Sarah Ingham is author of The Military Covenant: its impact on civil-military relations in Britain.
Three weeks ago, the Coronation presented a glorious spectacle of today’s Britain, a multi-ethnic, multi-cultural kingdom united by the ethos of service.
No more coronets, just kind hearts and meritocratic endeavour; most non-royal dukes NFIed (Not Flipping Invited); unknown earls – yellowing ermine and mothballs – ousted to make room for the people-pleasing likes of Nick Cave.
The country’s landed aristocracy were banned from the Coronation like a Bourbon king’s discarded mistress from the palace of Versailles. It reflected the bloodless revolution the country has undergone since 1953.
But if the King hoped his Coronation guest list would reinforce a sense of social solidarity among his subjects, this was dispelled last weekend with the publication of the latest Sunday Times’ Rich List. Since 1989, this annual wealth fest has underscored the financial chasm between the 0.001 per cent and the rest of us.
The Rich List is primary source material for academics who want to track social change in the UK since the late Thatcher era. Then dominated by landed toffs, today most listed are self-made, and often from overseas.
Now, fortunes are made through online businesses, mobile phone empires, and hedge funds. These brave new worlds only began being created in the 1990s.
The Rich List is a political inconvenience for the Prime Minister. He’s in at number 275 – thanks to his wife’s wealth.
Few women are listed. (Top tip for inclusion? A Croesus-rich father, husband or ex-husband.) Oddly, the Sunday Times omitted mentioning the partners of Ruth Parasol (221), Dame Margaret and Helen Barbour (274) and JK Rowling (191). Perhaps their dosh is not “shared with him”, as the ST cloyingly put it.
Paradoxically, the Rich List is more of a problem for the Labour leadership. Slap in the middle of the online piece was a live poll: ‘Should there be a wealth tax?’ Of the 21,500 who took part, just over half said yes.
Post-pandemic economic fragility means that the gulf (and Gulfstream) between the have-yachts and the have-nots is especially stark. Since the fall of Northern Rock in 2007 and the ensuing global financial crisis, many household incomes have remained more or less stagnant.
For all the talk of the “squeezed middle” and “just about managing”, in the aftermath of the crisis pay packets went backwards, while banks were bailed out and bankers were too big to jail.
Now that the era of cheap credit is at an abrupt end and high inflation is upon us, even the Waitrose-shopping classes are feeling the pinch. Bitter about the cost of butter, today the Blue Wall seems as fed up as the Red Wall was in June 2016.
Although not included in Labour or the LibDems 2019 election manifestoes, wealth taxes have crept on to the political radar.
Britain’s cost-of-living crisis makes voters far more susceptible to giving the super-rich a real kick in the wallets. A YouGov poll in January found that three-quarters supported a one-off wealth tax of either one per cent on £10m or two percent on £5m. Around half were in favour of increased capital gains tax – not only on shares but also on property.
A Wealth Tax for the UK (2020), from the LSE and University of Warwick, suggests a one-off levy on all individual wealth above £500,000 (excluding a main house and pension), charged at one per cent for five years would raise £260billion. This is the equivalent of 9p rise in income tax.
This week, the International Monetary Fund suggested the reform of UK property taxes. Along with its 0.4 per cent growth prediction, it called for “rebalancing away from transaction taxes”, which in plain English means the abolition of stamp duty.
(Those who are about to celebrate should note that the IMF’s call for “updating property valuations” echoes a proposal in the Wealth Tax report. Such valuations are needed for either a mansion tax or a wealth tax.)
Labour’s obsession with driving non-doms out of the UK will mean that the £7.9bn they paid in direct taxes to the UK in 2021 will have to come from other taxpayers. Funds raised by indirect taxes such as VAT will be welcomed by Treasuries in Dublin, Lisbon and Athens, which have separate tax arrangements for resident foreign nationals (i.e. non-doms).
More windfall taxes on stellar British energy companies, hitting non-doms, reversing reforms to the life-time pension allowance… It’s time to put Labour and the LibDems on the spot about making the pips squeak. Wealth tax and/or mansion tax: yes or no.
The Rich List wealth tax poll divided 52:48 in favour, an unhappy omen. The 52 per cent should be asking themselves how long it would be before a red-orange-green coalition came after their assets. After all, the 40 per cent tax rate burden was only supposed to be for, cliché alert, the broadest-shouldered.
In his book Values (2021) Mark Carney, former governor Bank of England, reflects on the civic virtue shown during the pandemic: “People have acted out of human compassion not financial optimisation. They prioritised the health of their families, neighbours and those they never met.”
As he suggests, the economy was put on life support to save lives. But the invoice for two years of lockdown is now in. The road to economic recovery will be a long, hard one – and taxes on the assets of Britain’s wealth creators, are not the convenient short cut they appear.
The Coronation reflected how our Head of State seeks to promote a united United Kingdom. Not only are wealth taxes short-sighted and financially illiterate, but they sow social division and represent the ugly politics of envy.