Is it time for a wealth tax on the super-rich?
The millionaire Dale Vince disagrees. A former new-age traveller who made his money in green energy and has donated to Just Stop Oil, he is part of the Patriotic Millionaires organisation who think it is high time people like them are asked to increase their contributions. 'There's a whole bunch of us. We're all saying the same thing, that we can afford to pay more tax. Rich people should pay more tax, and we can use that money to reduce inequality in our country.'
The tax expert and economics professor Arun Advani explains how a wealth tax could work and what the dangers could be. Would it send millionaires fleeing from the UK – and would that matter? And what other levers are at the government's disposal?
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Meanwhile, the aforementioned Surfers Against Sewage say of Cunliffe's report and his 88 recommendations for the government to transform the water industry that 'this is putting lipstick on a pig'. The Labour left, as ever, want water brought back into public ownership immediately. Such critics need to hose themselves down a bit. There's nothing in Cunliffe's report that would prevent any water company that is going bust from being rescued by the taxpayer or the water bill payer, and thus nothing to stop such companies going into a transitional regime that would almost certainly mean nationalisation anyway. This is, in fact, the current situation, and it is probably what will happen to Thames Water – deeply in the debt doo-doo itself – before much longer. It is vastly superior to Rachel Reeves nationalising the firm now and taking on its £15bn in debt. Apart from anything else, there's no room in the public finances for such a move. And that's just one company – there are many more in varying states of financial peril. Of course, Parliament could just pass a bill that takes control of the assets without compensation, but that Bolshevik approach wouldn't encourage private investment in the UK, and would in any case violate human rights – the right not to have property arbitrarily confiscated by the state. Not even the great post-war Attlee administration did that when it took over our run-down utilities. Cunliffe's report therefore leaves the door wide open for nationalisation of the individual companies in the future, but in an orderly manner that doesn't take money off, say, the schools or the welfare budget. That seems eminently sensible and un-ideological. It's a clever approach, but what I like best about Cunliffe's work is that he is telling the nation the hard truth: that someone, somewhere, has to pay for water and to repair the huge underinvestment over decades in what is still basically a Victorian system. Indeed, it is only fair to point out that one of the attractions for the Thatcher government in privatising water all those years ago was that it would avoid the need for the Treasury to pay for the wholesale rebuilding of the pipework and treatment plants that was becoming necessary and increasingly urgent. As with the soon-to-be-privatised railways, the magic of free-market forces would renew the industry, reduce costs and charges, and lead to a lovely sparkling Panglossian future pouring out of every tap and toilet cistern in our kingdom. Now, four decades on, the investment is still needed, and if the private sector can't do it in an acceptable fashion, then taxpayers and bill payers will have to do so. Someone will have to finance all the new reservoirs we haven't built since 1992. Someone will have to find the money to stop the sewage dumps and plug the leaks. They're the same people, of course, and there's a political decision to be made about how the burden is distributed – through a progressive tax system or, more regressively, by hiking water bills. It's unavoidable, whoever owns the networks. On that point, Cunliffe also makes the startling observation that only 12 per cent of households have smart meters, so it's difficult to follow the usual rule that those who consume the most water should pay for it. He's also right to suggest that the water companies should receive some payment from the housebuilders for connecting the planned 1.5 million new homes to the already overstressed water and sewage networks. 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Sir Jon, and the government, understand that there's more than one way to skin a water company, and it would be an even greater outrage if the water companies and their owners were to be rewarded for abject failure with a handsome payout from hard-pressed taxpayers. With patience, it will resolve itself.
