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 biggest divide in politics is not left against right, but liberals against authoritarians

My week, including a Lib Dem membership rise, The Avalanches, and why I'm putting pressure on Theresa May over child refugees.

It is a boost for us that Nick Clegg has agreed to return to the front line and be our Brexit spokesperson. I hadn’t even had a chance at our meeting to make him the offer when he said: “Before we start, I’ve been thinking about this and want to take on the fight over Europe.”

With Labour apparently willing to give the Tories a free pass to take us out of Europe, the Liberal Democrats are the only UK-wide party that will go into the next election campaigning to maintain our membership of the EU. The stage is remarkably clear for us to remind Theresa May precisely what she would be risking if we abandon free trade, free movement, environmental protection, workers’ rights and cross-border security co-operation. More than a month on from the referendum, all we have heard from the Tories is that “Brexit means Brexit” – but they have given us no clue that they understand what that means.

 

Premature obituaries

Not long ago, the received wisdom was that all political parties were dying – but lately the supposed corpses have twitched into life. True, many who have joined Labour’s ranks are so hard left that they don’t see winning elections as a primary (or even a desirable) purpose of a party, and opening up Labour to those with a very different agenda could ultimately destroy it.

Our experience has been happier: 20,000 people joined the Liberal Democrat fightback in the wake of the 2015 general election result, and 17,000 more have joined since the referendum. We now have more members than at any time this century.

 

Breaking up is hard to do

Journalists have been asking repeatedly if I want to see the break-up of the Labour Party, with moderates defecting to the Liberal Democrats. I have been clear that I am not a home-wrecker and it is for Labour to determine its own future, just as I focus on advancing the Liberal Democrat cause. Yet I have also been clear that I am happy for my party to be a home for liberals of whatever hue. I enjoyed campaigning in the referendum with a variety of progressive figures, just as moderates from different parties shared platforms in 1975. It struck me that far more unites us than divides us.

That said, not all “moderate” Labour figures could be described as “liberal”, as John Reid demonstrated as Labour home secretary. The modern political divide is less left v right than authoritarian v liberal. Both left and right are looking increasingly authoritarian and outright nasty, with fewer voices prepared to stand up for liberal values.

 

What I did on my holidays

Time off has been virtually non-existent, but I am reading A Wilderness of Mirrors by Mark Meynell (about loss of trust in politics, the media and just about everything). I’m also obsessively listening to Wildflower by the Avalanches, their second album, 16 years after their first. It’s outstanding – almost 60 minutes of intelligently crafted dialogue, samples and epic production.

During the political maelstrom, I have been thinking back to the idyllic few days I spent over half-term on the Scottish island of Colonsay: swimming in the sea with the kids (very cold but strangely exhilarating ­after a decent jog), running and walking. An added bonus is that Colonsay is the smallest island in the world to have its own brewery. I can now heartily recommend it.

 

Preparing for the next fight

The odds are weirdly long on an early general election, but I refuse to be complacent – and not merely because the bookies were so wrong about Brexit. If we have learned one truth about Theresa May as Prime Minister so far, it is that she is utterly ruthless. After her savage cabinet sackings, this is, in effect, a new government. She has refused to go to the country, even though she lectured Gordon Brown on the need to gain the endorsement of the electorate when he replaced Tony Blair. Perhaps she doesn’t care much about legitimacy, but she cares about power.

You can be sure that she will be keeping half an eye on Labour’s leadership election. With Jeremy Corbyn potentially reconfirmed as leader in September against the wishes of three-quarters of his MPs, Mrs May might conclude that she will never have a better chance to increase her narrow majority. Throw in the possibility that the economy worsens next year as Brexit starts to bite, and I rule nothing out.

So, we are already selecting candidates. It is vital that they dig in early. As we are the only party prepared to make the positive case for Europe, such an election would present us with an amazing opportunity.

 

Sitting Priti

David Cameron pledged to take an unspecified number of unaccompanied children from camps across the Continent. I am putting pressure on Theresa May to turn that vague commitment into a proper plan. Having visited such camps, I have been fighting for Britain to give sanctuary to a minimum of 3,000 unaccompanied children, who are currently open to the worst kinds of exploitation. We have heard nothing but silence from the government, with underfunded councils reporting that they are not receiving the help they need from Whitehall.

Meanwhile, it remains government policy to send refugees to Turkey – whose increasingly authoritarian government has just suspended human rights protection.

As if all of this were not grim enough, we have a new Secretary of State for International Development, Priti Patel, who has said that she thinks aid should be used largely to promote trade. As someone who wants our country to be respected around the world, I find this plain embarrassing. Actually, it’s worse. It’s shaming. As with Europe, so with the world: the ­Conservative government is hauling up the drawbridge just when we need more than ever to engage with people beyond our shores.

Tim Farron is the leader of the Liberal Democrats. To join the party, visit: libdems.org.uk/join

Tim Farron is leader of the Liberal Democrats.

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue