A vote of confidence in Britain
Published by The Guardian (13th May, 2014)
There is something repellent about the likes of James Stunt, who married billionaire Bernie Ecclestone’s daughter and drives around London with his security team in a fleet of flash cars worth a million pounds. So it is little wonder that the startling news that our capital is home to more super-rich than any other place on the planet has sparked outrage.
Britain now has more than 100 billionaires, according to a Sunday Times survey – more per head than any other country. Most live in London, and more than half were born abroad. For many Britons, such revelations confirm fears the nation has become a magnet for dodgy characters, crystallising concerns over globalisation, inequality, immigration and tax avoidance.
Certainly, it is wrong to see the ultra-wealthy dodge taxes as they flit around the world, and there should be far more scrutiny of people permitted to buy their way into Britain and launder their stained reputations. But however much it sticks in the craw to discover there is a market for gold-plated revolving safes that display $1m, this is ultimately cause for celebration.
It is first and foremost a big vote of confidence in Britain. We moan about our public institutions, but the problems pale beside those facing most countries. Those super-rich Russians and Chinese – the biggest buyers of investor visas for people committing at least £1m – see a stable political system, an open economy, honest courts and incorruptible officials. For all its faults, Britain remains a beacon of democracy, freedom and tolerance.
It also reflects the astonishing transformation of London, which in my lifetime has gone from being a dirty, dreary and declining place with rapidly falling population to one of the world’s most diverse, vibrant and successful cities. Much of this is attributable to immigrants, attracted to the UK for many of the same reasons as those billionaires and multimillionaires. They are not all fleeing repressive regimes; there are an estimated 350,000 French residents, many escaping higher taxes and restrictive regulations found in their homeland.
Cities are the motors of the global economy; the top 10 alone account for a fifth of output worldwide. This mix of rich and ambitious migrants has played a crucial role helping to power London into prominence, especially in the high-value service sectors from finance and law to digital media and education that are seeing demand from the developing world grows so fast. Other European cities can only look on with envy as they generate jobs and prosperity.
This influx of wealthy people also highlights how London and the south-east has become the most capitalist and globalised part of the UK, a thriving region that props up the economy and supports the welfare state. London alone accounts for close to a quarter of the economy while paying a similar share of income and corporation taxes; its output per person is about double the national average. The southeast is the only region making a positive contribution to the exchequer.
So it was absurd to hear the business secretary, Vince Cable, complain last year that London was sucking life from the rest of the country. He should be looking at wealth creation lessons that could be applied to our other great cities. Likewise, Labour should think carefully about plans to pursue the politics of envy or milk the capital with blunderbuss tactics such as a mansion tax.
It is wrong to be Panglossian. One property developer told me of a foreign investor buying 16 houses and wanting them “bubble-wrapped” – not bothering to rent them, merely seeking capital appreciation. Such people fuel the housing bubble and restrict supply. But housing shortages are largely down to political failures to build enough homes, not rich foreign buyers. Meanwhile taxes paid on all those pads sold to oligarchs in Kensington and Chelsea contribute more than combined house sale proceeds in Scotland, Wales and Northern Ireland.
Public services may be stretched and resentment growing at the super-rich. Yet there is one thing that’s far worse than Britain being a haven for the world’s richest people – and that is when they move to more successful and welcoming destinations.