Oxfam has just reported that Britain’s richest 5 families are wealthier than 12.6 Britons who make up a fifth of the entire UK population. The latest survey from Forbes magazine shows that these 5 fortunes are heavily based on property rather than entrepreneurial innovation. The families listed are those of the Duke of Westminster (who owns 190 acres of prime real estate in Belgravia, London), the property magnates David and Simon Reuben, the Hinduja brothers, the Cadogan family whose wealth has always traditionally come from property, and (the one exception) the Sports Direct investor Mike Ashley. Their combined wealth works out at £28.2bn, an average per family of £5.6bn each. The collective wealth of the poorest 12 million Britons however comes to only £2,230 each. Thus the wealth of the richest 5 families is 2.5 million times greater than that of the bottom fifth. This is grotesque: so what should be done about it?
The first requirement is obviously a wealth tax aimed primarily at the super-rich 1% (a total of 307,000 persons). Dependent on the levy rate applied, it could raise £10-15bn a year and likely considerably more. It would need to be applied in conjunction with three other measures. One is a Financial Transaction Tax pitched, initially at least, at some 0.01% of the value of the transaction, to rebalance tax between an under-taxed financial sector and an over-taxed industrial sector. Second is a real crackdown on tax avoidance by, in the case of individuals, requiring all tax havens in Britain’s Crown Dependencies and Overseas Territories to identify all British citizens holding accounts there, and in the case of corporations, requiring all multinationals to submit accounts based on country-by-country reporting of their activities. Third is ending the absurd corruption of the tax system whereby one-fifth of big businesses now pay no tax at all and more than half pay less than £10m a year.
This may be seen by some as whistling in the wind since after 30 years of neoliberal free markets capitalism the super-rich are often regarded as beyond the reach of the taxman. But the worm is beginning to turn partly because the increasing excesses of inequality in an era of austerity are seen as intolerable. More than that, a recent referendum is Switzerland – one of the most conservative countries in the West – only failed by a very narrow margin to cap top executives’ pay at 12 times the lowest earner in a company. If that option with mandatory effect were now introduced in the UK, it would probably pass.
Labour is already committed to raise the minimum wage and to incentivise companies to go further with the Living Wage, which would likely raise the wage floor for around 3 million low-paid workers. Two other more far-reaching measures are also needed. One is to shift the balance of bargaining power in favour of the workforce to counter the excess of corporate power, and the other is to make clear that full employment will be a central goal of economic policy for the next Labour government.