The news that the collective wealth of the 1,000 richest people in the UK rose to £335.5 billion over the past year, provides ample food for thought at the start of Poverty and Homelessness Action Week (30/1).
The wealth of this exclusive group increased over the past 12 months by 29 per cent from its previous level of £258.24 billion. Despite the worsening economic situation, this marks the largest annual increase in the wealth of this rich elite.
Some 53 of the richest 1,000 are billionaires. The level of wealth accruing to this elite has increased incredibly over the past 13 years, going from £98.99 billion in 1997 to £335.5 billion today.
What these figures denote is an increasingly unequal society that has enriched the already mega-wealthy at the cost of the mass of people. This ongoing impoverishment is confirmed with a look at how the amount of gross domestic product (GDP) dedicated to wages and salaries has declined over the past three decades. So while in 1976, wages and salaries accounted for 65.1 per cent of GDP, this had reduced to 52.6 per cent by 1996. The election of the Labour Government in 1997 did lead to some rebalancing of the wealth indices, with the introduction of the minimum wage and improvements in the public sector. This led to wages and salaries accounting for 55 per cent of GDP. However, this was also the period when the wealth of the richest 1,000 increased threefold.
Labour MP Austin Mitchell has suggested that the richest 1,000 could easily give up 25 per cent of their wealth, providing £84 billion toward deficit reduction. “This redistribution would reduce and probably eliminate the need for draconian cuts,” said Mr Mitchell.
When other factors like the very low level of tax that many of these billionaires and millionaires pay in the UK, despite having their businesses based here, are taken into account the argument becomes all the more attractive.
The whole injustice of wealth distribution is a subject in urgent need of debate.
Never has the slogan “we’re all in it together” been less appropriately applied than is the case of the Coalition Government’s plans to reduce the deficit.
The focus has been on the need to cut public services, freeze public sector workers pay, cut jobs and reduce pension rights. The concept known as the Big Society (BS) has become the backdrop for much of this austerity package. While the BS offers an opportunity to return some power to local level, those powers when coupled with funding reductions make the concept a somewhat empty vassal.
What the aforementioned figures reveal is a society skewed horribly in favour of the rich and against the poor. There is no way that such a distribution of wealth can be said to favour the common good.
It has been extraordinary to witness the way that so many individuals and institutions, including the Church, have gone along with the government mood music of we’re all in it together. Where has the argument for higher taxation on those who earn the most been heard? It is an argument that Church leaders need to be making, rather than simply looking for crumbs to fall from the Big Society table.
Mr Mitchell’s idea of taking 25 per cent of the wealth of the richest 1,000 would be likely to prove difficult to implement but higher taxation on those who have done best out of this wholly inequitable division of wealth in our society makes perfect sense.
Back in 1976 when salaries and wages made up a greater proportion of GDP, levels of taxation were far higher on the rich. Tax rates above 80 per cent plus on those earning the most were not uncommon. The society was more equal and cohesive as a result. It has only been the tax cutting mantra, that took root under the Thatcher governments and was then continued by Labour, that led to the low level taxation regime we have today.
Yet this mantra has no logic. If the country wants better services then they have to be paid for. It is not possible to have something for nothing. And those who earn the most - and usually have got most out of the system - should pay more tax. The same argument applies to funding the deficit.
It is difficult to understand why the Church has not made the argument for higher taxation, rather than remaining silent. The Church is not a political party seeking election, so why not make the argument for higher taxes on the rich in the interests of the common good?