As Rishi Sunak and the Tories plan new ways to put the financial burden of Covid on the shoulders of working-class people, new research has shown the scale of wealth that still exists in this country, wealth that could be used to pay all the contingency costs of the pandemic if only a ‘wealth tax’ were introduced.
According to research and calculations by Warwick University and the London School of Economics, funded by the Economic and Social Research Council, and revealed in the Financial Times (December 9), just a single one-off hit of 5 per cent of their wealth from the very top layer of the population would raise a staggering £262bn.
The calculations were based on applying the tax to individuals with net assets of over half a million pounds and it would cover eight million UK residents, including ‘non-doms’ – UK citizens whose permanent domicile is outside the UK. Couples would be evaluated separately, so their combined worth would need to exceed a million pound before paying.
Zero chance of a wealth tax
An alternative calculation put forward from their research was for a threshold of £2m per person, or £4m per household. Even this, they estimate, would affect just over 600,000 people, one per cent of the population, and could raise £80bn. The big majority of those who would be included in this tax, whichever threshold is applied, would be Tory-voters and for that reason alone there is zero chance of it ever being introduced by the Johnson government.
But the research is a useful indicator of the huge reservoir of wealth that is still there, in the upper rungs of society, at a time when the government is pondering over what has been described as a massive black hole in the government’s account. It is a reminder, at a time when sections of the British population are becoming increasingly destitute, that there is wealth a-plenty, if you know where to look for it.
Despite the affluence at the top, on the bottom rungs on the social ladder there is growing poverty. According to research by the Joseph Rowntree Foundation, serious levels of poverty are rapidly growing, both in scale and intensity. “Since 2017,” they say, “many more households, including families with children, have been pushed to the brink.”
Squeeze on welfare benefits
One of the main reasons for the increase in poverty has been the squeeze by the Tories on benefits payments in the last decade, alongside serious flaws in the Universal Credit system, cuts in disability benefits and a harsh and unsympathetic atmosphere around the whole question of benefit claiming.
The JRF study defines ‘destitution’ as “being unable to afford two or more of shelter, food, heating, lighting, weather-appropriate clothing or basic toiletries over the past month, or a weekly income after housing costs of or below £70 for a single adult or £145 for a couple with two children.” According to their estimates, about a million households in 2019 experienced destitution, up 35 per cent in two years and now affecting 2.4 million people. There can be no doubt that the financial hardships that have come as a result of Covid, including tens of thousands of job losses, will add considerably to that total.
Basic necessities of life
It is a scandal that in one of the richest countries of the world, where the top layers in society have more money than they know what to do with, that millions are forced to go without the basic necessities of life. We expect no better from this cabinet of Tory millionaires and multi-millionaires, but the question for us is, what are the Labour leadership doing about this?
Although back in July, Keir Starmer said that the government should “look at the idea of a wealth tax”, he has since gone back on the idea, suggesting that such a tax is not a good idea with such a ‘weak’ economy. In fact, Labour under Starmer is carefully avoiding any policy commitments so far ahead (they say) of the next general election.
Even the spokesperson for Oxfam, Rebecca Gowland, is far to the left of the Labour leadership. “It is morally repugnant,” she said, “to allow the poorest people to continue to pay the price for the crisis, when it is clear that a fair tax on the richest could make such a difference,” Oxfam is far more in tune with public opinion than the Labour front bench. As a recent poll by YouGov showed in November, 61 per cent of people thought that “the level of taxes paid by the richest people in Britain” was too low.
Rachel Reeves ‘tougher than Tories’ on benefits
And we get some idea of where the Labour front bench stands on welfare from a speech by Rachel Reeves in 2013, when, as a Shadow minister, she promised to be “tougher than the Tories”, when it comes to welfare benefits. Reeves is currently Shadow Chancellor of the Duchy of Lancaster, and, being a former Bank of England economist, she is no doubt at the heart of Starmer’s economic policy team. According to the Guardian, in October 2013, she made it clear that she thought a Labour government should be tougher than the Tories on welfare.
“Nobody should be under any illusions that they are going to be able to live a life on benefits under a Labour government,” she said. “If you can work you should be working, and under our compulsory jobs guarantee if you refuse that job you forgo your benefits, and that is really important.”
“It is not an either/or question,” she added, “We would be tougher [than the Conservatives]. If they don’t take it [the offer of a job] they will forfeit their benefit...”
Wealth tax is not a solution
We know the Tories are utterly out of touch with the lives of the big majority of the population and haven’t got an inkling of what it is like to be financially insecure and living on the edge of the precipice. But unless there has been a sea-change in the attitudes of New Labour politicians in recent years – and we see no signs of it – then Labour’s front bench is offering very little.
It is hardly surprising, given the obscene disparity in wealth and income between rich and poor, that a wealth tax is popular among ordinary people. It is something any socialist government would have to address. But for socialists a wealth tax is not in and of itself a solution. In any case, within the rules of the capitalist system, the rich have a thousand and one ways of dodging taxes or hiding away wealth. The key is which economic system prevails, in other words, who owns and controls the economy; in other words, is the economy planned, or are all the key decisions made on the basis of greed and profit?
Printed on the old Labour Party membership card – before it was changed by New Labour – was Clause IV, which talked about “the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service”. It represented, in a condensed form, the socialist aspirations of the Party.
Main levers of the economy
It was a recognition that the only guarantee there can be that everyone in the country can have, in the words of the Rowntree Foundation, decent “shelter, food, heating, lighting, weather-appropriate clothing or basic toiletries” – as basic human rights – is for the main levers of the economy to be owned in common and democratically managed for the benefit of all. If they had been owned by the state, for example, Debenhams and Arcadia would not have been looted to the tune of £2bn in the last two decades and would not be shedding tens of thousands of jobs.
In the coming months and years, the Tories will find that there is a growing groundswell of anger and opposition to their policy of impoverishment of the many in the interests of the few. That is a given. It will happen.
But Starmer’s New Labour – because that is what it is, despite its thin ‘New Leadership’ veneer – offers nothing. We are not living in the early 1990s, when New Labour was born, but in a totally different period, when life, livelihoods and all the ‘norms’ of society are hanging precariously by a thread. The Labour leadership has aroused a storm of protest and discontent within the party by its feeble opposition to the chaos and corruption of Johnson’s government. But more than anything, it will be the utter failure of Starmer’s version of New Labour to offer any way forward for working class people that will ultimately be its undoing.
December 10, 2020
