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'The super-rich are taking over.' | 0:00:05 | 0:00:07 | |
Somebody like me earns 10,000, 20,000 an hour. | 0:00:07 | 0:00:13 | |
'85 people own the same wealth as half the world's population.' | 0:00:13 | 0:00:17 | |
You don't get this stuff at IKEA, do you, John? | 0:00:17 | 0:00:20 | |
LAUGHTER | 0:00:20 | 0:00:22 | |
How much are you worth? | 0:00:22 | 0:00:24 | |
Around £250 million. | 0:00:24 | 0:00:26 | |
Never before has money been so polarised. | 0:00:26 | 0:00:29 | |
The 21st century will be the most unequal period in human history. | 0:00:30 | 0:00:35 | |
'My name's Jacques Peretti, and in this series, I'm going to find out | 0:00:35 | 0:00:39 | |
'how the super-rich have changed Britain.' | 0:00:39 | 0:00:42 | |
Explain how important Britain is as a tax haven for the super-rich. | 0:00:42 | 0:00:46 | |
It's very important. | 0:00:46 | 0:00:47 | |
It's the most attractive location now on the planet. | 0:00:47 | 0:00:50 | |
But are they making us richer... | 0:00:50 | 0:00:53 | |
We want more super-rich people here in England. | 0:00:53 | 0:00:56 | |
..or creating a more divided society? | 0:00:56 | 0:01:01 | |
We went to see our local Labour mayor and he said to us, | 0:01:01 | 0:01:04 | |
"If you can't afford to live in Newham, | 0:01:04 | 0:01:06 | |
"you can't afford to live in Newham. | 0:01:06 | 0:01:07 | |
"What do you want me to do about it?" | 0:01:07 | 0:01:09 | |
Human nature will always be a little envious | 0:01:11 | 0:01:14 | |
of those who have more than they do. | 0:01:14 | 0:01:17 | |
Who sold us the idea that the super-rich would make us better off? | 0:01:17 | 0:01:23 | |
There have always been the haves and the have nots, | 0:01:24 | 0:01:27 | |
but today, you have the haves, the have nots and the have yachts. | 0:01:27 | 0:01:29 | |
This is the story of The Super-Rich...And Us. | 0:01:29 | 0:01:33 | |
'As the rest of Britain struggles, | 0:01:45 | 0:01:47 | |
'the super-rich have never had it so good. | 0:01:47 | 0:01:49 | |
'Since the '08 crash, there's been £80 billion of austerity cuts. | 0:01:51 | 0:01:56 | |
'The same amount bankers will have been given in bonuses. | 0:01:56 | 0:02:00 | |
'At just over £180,000, this Lamborghini | 0:02:05 | 0:02:09 | |
'costs the same as an average house in Britain. | 0:02:09 | 0:02:12 | |
'Simon has flown in from Switzerland to buy a second-hand car, | 0:02:15 | 0:02:19 | |
'but not like one you or I might buy.' | 0:02:19 | 0:02:21 | |
You collect cars. How many cars have you got? Do you know? | 0:02:23 | 0:02:27 | |
I don't know if my wife's listening or not, but let's say less than ten. | 0:02:27 | 0:02:30 | |
-Less than ten? -Less than ten. | 0:02:30 | 0:02:31 | |
'The super-rich are behaving as if the biggest recession since the war | 0:02:34 | 0:02:37 | |
'didn't affect them, but it did, profoundly. | 0:02:37 | 0:02:42 | |
'They made lots of money from it. | 0:02:42 | 0:02:44 | |
'Hard to believe, until you hear it from the horse's mouth. | 0:02:45 | 0:02:47 | |
'Michael Wainwright is the boss of diamond merchant Boodles. | 0:02:48 | 0:02:52 | |
'His family's reported £85-million fortune | 0:02:52 | 0:02:56 | |
'is among the thousand biggest in Britain.' | 0:02:56 | 0:02:58 | |
When the crash happened, did you think, | 0:02:58 | 0:03:00 | |
"Oh, this is curtains for us," or... | 0:03:00 | 0:03:02 | |
-What was your feeling? -Well, we were. | 0:03:02 | 0:03:04 | |
It was very bleak for about three or four months. | 0:03:04 | 0:03:07 | |
In spite of what's gone on in the world since '08, | 0:03:07 | 0:03:11 | |
I think the wealthy probably have got wealthier. | 0:03:11 | 0:03:13 | |
There was a bit of reticence to spend it to begin with after '08, but not now. | 0:03:13 | 0:03:17 | |
They are definitely out to play again, yeah. | 0:03:17 | 0:03:19 | |
'Michael might have had a bad few months, | 0:03:19 | 0:03:21 | |
'but we've had seven years of austerity. | 0:03:21 | 0:03:25 | |
'Our incomes have stagnated, | 0:03:25 | 0:03:27 | |
'but last year alone, the top thousand saw their wealth rise | 0:03:27 | 0:03:30 | |
'by £70 billion, | 0:03:30 | 0:03:33 | |
'making their wealth equal to the combined annual earnings | 0:03:33 | 0:03:36 | |
'of Britain's entire full-time workforce. | 0:03:36 | 0:03:40 | |
'The gobsmacking gap between us and the richest 1% | 0:03:40 | 0:03:44 | |
'is returning us to a world we thought had gone away.' | 0:03:44 | 0:03:47 | |
You know, when I was growing up in the 1970s, | 0:03:48 | 0:03:50 | |
the idea that the aristocracy ruled Britain had gone. | 0:03:50 | 0:03:54 | |
They were finished. | 0:03:54 | 0:03:56 | |
But now there's a new aristocracy who have taken over. | 0:03:56 | 0:03:59 | |
And they're not the landed gentry, they're the super-rich. | 0:03:59 | 0:04:02 | |
'Britain now has 104 billionaires. | 0:04:04 | 0:04:07 | |
'That's more per head than any other country in the world. | 0:04:07 | 0:04:11 | |
'But when you ask how their presence benefits the rest of us, | 0:04:11 | 0:04:15 | |
'it turns out that the rich have a party line on that. | 0:04:15 | 0:04:18 | |
'It's called trickle-down. | 0:04:18 | 0:04:20 | |
'This is multimillionaire, Rob Hersov.' | 0:04:20 | 0:04:22 | |
-Michael. -Great to see you. | 0:04:22 | 0:04:24 | |
Are the rich good for Britain? | 0:04:24 | 0:04:27 | |
Yes, very good for Britain. | 0:04:27 | 0:04:28 | |
We want more super-rich people here in England. | 0:04:28 | 0:04:32 | |
Why? Because if they invest here, | 0:04:32 | 0:04:36 | |
if they hire people, if they use taxis, | 0:04:36 | 0:04:41 | |
if they go to restaurants, they are creating wealth | 0:04:41 | 0:04:44 | |
for people in England. | 0:04:44 | 0:04:46 | |
It's not trickle-down, it's trickle-through. | 0:04:46 | 0:04:49 | |
They are creating opportunities for other people. | 0:04:49 | 0:04:52 | |
Trickle-down or trickle-through, | 0:04:54 | 0:04:56 | |
the idea is that their spending will benefit all of us. | 0:04:56 | 0:05:00 | |
But does it? | 0:05:00 | 0:05:02 | |
I've come to a high-end showcase for super-watches to find out. | 0:05:02 | 0:05:06 | |
That looks amazing! | 0:05:09 | 0:05:11 | |
So, if I wanted to buy that, how much would that set me back? | 0:05:11 | 0:05:15 | |
Only £215,000. | 0:05:15 | 0:05:16 | |
-215? That's a bargain(!) -Yes. I know. | 0:05:16 | 0:05:19 | |
-Would you like to try it on? -Please. That would be great. | 0:05:19 | 0:05:22 | |
-Please have a seat. -Thank you. | 0:05:22 | 0:05:24 | |
So...here we have Metamorphosis II. | 0:05:26 | 0:05:30 | |
-Metamorphosis II? -Metamorphosis II. | 0:05:30 | 0:05:33 | |
What was Metamorphosis I like? | 0:05:33 | 0:05:35 | |
Metamorphosis I was amazing | 0:05:35 | 0:05:37 | |
-and this is now... -Better! | 0:05:37 | 0:05:39 | |
..on an even higher level. | 0:05:39 | 0:05:42 | |
-We've separated the hours from the minutes. -Yeah. | 0:05:42 | 0:05:45 | |
And then, here, you actually have your dates. | 0:05:45 | 0:05:47 | |
That's just insane! Now, how on earth can I tell the time? | 0:05:47 | 0:05:50 | |
So at the moment, it's very simple, | 0:05:50 | 0:05:52 | |
that we're now at 20...to 8. | 0:05:52 | 0:05:55 | |
So in a way, right, the only people who understand how this watch works | 0:05:55 | 0:05:59 | |
-are the people who own them, right? -Yes. | 0:05:59 | 0:06:02 | |
-So it's a bit like a private club. -Exactly. It's a secret. | 0:06:02 | 0:06:05 | |
-Can I try it on? -Of course you can. -Right. | 0:06:05 | 0:06:07 | |
Wow! That is... | 0:06:13 | 0:06:15 | |
-How does it look? -It looks really good. | 0:06:16 | 0:06:18 | |
Really, really good. | 0:06:18 | 0:06:20 | |
I think I might just make a move, all right? See you later. | 0:06:20 | 0:06:23 | |
LAUGHTER | 0:06:23 | 0:06:25 | |
And if you thought that was ostentatious, look at this. | 0:06:28 | 0:06:31 | |
It's made of Zambian emeralds, | 0:06:35 | 0:06:38 | |
White diamonds, white gold. | 0:06:38 | 0:06:41 | |
'A snip at £2 million.' | 0:06:42 | 0:06:45 | |
Looks a bit...tacky to me. | 0:06:45 | 0:06:48 | |
Whatever you think of this watch, these items are trophy assets. | 0:06:51 | 0:06:55 | |
Manufacturing them is unlikely | 0:06:56 | 0:06:58 | |
to employ thousands in a factory here in the UK. | 0:06:58 | 0:07:01 | |
So it's hard to see how this kind of spending benefits the rest of us. | 0:07:01 | 0:07:06 | |
'This is a problem for Britain. | 0:07:11 | 0:07:13 | |
'Many of the super-rich we are attracting | 0:07:13 | 0:07:15 | |
'spend their money on such trophy assets. | 0:07:15 | 0:07:19 | |
'Private helicopters, Learjets, or yachts. | 0:07:19 | 0:07:22 | |
'The money stays pretty much in their world. | 0:07:30 | 0:07:33 | |
'But for the seriously super-rich, only one thing will do. | 0:07:33 | 0:07:37 | |
'A Premiership football club.' | 0:07:39 | 0:07:40 | |
Tony, we're walking out onto the hallowed turf. | 0:07:45 | 0:07:47 | |
-We are. It's expensive turf. -LAUGHTER | 0:07:47 | 0:07:50 | |
I never thought a piece of grass would cost £1 million. | 0:07:50 | 0:07:53 | |
'QPR was bought in 2011 for £35 million by this man - | 0:07:53 | 0:07:58 | |
'Malaysian businessman Tony Fernandes.' | 0:07:58 | 0:08:02 | |
Asia's toughest job interview begins. | 0:08:02 | 0:08:04 | |
Welcome to the most challenging interview of your life. | 0:08:04 | 0:08:07 | |
He's the star of the Asian Apprentice. | 0:08:07 | 0:08:10 | |
The Alan Sugar of the Far East. | 0:08:10 | 0:08:12 | |
His net worth of £650 million | 0:08:12 | 0:08:15 | |
makes him one of the richest men | 0:08:15 | 0:08:17 | |
in both Britain and Malaysia. | 0:08:17 | 0:08:20 | |
It's a monumental screw-up. | 0:08:20 | 0:08:22 | |
For that reason, you're fired. You're fired. | 0:08:22 | 0:08:24 | |
'The Apprentice Asia premieres tonight at 9.00...' | 0:08:24 | 0:08:28 | |
So, Tony, you made your money from an Asian airline. | 0:08:28 | 0:08:30 | |
Why did you buy a British football club? | 0:08:30 | 0:08:32 | |
TONY LAUGHS | 0:08:32 | 0:08:33 | |
When you buy a Learjet or a massive yacht, | 0:08:33 | 0:08:36 | |
you know, it's generally for yourself, the occasional parties. | 0:08:36 | 0:08:40 | |
But QPR... The feelings, I can't describe. | 0:08:40 | 0:08:44 | |
Life is about experiences. | 0:08:44 | 0:08:46 | |
So I'd rather do that | 0:08:46 | 0:08:48 | |
than sit on a massive boat in the middle of the sea. | 0:08:48 | 0:08:52 | |
Buying big things might be exciting for the super-rich | 0:08:54 | 0:08:57 | |
and employ some people, | 0:08:57 | 0:08:58 | |
but if trickle-down was working, | 0:08:58 | 0:09:00 | |
the fact we have more super-rich than ever before in Britain | 0:09:00 | 0:09:03 | |
should mean we are all getting richer. | 0:09:03 | 0:09:06 | |
But we're not. | 0:09:07 | 0:09:09 | |
Instead, the 1% share of wealth is rising. | 0:09:09 | 0:09:12 | |
For the 99%, living standards remain at pre-crisis levels. | 0:09:12 | 0:09:17 | |
Across the world, people are marching. | 0:09:19 | 0:09:22 | |
This is a demonstration in Boston against low pay. | 0:09:23 | 0:09:25 | |
In London, what began with an occupation outside St Paul's | 0:09:27 | 0:09:31 | |
continued last year with a protest march against low pay | 0:09:31 | 0:09:34 | |
and the growing chasm between the 1% and the rest of us. | 0:09:34 | 0:09:38 | |
You know, me and my husband have worked all our life. | 0:09:42 | 0:09:45 | |
We are on quite low pay, but, you know, still, | 0:09:45 | 0:09:47 | |
we can't afford to live. | 0:09:47 | 0:09:49 | |
Everybody's struggling. Well, apart from the 1%. | 0:09:49 | 0:09:52 | |
For ten years, the average weekly income of a British family | 0:09:53 | 0:09:56 | |
stayed the same - £429. | 0:09:56 | 0:10:00 | |
'In the same period, the richest thousand people in Britain | 0:10:02 | 0:10:05 | |
'saw their wealth more than double | 0:10:05 | 0:10:07 | |
'from £200 billion to £500 billion.' | 0:10:07 | 0:10:10 | |
Do you think it's right, | 0:10:12 | 0:10:13 | |
the idea that their wealth would trickle down to the rest of us? | 0:10:13 | 0:10:16 | |
-Absolutely not. -It doesn't trickle down. -No. When has it ever? When have you ever seen that? | 0:10:16 | 0:10:19 | |
You can see it's not worked! You can see it, it's not working, is it? | 0:10:19 | 0:10:23 | |
Inequality has become the theme of epic Hollywood blockbusters | 0:10:25 | 0:10:29 | |
like The Hunger Games, | 0:10:29 | 0:10:31 | |
in which people from outside the super-rich city | 0:10:31 | 0:10:34 | |
fight to the death for survival. | 0:10:34 | 0:10:36 | |
Happy Hunger Games... | 0:10:38 | 0:10:40 | |
and may the odds be ever in your favour. | 0:10:40 | 0:10:44 | |
But this isn't just science fiction - | 0:10:46 | 0:10:47 | |
a recent US Government report predicted a Hunger Games future, | 0:10:47 | 0:10:51 | |
a world of elites and commoners. | 0:10:51 | 0:10:53 | |
And inequality is a race to the bottom that Britain is winning - | 0:10:56 | 0:11:00 | |
we're the only leading economy | 0:11:00 | 0:11:02 | |
to have grown consistently more unequal this century. | 0:11:02 | 0:11:06 | |
So how did we come to believe that attracting the super-rich | 0:11:07 | 0:11:10 | |
would benefit everyone? | 0:11:10 | 0:11:12 | |
Who sold us the idea - and why? | 0:11:12 | 0:11:15 | |
MUSIC: Sunny Afternoon by The Kinks | 0:11:15 | 0:11:16 | |
To understand, you need to go back to the 1960s. | 0:11:16 | 0:11:21 | |
Britain's wealth had been built on empire, | 0:11:21 | 0:11:23 | |
and the City of London was the hub. | 0:11:23 | 0:11:26 | |
Now that was gone. | 0:11:26 | 0:11:29 | |
But Britain had a plan to reinvent itself | 0:11:29 | 0:11:32 | |
as a tax haven for the super-rich. | 0:11:32 | 0:11:35 | |
We were no longer an empire - we were a casino. | 0:11:35 | 0:11:39 | |
And the biggest high rollers were about to roll into town. | 0:11:39 | 0:11:43 | |
MUSIC: Goldfinger by Shirley Bassey | 0:11:43 | 0:11:44 | |
This was the era of the jet set, | 0:11:51 | 0:11:53 | |
and leading the pack were the Greek shipping tycoons. | 0:11:53 | 0:11:57 | |
# Goldfinger... # | 0:11:57 | 0:12:00 | |
-PRESENTER: -These ships, and more, add up to 6,428,602 tonnes. | 0:12:00 | 0:12:06 | |
Whatever "it" is, the Greek shipping industry obviously has it. | 0:12:06 | 0:12:10 | |
They also had a problem. | 0:12:10 | 0:12:12 | |
If they settled here, they would end up paying tax on the profits | 0:12:12 | 0:12:16 | |
from their huge ships. | 0:12:16 | 0:12:18 | |
But a compliant British government | 0:12:18 | 0:12:20 | |
was happy for them to exploit a loophole. | 0:12:20 | 0:12:22 | |
It meant they could avoid paying tax, | 0:12:24 | 0:12:26 | |
and it was called the non-dom rule. | 0:12:26 | 0:12:28 | |
The rule was a hangover from Britain's imperial past. | 0:12:30 | 0:12:33 | |
It was designed to encourage wealthy British colonial magnates, | 0:12:33 | 0:12:37 | |
rich from the spoils of empire, | 0:12:37 | 0:12:39 | |
to come to Britain and spend their money. | 0:12:39 | 0:12:42 | |
This 19th-century relic now turned into a 20th-century tax giveaway. | 0:12:44 | 0:12:49 | |
The non-dom rule made Britain uniquely attractive | 0:12:52 | 0:12:54 | |
to the super-rich - you could come here and avoid paying taxes | 0:12:54 | 0:12:58 | |
simply through a family connection to a foreign country. | 0:12:58 | 0:13:01 | |
They couldn't believe their luck. | 0:13:01 | 0:13:03 | |
Grant Woods is a man who made the system work | 0:13:05 | 0:13:08 | |
as a senior wealth adviser at Coutts, bankers to the super-rich. | 0:13:08 | 0:13:13 | |
You place your profits in offshore centres, | 0:13:13 | 0:13:15 | |
it can be managed there, | 0:13:15 | 0:13:17 | |
you can live happily in London, enjoy all the facilities in London. | 0:13:17 | 0:13:22 | |
Among the non-doms who came to Britain | 0:13:23 | 0:13:25 | |
to reinvent themselves as pillars of the establishment | 0:13:25 | 0:13:28 | |
were Czech-born Robert Maxwell - originally Jan Hoch - | 0:13:28 | 0:13:32 | |
and German tycoon Tiny Rowland - Roland Fuhrhop to his friends. | 0:13:32 | 0:13:38 | |
Grant Woods, whose job was to woo these people, | 0:13:40 | 0:13:43 | |
saw tax breaks as the key tool. | 0:13:43 | 0:13:46 | |
People kept testing the limits of what was acceptable | 0:13:46 | 0:13:50 | |
and not acceptable because there were no rules laid down | 0:13:50 | 0:13:53 | |
by the Inland Revenue specifically dealing with this situation. | 0:13:53 | 0:13:58 | |
The rules were very, very loose. | 0:13:58 | 0:14:00 | |
It was all very cosy. | 0:14:00 | 0:14:02 | |
The non-dom loophole remained largely unscrutinised | 0:14:02 | 0:14:06 | |
until the 1990s, when Tory donor multimillionaire Asil Nadir | 0:14:06 | 0:14:11 | |
was found guilty of fraud. | 0:14:11 | 0:14:13 | |
There are a large number of people | 0:14:13 | 0:14:14 | |
who work in Britain, | 0:14:14 | 0:14:15 | |
who earn their money in Britain, | 0:14:15 | 0:14:16 | |
who don't pay much tax in Britain. | 0:14:16 | 0:14:18 | |
And many of these people | 0:14:18 | 0:14:19 | |
are millionaires who are using | 0:14:19 | 0:14:20 | |
non-resident status, | 0:14:20 | 0:14:22 | |
or non-domicile status to avoid their proper share of tax. | 0:14:22 | 0:14:25 | |
Now, I'm going to close these loopholes. | 0:14:25 | 0:14:27 | |
But guess what? Nothing happened for 15 years. | 0:14:27 | 0:14:30 | |
In 2008, Alistair Darling finally imposed an annual charge of £30,000. | 0:14:30 | 0:14:38 | |
-To someone who is a billionaire... -Yeah. | 0:14:38 | 0:14:41 | |
..how prohibitive is a £30,000 flat rate? | 0:14:41 | 0:14:45 | |
Well, for someone who's super-wealthy, | 0:14:45 | 0:14:47 | |
it's the sort of money they'd spend on a party for one of their kids. | 0:14:47 | 0:14:51 | |
Far from being a deterrent, £30,000 is peanuts to non-doms, | 0:14:55 | 0:14:59 | |
whose numbers are now back on the increase. | 0:14:59 | 0:15:01 | |
£30,000 is £3,000 more than the average salary in Britain. | 0:15:04 | 0:15:08 | |
You could blow a year's pay on one visit to this salon - | 0:15:09 | 0:15:13 | |
Oro Gold in High Street Kensington. | 0:15:13 | 0:15:16 | |
-Hi, there. I've come for an appointment. -Hi, is it Jacques? | 0:15:16 | 0:15:19 | |
-Yes. -My name's Lena, I'll be your therapist for today. | 0:15:19 | 0:15:22 | |
-Hi, Lena. -Would you like to come with me? | 0:15:22 | 0:15:24 | |
'£30,000 is also around the average deposit for a first-time buyer...' | 0:15:24 | 0:15:28 | |
Hi, Lena. | 0:15:29 | 0:15:30 | |
OK. What do you want me to do? | 0:15:30 | 0:15:31 | |
If you just want to hang your robe up, | 0:15:31 | 0:15:33 | |
-and you can lay down on the couch for me. -OK. | 0:15:33 | 0:15:35 | |
'..and the current timescale to save for such a deposit | 0:15:35 | 0:15:39 | |
'is 22 years. | 0:15:39 | 0:15:40 | |
'So what do you get for this kind of money? | 0:15:43 | 0:15:45 | |
'Something called a facial.' | 0:15:46 | 0:15:49 | |
I'm a bit nervous, Lena. | 0:15:49 | 0:15:51 | |
What's going to happen? | 0:15:51 | 0:15:53 | |
Don't worry, you're in good hands. | 0:15:53 | 0:15:55 | |
So, I'm just going to cleanse the skin now. | 0:15:56 | 0:15:58 | |
The thing is, if you are super-rich, you know, | 0:16:01 | 0:16:04 | |
this isn't that unusual a treatment. | 0:16:04 | 0:16:06 | |
You're totally right, | 0:16:06 | 0:16:07 | |
and usually it's not really a one-off treatment, | 0:16:07 | 0:16:09 | |
as they usually come for a series of treatments | 0:16:09 | 0:16:13 | |
to get maximum results. | 0:16:13 | 0:16:14 | |
-OK. -So, usually between six and twelve treatments | 0:16:14 | 0:16:18 | |
on a monthly basis. | 0:16:18 | 0:16:19 | |
It's a bit more expensive than an avocado all over your face... | 0:16:21 | 0:16:24 | |
-Yes! -..which is 40p or something. | 0:16:24 | 0:16:26 | |
Well, it is gold. | 0:16:26 | 0:16:27 | |
'The full super-rich service | 0:16:27 | 0:16:29 | |
'adds gold-flecked moisturisers to the gold mask, | 0:16:29 | 0:16:33 | |
'with a caviar massage thrown in... | 0:16:33 | 0:16:36 | |
'because you're worth it. | 0:16:36 | 0:16:38 | |
'Or just because you can.' | 0:16:38 | 0:16:39 | |
It's just particles of gold in a gel form. | 0:16:41 | 0:16:45 | |
'Luxury services like Oro Gold | 0:16:48 | 0:16:51 | |
'thrive thanks to the arrival of so many super-rich people in Britain.' | 0:16:51 | 0:16:54 | |
In the 1970s, | 0:16:58 | 0:16:59 | |
we were getting used to their presence for the first time. | 0:16:59 | 0:17:04 | |
But while they enjoyed tax haven Britain, | 0:17:04 | 0:17:06 | |
the home-grown super-rich were not amused. | 0:17:06 | 0:17:10 | |
In 1974, the new Labour government | 0:17:12 | 0:17:14 | |
promised a massive increase in welfare spending. | 0:17:14 | 0:17:17 | |
To pay for this, they increased taxes on the wealthiest to 83%. | 0:17:17 | 0:17:22 | |
The top earners had had enough. | 0:17:22 | 0:17:25 | |
MUSIC: Taxman by The Beatles | 0:17:25 | 0:17:27 | |
# There's one for you, 19 for me | 0:17:27 | 0:17:30 | |
# Cos I'm the taxman | 0:17:33 | 0:17:36 | |
# Yeah, I'm the taxman... # | 0:17:36 | 0:17:40 | |
But their saviours were at hand, | 0:17:40 | 0:17:43 | |
in the unlikely form of two enterprising accountants - | 0:17:43 | 0:17:46 | |
Roy Tucker and Ron Plummer. | 0:17:46 | 0:17:49 | |
# Be thankful I don't take it all... # | 0:17:49 | 0:17:51 | |
Spotting a gap in the market, they'd set up their own bank | 0:17:51 | 0:17:56 | |
called Rossminster. | 0:17:56 | 0:17:57 | |
Its main purpose was the development of complex schemes | 0:17:57 | 0:18:01 | |
for avoiding tax. | 0:18:01 | 0:18:03 | |
The waiting room of the accountants' office | 0:18:03 | 0:18:05 | |
resembled an extraordinary cocktail party - | 0:18:05 | 0:18:08 | |
Led Zeppelin and Roger Moore were clients, | 0:18:08 | 0:18:10 | |
and, most famously, two of The Beatles. | 0:18:10 | 0:18:13 | |
-# If you get too cold -I'll tax the heat | 0:18:13 | 0:18:16 | |
-# If you take a walk -I'll tax your feet... # | 0:18:16 | 0:18:20 | |
Richard Brooks was a tax inspector | 0:18:21 | 0:18:23 | |
who has investigated Rossminster's activities. | 0:18:23 | 0:18:26 | |
They were promoting weird and wonderful schemes | 0:18:26 | 0:18:30 | |
with names like "Exempt Debt Scheme", "Commodity Carry Scheme", | 0:18:30 | 0:18:34 | |
"Non-Deposit Interest" - all kinds of wacky stuff. | 0:18:34 | 0:18:37 | |
You, in. | 0:18:41 | 0:18:42 | |
Attention. | 0:18:42 | 0:18:44 | |
Things they didn't teach you in school... | 0:18:44 | 0:18:46 | |
One of Rossminster's most unusual schemes | 0:18:46 | 0:18:48 | |
was to use the losses from investments in British films | 0:18:48 | 0:18:51 | |
to reduce customers' tax bills. | 0:18:51 | 0:18:54 | |
One film dragged into this tangled web | 0:18:54 | 0:18:56 | |
was the British cult classic Scum - | 0:18:56 | 0:18:59 | |
a film about borstal. | 0:18:59 | 0:19:01 | |
And trouble was now looming for Tucker and Plummer. | 0:19:01 | 0:19:05 | |
On the 13th of July 1979, | 0:19:05 | 0:19:08 | |
70 tax inspectors and 28 police officers raided Rossminster. | 0:19:08 | 0:19:14 | |
Their offices here were closed, and their little party was over - | 0:19:14 | 0:19:18 | |
but an even bigger party was just about to begin. | 0:19:18 | 0:19:22 | |
Rossminster showed what you could do with the tax law - | 0:19:26 | 0:19:29 | |
just how creative you could be with it. | 0:19:29 | 0:19:31 | |
By the late '80s, you found the big accountancy firms | 0:19:31 | 0:19:36 | |
devising tax-avoidance schemes and selling them very aggressively. | 0:19:36 | 0:19:40 | |
Although Tucker and Plummer did not face criminal charges, | 0:19:40 | 0:19:43 | |
things would never be the same. | 0:19:43 | 0:19:45 | |
The men behind Rossminster marked the fundamental change in attitudes. | 0:19:46 | 0:19:51 | |
From now on, they were saying, rules are there to be broken - | 0:19:51 | 0:19:55 | |
but only if you're wealthy. | 0:19:55 | 0:19:58 | |
MUSIC: Angel by Massive Attack | 0:19:58 | 0:20:00 | |
Britain was now the tax-dodge capital of the world. | 0:20:00 | 0:20:05 | |
And it's still happening. | 0:20:05 | 0:20:07 | |
Last year, it cost the rest of us £20 billion. | 0:20:07 | 0:20:10 | |
One man who's experienced how tax avoidance works for the super-rich | 0:20:13 | 0:20:16 | |
is billionaire John Caudwell. | 0:20:16 | 0:20:19 | |
-John. -Hi, Jacques. How are you doing? -Nice to see you. | 0:20:21 | 0:20:24 | |
-Thanks for your time. -Pleasure. | 0:20:24 | 0:20:25 | |
It's a nice little place you've got here(!) | 0:20:25 | 0:20:27 | |
It is, it's a phenomenal place. | 0:20:27 | 0:20:30 | |
You don't get this stuff at IKEA, do you, John?! | 0:20:30 | 0:20:33 | |
It's probably a good job, really. | 0:20:33 | 0:20:36 | |
He built up Phones 4u from nothing, to a billionaire lifestyle | 0:20:38 | 0:20:41 | |
of helicopters and a Jacobean pile in Staffordshire. | 0:20:41 | 0:20:45 | |
But this is his latest acquisition - | 0:20:47 | 0:20:50 | |
a pair of Mayfair mansions. | 0:20:50 | 0:20:52 | |
Reported value - £250 million. | 0:20:52 | 0:20:56 | |
It's a good place to entertain... | 0:20:58 | 0:21:01 | |
Brilliant place to network with the rich and famous of London. | 0:21:01 | 0:21:06 | |
John, how does this compare with where you grew up? | 0:21:07 | 0:21:10 | |
THEY LAUGH | 0:21:10 | 0:21:12 | |
-Oh, my gosh. -A little more spacious(!) | 0:21:12 | 0:21:16 | |
Well... | 0:21:16 | 0:21:17 | |
Well, my first home - first marital home, | 0:21:17 | 0:21:21 | |
when I was....I was about 20, at the time, | 0:21:21 | 0:21:24 | |
was a 14-foot Sprite Musketeer caravan on my mother's lawn. | 0:21:24 | 0:21:29 | |
Caudwell's not like many of the super-rich - | 0:21:29 | 0:21:32 | |
he actually pays his way, and as Britain's biggest taxpayer, | 0:21:32 | 0:21:36 | |
he's handed over £200 million in the last five years. | 0:21:36 | 0:21:40 | |
But has he ever been tempted to break the rules? | 0:21:40 | 0:21:44 | |
John, have you ever been approached with mad schemes...? | 0:21:44 | 0:21:47 | |
Well, I was approached all the time with mad schemes, | 0:21:47 | 0:21:50 | |
and we DID take some of them up, you know, and I'm not proud of that. | 0:21:50 | 0:21:53 | |
How does it work? | 0:21:53 | 0:21:55 | |
You know, what's the conversation that's had? | 0:21:55 | 0:21:57 | |
Oh, do you know, some of the schemes are so convoluted | 0:21:57 | 0:22:00 | |
that I couldn't even... | 0:22:00 | 0:22:01 | |
I wouldn't even begin to necessarily understand them. | 0:22:01 | 0:22:04 | |
There's hundreds or even thousands of tax accountants, | 0:22:04 | 0:22:07 | |
often recruited from the Inland Revenue, | 0:22:07 | 0:22:10 | |
who were tax inspectors, to advise people | 0:22:10 | 0:22:13 | |
on how to have the latest, barmiest, cutting-edge scheme. | 0:22:13 | 0:22:17 | |
If I thought they were reasonably ethical, I'd do them, | 0:22:17 | 0:22:19 | |
-but...they were wrong. -Mmm. | 0:22:19 | 0:22:23 | |
At the end of the day, I believe they were wrong. | 0:22:23 | 0:22:25 | |
But this wasn't just about individuals. | 0:22:25 | 0:22:28 | |
There was a culture in which cosy relationships developed | 0:22:28 | 0:22:31 | |
between corporations and the tax authorities, | 0:22:31 | 0:22:34 | |
with devastating consequences for the public purse. | 0:22:34 | 0:22:38 | |
There was very much a system in which senior tax officials | 0:22:38 | 0:22:43 | |
were rewarded in terms of promotions and bonuses - | 0:22:43 | 0:22:48 | |
not for success in tackling tax avoidance, | 0:22:48 | 0:22:52 | |
but success in fostering a partnership between the companies | 0:22:52 | 0:22:57 | |
and the department. | 0:22:57 | 0:22:59 | |
So it was about how well can you create a relationship with a company, | 0:22:59 | 0:23:02 | |
rather than how much money can you actually get for the public out of that company? | 0:23:02 | 0:23:07 | |
That's right. And if you ended up in a big dispute with that company, | 0:23:07 | 0:23:12 | |
that would probably count against you in terms of your prospects. | 0:23:12 | 0:23:16 | |
So, you're actually being promoted for not doing your job, essentially? | 0:23:16 | 0:23:20 | |
-Many people... -Your job as a public employee is to raise revenue | 0:23:20 | 0:23:24 | |
on behalf of the public, but actually, they were working | 0:23:24 | 0:23:27 | |
pretty much on behalf of the companies. | 0:23:27 | 0:23:30 | |
Yeah, I think many senior tax officials, er, ten years ago | 0:23:30 | 0:23:34 | |
would have said that's how they felt, yes. | 0:23:34 | 0:23:36 | |
'This toxic combination of tax breaks for foreigners | 0:23:40 | 0:23:44 | |
'and massive avoidance amongst the home-grown wealthy | 0:23:44 | 0:23:47 | |
'has changed Britain's role in the world. | 0:23:47 | 0:23:50 | |
'We were once an imperial superpower. | 0:23:50 | 0:23:52 | |
'Now we're a tax haven. | 0:23:52 | 0:23:54 | |
'Pippa Malmgren is a former economic adviser to President George W Bush.' | 0:23:55 | 0:24:00 | |
Can you explain how important Britain is | 0:24:00 | 0:24:03 | |
as a tax haven for the super-rich? | 0:24:03 | 0:24:05 | |
It's very important. | 0:24:05 | 0:24:06 | |
It's the most attractive location now, I think, on the planet - | 0:24:06 | 0:24:10 | |
and that's partly because the old | 0:24:10 | 0:24:11 | |
tax havens in places like Switzerland | 0:24:11 | 0:24:13 | |
are no longer open for business for NEW money. | 0:24:13 | 0:24:16 | |
Do you think the super-rich and the super-wealthy were surprised | 0:24:16 | 0:24:20 | |
by how open Britain was as this new tax haven - this new Switzerland? | 0:24:20 | 0:24:25 | |
Yeah. I think that they had assumed | 0:24:25 | 0:24:30 | |
that they would be placing their money in, you know, Geneva | 0:24:30 | 0:24:33 | |
and the Cayman Islands and places like that. | 0:24:33 | 0:24:36 | |
MUSIC: Time by Pink Floyd | 0:24:36 | 0:24:38 | |
These changes only happened because successive governments | 0:24:38 | 0:24:41 | |
became convinced that trickle-down was the answer. | 0:24:41 | 0:24:44 | |
It started in 1979. | 0:24:44 | 0:24:47 | |
A Conservative government is elected | 0:24:48 | 0:24:50 | |
on the assumption that Britain is broken, | 0:24:50 | 0:24:53 | |
and the money of the wealthiest will help save us. | 0:24:53 | 0:24:56 | |
Within weeks, they slashed the top rate of tax from 83% to 60% - | 0:24:56 | 0:25:02 | |
the biggest giveaway to the wealthy in decades. | 0:25:02 | 0:25:05 | |
Tax avoidance was now government policy. | 0:25:07 | 0:25:10 | |
The old world of heavy industry, unions and high taxes | 0:25:13 | 0:25:17 | |
was no longer to be trusted. | 0:25:17 | 0:25:19 | |
It had failed, and should be chucked on the bonfire of history. | 0:25:19 | 0:25:23 | |
# Ticking away the moments that make up a dull day... # | 0:25:23 | 0:25:30 | |
But there was serious concern about how this brave new world | 0:25:30 | 0:25:33 | |
of lower taxes for the 1% would create inequality. | 0:25:33 | 0:25:38 | |
It dominated Mrs Thatcher's first ever TV interview as Prime Minister. | 0:25:38 | 0:25:43 | |
Is the price for our economic recovery and prosperity | 0:25:52 | 0:25:56 | |
greater inequality in this country? | 0:25:56 | 0:25:59 | |
You will get a more thriving society | 0:25:59 | 0:26:02 | |
when people can rise to the limit of their talents, | 0:26:02 | 0:26:05 | |
and out of the wealth they create, we shall all be better off. | 0:26:05 | 0:26:08 | |
So a more unequal society, you think, | 0:26:08 | 0:26:10 | |
is actually better for prosperity? | 0:26:10 | 0:26:12 | |
A more opportunity society, which enables the able to earn more. | 0:26:12 | 0:26:17 | |
But it does mean more inequality, does it not? | 0:26:17 | 0:26:19 | |
It does mean more... Yes, indeed. | 0:26:19 | 0:26:21 | |
If opportunity and talent is unequally distributed, | 0:26:21 | 0:26:25 | |
then allowing people to exercise that talent and opportunity | 0:26:25 | 0:26:30 | |
means more inequality, but it means you drag up the poor people, | 0:26:30 | 0:26:34 | |
because there are the resources to do so. | 0:26:34 | 0:26:36 | |
No-one would remember the Good Samaritan | 0:26:36 | 0:26:39 | |
if he'd only had good intentions. | 0:26:39 | 0:26:41 | |
He had money as well. | 0:26:41 | 0:26:42 | |
Thank you very much, Prime Minister. | 0:26:42 | 0:26:44 | |
This belief that lower taxes would stimulate growth | 0:26:47 | 0:26:51 | |
came from the US | 0:26:51 | 0:26:52 | |
with radical economists like this man, Arthur Laffer, | 0:26:52 | 0:26:57 | |
an adviser to Republican presidential candidate | 0:26:57 | 0:27:00 | |
Ronald Reagan. | 0:27:00 | 0:27:02 | |
Laffer believed that business, not government, | 0:27:02 | 0:27:05 | |
should be trusted to create prosperity, | 0:27:05 | 0:27:07 | |
and to do this, the rich should be freed from the burden of tax. | 0:27:07 | 0:27:13 | |
Rich people are different than most people. | 0:27:13 | 0:27:15 | |
The rich is the one group of people where you lower tax rates, | 0:27:15 | 0:27:18 | |
you will get more revenues - | 0:27:18 | 0:27:19 | |
and every time we've raised those tax rates on the rich | 0:27:19 | 0:27:23 | |
they've paid less. | 0:27:23 | 0:27:24 | |
Laffer went further. | 0:27:24 | 0:27:26 | |
He said taxing the rich would make society as a whole poorer. | 0:27:26 | 0:27:30 | |
If you tax rich people and give the money to poor people, | 0:27:32 | 0:27:35 | |
you're going to get lots and lots of poor people and no rich people. | 0:27:35 | 0:27:38 | |
The dream is always to make the poor rich, not to make the rich poor. | 0:27:38 | 0:27:42 | |
In Britain, Chancellor after Chancellor courted the super-rich | 0:27:44 | 0:27:49 | |
in the belief that they would create wealth | 0:27:49 | 0:27:51 | |
and trickle-down would be our reward. | 0:27:51 | 0:27:54 | |
22 pence... | 0:27:54 | 0:27:56 | |
But after three decades of devotion to lower taxes, | 0:27:59 | 0:28:03 | |
a new breed of economists who have looked at the evidence | 0:28:03 | 0:28:07 | |
are convinced we've got it wrong. | 0:28:07 | 0:28:10 | |
Among them, one of the world's leading economists, | 0:28:11 | 0:28:14 | |
Cambridge academic Ha Joon-Chang. | 0:28:14 | 0:28:17 | |
Trickle-down economics, you know, in theory, is not a stupid idea. | 0:28:17 | 0:28:21 | |
But the trouble is that, in reality, this prediction | 0:28:21 | 0:28:25 | |
has not been borne out, because in countries like the UK, the US, | 0:28:25 | 0:28:29 | |
that have used these policies, | 0:28:29 | 0:28:31 | |
investment as a share of national income has fallen, | 0:28:31 | 0:28:34 | |
economic growth has fallen, | 0:28:34 | 0:28:37 | |
so where is that pudding, you know, that that we were promised? | 0:28:37 | 0:28:42 | |
That, "Well, if you give these people more money, | 0:28:42 | 0:28:46 | |
"they create more jobs, more income." | 0:28:46 | 0:28:48 | |
They haven't done anything, you know? | 0:28:48 | 0:28:51 | |
The pursuit of trickle-down in the UK | 0:28:53 | 0:28:55 | |
means the rich have doubled their share of income since the 1980s. | 0:28:55 | 0:28:59 | |
The last decade has seen incomes for most of us stagnate, | 0:29:00 | 0:29:04 | |
further widening the gap, | 0:29:04 | 0:29:07 | |
so it's hard to see how trickle-down could not be linked to inequality. | 0:29:07 | 0:29:11 | |
Unless you're Arthur Laffer, of course. | 0:29:11 | 0:29:13 | |
What critics would say about your innovation - | 0:29:16 | 0:29:20 | |
the moment at which economics is turned on its head - | 0:29:20 | 0:29:22 | |
is that, essentially, it's a fig leaf for politicians | 0:29:22 | 0:29:26 | |
to cynically create tax cuts, | 0:29:26 | 0:29:28 | |
but with absolutely no economic rationale behind it whatsoever. | 0:29:28 | 0:29:32 | |
-Oh, that's not true. Come on! -Taxation at its most basic | 0:29:32 | 0:29:35 | |
is raising revenue so a society can function. | 0:29:35 | 0:29:38 | |
-Exactly. -To say taxation is bad | 0:29:38 | 0:29:40 | |
-is to essentially say, "Everyone for themselves..." -No. | 0:29:40 | 0:29:43 | |
"There is no such thing as society, and this is what the deal is." | 0:29:43 | 0:29:47 | |
Of course the reason you tax is so that you can get those revenues | 0:29:47 | 0:29:51 | |
and do good. The government can do what governments should do - | 0:29:51 | 0:29:54 | |
-I mean, highways, schools, defence - all these wonderful things. -Mm. | 0:29:54 | 0:29:58 | |
And when they've run out of things the government should do, you stop. | 0:29:58 | 0:30:02 | |
But look what's happened in Britain - | 0:30:02 | 0:30:04 | |
we have one of the lowest levels of taxation for the super-wealthy, | 0:30:04 | 0:30:07 | |
and our economy has, at a real level, stagnated. | 0:30:07 | 0:30:11 | |
Do you think inequality has increased as a result? | 0:30:11 | 0:30:14 | |
If by inequality declining, you make everyone poorer, | 0:30:14 | 0:30:17 | |
but you make the poor a little bit less poorer, | 0:30:17 | 0:30:19 | |
then you make the rich a lot poorer, I don't like it. | 0:30:19 | 0:30:21 | |
I like equality when everyone is benefitting | 0:30:21 | 0:30:25 | |
and I don't want to see everyone reaching equality | 0:30:25 | 0:30:28 | |
by everyone going to the basement. | 0:30:28 | 0:30:30 | |
That's my view. | 0:30:30 | 0:30:32 | |
So I think looking at equality as an issue by itself is nonsense. | 0:30:32 | 0:30:35 | |
This conviction that taxes should be low | 0:30:41 | 0:30:44 | |
is the super-rich mantra. | 0:30:44 | 0:30:46 | |
But here in Seattle, one of them is breaking rank. | 0:30:46 | 0:30:50 | |
Nick Hanauer is an internet billionaire | 0:30:52 | 0:30:55 | |
who believes we've been duped. | 0:30:55 | 0:30:57 | |
Trickle-down economics | 0:30:57 | 0:30:59 | |
is as old as human civilisation - | 0:30:59 | 0:31:01 | |
we used to call it "divine right". | 0:31:01 | 0:31:04 | |
Now we call it "trickle-down economics" - | 0:31:04 | 0:31:06 | |
it's simply the idea that I matter and you don't. | 0:31:06 | 0:31:11 | |
HE LAUGHS | 0:31:11 | 0:31:12 | |
That what I do is indispensable, and what you do is extra. | 0:31:12 | 0:31:18 | |
It's how we keep you in line. | 0:31:19 | 0:31:21 | |
He agrees with the critics | 0:31:23 | 0:31:24 | |
that the gross inequality we are now witnessing | 0:31:24 | 0:31:27 | |
is the result of the wrong turn we took three decades ago. | 0:31:27 | 0:31:30 | |
The great problem we face in Britain and the United States | 0:31:32 | 0:31:36 | |
is that we have formed our economic policies | 0:31:36 | 0:31:40 | |
on essentially believing the trickle-down idea | 0:31:40 | 0:31:43 | |
of Reagan-Thatcherism. Right? | 0:31:43 | 0:31:45 | |
The idea that if you make rich people richer, | 0:31:45 | 0:31:47 | |
everybody's going to be better off. | 0:31:47 | 0:31:49 | |
And, you know, that's just not true - it's not how the economy works. | 0:31:49 | 0:31:54 | |
To use me as an example... | 0:31:54 | 0:31:55 | |
I mean, I earn literally a thousand times as much per year | 0:31:55 | 0:32:01 | |
as the median wage, essentially, in the United States, plus or minus. | 0:32:01 | 0:32:07 | |
But I don't buy a thousand times as much stuff - | 0:32:07 | 0:32:11 | |
I own three or four pairs of jeans, a couple of pairs of shoes... | 0:32:11 | 0:32:16 | |
You know, we have a big, beautiful house, | 0:32:16 | 0:32:19 | |
but I don't have a thousand houses here in Seattle, | 0:32:19 | 0:32:22 | |
and so, no matter how much money I have, | 0:32:22 | 0:32:26 | |
I cannot sustain a great national economy - | 0:32:26 | 0:32:30 | |
only a robust middle class can do that. | 0:32:30 | 0:32:32 | |
This is not simply about the failure of trickle-down. | 0:32:33 | 0:32:36 | |
Inequality is threatening capitalism itself. | 0:32:36 | 0:32:40 | |
Capitalism, which is the greatest social technology | 0:32:40 | 0:32:43 | |
ever created for creating prosperity in human societies, | 0:32:43 | 0:32:46 | |
does need some inequality, | 0:32:46 | 0:32:48 | |
just like plants do need some water... | 0:32:48 | 0:32:52 | |
but in precisely the same way that too much water kills plants | 0:32:52 | 0:32:57 | |
by drowning them, too much inequality kills capitalism | 0:32:57 | 0:33:01 | |
by drowning the middle class. | 0:33:01 | 0:33:03 | |
The gains of the super-rich have come at the expense of all of us. | 0:33:03 | 0:33:08 | |
Stagnation is touching parts of society | 0:33:08 | 0:33:12 | |
that had previously avoided pain. | 0:33:12 | 0:33:14 | |
Welcome to Twickenham - home of the middle classes for decades - | 0:33:15 | 0:33:20 | |
who complained when shops like Lidl arrived. | 0:33:20 | 0:33:23 | |
Not any longer. | 0:33:23 | 0:33:25 | |
I wanted to see if they still felt secure as a class, | 0:33:25 | 0:33:28 | |
or were suffering like everyone else. | 0:33:28 | 0:33:31 | |
Since 2008, I haven't enjoyed an increase in pay, | 0:33:31 | 0:33:36 | |
and yet inflation has run higher than my pay packet, | 0:33:36 | 0:33:39 | |
so effectively, I am earning less now than I was in 2008. | 0:33:39 | 0:33:43 | |
I think, generally, personal wealth is going to go down | 0:33:43 | 0:33:45 | |
and down and down. I mean, my parents both had good pensions, | 0:33:45 | 0:33:50 | |
you know, they get their winter fuel payments, | 0:33:50 | 0:33:55 | |
they get a lot of freebies, but I'm not expecting to have a pension - | 0:33:55 | 0:34:00 | |
I'm expecting to be much poorer when I'm older. | 0:34:00 | 0:34:02 | |
-Mmm. -Because the money isn't there. | 0:34:02 | 0:34:05 | |
If I ever need continuing health care, forget it. | 0:34:05 | 0:34:08 | |
I'll be off to Dignitas! | 0:34:08 | 0:34:10 | |
But inequality isn't just about the middle class, | 0:34:12 | 0:34:15 | |
it's about something more fundamental. | 0:34:15 | 0:34:17 | |
Here in Paris, ground-breaking research is being carried out | 0:34:17 | 0:34:22 | |
which reveals that a seismic change is taking place | 0:34:22 | 0:34:24 | |
in the structure of society. | 0:34:24 | 0:34:26 | |
It was here at the Place De La Concorde in Paris, | 0:34:30 | 0:34:34 | |
at the height of the French Revolution, | 0:34:34 | 0:34:36 | |
that the original 1% had their heads chopped off. | 0:34:36 | 0:34:39 | |
GUILLOTINE DROPS | 0:34:41 | 0:34:42 | |
So it's fitting that, here in Paris, 200 years on, | 0:34:42 | 0:34:46 | |
one man, an economist, is changing our very understanding | 0:34:46 | 0:34:50 | |
of what's going on | 0:34:50 | 0:34:52 | |
by analysing how the super-rich are transforming our world. | 0:34:52 | 0:34:56 | |
The man in question is the world's most influential economist - | 0:34:59 | 0:35:02 | |
Thomas Piketty. | 0:35:02 | 0:35:04 | |
The middle class, | 0:35:05 | 0:35:07 | |
it's very important for the economy, | 0:35:07 | 0:35:09 | |
because this is what also allows us to develop mass consumption, | 0:35:09 | 0:35:14 | |
to develop mass investment in construction, | 0:35:14 | 0:35:17 | |
and it has started to shrink, to some extent, | 0:35:17 | 0:35:20 | |
in the past 20 or 30 years, and I think it will be a major threat | 0:35:20 | 0:35:25 | |
to our democracies if it was to continue shrinking | 0:35:25 | 0:35:30 | |
in the coming decades. | 0:35:30 | 0:35:32 | |
And Piketty puts the blame for the shrinking middle class | 0:35:34 | 0:35:37 | |
on the growing concentration of wealth in the hands of the rich. | 0:35:37 | 0:35:41 | |
Are we going to continue in this direction | 0:35:43 | 0:35:45 | |
of a shrinking middle class? | 0:35:45 | 0:35:47 | |
It's difficult to know how far this can go. | 0:35:47 | 0:35:49 | |
What is sure is that, in recent years, what we observe in Britain | 0:35:49 | 0:35:54 | |
and across countries is that very top wealth holders, billionaires, | 0:35:54 | 0:36:00 | |
have been rising much faster than average wealth | 0:36:00 | 0:36:05 | |
and much faster than the size of the economy. | 0:36:05 | 0:36:07 | |
You can see that if this continues for several decades, | 0:36:07 | 0:36:10 | |
the share going to the middle class could decline. | 0:36:10 | 0:36:13 | |
If we believe that a more equal society represents progress, | 0:36:14 | 0:36:18 | |
this is under threat. | 0:36:18 | 0:36:21 | |
Piketty points to one form of wealth in particular | 0:36:21 | 0:36:25 | |
as a key to understanding his argument - property. | 0:36:25 | 0:36:29 | |
# Grab your coat and get your hat | 0:36:30 | 0:36:33 | |
# Leave your worry on the doorstep... # | 0:36:33 | 0:36:36 | |
For much of the 20th century, Britain's property market worked. | 0:36:36 | 0:36:40 | |
Home ownership grew, | 0:36:40 | 0:36:42 | |
and wealth was spread across society in the process. | 0:36:42 | 0:36:45 | |
# Leave your worry on the doorstep... # | 0:36:45 | 0:36:49 | |
In fact, it was the biggest wealth transfer | 0:36:49 | 0:36:53 | |
from the rich to the rest of us in British history. | 0:36:53 | 0:36:56 | |
-JOHN BETJEMAN: -Along the serried avenues of Harrow's garden villages, | 0:36:56 | 0:37:01 | |
households rise and shine and settle down to the Sunday morning rhythm. | 0:37:01 | 0:37:08 | |
In the 1970s, when John Betjeman made his film about Metro-land, | 0:37:08 | 0:37:12 | |
he was reflecting on a story of quiet triumph - | 0:37:12 | 0:37:16 | |
wealth spreading as the suburbs grew. | 0:37:16 | 0:37:19 | |
HE INHALES | 0:37:24 | 0:37:26 | |
The healthy air of Harrow in the 1920s and '30s, | 0:37:27 | 0:37:31 | |
when these villas were built. | 0:37:31 | 0:37:33 | |
You paid a deposit and eventually, we hope, | 0:37:34 | 0:37:38 | |
you had your own house with its garage and front garden | 0:37:38 | 0:37:43 | |
and back garden. | 0:37:43 | 0:37:44 | |
Variety created in each facade of the houses, | 0:37:44 | 0:37:49 | |
and in the colouring of the trees. | 0:37:49 | 0:37:52 | |
# On the sunny side of the street... # | 0:37:52 | 0:37:54 | |
But there was no fairy-tale ending. | 0:37:54 | 0:37:57 | |
I grew up in Harrow, | 0:37:57 | 0:37:58 | |
and my parents were part of that revolution in home ownership. | 0:37:58 | 0:38:01 | |
Many of my generation followed them onto the property ladder, | 0:38:01 | 0:38:05 | |
but since 2003, home ownership has stalled. | 0:38:05 | 0:38:09 | |
This is Oxford. | 0:38:15 | 0:38:16 | |
But we're far away from the dreaming spires here. | 0:38:18 | 0:38:21 | |
In this city, homes used to cost | 0:38:22 | 0:38:24 | |
three times the average local salary. | 0:38:24 | 0:38:27 | |
But now an average home costs 11 times the local salary, | 0:38:27 | 0:38:31 | |
making Oxford one of the least affordable places in Britain. | 0:38:31 | 0:38:36 | |
Oxford professor Danny Dorling | 0:38:40 | 0:38:42 | |
agrees that the decline in home ownership | 0:38:42 | 0:38:44 | |
is at the heart of the growth in inequality. | 0:38:44 | 0:38:47 | |
How important was the idea of owning property | 0:38:49 | 0:38:52 | |
to actual relative economic equality? | 0:38:52 | 0:38:55 | |
I mean, this was incredibly important. | 0:38:55 | 0:38:57 | |
We went from a position of 90% of us renting, | 0:38:57 | 0:39:00 | |
and only those who were moneyed owning, | 0:39:00 | 0:39:03 | |
to a position where it was absolutely normal | 0:39:03 | 0:39:05 | |
for the middle class to buy property - | 0:39:05 | 0:39:07 | |
my mum and dad bought a house here for £4,000 in the '70s - | 0:39:07 | 0:39:10 | |
to a position where it was normal in the working class to do this. | 0:39:10 | 0:39:14 | |
You know, we had building societies set up | 0:39:14 | 0:39:16 | |
to help you borrow money to get a friend to build you a house. | 0:39:16 | 0:39:21 | |
"My house." | 0:39:21 | 0:39:23 | |
You know, I can't get used to saying that? | 0:39:23 | 0:39:26 | |
"Have you seen my house?" | 0:39:26 | 0:39:27 | |
"Why don't you all come round to my house?" | 0:39:27 | 0:39:30 | |
Oh, Bob, I can't wait to move in. | 0:39:30 | 0:39:34 | |
In the '70s, popular sitcoms such as The Likely Lads | 0:39:34 | 0:39:38 | |
reflected the reality of an upwardly mobile society. | 0:39:38 | 0:39:42 | |
MUSIC: In Every Dream Home A Heartache by Roxy Music | 0:39:42 | 0:39:45 | |
But today's likely lads are more likely to live in a rented flat, | 0:39:45 | 0:39:49 | |
spending twice as much renting as they would on a mortgage. | 0:39:49 | 0:39:53 | |
# In every dream home a heartache | 0:39:55 | 0:39:58 | |
# And every step I take | 0:40:00 | 0:40:03 | |
# Takes me further... # | 0:40:03 | 0:40:06 | |
And there's nowhere that this crisis is more evident | 0:40:06 | 0:40:08 | |
than here in London. | 0:40:08 | 0:40:10 | |
They're building - but it's the super-rich who are buying. | 0:40:10 | 0:40:14 | |
And developers are chasing their cash | 0:40:16 | 0:40:19 | |
with extraordinary developments like this... | 0:40:19 | 0:40:22 | |
..showcased in this highly polished promo... | 0:40:24 | 0:40:26 | |
'One Hyde Park represents a valuable investment.' | 0:40:26 | 0:40:29 | |
..in which developers sell potential buyers the dream | 0:40:29 | 0:40:32 | |
of living a celebrity lifestyle in the centre of London. | 0:40:32 | 0:40:36 | |
'To the south, Knightsbridge, one of the finest...' | 0:40:36 | 0:40:39 | |
The cheapest flat is £6.5 million. | 0:40:39 | 0:40:42 | |
On average income, it would take 250 years to buy it... | 0:40:43 | 0:40:48 | |
if you just went to work and slept | 0:40:48 | 0:40:52 | |
and never had children or holidays...or food. | 0:40:52 | 0:40:56 | |
Thanks in part to super-rich investments, | 0:40:56 | 0:40:59 | |
London prices have increased by 25% in a year. | 0:40:59 | 0:41:04 | |
'One Hyde Park offers legendary service. | 0:41:04 | 0:41:07 | |
'A new global benchmark for luxury residential living. | 0:41:07 | 0:41:11 | |
'Representing a secure investment in the current economic climate, | 0:41:11 | 0:41:15 | |
'some existing owners have already seen | 0:41:15 | 0:41:17 | |
'a substantial increase in capital value, in excess of 80%. | 0:41:17 | 0:41:22 | |
'Own the legacy - experience the exceptional.' | 0:41:22 | 0:41:25 | |
Few people have changed London's skyline like Peter Rees. | 0:41:26 | 0:41:31 | |
The former head of planning at the City of London, | 0:41:31 | 0:41:34 | |
he now blames foreign speculation | 0:41:34 | 0:41:36 | |
for driving prices out of the reach of ordinary Londoners. | 0:41:36 | 0:41:39 | |
We have a housing bubble in London | 0:41:41 | 0:41:43 | |
that is fuelled by an almost limitless wave | 0:41:43 | 0:41:46 | |
of international capital. | 0:41:46 | 0:41:48 | |
There's no end to that supply - | 0:41:48 | 0:41:50 | |
it's constantly being generated in Russia and China | 0:41:50 | 0:41:53 | |
and in the Middle East. | 0:41:53 | 0:41:54 | |
How do foreign investors view the properties they're buying in London? | 0:41:54 | 0:41:58 | |
Do they see them as homes? | 0:41:58 | 0:41:59 | |
Investment in the residential real estate market in London | 0:41:59 | 0:42:02 | |
is perceived as even better than gold bricks, | 0:42:02 | 0:42:05 | |
which you have to hide in a vault, and you can't see. | 0:42:05 | 0:42:08 | |
These things are out there, piled up, | 0:42:08 | 0:42:10 | |
and you can actually keep an eye on them. | 0:42:10 | 0:42:13 | |
But of course, inside, they are just containers for the same capital | 0:42:13 | 0:42:17 | |
that you would otherwise put in a bank vault, | 0:42:17 | 0:42:20 | |
which is why I refer to these as piles of safe deposit boxes. | 0:42:20 | 0:42:24 | |
# Us... | 0:42:24 | 0:42:26 | |
# And them... # | 0:42:29 | 0:42:32 | |
Battersea Power Station, once a symbol of industrial power, | 0:42:32 | 0:42:36 | |
seen in this glossy ad, is being redeveloped for flats. | 0:42:36 | 0:42:40 | |
In the first release, 50% were sold to foreign buyers, | 0:42:40 | 0:42:44 | |
speculating on Britain's property market. | 0:42:44 | 0:42:48 | |
70% of all new-build residential property in central London | 0:42:48 | 0:42:52 | |
is now being bought by foreign investors. | 0:42:52 | 0:42:56 | |
So, what does this mean for ordinary people? For us? | 0:42:56 | 0:43:00 | |
The enclaves of the very rich are spreading | 0:43:00 | 0:43:04 | |
over larger and larger areas - | 0:43:04 | 0:43:05 | |
and not even areas where the uber-rich are living, | 0:43:05 | 0:43:09 | |
but areas where they're simply investing. | 0:43:09 | 0:43:12 | |
How far can this go? | 0:43:12 | 0:43:13 | |
How much do we give over to this desert of wealth | 0:43:13 | 0:43:16 | |
before London ceases to work? | 0:43:16 | 0:43:19 | |
This is creating a new class of economic refugees. | 0:43:23 | 0:43:28 | |
In Newham, this group of single mums are being removed from their homes | 0:43:28 | 0:43:32 | |
to make way for a new development. | 0:43:32 | 0:43:36 | |
But they've refused to go. | 0:43:36 | 0:43:37 | |
What's happening here is being called social cleansing. | 0:43:37 | 0:43:41 | |
It's obvious what's happening - | 0:43:41 | 0:43:43 | |
all these council homes and places | 0:43:43 | 0:43:47 | |
are being demolished and built into glass buildings | 0:43:47 | 0:43:49 | |
that are luxury apartments that nobody in the local area can afford. | 0:43:49 | 0:43:53 | |
There's one being built just there - | 0:43:53 | 0:43:54 | |
it's a stone's throw from where we are standing right now. | 0:43:54 | 0:43:57 | |
-Yeah. -Yeah, that's Stratford Plaza - | 0:43:57 | 0:43:58 | |
-and before that was even halfway up, it was already bought off. -Yeah. | 0:43:58 | 0:44:02 | |
We went to see our local Labour mayor, | 0:44:02 | 0:44:04 | |
and he said to us, "If you can't afford to live in Newham, | 0:44:04 | 0:44:07 | |
"you can't afford to live in Newham. What do you want me to do about it?" | 0:44:07 | 0:44:10 | |
And that's the response that we've had from our MPs, | 0:44:10 | 0:44:13 | |
-councillors, and our mayor. -How does that make you feel, | 0:44:13 | 0:44:17 | |
that you're being made to move out of where you live? | 0:44:17 | 0:44:19 | |
It's really upsetting, because, obviously, | 0:44:19 | 0:44:22 | |
all of our family and support networks are here. | 0:44:22 | 0:44:25 | |
-Has anyone shown you any support? -No! Why would they? -No. | 0:44:25 | 0:44:29 | |
We're a thorn in their side for all they care. | 0:44:29 | 0:44:31 | |
We're an embarrassment to them, | 0:44:31 | 0:44:33 | |
because we're proving something that they're saying is not happening. | 0:44:33 | 0:44:35 | |
After a public outcry, | 0:44:35 | 0:44:38 | |
Newham Council did eventually reprieve 40 out of 434 homes, | 0:44:38 | 0:44:43 | |
and apologised for the treatment of the women. | 0:44:43 | 0:44:46 | |
But the fact that they are just fighting for a place to live | 0:44:46 | 0:44:49 | |
shows how far expectations have dropped. | 0:44:49 | 0:44:52 | |
For this generation, buying a property is a ridiculous dream. | 0:44:52 | 0:44:56 | |
By 2032, Britain will be a country in which the majority are renters. | 0:44:59 | 0:45:04 | |
Getting hold of that key piece of wealth - property - | 0:45:07 | 0:45:11 | |
will become ever more difficult. | 0:45:11 | 0:45:14 | |
..and no key worker accommodation. | 0:45:14 | 0:45:17 | |
That is a SHAME! | 0:45:17 | 0:45:19 | |
We should not be collaborating with developers | 0:45:19 | 0:45:23 | |
and excluding ordinary people from housing. | 0:45:23 | 0:45:27 | |
This demonstration is taking place outside a property fair | 0:45:27 | 0:45:30 | |
in London's Olympia. | 0:45:30 | 0:45:32 | |
But this fair isn't just about London. | 0:45:35 | 0:45:37 | |
Cash-strapped councils from all over Britain are selling off land. | 0:45:37 | 0:45:42 | |
Hi, there. | 0:45:42 | 0:45:45 | |
If I was an investor coming here | 0:45:45 | 0:45:46 | |
and I said I've got 15 billion to spend, OK? | 0:45:46 | 0:45:50 | |
-We've certainly got plenty of space for 15 billion. -Have you? OK. | 0:45:50 | 0:45:53 | |
Foreign investors are now circling property markets across the country. | 0:45:54 | 0:45:58 | |
It's unbelievable. | 0:46:00 | 0:46:02 | |
They're all just here flogging off, basically, what they own | 0:46:02 | 0:46:06 | |
to private investors from abroad. | 0:46:06 | 0:46:09 | |
I'm from Tokyo, on a business trip, for about a week. | 0:46:11 | 0:46:13 | |
And I'm in the property business. | 0:46:13 | 0:46:16 | |
-We have a portfolio of 180 million. -180 million? -Currently. -OK. | 0:46:16 | 0:46:20 | |
180 million. | 0:46:20 | 0:46:22 | |
So, it's kind of a little bit of money to spend(!) | 0:46:22 | 0:46:25 | |
We have many investors interested in UK properties, | 0:46:25 | 0:46:28 | |
and that's why I'm here today - just to meet people in the same industry | 0:46:28 | 0:46:32 | |
and to find out what are the opportunities here. | 0:46:32 | 0:46:34 | |
But what is now becoming clear is the type of properties | 0:46:37 | 0:46:40 | |
these new investors are after. | 0:46:40 | 0:46:42 | |
They want more and more of us to rent. | 0:46:43 | 0:46:46 | |
And that's increasingly what the market will supply. | 0:46:49 | 0:46:52 | |
MUSIC: For The Love Of Money by The O'Jays | 0:46:53 | 0:46:56 | |
But it's not just super-rich foreign investors exploiting this trend. | 0:46:56 | 0:47:01 | |
Properties are being swept up by a growing class | 0:47:01 | 0:47:03 | |
of British super-rich property investor - | 0:47:03 | 0:47:06 | |
the buy-to-let baron. | 0:47:06 | 0:47:08 | |
# Money, money, money, money... # | 0:47:09 | 0:47:11 | |
And this man is the biggest buy-to-let baron of them all - | 0:47:11 | 0:47:15 | |
Kevin Green. | 0:47:15 | 0:47:16 | |
After the count of three, we're going to say, "Yes, yes, yes," | 0:47:18 | 0:47:23 | |
in really quick succession. | 0:47:23 | 0:47:24 | |
One, two, three... | 0:47:24 | 0:47:26 | |
-ALL: -Yes, yes, yes! | 0:47:26 | 0:47:29 | |
Brilliant! Give a high-five to the person next to you. | 0:47:29 | 0:47:32 | |
He owns 700 properties, | 0:47:32 | 0:47:34 | |
but he also gives wealth seminars on how to be a buy-to-let millionaire. | 0:47:34 | 0:47:38 | |
If you worry what everybody's going to say about you, | 0:47:38 | 0:47:41 | |
you ain't going to become a very successful entrepreneur. | 0:47:41 | 0:47:45 | |
Does that make sense? | 0:47:45 | 0:47:47 | |
Kevin's business is doing very well, | 0:47:47 | 0:47:49 | |
but he's gaining at the expense of one group in particular - | 0:47:49 | 0:47:52 | |
first-time buyers. | 0:47:52 | 0:47:54 | |
By value, buy-to-let lending is growing faster | 0:47:54 | 0:47:57 | |
than first-time mortgages. | 0:47:57 | 0:47:59 | |
It seems as though, in Britain, there are two worlds being created, | 0:47:59 | 0:48:02 | |
and one is the buy-to-let market, which is booming, | 0:48:02 | 0:48:05 | |
and then, on the other half, is everyone else | 0:48:05 | 0:48:07 | |
who's trying to get on the property ladder | 0:48:07 | 0:48:09 | |
and just simply can't afford to get on the property ladder - | 0:48:09 | 0:48:12 | |
and they're related, because your world is forcing everyone else | 0:48:12 | 0:48:17 | |
from not being able to buy anything. | 0:48:17 | 0:48:19 | |
So how do you feel about that? | 0:48:19 | 0:48:21 | |
Yeah, I mean, it's a fair comment, there. | 0:48:21 | 0:48:23 | |
Property, if you're into it, does - if you do it right - | 0:48:23 | 0:48:26 | |
get you in a very wealthy position. | 0:48:26 | 0:48:27 | |
Generally, there is a split, | 0:48:27 | 0:48:29 | |
and it's getting harder for first-time buyer to come in. | 0:48:29 | 0:48:32 | |
Whether that's because of investors is arguable. | 0:48:32 | 0:48:35 | |
We then had a payment of £31,000 tax free. | 0:48:35 | 0:48:39 | |
Hands up who'd like that? | 0:48:39 | 0:48:41 | |
These people aren't mega landlords, | 0:48:41 | 0:48:44 | |
but every one that succeeds, could push out one more first-time buyer. | 0:48:44 | 0:48:47 | |
If everyone becomes a buy-to-let landlord, | 0:48:47 | 0:48:51 | |
there won't be any property left for anyone else - | 0:48:51 | 0:48:54 | |
it's going to just exacerbate the problem, make things even worse. | 0:48:54 | 0:48:57 | |
Probably that problem has already been realised, | 0:48:57 | 0:49:01 | |
and we've reached that point. | 0:49:01 | 0:49:02 | |
Our housing crisis is Kevin's business opportunity, | 0:49:02 | 0:49:07 | |
as we become a nation of renters. | 0:49:07 | 0:49:10 | |
When I get up every morning, | 0:49:11 | 0:49:13 | |
I do something which is a little bit different - | 0:49:13 | 0:49:16 | |
cos sometimes, as an entrepreneur, | 0:49:16 | 0:49:18 | |
it's good to be a little bit crazy or a little bit different, isn't it? | 0:49:18 | 0:49:22 | |
What I do is, I instil self belief. | 0:49:22 | 0:49:24 | |
I go, "If I wasn't me, I would SO want to be me!" | 0:49:24 | 0:49:29 | |
You know? And then... I feel better already, do you know what I mean? | 0:49:30 | 0:49:34 | |
Once you've got that sweet taste of success that starts coming, | 0:49:34 | 0:49:38 | |
then you just want more. | 0:49:38 | 0:49:40 | |
After three - one, two, three... | 0:49:40 | 0:49:44 | |
-ALL: -If I wasn't me, I would SO want to be me! | 0:49:44 | 0:49:47 | |
Brilliant! Give yourself a round of applause. | 0:49:47 | 0:49:49 | |
Property equals wealth in Britain. | 0:49:51 | 0:49:53 | |
It's at the heart of ballooning inequality, | 0:49:53 | 0:49:56 | |
increasing wealth for the super-rich and taking it away from us. | 0:49:56 | 0:50:00 | |
And as we struggle, | 0:50:04 | 0:50:05 | |
the party only gets better for the wealthiest in Britain. | 0:50:05 | 0:50:08 | |
I'm on my way to a private event at Prince Harry's favourite club, | 0:50:08 | 0:50:13 | |
Mahiki, thrown by diamond seller to the super-rich - Vashi. | 0:50:13 | 0:50:17 | |
-How's it going, Vashi? -Mate, it's just unbelievable. | 0:50:17 | 0:50:20 | |
As you can see, we've got about 150 people already here. | 0:50:20 | 0:50:23 | |
-So it's just going better than expected. -Yeah. | 0:50:23 | 0:50:26 | |
For Vashi, business is booming. | 0:50:35 | 0:50:37 | |
This is Stephanie, the wife of a Russian multimillionaire in London | 0:50:37 | 0:50:42 | |
who wants to spend a lot of money on diamonds. | 0:50:42 | 0:50:45 | |
So, in terms of the jewellery, what were you looking for? | 0:50:45 | 0:50:49 | |
-I would like to surprise people with something. -Yeah? Great. | 0:50:49 | 0:50:52 | |
Let's take it out. | 0:50:52 | 0:50:53 | |
What's the most ridiculous thing | 0:50:55 | 0:50:56 | |
that you've been asked to cover in diamonds? | 0:50:56 | 0:50:58 | |
Well, we had the other day someone buying a bra crusted with diamonds. | 0:50:58 | 0:51:02 | |
That's the only way that you can buy a bra that's worth £10 million. | 0:51:02 | 0:51:06 | |
Buying diamonds isn't simply an extravagance for the super-rich - | 0:51:06 | 0:51:10 | |
like gold or watches, they're an investment, | 0:51:10 | 0:51:13 | |
insulating their wealth in case the economy goes belly up again. | 0:51:13 | 0:51:17 | |
-Can I take one more? -Yes, please. | 0:51:17 | 0:51:19 | |
After a bit of polite horse trading, they agree on a price. | 0:51:19 | 0:51:22 | |
Altogether 54, 55, so we can do it for 50. | 0:51:22 | 0:51:25 | |
-Thank you very much! -It's a pleasure! | 0:51:25 | 0:51:27 | |
-Thank you, Stephanie. -Thank you. -Great doing business with you. | 0:51:27 | 0:51:30 | |
Mwah! Mwah! Mwah! | 0:51:30 | 0:51:32 | |
For decades, as we've seen, government after government | 0:51:36 | 0:51:39 | |
pursued an economic policy to attract the super-rich to Britain. | 0:51:39 | 0:51:43 | |
It was all based on a flawed idea - | 0:51:43 | 0:51:45 | |
that their wealth would trickle down to the rest of us. | 0:51:45 | 0:51:48 | |
It didn't. | 0:51:48 | 0:51:50 | |
Economists believe it actually trickled up, | 0:51:50 | 0:51:52 | |
from us to the super-rich, | 0:51:52 | 0:51:55 | |
into their giant reservoir of private wealth. | 0:51:55 | 0:51:58 | |
So you think, in a way, trickle-down was almost a way of duping us | 0:51:58 | 0:52:01 | |
into redistributing wealth from all of us | 0:52:01 | 0:52:05 | |
to the richest members of society? | 0:52:05 | 0:52:08 | |
Yes, I can only describe it like that, | 0:52:08 | 0:52:10 | |
because, especially in the US and the UK, | 0:52:10 | 0:52:12 | |
back in the late 1970s, | 0:52:12 | 0:52:15 | |
the top 1% used to take about 10% of total income - | 0:52:15 | 0:52:18 | |
on the eve of the 2008 financial crisis, this rose to 23%. | 0:52:18 | 0:52:25 | |
There is now a growing consensus that this trickle-up effect | 0:52:25 | 0:52:29 | |
needs to be reversed. | 0:52:29 | 0:52:32 | |
We have indeed made rich people richer - | 0:52:32 | 0:52:35 | |
I am testament to that - but clearly, | 0:52:35 | 0:52:38 | |
everyone else isn't better off. | 0:52:38 | 0:52:40 | |
And it's both immoral but also economically idiotic. | 0:52:40 | 0:52:46 | |
The super-rich have the money and we need it - | 0:52:46 | 0:52:50 | |
so how do we get it off them? | 0:52:50 | 0:52:52 | |
Thomas Piketty has a radical solution - | 0:52:52 | 0:52:54 | |
instead of increasing income tax, | 0:52:54 | 0:52:56 | |
directly target the wealth of the super-rich. | 0:52:56 | 0:52:58 | |
It would be better, actually, to have an annual tax on wealth. | 0:52:58 | 0:53:02 | |
This is just a matter of common sense - | 0:53:02 | 0:53:05 | |
you know, this is not a matter of just left or right. | 0:53:05 | 0:53:08 | |
When you have booming property values at the top | 0:53:08 | 0:53:11 | |
and booming top wealth portfolio at the top, | 0:53:11 | 0:53:15 | |
you know, it would be crazy not to ask a little bit more | 0:53:15 | 0:53:18 | |
to these people. | 0:53:18 | 0:53:20 | |
But guess who disagrees... | 0:53:20 | 0:53:23 | |
the super-rich themselves. | 0:53:23 | 0:53:26 | |
I'm very, very much in favour of very low taxation | 0:53:27 | 0:53:31 | |
right the way across the board. | 0:53:31 | 0:53:33 | |
I think we don't need to be taxed any more - | 0:53:34 | 0:53:37 | |
we are paying a lot of tax. | 0:53:37 | 0:53:38 | |
if I gave you, Jacques, my tax bill you'd probably have a heart attack. | 0:53:38 | 0:53:41 | |
So this approach of robbing the rich to pay the poor, | 0:53:41 | 0:53:44 | |
I don't agree with it. | 0:53:44 | 0:53:46 | |
If somebody's done well for themselves through hard work | 0:53:46 | 0:53:48 | |
and effort, why should they be taxed through the eyeballs? | 0:53:48 | 0:53:51 | |
The super-rich don't want higher taxes - | 0:53:53 | 0:53:55 | |
but low taxation does not necessarily equal higher growth. | 0:53:55 | 0:53:59 | |
Since 1980, countries which have reduced tax rates for the wealthy, | 0:53:59 | 0:54:04 | |
such as Britain and the US, have not grown any quicker | 0:54:04 | 0:54:08 | |
than Denmark or Sweden, which kept them higher. | 0:54:08 | 0:54:12 | |
We need to change the discourse here, | 0:54:13 | 0:54:16 | |
because if low tax was good in itself, | 0:54:16 | 0:54:20 | |
why doesn't everyone move to Jamaica? | 0:54:20 | 0:54:22 | |
The highest income tax rate in Jamaica is 5%. | 0:54:22 | 0:54:26 | |
If you look at the Scandinavian countries, | 0:54:26 | 0:54:29 | |
the system there is that you tax everyone heavily, | 0:54:29 | 0:54:32 | |
but then you spend that for everyone quite heavily. | 0:54:32 | 0:54:35 | |
88% of Danish people say they are happy to pay | 0:54:35 | 0:54:40 | |
what tax they are paying. This is quite amazing. | 0:54:40 | 0:54:43 | |
We, in Britain, have a low-tax culture, instilled in us | 0:54:45 | 0:54:48 | |
through 30 years of driving taxes down for the super-rich. | 0:54:48 | 0:54:53 | |
But it hasn't worked. | 0:54:53 | 0:54:55 | |
The economy would be 20% bigger | 0:54:55 | 0:54:57 | |
had the gap between the rich and poor not widened since the 1980s. | 0:54:57 | 0:55:02 | |
Now even the rich believe things must change. | 0:55:02 | 0:55:07 | |
Nobody wants to live in a society where your society is gated, | 0:55:07 | 0:55:10 | |
where you have to live behind barbed wire, | 0:55:10 | 0:55:13 | |
where you can't walk down the street. | 0:55:13 | 0:55:15 | |
You know, people who are very wealthy, | 0:55:15 | 0:55:17 | |
billionaires and zillionaires of every stripe, do need to wake up. | 0:55:17 | 0:55:20 | |
The price that you have to pay in higher taxes | 0:55:20 | 0:55:25 | |
for a safe, civil society | 0:55:25 | 0:55:28 | |
where everybody is happy and doing better | 0:55:28 | 0:55:31 | |
is very, very low - it's just not that big a deal. | 0:55:31 | 0:55:35 | |
But it would be a massive struggle to convince any government | 0:55:35 | 0:55:39 | |
to seriously hammer the super-rich. | 0:55:39 | 0:55:42 | |
The drive is to attract more of them here than ever before - | 0:55:42 | 0:55:46 | |
and there's a surprising reason why. | 0:55:46 | 0:55:48 | |
Economist Matt Whittaker has been crunching the numbers | 0:55:49 | 0:55:52 | |
on the super-rich and come to a startling conclusion. | 0:55:52 | 0:55:55 | |
It turns out the super-rich do have a vital role | 0:55:55 | 0:55:59 | |
to play in our economy, | 0:55:59 | 0:56:00 | |
just not the one we were told they were playing. | 0:56:00 | 0:56:02 | |
Take the activities of the super-rich away, | 0:56:02 | 0:56:05 | |
particularly in finance and in business services | 0:56:05 | 0:56:07 | |
and our GDP figures simply would not have looked as good. | 0:56:07 | 0:56:10 | |
So the super-rich have played a role in our economy | 0:56:10 | 0:56:13 | |
in terms of window dressing the economic figures. | 0:56:13 | 0:56:17 | |
You can certainly see the attraction to Chancellors of the Exchequer | 0:56:17 | 0:56:20 | |
of attracting the super-rich to the UK. | 0:56:20 | 0:56:23 | |
But clearly, for the majority of people in the UK, | 0:56:23 | 0:56:25 | |
actually what the super-rich have done is simply mask over the fact | 0:56:25 | 0:56:30 | |
that economic growth has not been as strong | 0:56:30 | 0:56:32 | |
as it would otherwise have been in recent years, | 0:56:32 | 0:56:34 | |
and living standards haven't improved for a significant number of people, | 0:56:34 | 0:56:38 | |
even in the pre-crisis years, | 0:56:38 | 0:56:40 | |
and I think that a model which is based on a top 1% | 0:56:40 | 0:56:43 | |
generating and consuming all of the growth simply isn't sustainable. | 0:56:43 | 0:56:48 | |
So if I gave you an option of, | 0:56:48 | 0:56:50 | |
"Were the super-rich good for Britain - yes or no?" | 0:56:50 | 0:56:54 | |
which one of those two words would you go for? | 0:56:54 | 0:56:56 | |
I'd say no. | 0:56:56 | 0:56:58 | |
When we first began to woo the super-rich to Britain, | 0:56:59 | 0:57:02 | |
there was no pretence that we'd benefit. | 0:57:02 | 0:57:04 | |
But then, with the collapse of manufacturing in the '80s, | 0:57:06 | 0:57:09 | |
we were told that these people would be the saviour | 0:57:09 | 0:57:12 | |
of the British economy. | 0:57:12 | 0:57:13 | |
But it was a lie. We've ended up poorer. | 0:57:13 | 0:57:17 | |
It was not even us, nor even really the super-rich | 0:57:17 | 0:57:19 | |
who ultimately benefited most, but government, | 0:57:19 | 0:57:23 | |
allowing successive Chancellors to hail economic growth | 0:57:23 | 0:57:26 | |
when the reality for us was a decade of stagnation. | 0:57:26 | 0:57:30 | |
The super-rich were a massive PR exercise - and we bought it. | 0:57:30 | 0:57:35 | |
But not any more. | 0:57:35 | 0:57:37 | |
Next, we travel into the world of the global super-rich. | 0:57:39 | 0:57:43 | |
How the billions that fuelled their fortunes were made from our debt... | 0:57:43 | 0:57:48 | |
Finance just means other people's debts. | 0:57:48 | 0:57:50 | |
So, you yourself didn't bring about the crash, | 0:57:50 | 0:57:52 | |
but you created the mechanics for it to happen. | 0:57:52 | 0:57:54 | |
That's true. | 0:57:54 | 0:57:56 | |
..and as luxury booms, we reveal how job insecurity has been | 0:57:56 | 0:58:00 | |
turned into a super-rich business opportunity... | 0:58:00 | 0:58:03 | |
Employment, as we know it traditionally, | 0:58:03 | 0:58:05 | |
has made people quite lazy, in many ways. | 0:58:05 | 0:58:08 | |
..but increasing inequality is going to change our world. | 0:58:08 | 0:58:12 | |
And the super-rich are worried. | 0:58:12 | 0:58:15 | |
So, are the pitchforks coming? | 0:58:15 | 0:58:17 | |
If things keep going the way they are, for sure they're going to come. | 0:58:17 | 0:58:20 |