The Big Question: Why do the world's super-rich live in Britain - and do we want them here?

Share


How rich is rich nowadays?

There are many gradations of rich, for not only are the rich not like us, in Scott Fitzgerald's phrase - they are not like each other. They come from different countries, they make their money in different ways and they spend it in different ways.

The "wealth management industry" has divided them into four grades of wealth. At the top are the super-rich, the top 1,000 in Britain. The Sunday Times Rich List says these people have a total wealth of £300bn. To scrape into the club you must have assets of £60m and each year the bar is raised higher: a year ago £50m got you in. But even that grade is not the top of the tree, for the super-super-rich are as different from the £60m crew as those people are from the £5m crew.

Next are the ultra-high net-worth individuals. There are 135,000 people in this category according to Tulip Financial Research - people with a clear £6.6m (or $10m), not counting their homes. Below that come the high-net-worth people, with a clear £660,000 (or $1m), and finally at the bottom are the mass affluent, people who have at least £150,000 to invest over and above the value of their homes. Most professional Britons would enter that category in middle age, and it is 4 per cent of the population.

Where do these super-rich come from?

At the bottom end they are mainly British, at the top almost entirely foreign. Thus out of the top 10 people in London and the South-east, only one - Sir Richard Branson - is British. Of the top 10 richest in Britain, as revealed in the latest Sunday Times survey, only three are British. The three richest - Lakshmi Mittal, Roman Abramovich and Hans Rausing - are Indian, Russian and Swedish.

At the top the rich fall into two main groups: global entrepreneurs who chose to relocate to Britain and tax exiles from continental Europe, in particular Scandinavia. Further down there are larger numbers of people who have come to London to make money, mostly in financial services, including many Americans and Britons.

What attracts them to Britain?

Initially mostly tax. It is all to do with the distinction between residence and domicile. Britain has an unusually favourable tax regime for people who come to live here. We Britons are taxed on our worldwide income, so if a Briton has property abroad, any rents have to be declared and tax paid. Foreigners, however, are taxed only on the money they bring to Britain and spend here.

Many of the richest Britons, by contrast, technically live abroad (typically in a tax haven such as Monaco or the Channel Islands) and are just visitors when they come here.

So is it just tax?

No, it is also job opportunities, services and political stability. There are more jobs in London paying more than £1m a year after tax than in the whole of the rest of Europe put together. Most of these are in financial services. Many young Europeans want a spell in the UK, partly for experience, partly to build up capital. Some European companies even agree to post their brightest young people to London to give them the opportunity to make money, before transferring them back. The mass of rich and quite rich has led to a surge in services for them, of which the most important are legal and financial, but which also includes restaurants and entertainment and schools for children and access to the UK university system.

Political stability is also important, particularly for migrants from Asia and the Middle East. Perceived hostility in the US towards Middle Eastern migrants has probably raised UK attractiveness vis-à-vis the US.

What do we get out of it?

Three things. First we get jobs. Wealth demands services at all levels, from housekeeping to investment management. That economic activity spreads outwards through the economy and is one of the reasons why inner London is Europe's wealthiest region. Thanks to the growth of service industries and international finance, the UK is now the second-richest country of the G7 developed nations, second only to the US, as measured by gross national income per head.

Second, we get skills. The mass of talented people should help secure this position as a top-end global service provider for another generation.

Third, we get influence. Because global talent chooses to locate in the United Kingdom for a period, Britain will have people who know it (and hopefully like it) in key positions around the world in the future.

But there must be a downside?

There is. We have become a less equal nation and that might increase social strains. If a billionaire moves from, say, Sweden to the UK, the UK has a less equal income distribution and Sweden has a more equal one. There are costs to that, for not only does it increase inequality within Britain as a whole - which has already been rising thanks to demand for higher skills - it also increases regional pressures.

The South-east is growing more quickly and its population rising faster than the rest of the UK, and that creates a challenge for government - how best can it lift the lagging regions? A visible effect of this migration of wealthy people has been the rise in property prices in the South-east, with the danger being that British people are priced out of living in areas popular with foreigners. On the other hand, there does not seem to be much anti-immigration pressure against the rich: insofar as there is anti-immigration concern it seems to be directed more against poor migrants.

Isn't there a danger that they might just leave and take their money with them?

Yes. You could envisage circumstances in which Britain could become hostile to wealth in general and foreign wealth in particular. But were that to happen the problem would be much bigger than some rich foreigners leaving. A lot of rich (or should we say mass-affluent) Britons might well choose to leave as well.

The ultimate rich list: our 10 wealthiest people

1. Lakshmi Mittal, Indian, £14.88bn

Steel magnate, born in Rajasthan, now residing in Kensington Palace Gardens, London.

2. Roman & Irina Abramovich, Russian, £10.80bn

Born in 1966 in Saratov, Russia, Roman began his commercial life in his home country in the 1980s when reforms made private enterprise possible. Now an oil billionaire, he is best known for owning Chelsea football club, which he bought in June, 2003.

3. Duke of Westminster, British, £6.60bn

Known for his Mayfair properties, but also has extensive interests abroad.

4. Hans Rausing, Swedish, £4.95bn

Sussex-based packaging manufacturer, has an honorary knighthood for his charity work.

5. Philip & Tina Green, British, £4.90bn

Both are involved in running a retail empire that includes the BHS department stores.

6. Leonard Blavatnik, Russian, £4.67bn

Oil, plastics and metals oligarch who set up TNK-BP, Russia's second-largest oil firm.

7. Sri & Gopi Hinduja, Indian, £3.6bn

Oil, banking, telecommunications and trucking concerns in India, Europe and Middle East.

8. Simon & David Reuben, British, £3.25bn

Property and metal-processing magnates who were born in Bombay.

9. Sir Richard Branson, British, £3.06bn

Owner of Virgin brand that includes trains, planes, mobile phones and music interests.

10. John Fredriksen, Norwegian, £2.86bn

An oil tanker- and-shipping tycoon. The owner of the world's largest oil tanker fleet.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Reach Volunteering: Financial Trustee and Company Secretary

Voluntary Only - Expenses Reimbursed: Reach Volunteering: A trustee (company d...

Recruitment Genius: Senior Project Manager

£45000 - £65000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Shopfitter

Negotiable: Recruitment Genius: This is an opportunity to join a successful an...

Recruitment Genius: Digital Sales Account Manager

£25000 - £30000 per annum: Recruitment Genius: A Digital Sales Account Manager...

Day In a Page

Read Next
Emily Thornberry  

Left-leaning patriots unite! Let's get straight about Ukip

Katy Guest
Gary Catona has worked with a number of high profile singers including Stevie Wonder, pictured  

High pitch: In search of the next Whitney

Simmy Richman
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin