Labour MP: Why this Budget must tax the rich - Liam Byrne
The big picture
Liam Byrne is the Labour MP for Birmingham Hodge Hill and Solihull North. He’s just written a book, The Inequality of Wealth: Why it Matters and How to Fix it.
He says that most Labour MPs have gone through what he calls the ABC of UK politics: Austerity, then Brexit, then Chaos starting with Liz Truss. Which I just have to mention because it makes me wanna laugh and cry - the last 15 years have been nuts.
He argues that something profound has happened since 2010. He says that the top 1% have multiplied their wealth by 31 times more than anyone else.
He also says the recent success of the Reform UK party in really deprived areas tells us something - people are deeply unhappy with inequality, the lack of opportunity, financial security etc. and they are voting for change.
He also argues that this was one of the key drivers for the Brexit vote - it was a protest vote, a vote for change.
But it goes deeper than the last 15 years or so. He says that anyone who started working after the 1970s - certainly after the 1980s - has found it increasingly tough to find economic security and prosperity because they’ve been competing in a global labour market. Essentially global competition has kept a cap on local wages because UK companies could go abroad.
Most of the wealth in the last few decades has been created in London and the South East. And it has, of course, become increasingly difficult for young people to buy assets like property.
This was then exacerbated by the ABC of British Politics which put a trillion pounds into the UK monetary system through quantitive easing - and most of that ultimately got gobbled up by the rich.
In writing his book he found that when people become really successful financially, their brain chemistry changes. They become more selfish rather than selfless. It sounds a bit bonkers but sadly not that surprising.
If we don’t sort out inequality and help our youth now, then Liam says we are going to be royally screwed.
Influence of bad money on UK politics
Liam’s never seen the kind of money that we now have washing around Westminster.
He says the way that money works in UK politics is quite subtle, like pumping money into think tanks, TV channels, or leadership campaigns.
Take think tanks, for example. They don’t declare where their money comes from, but they influence media and politics, so the question is - who’s influencing our politics?
Because of this evolution in political spending, he has become a fan of state-funding political parties, like they do in Germany. This helps prevent wealthy elites from buying influence in politics.
Money follows power, and sadly, he says there’s now a playbook for nefarious characters like Russian oligarchs to clean up their images through UK institutions. One of the tools they use is to donate to and get involved with UK politics.
So what’s his plan to fix inequality?
Well, to be fair to him, he was quite open in saying that he wasn't sure if this is the best idea - but he’s yet to hear a better one.
He argues that if there were a wealth tax of 1% on the ‘super rich’ - people with assets of at least £10m - of whom there are 22,000 people in the UK, then you could quite quickly build a sovereign wealth fund of £200b he says (in 4/5 years).
To get to that number, he suggests putting together state assets we already own like the Crown Estate, equalising capitalise gains, changing income tax, asking people to pay National Insurance on investment income, closing some Inheritance Tax loopholes etc.
Once you’ve built this pot of £200b, then he suggests paying a one-off dividend of £10k to every 25 year old, which is the average shortfall to buy a house.
His rationale is that to fix the housing crisis, it’s not just about building more houses. People need the capital to buy these assets - and that’s what his plan seeks to fix.
This sovereign wealth fund should be independent of government, obvs.
