date: 3 September 2008

embargo: 00.01hrs Sunday 7 September 2008

Today's super-rich are wealthier than in Victorian times, says TUC

The recent growth of the super-rich has overturned a century of progress towards greater equality between rich and poor - causing immense harm to the rest of the economy and society, according to a new pamphlet published today (Sunday) by the TUC.

Later today in an economic statement published on the eve of the 140^th Congress in Brighton, the TUC will call for all those earning more than £100,000 a year to pay new minimum tax rates.

The TUCpamphlet - Do the super rich matter? - is authored by Stewart Lansley, who has written extensively on the UK's super-rich, and is the fourth title in the TUC's Touchstone series of pamphlets.

The pamphlet shows that the wealthiest few in the UK now own as much, if not more, than their equivalents did at the end of the nineteenth century. This surge in wealth at the top has overturned the advances made in a century that saw the gap between rich and poor narrow as a result of progressive taxation, the growth of trade unions and regulation.

Do the super rich matter? calls for a series of policies to reverse the trend including a new minimum tax rate for those earning more than £100,000 - a call which will be backed in a TUC statement put forward for endorsement by its Congress which opens tomorrow.

The TUC will say that a minimum rate of tax - which should start at 32 per cent for those earning between £100,000 and £150,000 and rise to 40 per cent on salaries of more than £200,000 - would not increase any tax rates, but would limit the tax reliefs and tax avoidance measures open to the well-off and could raise £5 billion.

The pamphlet lists the richest person to die in each decade from the 1850s onwards and finds that none is richer than the wealthiest person in Britain today, Lakshmi Mittel, estimated to be worth more than £27 billion. The richest person to die in the latter half of the nineteenth century - the Duke of Westminster in 1899 - was worth the equivalent of £10.6 billion in 2008 (after adjusting for economic growth and inflation).

New analysis in the pamphlet shows that individuals needed to be worth £50 million to be among the UK's 200 wealthiest people in 1990, but today they need to be worth more than £400 million - an eightfold increase.

This might be less objectionable, says the TUC, if the increase came from the creation of new wealth and the rise to the top of talented risk-takers in a meritocratic economy, but the pamphlet shows that:

• The main source of the new wealth has been the growing power of 'financialisation'. The most obvious example of this is the huge profits made from selling sub-prime mortgages wrapped up in exotic financial instruments. These turned out to be near worthless and led, not just to many losing their homes, but to the credit crunch which is now causing world economic slowdown.
• Soaring corporate pay has not secured any significant improvement in the nation's productivity and innovation record. Today's new rich tend not to have made their money by building firms and products but to be those who have taken 'advantage of today's more pro-rich culture to grab a larger slice of the cake by taking giant risks with other people's money and ensuring someone else pays when they call it wrong'.
• If the celebrity rich are excluded, most of today's super-rich come from relatively privileged backgrounds.

TUC General Secretary Brendan Barber said: 'The evidence assembled here is conclusive proof that the growth of the super-rich is not just socially divisive and morally objectionable, but deeply damaging for the rest of the economy. The super-rich have not created much in the way of extra wealth - they have mostly taken it from the rest of us. It's Robin Hood in reverse.

'Those suffering from the impact of the credit crunch should know that it was caused by the super-rich taking risks with other people's money, pocketing the profits and passing on the inevitable losses.

'And any would-be first-time buyers should know who to blame for first the house price bubble and now the difficulties in getting a mortgage.

'It is time that the super-rich started to pay a fair rate of tax. There is no point in putting up tax rates that they can avoid. The 54 billionaires living in Britain paid £14.7m in tax on their £126bn combined fortunes in 2006 - an average rate of a little over 0.1 per cent. Our modest proposal for a minimum rate of tax will simplify the tax system and raise £5 billion.'

The super rich by decade

NOTES TO EDITORS:

- Stewart Lansley is the author of 'Rich Britain, The Rise and Rise of the Super-Wealthy', 'Politico's, 2006' and joint author of 'Top Man, How Philip Green Built His High Street Empire', (Aurum, 2006). His book 'Londongrad' on the story of the UK-based Russian oligarchs will be published in 2009.

- Do the super rich matter? can be downloaded from 00.01hrs Sunday 7 September at www.tuc.org.uk/extras/touchstonesuperrich.pdf. Embargoed copies for journalists are available from the TUC press office. Hard copies cost £10 and can be purchased from www.tuc.org.uk/publications It is the fourth pamphlet to be published in the Touchstone series which is designed to inject a trade union perspective into serious debate about public policy issues.

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

- Congress 2008 will be held at the Brighton Centre, Brighton from Monday 8 September to Thursday 11 September. The deadline for free media passes for Congress closed at noon on Tuesday 2 September. All applications will be now processed in Brighton and will be subject to a £50 administration fee. The form for media credentials, plus information on how to book wireless internet access and a phone line at the Brighton Centre can be accessed at www.tuc.org.uk/mediacredentials

Contacts: Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Brenchley T: 020 7467 1337 M: 07900 910624 E: ebrenchley@tuc.org.uk

Press release (1,200 words) issued 7 Sep 2008