Building Leverage for a Wealth Levy

Returning to Jimmy Reid’s renowned ‘alienation’ speech, Graham O’Neill reflects on the prospects of wealth tax in Scotland today

50 years ago, Jimmy Reid delivered an insightful, deeply empathetic and inclusive speech. It was his first as the Rector of Glasgow University. His subject was alienation or, in Jimmy’s words, “The feeling of despair and hopelessness that pervades people who feel with justification that they have no real say in shaping or determining their own destinies.” Jimmy’s speech effused care. Its genius lay in a moral truth; that we all know of this thing, alienation, even if we prefer not to admit it. The speech had a profound and far-reaching cut-through. That is why it was published by the New York Times. It is why so many still reach back to it. Here was a politics of empathy and inclusion. Not of envy or exclusion. It spoke to our innate dignity. Poor or rich, we matter. We all have lives of possibilities. The problem is that only a few realise these. For the rest, unprotected from alienation seeping in, fulfilment or joy are sporadic, a respite in lives of insecurity. Again, in Jimmy’s own words: “I am convinced that the great mass of our people go through life without even a glimmer of what they could have contributed to their fellow human beings. This is a personal tragedy [and] a social crime.”

So, we return from Jimmy’s speech in Glasgow 50 years ago, to the present of a Tory governing elite – a Cabinet stuffed with millionaires – inflicting yet again its political economy of envy and exclusion. In soothsaying words, as in 2008 after the financial crash, this few told the many in last year’s regressive Autumn Statement that we ‘are all in it together’, in wilful ignorance to the suffering of millions in Austerity 1.0, or those who struggled to survive Covid-19 and are now assailed by a worsening cost of living social emergency. The truth is visceral: a decade of plummeting living standards, rising child poverty and widening wealth inequities. The Office for Budget Responsibility, in its forecasts accompanying the last Autumn Statement, said that households faced the steepest fall in living standards since records began. In the next two years household incomes are to fall by 7%.

We cannot allow Austerity 2.0. There is a super-rich elite, increasing its land power and absurdity and holding rising shares of wealth. These accumulate in assets, far from the productive real economy. The Office for National Statistics reported that by 2020 almost half (43%) of wealth in Britain was concentrated in the top 10% of households. The bottom 50% had only 9% of that wealth. The winning households in the Autumn Statement were the top 10%, guarding their assets. That is the real politics of envy. It is why we need to talk about wealth. We need wealth fairness in politics.

That should prompt Labour to demand that the UK government increase taxes on the wealthiest, such as levies on inheritance, capital gains, dividends and profits including windfalls. But we also need an explicit tax on net wealth, to be applied to the richest in our society. They benefit from the common infrastructure we all pay for, but do not reciprocate proportionate to their wealth. That is ethically unjustifiable, alienating to the many, and it is unproductive too. As a minimum and as the centrepiece of an unapologetic wealth fairness politics, the Labour Party should advocate a one-off wealth tax: a ‘cost of living solidarity wealth levy’. Those with the broadest shoulders can well afford it. Some of the wealthiest people in the country are saying that this is necessary. As a one-off, it is less vulnerable to avoidance or evasion. Revenues can be maximised. Most of all, it is the fair alternative to Austerity 2.0.

If this wealth tax gets no traction with Labour at Westminster, then genuinely progressive MSPs and our Left political parties must pressure and work with the Scottish Government to introduce a wealth tax. This can be done via the Scotland Acts by seeking an Order in Council at Westminster. The UK Tories might say no, but the very least we can do in Scotland is to try, and to shout about it from the rooftops. Such a wealth levy could transform the ability of the Scottish Parliament to invest in the Scottish people, its public sector workers, and its services. It could help in lifting tens of thousands of children out of poverty in Scotland.

There is nothing utopian about this. The Wealth Tax Commission has laid the groundwork. Tax Justice UK have set out a wealth taxation agenda. It is all feasible. This is about fairness, political will and keeping public services for the people. The Autumn Statement 2022 was a fork in the road: do we allow Austerity 2.0 or demand a politics of wealth fairness. The Chancellor made his ‘difficult decisions’; difficult, that is, for the many, especially the poorest. It is not at all difficult for the wealthy. 

Based on the Wealth Tax Commission final report in 2020, this levy would generate a huge resource. A one-off wealth tax set at an annual rate of 1% over five years would, at net wealth threshold (a) of £1million, generate £147 billion from 3 million taxpayers; (b) of £2 million, generate £ 81billion from 626,000 taxpayers and (c) of £5 million, generate £53 billion from 83,000 taxpayers. Tax Justice UK reported that £37 billion per annum may be raised via taxes on wealth. Critically, this transfer is also productive, moving from moribund assets to the real economy.

A politics of wealth fairness, with this ‘cost of living solidarity wealth levy’ at its core, can and would protect people from the worst impacts of survival decisions of heating or eating or being abandoned and left with rent arrears, mortgage default, crippling debt, homelessness or worst of all dying in despair. Inflation already rips through millions of lives. As always it hits the poorest, hardest. Austerity 2.0 would complete a brutal job of the alienation of the many.

Politics is not only about choices. It is partly about that, of course. But most of all, as Jimmy Reid reminded us 50 years ago, it is more than anything else about people. Are we comfortable with millions suffering? Having endured a triple whammy in the last decade of Austerity 1.0, spiralling living standards and then Covid-19, are we to be assailed again, this time by Austerity 2.0? There were approximately 335,000 additional deaths in Britain in 2012-2019, largely stemming from Austerity 1.0, and disproportionately affecting women in poverty.

The cost of living emergency and deep wealth inequities are symptoms of a failed political economy of envy, exclusion and selfishness. Austerity is a choice. We cannot allow the few to choose ‘Austerity 2.0’ for the many. The ‘cost of living solidarity wealth levy’, as part of a political economy of wealth fairness, is the choice we must demand of the UK government, of Labour, and of each other. That may stop any further dreadful alienation.

Graham O’Neill has been a human rights campaigner for over 20 years, especially with refugees, trafficking survivors and vulnerable migrants. He also writes on socio-economic injustice.