The richest 1% of the UK population – made up entirely of millionaires – has captured more than a quarter of the £4 trillion increase in national wealth since 2000, while the poorest continue to struggle to make ends meet, an Oxfam report reveals today.
Ending the Era of Tax Havens, published ahead of Wednesday’s Budget, calls for a crackdown on tax havens that enable rich individuals and companies to avoid paying their fair share of tax in the UK and in some of the world’s poorest countries.
It is estimated that wealthy British tax-dodgers hold more than £170bn in tax havens such as the Cayman Islands and Bermuda, costing the Treasury around £5bn a year in lost revenues – money that could be used to fight poverty. Globally, governments are believed to be losing $190bn (£120bn) annually, with the world’s poorest regions losing at least $70bn (£43bn).
One in five people in the UK today are struggling to put food on the table and heat their homes. More people are using food banks than ever before, with more than one million emergency food parcels distributed in the last year.
Mark Goldring, Oxfam Chief Executive, said: “Currently, a privileged minority are able to hide billions offshore away from tax authorities, which unfairly increases the burden on the rest – especially people who are already struggling to get by.
“It’s time the Government ended the secrecy that allows tax dodgers to get away without paying their fair share, robbing the UK – and poor countries – of vital revenue that could help fund public services and provide a strong safety net for most vulnerable.
“It’s simply not right that a tiny group of individuals hoovers up so much of the UK’s growing prosperity while barely any trickles down to those who have least.
“We need action to ensure that a rise in wealth is more evenly shared in order to combat poverty and ensure everyone gets a fair share.”
Since 2000, the total net wealth in real terms of people in the UK has increased from £6tr to more than £10tr in 2015. Oxfam’s findings show that 26 pence in every pound of this increase in wealth went to the UK’s top 1% – approximately 600,000 people – while just seven pence went to the nation’s poorest 50%, around 30 million people.
The net result is that between 2000 and 2015 the richest 1% were able to increase their collective wealth by 79% to £2.4tr. The average wealth of each of this elite group was £3.7m in 2015, an increase of £1.5m each. Meanwhile, the average wealth of someone in the bottom 10% was just £1,600 last year, making them only £500 wealthier than 15 years ago.
£3.7m could buy outright an eight-bedroom home with swimming pool in Wimbledon, South-West London, while £1,600 wouldn’t even cover five days rent of the same property.
Oxfam is calling on the Government to do more to clamp down on tax dodging by the super-rich by ensuring UK-linked tax havens reveal the real beneficiaries of shell companies registered there, ahead of an Anti-Corruption Summit in London in May. Providing financial services to non-residents is a key feature of countries that operate as tax havens, and the UK, when combined with its Crown Dependencies and Overseas Territories, is estimated to account for nearly a quarter (23%) of this global business.
Oxfam is also urging the Chancellor in his Budget to tackle corporate tax dodging by requiring UK multinationals to publicly report their profits and taxes in every country where they operate – especially in the world’s poorest nations, who are hardest hit by corporate tax dodging.
In January, Oxfam’s report An Economy for the 1% highlighted a global picture of runaway inequality where the world’s richest 62 people own the same amount of wealth as the poorest half.
Although the number of people living in extreme poverty halved between 1990 and 2010, had inequality within countries not grown during this time, an extra 200million people would have escaped poverty. The average annual income of the poorest 10% has risen by less than $3-a-year in the past quarter of a century.
Women bear the brunt of poverty around the world, including in the UK and are disproportionally hit by spending cuts at home. They are still paid less than men for the same work and make up the majority of those in low-paid and insecure jobs.