Billionaire Britain: Just how little the rich contribute would shock most people

We are living in an economy increasingly geared to catering to the wealthy
  • @lindamcquaig

The case for imposing austerity on ordinary Britons – already as flimsy as Lululemon’s latest yoga pant - got a whole lot flimsier last weekend with the publication of the Sunday Times Rich List.

The annual release of the list presumably allows ordinary Britons a moment’s diversion from their struggling lives to celebrate the richest living among them – a throng of mostly foreign billionaires whose only obvious attachment to Britain is the exceptionally low tax rates the UK offers wealthy foreigners.

Most Britons would probably be surprised to learn that the Rich List actually downplays the size of the fortunes of Britain’s 200 richest people, who have a combined wealth of £318 billion this year.

Since the Rich List is based on publicly available data – and therefore doesn’t count most of the assets hidden in tax havens (estimated to be some £32 trillion worldwide) – it vastly understates the fortunes of Britain’s wealthiest.

Interestingly, the man who tops this year’s list, Russian tycoon Alisher Usmanov, worth £13.3 billion, recently consolidated his assets in the British Virgin Islands – one of the tax havens at the epicentre of the spectacular recent release of secret documents detailing offshore accounts held by thousands of individuals and corporations around the world.

While the Rich List might stir resentment in some disgruntled types, others - including Rich List author Philip Beresford - see it as a healthy reminder of the virtues of Thatcherism.

Beresford told the BBC that while the list had been mostly made up of landed aristocrats when it was launched in 1989, today it is dominated by “self-made” billionaires – a development he attributed to Thatcher’s legacy.

This seems like a bit of a stretch. Certainly the list provides little support for the contention that Thatcherism created an entrepreneurial culture in Britain, since virtually all the big dogs made their fortunes elsewhere, notably in Russia, India and Pakistan. Usmanov, for instance, acquired his key metal and mining assets in Russia after its frenzied privatization binge.

Indeed, far from being “wealth creators” in today’s alleged “meritocracy,” the Rich List abounds with characters who’ve mostly managed to capture wealth already created by others.

The highest-ranking UK-born rich person is the Duke of Westminster, whose vast fortune consists of inherited landholdings, and whose family is well known in international tax circles for a 1936 ruling by the House of Lords which allowed the then-duke, a notorious Nazi sympathizer, to deduct the cost of his personal servants through the tricky use of a tax device normally used for making charitable contributions.

Beresford and others seem keen not only to defend Thatcherism but also Britain’s bizarre “non-dom” system, which offers enormous tax-avoidance privileges today to wealthy foreigners – without any evident advantages for Britain.

Prime Minister David Cameron has made a point of wooing the rich from other countries, although exactly why isn’t clear, since the non-dom system ensures these foreigners will contribute little in taxes.

Just how little they contribute would probably shock most Britons. But unlike the US, where the government discloses annual data showing the actual taxes paid (in aggregate) by the richest 400 Americans, such data is a carefully guarded secret in Britain.

Perhaps Cameron is simply dazzled by the prospect of luring the likes of fading film legend (and French tax exile) Gérard Depardieu.

The glamour factor – and sky-high real estate prices that render much of London uninhabitable by ordinary people – are inevitable outcomes of attracting a crowd of billionaires to the UK.

Beyond that, the only known impact is an economy increasingly geared to catering to the wealthy.

Indeed, Thatcher’s true legacy for Britain may be less a culture of entrepreneurs and more a culture of servers. Certainly the presence of a very wealthy elite has meant lots of work for chauffeurs, gardeners, tax lawyers, accountants, foxhound breeders, cosmetic surgeons, butlers and others particularly adept at servicing the rich.

Linda McQuaig and Neil Brooks are authors of The Trouble with Billionaires: How the Super-Rich Hijacked the World and How We Can Take It Back