Austerity is back on the agenda in British politics. Each day we seem to hear fresh reports from the Treasury warning that spending cuts are on the horizon. Not only would this be the wrong political choice for the Labour government, it would be the wrong economic choice for Britain. A wealth tax is the most viable alternative.
Politicians of all parties seem to agree that few things work well in Britain today. Public services are on their knees, town centres are boarded up, rivers and seas are polluted, roads and railways are outdated. In Yorkshire we have witnessed the consequences more than most.
Britain has fallen behind the rest of the world. The majority of people are getting poorer, even as a small minority gets much richer. How has this happened?
Austerity
Between 2010 and 2024 we had a Conservative government that was committed to austerity and refused to invest. They believed that if they cut public spending and investment then the private sector would fill the gap. This proved to be an ideological fantasy. Instead, they left a gaping hole in public services and national infrastructure. Growth flatlined, living standards stagnated and the state’s capacity declined.
Labour was elected to lead the country and clean up the Tories’ mess. The government has a huge mandate for change. It is therefore astounding that less than a year in we are already considering more of the same toxic medicine that left our country in such a terrible shape.
I believe that we should learn from our recent past. You cannot rebuild a country with public spending cuts. You won’t develop critical national infrastructure if it’s left to private investors. You can only grow an economy with smart public investment.
In addition, the government must learn from its damaging experience of cutting the winter fuel payment, which caused a significant rift with the electorate. The political impact of pushing through a fresh wave of cuts will be far, far worse.
But there is a clear alternative to further austerity. It starts with an analysis of wealth inequality in Britain today.
Wealth inequality
Our society is more unequal than it has ever been. A small number of wealthy individuals hold the lion’s share of our country’s financial resources, while millions of ordinary citizens struggle to make ends meet.
The richest 1% of people hold a staggering proportion of national wealth, while millions face stagnant wages, rising living costs, and diminished public services. According to Oxfam, the richest 1% of UK households own 23% of the nation’s wealth, while the bottom half of the population collectively holds just 9%. Billionaires’ wealth increased by £35mn a day in 2024.
These figures demonstrate how entrenched wealth inequality has become, with the ultra-wealthy reaping the benefits of tax policies that overwhelmingly favour them. In the face of this crisis, it is becoming increasingly clear that a wealth tax could provide a fairer and more sustainable way to address our economic difficulties.
It should not be the case that when the UK’s super-rich do exceptionally well, the state does dreadfully badly. It’s clear that something has gone badly wrong and our tax system must respond to these circumstances.
Wealth tax
A wealth tax, which levies a percentage on assets such as property, investments, and savings, would address this imbalance. By targeting accumulated wealth rather than income alone, it would focus on the unearned advantages that the wealthy currently enjoy.
A wealth tax is not about punishing success. It’s about making sure the wealthiest people in society contribute their fair share to the public good. Right now, the richest individuals in this country pay a fraction of their wealth in tax, while the rest of us bear a heavy burden. The system is rigged.
Wealth taxes have been implemented in countries like Norway and Switzerland, where inequality is reduced and public services are in much better shape.
I understand that politicians don’t like to be seen to raise taxes, but the upside is huge. Richard Hagan, director of the Crystal Doors company and a member of Patriotic Millionaires UK, has said: “A two per cent tax on wealth over £10mn would create £24bn a year for the UK Treasury and rein in extreme wealth. Only 20,000 people would pay it – and they would barely notice.”
We’re talking about asking a tiny minority of the population to pay a little bit more for the good of the country as a whole. This will require the government to be brave and stand up to the rich and powerful. By taxing the wealthiest individuals, we can generate the funds to genuinely rebuild Britain and create a more prosperous and equitable future for us all.
