The UK’s former prime minister lacked any sense of irony. Millionaire Rishi Sunak boasted about regularly choosing to go without meals because he believes fasting is beneficial, while many now have nothing to eat unless they can access a food bank.
He did not exactly say “Let them eat cake”, but Marie-Antoinette probably didn’t either. But her perceived lack of compassion for the poor helped propel her to the guillotine. Sunak not only kept his head but even his seat in parliament but, while the British may not have an appetite for revolution, there is growing unhappiness about our unequal society.
The parlous state of the UK economy has worsened inequalities. The new Labour government faces vast challenges, and improving the lives of the poorest has to rank high.
It went into the election with a slate of “five missions to rebuild Britain” and the first of those, achieving economic growth, included “making everyone, not just a few, better off”.
However determined the government may be to achieve that aim, there are always going to be other issues demanding immediate attention – and cash. The current one is prisons. Drastic reform may make a positive difference to public services, but there is no escaping the need for hard cash: the government needs more revenue.
Rachel Reeves has expended huge political capital on persuading business and the City that she was not going to slap new taxes on them beyond the very moderate ones spelled out before the election.
A wealth tax would be an obvious way of beginning to restore an effective level of funding to our public services, but Reeves probably sees it as a step too far in her first term.
She should be braver. According to the last Sunday Times Rich List, there are 165 billionaires in the UK, with a combined wealth that exceeds the GDP of Poland. They could – and most people would think should – make a significant contribution to the wellbeing of the country.
Wealth is very concentrated in the UK, where the landed gentry continues to thrive.
The Grosvenor family own vast tracts of the most valuable real estate in London. The sixth duke described his son as having been born with “the longest silver spoon anyone can have” in his mouth.
When he died in 2016, with, according to probate records, personal assets worth £616,418, 184 family trusts ensured that the real estate, including 300 acres of Mayfair and Belgravia, would still pass to his son.
Another 300 acres of prime central London belongs to the Cadogan family, whose portfolio was valued in 2022 at £5.16bn. Both families insist that they pay all the tax they should and, legally, that may be true. But could they do a bit more to help the people who did not have even the shortest of silver spoons?
That question also applies to those who have made fortunes on the financial markets. The latest Sunday Times Rich List is full of people who have amassed fortunes from running hedge funds. According to the Charities Aid Foundation, of the 100 wealthiest in the UK, 71 failed to give even 1% of their wealth to charity in the previous year.
In 2021, the Wealth Tax Commission, set up by the London School of Economics and the Economic and Social Research Council, concluded that a one-off hit would be effective and justified because of the unprecedented hits the UK had suffered, most notably the Covid pandemic.
Levied on every household with assets of £1m, the commission estimates it would yield £260bn. That is probably too broad, but targeting the top 1-2% would have broad approval and would still yield a useful sum.
Reeves will have to be inventive in finding ways to bring in revenue as she waits for the economic growth that she is clear is the starting point for rebuilding the economy. In the meantime, she will be reluctant to break her promise on new taxes.
But that should not stop her calling a summit of the wealthiest in the country and making clear to them that, if they do not hand over some cash voluntarily, then legislation will be inevitable.
They might argue that they already do their bit via charitable giving, but let me repeat that statistic: 71% of the Sunday Times’ top 100 richest gave less than 1% of their wealth to charity. Reeves is in the perfect position to exert a little gentle blackmail: “Hand over more cash or I’m coming for you.”
