Society needs to take back control from the billionaires

It’s no secret why Labour has declared war on Britain’s 151 billionaires and what the Shadow Chancellor calls their “obscene” wealth. Polls show that voters overwhelmingly support increased taxation on the rich. Even the Tories have stopped talking about tax cuts.

This is not surprising. To most of us the figures are simply incomprehensible. What does Sir Ian Wood, one of Scotland’s tiny crop of billionaires, do with £1,700,000,000,000? How many luxury cars, houses and yachts can anyone actually need?

Of course, the super-rich say this is a silly way to look at their wealth. It isn’t stacked up in piles of cash or gold bars or even hidden deep in bank accounts. Rich List figures are compiled from declared assets, largely shares in the companies they own. Very little is actually spent day-to-day and these companies do create jobs.

However, the workers aren’t seeing a lot of the wealth they supposedly create. Wages have stagnated over the past decade, yet the wealth of the top 1,000 families in the UK has risen by around 30 per cent in the past five years alone, to £750 billion, according to the Equality Trust.

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I don’t know if this is obscene, but it can’t go on. It is simply unsustainable, morally or economically, for the super-rich to receive annual windfalls of nearly £55bn. Society must take back control.

A decade of near-zero interest rates has boosted asset values – shares and property – and made ownership a licence to print money. Stock markets have boomed on the back of the hundreds of billions in cheap money pumped into the economy by the central banks. Where does it all go?

Well, Scotland had 11 billionaires at the last count, worth a paltry £17bn. They include Eqyptian-born Mohammed Al Fayed of Harrods fame; the Norwegian industrialist, Trond Mohn; bottled water billionaire Mahdi al-Tajir, who hails from the Arab Emirates; and Kiran Mazumdar-Shaw, who owns one of India’s biggest pharmaceuticals company. Many of our billionaires don’t actually live here a lot.

Ms Mazumdar-Shaw, who is married to a Scot, says she tries to come to Scotland at least once a year. Our top billionaire, Glenn Gordon of Grants Whisky, worth £2.9bn, lives in the Channel Islands. Mr Al Fayed, owns a huge Scottish estate but is a citizen of the world. Mr Mohn runs his philanthropic enterprises from Bergen in Norway.

Billionaires are notoriously footloose and have numerous bolt holes to which they can depart when governments threaten them with increased taxation. This is why the SNP has been intensely wary of taxing the rich. You don’t hear Nicola Sturgeon threatening to have tea with billionaires.

Some are or have been Scottish nationalists. Jim McColl of Clyde Blowers, who lives in Monaco, is one. Mr Al-Fayed once offered to be president of Scotland. Sir Brian Soutar, of Stagecoach, was a major SNP donor – though he’s recently fallen on hard times and is now only worth around £800 million. Perhaps we should organise a whip-round.

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The message is that billionaires have small countries over a barrel. If Scotland became independent they would hop over the border before you could say super tax.

Even trying to keep them in the UK would require all the tea in China, were Labour to honour its pledge to “abolish” billionaires.

But this is no excuse for not trying to tax them judiciously. The very wealthy need to live somewhere. And Britain has been very good to them for a long time.

Labour pretends to be shocked to discover that billionaires donate to the Conservative Party. But they’ve only contributed £50 million to the Tories since 2005 which, given their massive wealth, seems an almost laughably small bung. Yet billionaires have received tax relief on capital gains, income and assets which, according to Labour, has benefited them to the tune of £100bn since the Tories came to office.

Mind you, the Tories have been rather better than Labour at getting the super-rich to pay taxes. The top one per cent of earners pay more in tax now, 28 per cent, than they did when Gordon Brown was Chancellor, when they contributed only 24 per cent of total tax revenue.

Indeed, if I were super-rich, I’d be tempted to put money into the Labour Party, as they used to back in the days of Tony Blair. Public attitudes are changing fast. The wealthy have a very good deal right now and if I were them, I’d be offering to pay more tax, not less.

As recently as 1974, the top rate of tax in the UK was 83 per cent. There was also a 15 per cent surcharge on investment income which took the real top rate of tax to nearly 90 per cent. And that isn’t the highest it has been. Top rates peaked at 99 per cent during the Second World War, and remained at very high levels through the 1950s and 60s.

This was why pop groups like the Rolling Stones became tax exiles, and the Beatles wrote songs attacking “The Taxman”. This is all within living memory. The great increase in wealth inequality which we see today, really only dates from Margaret Thatcher’s Budgets in the 1980s.

There is no law that says punitive tax rates cannot be restored. Viewed historically Labour’s plans so far seem exceptionally modest – a 50 per cent tax on earnings over £123,000 and restoring cuts in Corporation Tax. Billionaires should be laughing, not emigrating, because that leaves asset wealth largely intact.

There is a strong case for restoring the surcharge on investment income, as argued by the economist Richard Murphy. This is because the inflation of asset values is sucking wealth out of the real economy. Some of this needs to be recycled back into productive investment and consumer demand.

In the long run, this actually helps capitalists. They need consumers with cash to buy goods and services on the high streets. That’s what Mr McDonnell should tell Mr Caudwell over tea. After getting him to pay the bill.