Uzbek-born Alisher Usmanov is the second richest man in Britain. Photo: Getty.
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The UK has more billionaires per head than any other country – which is bad news

Billionaires love Britain. But here are three big reasons why Britain shouldn’t love billionaires. 

According to this year’s Sunday Times rich list, there are 100 billionaires living in Britain. This means that the UK has a higher proportion of billionaires per capita than any other country. You might think this is a good thing: perhaps the UK really is “open for business”, perhaps these billionaires are pumping lots of money into the economy – shopping in Harrods, buying up mansions, sending their kids to private schools and occasionally giving multi-billion donations to arts foundations. Maybe some of that money will trickle down. Even if you think inequality is bad, should you be bothered by a hundred or so super-rich? Well yes, you should. Here’s why:

1. It shows we’ve got our tax system all wrong

Unlike America, China and India, we don’t grow our own billionaires, we import them (two thirds of our billionaires are foreign-born). It’s not just big companies such as Amazon and Starbucks that structure their financial affairs across multiple countries to minimise their tax bills - and for a billionaire having a base in the UK makes a lot of tax sense. Provided you are registered as non-domiciled for tax purposes (“non-dom” in accountant speak) you are only taxed £30,000 on your non-UK income (or £50,000 if you’ve been resident in the UK for over 12 years.)

Now you have to be pretty wealthy for these tax arrangements to make financial good sense. But if you do happen to be a multi-billionaire with a second (or tenth) home in London, you have a strong tax incentive to keep as much out of your money as possible out of the UK. Thankfully, for billionaires, we have some great tax lawyers to help them structure their wealth “efficiently”, taking advantage of the capital’s close links with offshore tax havens.

 

2. Most billionaires are putting money into the UK economy – but it’s going in all the wrong places

Wealthy non-doms are partly to blame for the rocketing prices of central London property. And, once a billionaire buys a Mayfair mansion there’s a very strong tax incentive for him to keep it empty for most of the year: if they spend too much time in the UK, they lose their non-dom tax status and their tax bill shoots up.

There are other ways in which billionaires pump money into the UK economy: they employ a range of household staff, keep Bond Street boutiques and art galleries afloat and splash their cash in central London restaurants and clubs. And yet industries that depend on the patronage of the super-rich enjoy a precarious existence. As the journalist Robert Frank explains in his 2011 book High-Beta Rich, the incomes of the world’s richest has never been so volatile, because unlike the big business owners of the past, most modern billionaires have their money tied up in stocks and shares. When billionaires fortunes are booming, everyone’s happy, but when they go bust it sends shockwaves through the many industries catering to the super-rich. Do we really want large chunks of the British economy so tied to the fortunes of a few hundred individuals?


3. They are exerting far too much influence on British politics

Billionaires can exert an outside influence on Britain’s politics through their donations. If you give more than £50,000 you can get a dinner with the PM, and to a billionaire, £50,000 is small change. Of the 43 big donors that dined with Cameron in the first quarter of 2014, four were listed as billionaires by the Sunday Times.  

Even though billionaires get a good tax deal in the UK, they still contribute significantly to the government’s coffers through tax. The average non-dom pays £55,000 in tax a year, which is 22 times the UK average. Ten years ago, the wealthiest one per cent paid 20 per cent of the UK government’s income tax. Now it’s 30 per cent. As the Sunday Times points out: in the 2012-13 tax year, sales of prime homes in the boroughs of Westminster and Kensington and Chelsea generated £708m of stamp duty, which is £73m more than the residential stamp duty receipts for Northern Ireland, Wales, Scotland, the northeast, northwest and Yorkshire and the Humber put together.

In some ways this is good – the government, after all needs the money – but it’s also problematic. The UK government’s solvency is increasingly dependent on the incomes of a small number of individuals – who can choose to move their money elsewhere at any time, and whose incomes fluctuate with the stock market. 

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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The 11 things we know after the Brexit plan debate

Labour may just have fallen into a trap. 

On Wednesday, both Labour and Tory MPs filed out of the Commons together to back a motion calling on the Prime Minister to commit to publish the government’s Brexit plan before Article 50 is triggered in March 2017. 

The motion was proposed by Labour, but the government agreed to back it after inserting its own amendment calling on MPs to “respect the wishes of the United Kingdom” and adhere to the original timetable. 

With questions on everything from the customs union to the Northern Irish border, it is clear that the Brexit minister David Davis will have a busy Christmas. Meanwhile, his declared intention to stay schtum about the meat of Brexit negotiations for now means the nation has been hanging off every titbit of news, including a snapped memo reading “have cake and eat it”. 

So, with confusion abounding, here is what we know from the Brexit plan debate: 

1. The government will set out a Brexit plan before triggering Article 50

The Brexit minister David Davis said that Parliament will get to hear the government’s “strategic plans” ahead of triggering Article 50, but that this will not include anything that will “jeopardise our negotiating position”. 

While this is something of a victory for the Remain MPs and the Opposition, the devil is in the detail. For example, this could still mean anything from a white paper to a brief description released days before the March deadline.

2. Parliament will get a say on converting EU law into UK law

Davis repeated that the Great Repeal Bill, which scraps the European Communities Act 1972, will be presented to the Commons during the two-year period following Article 50.

He said: “After that there will be a series of consequential legislative measures, some primary, some secondary, and on every measure the House will have a vote and say.”

In other words, MPs will get to debate how existing EU law is converted to UK law. But, crucially, that isn’t the same as getting to debate the trade negotiations. And the crucial trade-off between access to the single market versus freedom of movement is likely to be decided there. 

3. Parliament is almost sure to get a final vote on the Brexit deal

The European Parliament is expected to vote on the final Brexit deal, which means the government accepts it also needs parliamentary approval. Davis said: “It is inconceivable to me that if the European Parliament has a vote, this House does not.”

Davis also pledged to keep MPs as well-informed as MEPs will be.

However, as shadow Brexit secretary Keir Starmer pointed out to The New Statesman, this could still leave MPs facing the choice of passing a Brexit deal they disagree with or plunging into a post-EU abyss. 

4. The government still plans to trigger Article 50 in March

With German and French elections planned for 2017, Labour MP Geraint Davies asked if there was any point triggering Article 50 before the autumn. 

But Davis said there were 15 elections scheduled during the negotiation process, so such kind of delay was “simply not possible”. 

5. Themed debates are a clue to Brexit priorities

One way to get a measure of the government’s priorities is the themed debates it is holding on various areas covered by EU law, including two already held on workers’ rights and transport.  

Davis mentioned themed debates as a key way his department would be held to account. 

It's not exactly disclosure, but it is one step better than relying on a camera man papping advisers as they walk into No.10 with their notes on show. 

6. The immigration policy is likely to focus on unskilled migrants

At the Tory party conference, Theresa May hinted at a draconian immigration policy that had little time for “citizens of the world”, while Davis said the “clear message” from the Brexit vote was “control immigration”.

He struck a softer tone in the debate, saying: “Free movement of people cannot continue as it is now, but this will not mean pulling up the drawbridge.”

The government would try to win “the global battle for talent”, he added. If the government intends to stick to its migration target and, as this suggests, will keep the criteria for skilled immigrants flexible, the main target for a clampdown is clearly unskilled labour.  

7. The government is still trying to stay in the customs union

Pressed about the customs union by Anna Soubry, the outspoken Tory backbencher, Davis said the government is looking at “several options”. This includes Norway, which is in the single market but not the customs union, and Switzerland, which is in neither but has a customs agreement. 

(For what it's worth, the EU describes this as "a series of bilateral agreements where Switzerland has agreed to take on certain aspects of EU legislation in exchange for accessing the EU's single market". It also notes that Swiss exports to the EU are focused on a few sectors, like chemicals, machinery and, yes, watches.)

8. The government wants the status quo on security

Davis said that on security and law enforcement “our aim is to preserve the current relationship as best we can”. 

He said there is a “clear mutual interest in continued co-operation” and signalled a willingness for the UK to pitch in to ensure Europe is secure across borders. 

One of the big tests for this commitment will be if the government opts into Europol legislation which comes into force next year.

9. The Chancellor is wooing industries

Robin Walker, the under-secretary for Brexit, said Philip Hammond and Brexit ministers were meeting organisations in the City, and had also met representatives from the aerospace, energy, farming, chemicals, car manufacturing and tourism industries. 

However, Labour has already attacked the government for playing favourites with its secretive Nissan deal. Brexit ministers have a fine line to walk between diplomacy and what looks like a bribe. 

10. Devolved administrations are causing trouble

A meeting with leaders of Scotland, Wales and Northern Ireland ended badly, with the First Minister of Scotland Nicola Sturgeon publicly declaring it “deeply frustrating”. The Scottish government has since ramped up its attempts to block Brexit in the courts. 

Walker took a more conciliatory tone, saying that the PM was “committed to full engagement with the devolved administrations” and said he undertook the task of “listening to the concerns” of their representatives. 

11. Remain MPs may have just voted for a trap

Those MPs backing Remain were divided on whether to back the debate with the government’s amendment, with the Green co-leader Caroline Lucas calling it “the Tories’ trap”.

She argued that it meant signing up to invoking Article 50 by March, and imposing a “tight timetable” and “arbitrary deadline”, all for a vaguely-worded Brexit plan. In the end, Lucas was one of the Remainers who voted against the motion, along with the SNP. 

George agrees – you can read his analysis of the Brexit trap here

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.