rich and poor. For there is a value to that welfare state. Quite what it is could be controversial but let's say, just for that sake of argument, that it's £30,000 (which is a very low estimate indeed).
Thus low income families have savings of £30,095, higher income of £92885, the same nominal distance between them but a very much lower multiplier, no?