I spent nearly a decade advising the UK’s wealthiest families on how to preserve their wealth. As we witness extraordinary hikes in the cost of living, we need to talk about the elephant in the room: wealth inequality.
The UK is the fifth largest economy in the world. Yet, Britain is the second most unsustainable of 36 major economies, according to recent research by L’Atelier BNP Paribas, an independent research subsidiary of the French bank. Depressed salaries coupled with high costs of housing and childcare have been a persistent problem in the country over the last few decades, and now, according to its report, extreme wealth inequality is threatening to provoke civil unrest.
Families already under considerable financial strain are facing the prospect of a “cost-of-living tsunami” as prices of everyday groceries rise by 50%. Concurrently, billionaire wealth has soared over the past year. The UK now has a record total of 177 billionaires, according to the Sunday Times rich list 2022.
I have a particular sensitivity about platforming extreme wealth without critique, owing to my past life as a private wealth solicitor. An intellectually stimulating practice area, I had intended to continue on my career trajectory indefinitely, until one day a friend told me that there were more food banks than McDonald’s branches in the UK. I was horrified to discover the gap between rich and poor was so extreme. To my mind, this represents something incredibly disturbing about the economic health of this country.
I had already started to reflect on the critical role of tax for investment in public services and felt an increasing level of discomfort regarding wealth disparities, as well as the existence of harmful narratives around tax. Somewhat inconveniently, giving advice on how to “mitigate” taxes on wealth was a fundamental aspect of my day-to-day role. Once I realised that I was in a state of cognitive dissonance on the matter of wealth inequality, it became clear that I was part of the problem. As an actor in the global economy, I was operating in a system that exists predominantly to preserve and accumulate assets, as well as minimise taxes for the wealthy. There had to be some relationship between my professional role and the growing levels of wealth concentration that were being revealed to me.
I arrived at the conclusion that, in its current form, our economic system perpetuates wealth inequality by design. Economic gains are concentrated among a very small proportion of the population and political choices have been made to avoid redistributing these gains more equitably. After a dramatic change in direction, I now work with a growing number of wealth holders who recognise that wealth inequality is destabilising our economy and endangering the fabric of our society. They are advocating for higher taxes on wealth so that ordinary families and low-paid workers are not saddled with a disproportionate financial burden.
A boom in billionaire wealth should be no cause for celebration at a time when many people in the country cannot afford to heat their homes and put food on the table. While inflation, which effectively becomes a tax on ordinary people, spirals out of control, the wealthiest remain largely shielded from tax. Many of those named in the top 10 on the Sunday Times rich list do not feature on the Sunday Times tax list, a list of the 50 biggest taxpayers in the UK. Contrary to what this government claims, the impact of the increase in living costs is not attributable to inflation only, and it is revealing the true extent of a serious economic imbalance that has existed for a long time.
Although it is encouraging to see the implementation of a temporary windfall tax as part of the £15bn cost-of-living support package targeting low-income families, the measures do not provide an adequate long-term solution for our most vulnerable. What is urgently required alongside these measures is a fundamental redesign of our tax system such that wealth is taxed more effectively and those with the most resources contribute their fair share.
We need to start telling the whole story about the economy and why the sudden increase in the cost of living is having such a disastrous impact on ordinary people. Wealth is not created in a vacuum and choices around how we raise revenue are political. We need to have an honest conversation about how extreme wealth is generated and amassed, and force this government to acknowledge that the most equitable way of redistributing that wealth is through a fair system of progressive taxation.