The rich keep getting richer

Posted by Ralph Blake on May 13, 2011. Filed under Economy. Posted with the tags:Economy
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In a year when the majority of the population are faced with a pay freeze the richest 1000 people in the country have seen their wealth rise, in 2010, by just over£60 billion (a billion is one thousand million) or 18% to a total of nearly £400 billion.

This wealth which includes land, property, art, race horses and shares in companies is underestimated because it excludes the money held in bank accounts (liquid cash). Of course much of the “money” they have made is not down to anything clever they have done in 2010 but simply from the rise in the stock market, expensive property and land that we have seen in 2010.

Some people point that we are all actually pretty wealthy – the average wealth of a UK household is around £200,000. But when you a looks little closer this is not really the case. 70% of this average wealth is the value of our houses but we don’t really own them as they have been bought with borrowed money the majority of which has not been repaid. The same applies to the cars we “own” and the balance is our pensions which is part of our deferred wages. When you look at net wealth which is our assets minus loans and take away the value of our pension you are left with an average figure of less than £5,000.

The wealth of the super-rich is net wealth – they don’t have loans on their assets. This is the wealth that we should be taxing to help reduce the public debt – after all it is the rich super wealthy that have benefited from the financial bubble economy not us. A 10% annual tax on their wealth would eliminate the need for any cuts when combined with taking North Sea Oil under public control and ownership. They would not have to even sell anything just use the billions they have hidden away in their secret bank accounts to pay the annual wealth tax.

Interesting in Scotland the second wealthiest person is Ian Wood who has estimated wealth of £1,119 million. Here is a man who has made his money out of the profits from North Sea Oil, money that really belongs to the people of Britain and Scotland. Money that should have been used for useful public services.

In Scotland one of the Scottish National Party (SNP)’s biggest backers, Brian Souter, has a personal fortune of £650 million made from privatising public transport. At a time when the SNP have frozen the council tax for five years leading to a real loss in local public spending of £240 million they are quite happy to take donations from Souter and keep transport private while freezing the wages of public sector workers in Scotland for two years. This is in effect a 10% pay cut with consumer price inflation running at over 5% a year.

There is the real chance that Scotland will become independent in the near future and if that is the case we have to make sure it is an independent republic. The two biggest land owners in Scotland are Dukes (Sutherland and Buccleuch) who are related to the Royal Family and their families were “given” their estates centuries ago. Their combined estates are worth £760 million.

Most of the wealth of the richest people is sitting idle doing nothing. Any consumption these people have is mainly luxury consumption providing few jobs or the creation of useful products and services. Their wealth does very little to benefit the economy and help create jobs and increases tax revenues.

On the other hand the majority of us are useful consumers buying things on mass that are basic necessities that create jobs and services and tax revenues. That’s why it is ludicrous to freeze our pay when the economy needs a boost and let the rich off tax free. It’s time we turned that on its head.

The views expressed are the author’s own and of no other person or organisation.