'As private jet sales to rich hit all time high, food banks are running empty'
As the super-rich gathered at the World Economic Forum in Davos last week, Oxfam revealed that despite the economic slowdown, the world’s richest are getting richer. No wonder sales of super-yachts, Rolls-Royces and private jets are at an all-time high.
The average price of a house on Britain’s most expensive street has soared to a mind-blowing £23million – but you could buy several streets in my constituency for that. If we don’t change things pronto, this inequality of wealth that divides our nation is going to get worse and worse. On current trends, Britain’s super-rich are set to multiply their fortunes by 91 times more than everyone else by 2028.
Yet in my Birmingham constituency, I have food banks running out of food. We have falling life expectancy for Britain’s poorest citizens. We have people going into hospital with the diseases of poverty, such as malnutrition and rickets. This is 21st century Britain. So, what is going on?
Since I was born in 1970, the wealth of our nation has grown 100-fold to an incredible £12trillion. That’s enough to pave a path five gold bars wide from John O’Groats to Land’s End.
For most of my life, wealth inequality was falling, as people got on in life, bought a home, sent kids to university and tucked away a bit for a pension. But since the Tories came to power after the financial crash, the wealth we create together is no longer shared.
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In fact, since 2010, the richest 1% have multiplied their wealth 31 times faster than the rest of us. That is simply not fair. And it’s bad for economics, society – and politics.
Indeed, when you look around the world at countries that are very unequal, you see they’ve got three things in common.
They become poorer, because dodging taxes becomes a real problem. They become corrupt, because too many with large fortunes begin meddling in politics to change the laws to suit themselves. And social mobility collapses, because the kids of the luckiest tend to access the privileges that boost them on in life faster than anyone else.
Isn’t that starting to sound just a little bit like Tory Britain? Polling I’ve done has found that people think we’re becoming an ‘inheritocracy’, where the only people who can get on in life are those born into wealth.
‘Hard work’ is just fourth on the list of things people believe we need to succeed. We have the worst inequality of any major European country. Our living standards are going backwards. Growth is low, national debt has doubled since Gordon Brown left office – and it now takes five generations for the heirs of someone born poor to earn average wages.
The British public already think the top 1% has the most power in Britain – more power than the Government – and it could be about to get worse. As the baby boomers die, some will inherit fortunes. But many will inherit only bills.
Today’s young people may be about to become the most unequal generation in half a century. So, how do we fix it?
First, we must raise the rate of economic growth. All politicians say this, but look at the fastest growing countries around the world, and they’re investing in innovation.
We need to spend more on science because it’s the source of jobs that pay £163 a week more than average. Half of those jobs are in London and the South East. So, we need to get spending out to the cities and regions.
Second, we must end the race to the bottom that drives down average wages. That means transforming rights at work and harnessing the power of pension savers to invest in companies that are not screwing their workers, dodging their taxes or poisoning the planet.
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Third, we must boost savings with what I call universal basic capital. We should open a Universal Savings Account for everyone when they start work, into which they save automatically. It’s just been tested by the National Endowment & Savings Trust and proved a huge success.
Into these accounts should go a special one-off dividend for young people worth up to £10,000 to help them with a home deposit – like a Premium Bond paid out by the nation to the next generation. The money would come from a new national savings fund.
If we had saved the money from North Sea oil – like the Norwegians – we would have a sovereign wealth fund worth over £500billion. But we didn’t. Let’s learn from that mistake and join the 80 countries around the world that have built national social wealth funds.
We could do it faster if we restored fairness to our tax system. Our tax code simply doesn’t reflect our moral code. Rishi Sunak earns £2million a year but only pays 21% tax because so much of his income comes from investments.
I think that’s wrong when one in five taxpayers are paying 40%. We deserve a fair shot and a fair share – not just for a few, or for some, but for all.
The Inequality of Wealth: Why It Matters and How to Fix It by Liam Byrne, is published by Head of Zeus (£20). Visit inequalityofwealth.co.uk
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