Fraser Nelson Fraser Nelson

Assetocracy: the inversion of the welfare state

To understand how the Tories ended up in such a muddle about who they are and what they stand for, take a walk down any of the nicer streets in Boris Johnson’s constituency. North Hillingdon is as idyllic now as it was a generation ago: spacious houses, with large drives, built before the war. The houses were, once, more or less affordable. One property on Parkway, for example, was bought for £175,000 just over 20 years ago. It’s now valued at £1 million. And what’s true in Hillingdon is true of the rest of the country too.

The asset boom that started at the turn of the century has transformed the finances of families across the country, turning modest-income retirees into unexpected millionaires: a new ‘assetocracy’. Homeowners have to sell to access the money, but their children can expect to inherit life-changing amounts — just as long as their parents don’t end up needing long-term care, in which case the costs can gobble up the inheritance.

‘My job is to protect you or your parents or grandparents from having to sell your home to pay for the costs of care,’ said Boris Johnson after becoming prime minister two years ago. This was quite a statement. But to do it would cost billions and the Prime Minister had also promised, in his manifesto, not to raise taxes. So what to do? Should he keep his promise to the voters, or create a safety net for the asset-rich? It’s telling that he chose to protect the assetocracy.

The emergence of this new class in the space of the past two decades has changed politics more than any party likes to admit. Wealth has become concentrated in a group of people who now decide British elections. Before the crash, 7 per cent of British pensioners were millionaires, as measured by household wealth.

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