And the rich just keep on getting richer

Feb 18 2008 by Peter Elson, Liverpool Daily Post

AS MOST of us busily toil away in the termite hill batting away the next bill, there’s little time to wonder about who really has most of the money.

It’s probably wise to avoid such questions for want of lapsing into despair, except when those annual rich lists appear and you can’t resist pondering the names.

Apart from a few obvious examples like the Queen, Paul McCartney and JK Rowling, how did they get their mitts on so much moolah?

I don’t resent people making money. What I do resent is their tax avoidance scams, while you and I shoulder the burden of the NHS and the defence budget. The Queen does what is expected well, but it’s also better that now she pays tax, too.

Yet, last year, the 54 billionaires who work in Britain paid a piffling £15m tax on earnings of around £126bn.

Two years ago, Philip Green, head honcho of BHS, Topshop and other high street emporia, paid himself £1.2bn – yes, over one billion pounds – via his “offshore” wife.

Some 4,000 City of London bankers and financiers received bonuses of £1m or higher and almost certainly didn’t shell out 40% tax like the remainder of the country’s workforce.

We had plutocrats of yesteryear a-plenty on Merseyside, with names that still resonate today: the Ismays, Vesteys and Barclay-Walkers. They generously stumped up for the likes of Wallasey’s Mariners’ Park, Liverpool Cathedral and the Walker Art Gallery, leaving the place far better than they found it.

In contrast, today’s super-rich are now clustered in London and do practically nothing personally in return for the greater good of society through charities, public works and other schemes, or indirectly through taxation.

There’s an earnings indicator, called the Gini co-efficient, which measures the gap between the very rich and poor. A process started by Margaret Thatcher was sharply accelerated by Tony Blair.

During the last decade of Labour, average earnings doubled (I think that passed me by, too), yet those of the average boss trebled.

Like me, you’re probably old enough to remember when the TUC bosses used to saunter in and out of Downing Street during Labour tenures to enjoy sandwiches and pints with the PM and cabinet.

Not any more.

As Robert Peston puts it in his new book, Who Runs Britain? The Super-rich and How They’re Changing Their Lives, the New Labour cabinet has “an almost neurotic determination never to be associated with the anti-business image of old Labour.”

As a result, instead of the Union of Amalgamated Hole-borers’ delegate getting ale and sympathy on the No 10 sofa, it’s our new lords of the financial universe who waltz in with a check-list of their demands. And they invariably get it.

Peston explains how money poured into the City of London through smart financiers. As I understand it, their companies borrowed from Arab and Russian liquid cash funds to buy other companies with tax-free debt, while taking their cut off-shore.

Apart from the monetary manipulation, the financiers’ cleverness was in repackaging their greed as a benefit for British commerce.

By paying a tax rate of 10% or nothing, the “trickle-down” would benefit us all.

When Gordon Brown reduced capital gains taxes from 40% to 18%, these corporate sharks, says Peston, “could not believe their luck”. Thus, the City of London became an off-shore tax haven running a business about money.

The faceless suits behind this have been allowed to run off with Britain’s pension funds (thanks for that, too, Gordon Brown) and Peston writes that companies “no longer ask what it will cost them to provide a comfortable retirement for their staff”, but instead learn how to ditch any such responsibility.

But there is one retired worker who, like his political colleagues, is not faced with paltry pension provision for his retirement.

He is also now heavily bankrolled by those very financial firms he unleashed on our economy: step forward multi-millionaire Tony Blair.

peter.elson@dailypost.co.uk