'Close tax loophole to help poor children'

Union leaders want the Prime Minister to close tax "loopholes" for Britain's super-rich. They say the move could raise £4bn, which could be used to lift thousands of children out of poverty.

The TUC warned yesterday that high earners "float free from society" and contribute to the growing gap between rich and poor in Britain. Brendan Barber, the TUC general secretary, called on Gordon Brown to end non-domiciliary status, which benefits foreign business people living in Britain, and demanded that he abolish controversial tax reliefs for private equity firms.

He warned that bonuses and huge salaries paid to a small group of top earners distorted the housing market and helped fuel the breakdown of society.

"Today, a significant group of super-rich float free from the rest of society and think that tax is for the little people," he said. "Today the rest of society pays a heavy price for the wealth gap, whether middle, low or no income. The super-rich distort the housing market, with house prices following top pay not average pay.

"The result is that many would-be first-time buyers and vital public service workers can't get a foot on the housing ladder and even chronic housing need is no guarantee of decent social housing," he said.

"The gap harms social cohesion and, without joining the moral panic about crime rates in the UK, it's noticeable that many countries with a fairer distribution of incomes have lower crime rates."

Mr Barber launched a report warning that child poverty costs £40bn and called for action to use the money raised by closing tax loopholes to fund the Government's pledge to pull children out of poverty.

His attack on the super-rich follows union campaigns against private equity firms and the tax breaks they enjoy. The TUC claimed that Britain was now the third most unequal country in Europe, with the top 1 per cent of earners owning 21 per cent of the nation's wealth. Britain also had one of Europe's highest rates of child poverty.

Mr Barber said he wanted "a generation-long commitment to narrow the gap between the super-rich and the rest of us, and to lift every child out of poverty".