Analysis Breaking News

‘The Nature of Wealth in Britain’: new landmark report highlights abuse of wealth and need for change

A proper government response to massive wealth accumulation could easily fill social care funding gap, increase pay for public sector workers by 15% to reduce Universal Credit reliance, reverse the £20 a week cut to UC, solve the housing crisis, reverse education funding cuts – and more. One Labour MP is making the arguments the party’s leader refuses to even raise

Jon Trickett MP

A landmark new report by Labour MP Jon Trickett has examined the way that wealth works – and is abused – in the UK and concludes that the case for a wealth tax is overwhelming.

‘The Nature of Wealth in Britain: How Wealth Wields Power and the Case for a Wealth Tax’ notes the enormous increase in the wealth of the richest in this country during the course of the pandemic so far, as millions of others have struggled and fallen into poverty – and that the number of billionaires in Britain is at an all-time high as wealth becomes ever more concentrated in the hands of a few.

And that increase in wealth for a tiny minority is to the detriment of the country as a whole. Trickett points out that the syphoning of wealth into private bank accounts, often offshore, sucks ‘untapped funds’ away from investment drives that could easily,

grow the economy by £220bn per year…

In Britain we don’t tax wealth. We tax earned income. Even with corporation tax we have reduced the tax load so that now it is only raising a quarter of the amount we raise from income tax. The accumulation of wealth is largely ignored. It’s time for this to change. In our late capitalist economy, the idea of touching capital itself is almost a sacrilegious thought.

It’s time we thought the unthinkable.

That is why I have published this report that proposes a radical overhaul of our tax system.

In total, approximately £490.9 billion could be raised in 5 years from the proposals within this report. That is £98.18 billion a year which could be used to build a dynamic green economy focussed on growth and investment rather than simply to tax and spend.

Instead, the Tories are looking to cut public spending and entrench inequality even further. The report’s executive summary explains:

As we approach the Autumn Statement, it looks likely that there will be more cuts to public services. In preparation for the Statement, the Chancellor has asked departments to find “at least 5 percent of savings and efficiencies from their day-to-day budgets”.

We have already seen the government raise national insurance -which they promised not to do in their election manifesto. However, this measure, along with real wage cuts, rising inflation and the crisis over energy prices is only going to hit those on lower and middle income earners. Pushing the burden of tax, and the cost of living, onto those on low and middle incomes is not only unjust it is also unnecessary.

This report shows that there is untapped wealth in this country which at present is lying unproductive. There has been a steady increase in inequality between the very wealthy and everyone else. The richest people have seen their wealth increase, by £538 billion between the financial crash and just before the start of covid. Even under covid, the richest 250 increased their wealth by another £106.7 billion.

The government has been focusing too much on taxing income – i.e the incomes of working and middle class people – yet they have largely ignored the accumulation of wealth. Remember, wealth is taxed at a much lower rate than income.

The report proposes four options for a wealth tax to be consulted on. We do not believe in top-down policy making so we have given options for a one off tax, annual tax and a hybrid tax targeting increases in wealth. It also proposes bringing dividends and capital gains in line with income tax. As well as closing the loopholes used to avoid or evade tax and tackling big companies hoarding cash in reserves.

The median revenue which could be raised by the four wealth tax options is£218.4 billion over 5 years. £37 billion over 5 years for bringing dividends into line with income tax and £90 billion over 5 years for levelling up Capital Gains Tax. This would total £345.4 billion in 5 years. This estimate is deliberately conservative to account for behavioural changes, admin costs, and other factors.

Closing tax avoidance loopholes will raise £7.6 billion a year and tackling tax evasion would raise £21.5 billion a year. A total of £29.1 billion a year, £145.5 billion in 5 years.

In total, approximately £490.9 billion could be raised in 5 years, that is £98.18 billion a year which could be used to build a dynamic green economy focussed on growth and investment rather than simply tax and spend.

The money could also be used to fund policies which would increase the spending power of working people, which is key to rebuilding the economy:

– 15% NHS pay increase (£5.1bn nominal cost)
– Making the £20 UC uplift permanent (£6bn)
– Plug the Social Care funding gap (£4.3bn)
– Local Council funding gap (£7.4bn)
– Reverse education funding cuts (£7 billion)
– Insulating all homes, reducing energy bills and cutting carbon emissions by 10%through
– “Warm Homes for All” (£250 billion)
– Building 150,000 houses a year (£75 billion)

This money could also fund big parts of our public services, including:

– The entire yearly education budget of
– £96.1 billion (including schools, colleges, etc);
– The entire Departmental Expenditure Limits of: Local Government, including housing; Transport, the Home Office and the DWP

In order to implement such radical policies, we have to tackle the power wealth wields over our political systems.

Unfortunately, wealth buys influence. In order to make taxing wealth workable, vested interests need to be taken out of our political structures and institutions.

Lastly, we do not want to tax people’s homes, pensions, savings or earnings.

Indeed, the aim of this report is to show that it is the wealthy who should be contributing more, not workers. The latter are already taxed at a much higher rate, and we expect to only tax the wealth of a small number of people in the top 1%.

Trickett’s willingness – unlike Keir Starmer or anyone on his front bench – to make the very winnable argument has attracted high-profile endorsements from the likes of former Labour leader Jeremy Corbyn (no stranger to winning the argument and bringing the public to his view), Ian Lavery, John McDonnell and more.

The report makes four recommendations, four ways in which its principles could be applied: a one-off wealth tax as proposed by the Wealth Commission; a similar tax but graduated on wealth above £2m; an annual wealth tax on a similar threshold; and a ‘hybrid wealth tax consisting of a one-off tax on accumulated wealth and then an annual tax on increases to that wealth.

The Wealth Commission gives an idea of the benefits achievable if the political will is there:

A well-designed one-off wealth tax would raise a total of £260 billion at a rate of 5% over £500,000 per individual or £80 billion at a rate of 5% over £2 million per individual, payable at 1% per year over five years. These estimates account for all relevant behavioural responses and administrative costs to government.

And Trickett adds four further recommendations:

  1. bring tax on dividends into line with income tax
  2. bringing capital gains tax into line with income tax
  3. closing tax loopholes
  4. a ‘use it or lose it’ policy to force companies sitting on huge cash reserves to put them to work

The full report can be downloaded here.

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  1. Starmer too busy attacking the SNP Leader rather than the Johnson. And ruling out any co-operation with a party that is way to the left of his …. but maybe that’s the point …. can’t have any part of the UK with actual left-wing policies?

    Again, we ask – WHO is Starmer working FOR?

    1. Joe, Max Headroom works for the Trilateral Commission, and always has done. How some people voted for him without doing their homework is beyond me. But they did, and here we now are. Labour is dead as a consequence.

      1. It’s similar to people being surprised how Johnson’s ‘Prime Ministership’ has turned out! The evidence was there right in front of our eyes well before the election of either. Although call me naive, but I confess I have been a little surprised at just how very low Starmer has sunk…

  2. Hilarious, if you think this bunch of MPs centred around Burgon, Trickett etc are capable of running an economy with any level of funding you are mad. We can look at examples all over the world not least of which is Venezuela, the much lauded poster boy of socialist reform and it’s collapse into complete corruption and ineptitude. In order to get the oil business to actually produce any they are privatising the firm they nationalised and getting rid of (with huge corrupt pay offs) the left wing politicians they put in to ‘run it’. Then closer to home we can see a Union run by an icon of the loony left build a hotel and conference centre which should have cost £10M and came in years late at over £80M! Piss up and Brewery come to mind. Don’t let dickheads with aspirations of a degree in Corbynomics anywhere the cheque book. Venezuela, Cuba, all Warsaw Pact countries pre 1990, Zimbabwe etc etc. The list goes on.

    1. Venezuela collapsed many times over with corruption and ineptitude when it was capitalist and right wing long before Hugo Chavez. In fact, Hugo Chavez took power in a coup *because* Venezuela was collapsing under corruption and ineptitude. Chavez did not cause the mess and, at worse, failed to sort it. Logically, the effects are not supposed to precede the cause.

      1. Venezuela under Chavez and Maduro, is one of the few countries in the world where the average weight of the citizens is declining and malnutrition is rearing its head. This is the country with the earths biggest oil reserves and enormously rich in other natural resources. The country was earning fortunes from oil (funding massive crackpot social programmes) and during this period Chavez packed the national oil company with his placemen and women. Of course production fell off a cliff and when the oil price declined chickens came home to roost. Meanwhile Chavez’s daughter accumulated over $2Billion in a Swiss account. Another example: after a few years Chavez’s Minister of Housing emigrated to Florida where he bought 20, million dollar plus properties and established 50 racehorses in training. Need I go on? Chavez and Maduro corruption and economic ‘reforms’ preceded the economic crisis.

      2. What a load of black propaganda and lies. Even Wikipedia won’t carry your long disproven nonsense.
        If María Gabriela Chávez Colmenares had this money which was alleged to be in American, Swiss bank accounts, it would have been confiscated by the Americans. You like to present yourself as intelligent PC, and the rest of us as stupid, yet here you are posting long disproven black propaganda.

    2. Same old, same old, anyone would think we were a world class economy the way you are talking, instead of having been reduced to a third rate economy that has had trade deficits averaging £4-£6 billion every month, month in, month out since Thatcher dismantled our manufacturing base.

      I’m absolutely positive you know you are spouting rubbish, so why do people like you peddle this kind of propaganda when you know the reasons behind it, all emanating from the good old United States of America.

      What is a problem for people like you though, is how far you think we have to fall before you accept that a government should do something.

      Whilst people like you peddle propaganda, our country has been going into reverse, because of Neo-Liberal dogma that says we can’t afford public services, but can bail out Banks and fund billionaire friends of the Tories without even blinking.

      Where do you think we got the money to do that?

      Any thinking person would be embarrassed knowing that, to pretend that we need to raise tax in order for a government to spend, when the evidence over the last 15 years proves beyond doubt that it is patently false.

      Please don’t refer to the national debt, as though we have to borrow our own money either, because the government issues bonds to cover the so called national debt, which is an expression of the nations savings, not debt. But just in case you think the government doesn’t have any money, (because it had to borrow it) how do you think they pay the interest on the bonds? I’ll tell you, they print it out of thin air, only its done electronically today on a computer keyboard, just like they do with 97% of all the money in circulation.

    3. Reply to Plain Citizen
      We are one of the richest countries in the world yet we have had people too sick to work dying of starvation due to benefit sanctions, we have people living their lives on the streets due to homelessness, we have food banks in every town and city which are struggling to keep up with demand due to increasing levels of poverty including in work poverty and every winter we have elderly people dying of hypothermia because they cannot afford to heat their homes. Our NHS is on the brinnot receiving thek and waiting lists are through the roof. Social care is a lottery with neglect and degradation the lot of many vulnerable people.
      You refer to a failed socialist government (the reasons for its failure are disputable but the major part played by American in it is not) and we have imported the very worst of the American way of life .
      The USA is a rich and powerful country where if you become seriously ill you are likely to lose everything, unless you are highly skilled you are likely to have to do 2 or 3 jobs just to survive ,where every city has a shanty town where the poor and homeless live in conditions you wouldn’t keep an animal in.
      Jon Trickett and Jeremy before him may not have got everything right but Jeremy got enough right for the rich and powerful to use their unlimited resources to set out to destroy him. I have no doubt the same will happen to Jon if his report is well received because these people including millionaires and multi millionaires associated with the Labour party such as Starmer Blair Hodge are happy with the status quo which protects their wealth and their interests at the expense of the people they claim to serve.

    4. Surely you have lost your way and were meaning to post on the Daily Mail? And you forgot to mention the not inconsiderable good ol’ USofA’s involvement prior to Chavez….

  3. Well Mr plain citizen..I think you must be having a bad day if you think Triketts solutions are loony left.All countries have to raise taxes for the well being of the wealth creators mainly the ordinary people.AT the moment most mps are more worried about looking at their allowancess and expenses in relation to the “Threat level” against mps which we are told is high by our trusty Home Secretary priti patel is at its highest level since the murder of whilst our Mps are looking out for themselves with a veiw to raising allowances and expenses you condemn Trickett for doing the job hes elected for and looking forward to extending taxation amongst tax exiles,various companys and creative accounting criminals who have taken the country for a ride.Seems to me you have more in common with the Westminster wine boys than Our mr Trickett ex plumber and typically of a plumber knows were the money 💰is.stashed.

  4. Some in the PLP are trying to exclude Jeremy Corbyn permanently.

    Sam Coates Sky
    There’s a plan afoot amongst some Labour MPs to exclude Jeremy Corbyn permanently from the Parliamentary Labour Party.
    They want to change Labour standing orders to allow MPs to decide Corbyn’s future. Then vote him out. This would spare Starmer from having to ‘own’ any decision
    7:00 pm · 20 Oct 2021·Twitter for iPhone

    Read the rest of thread

    1. Steve H
      It wouldn’t surprise me. Their hatred for Jeremy Corbyn and his Socialist beliefs defines them just as Starmer’s lack of principles defines him.

  5. I wonder how much “Plain Citizen” gets from Bellingcat et al. to spew his vicious right-wing nonsence on socialist websites such as Sqwawkbox?

    Many thanks, Ben Lapointe for pointing out the fact (surely known to PC) that Venezuela was collapsing under the weight of corruption and ineptitude long BEFORE Chavez took over. He could also have added that one of the main reasons why Chavez “failed to sort it” was the malign interference of Uncle Sam, sabotaging the economy, making Venezuela a ‘bete noir’ of the global economy no-one dare trade with for fear of retaliation by the USA. Furthermore, as we know, Venezuela’s imperialist northern neighbour also tried to impose a president of its own choice shortly after voters had gone to the polls re-electing Nicolas Maduro by a sizeable majority. But of course, this is the way the US has behaved in terms of global power dynamics since the end of WW2, with no-one but a few disparate ‘lefties’, daring to call out this outrageous behaviour.

    But getting back to Britain and Jon Trickett. His is an excellent contribution to the debate on public finance. However, I fully expect it to be kicked into the “long grass”. Who is going to run with this one, with Johnson’s huge Parliamentary majority, and a Labour Party dominated by Starmer’s right-wing goons? Time to found a new party of the people.

    I would have more faith in the Labour Party if I felt that Trickett had a cat’s chance in hell of becoming its next leader. But this is not going to happen, is it? By now the Labour right right have surely identified him as Corbyn Mark 2, and are taking steps to ensure that he never gets within sniffing distance of the leadership, especially with the changes to Parliamentary nomination thresholds Starmer and his acolytes managed to manoeuvre through during the recent conference.

    1. I agree with you Redveg about Jon’s chances of the leadership. I believe that if by some miracle he got the required nominations the PLP Southside MSM and the rest would do to him exactly what they did to Jeremy Corbyn and to a lesser extent to Ed Milliband before him. These people will never allow anyone with any sort of socialist credentials to lead the party and will do whatever it takes to marginalise the left and uphold their Tory lite policies.

  6. Such a great thread following a great piece.

    So, Mr.T was a plumber in his former life. My respect for him just climbed a little more. But I don’t see how he will achieve this.

    Once again, thank you for the links.

    I got into a Twitter spat with Bellingcats US chemical weapon expert. He was lying (too much to go into here). I later found out he was being paid $2 a word to post. High rate, but gives you an idea of what the “rewards” are.

    Let’s see how far you get under crippling sanctions.

    @all who also pointed out PCs bias

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