Rich List 2011: Charity down and inequality up

Duncan Exley looks at the social issues behind the Rich List 2011 and the income inequality causing them.

Philip Green and Kate Moss

Duncan Exley is the campaign director for One Society

Yesterday’s Sunday Times 2011 Rich List deserves attention, not only because it is a very thorough and informative piece of research, but also because the accompanying analysis recognises the political risks of conspicuous wealth in an age of austerity.

The Sunday Times’ says “as their wealth grows, leaving the middle classes far behind, the super-rich…must be seen to be doing more for society, or they will provoke public anger of the kind that is currently directed towards bankers and risk the election of a more confiscatory government”. The report shows that charitable donations by the super-rich have fallen, and advocates a resurgence of charitable giving as a good way of demonstrating social responsibility.

However, the problem with charity is that it can divert attention from the harm done by excessive  inequality. There is a common assertion that the super-rich create wealth and pay millions in taxes, and that even the poor therefore benefit from inequality, but there are a number of reasons to question that assertion.

One person’s wealth is often based on the poverty of another. For example, Sir Philip Green is number 13 in the Rich List, but the Evening Standard revealed in March that his staff in Dorothy Perkins received just £6 per hour – barely above the minimum wage and 24 per cent lower than London Living Wage. The effects of this go beyond the staff themselves. According to the Institute for Fiscal Studies, the costs (e.g in social security payments) associated with sub-Living Wage pay costs the taxpayer £6 billion a year. There are also the other health and social costs of inequality, as outlined in The Spirit Level and elsewhere.

Another cost of inequality is hinted at by Rich List analysis itself: the effect of “surging property prices” reaches far beyond Belgravia, leading housing costs to far outstrip incomes in many areas.

The supposed overall economic benefits of allowing the rich to get much richer are also contradicted by statistical evidence: The 1,000 multimillionaires in the Rich List may be “£60.2 billion better off than they were in 2010”, but the rest of us are worse off: real household income fell by 0.8 per cent in 2010. Nor does high pay reflect high performance: according to research by Income Data Services, FTSE 100 CEOs saw their remuneration rise by 55 per cent in the year ending June 2010, while company performance flatlined.

The public anger that the Sunday Times warns us about would be justified, because in many ways the super rich are getting richer at our expense. Philanthropy is an extremely inadequate response.  There are some initiatives that would help: policy-makers can work with employers and investors to tackle the top pay arms race and the problem of sub-Living Wage pay, they can also take advantage of the popularity of ‘mansion tax’ and take steps to ensure that the rich actually pay their fair share of taxes. Britain needs to become more just, not to become a charity case.

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34 Responses to “Rich List 2011: Charity down and inequality up”

  1. Politics in Brum

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  2. Other TaxPayers Alli

    RT @leftfootfwd Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  3. Andrew Brennan

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  4. James Ball

    RT @OtherTPA: RT @leftfootfwd Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  5. Politics in Brum

    : Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc
    "One person’s wealth is often based on the poverty of another "

  6. Hitchin England

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  7. fauxpaschick

    "Rich List 2011: Charity down and inequality up: http://t.co/6DiouBd writes @One_Society's Duncan Exley" Illuminating but unsurprising!

  8. Kyle Grayson

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc

  9. Michael

    Rich List 2011: Charity down and inequality up I Left Foot Forward – http://j.mp/k02zxN

  10. One Society

    The Rich List are getting richer at our expense. Our blog on @leftfootfwd http://bit.ly/mJanXr

  11. Peter Hughes

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  12. Nehaal Bajwa

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  13. Pucci Dellanno

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  14. One Society

    The Sunday Times' Rich List published yesterday.
    Our response, on how the super rich are getting richer at the… http://fb.me/XvMlmlov

  15. Chris Wallace

    @leftfootfwd: Rich List 2011: Company performance flat, CEO pay up, charitable giving down, inequality up. How lovely. http://bit.ly/jZQutc

  16. Huston Gilmore

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc

  17. Zero-credit

    just waiting for the reality porn, to help us aspire to it all…. http://fb.me/Q8Rz5SKu

  18. William

    Non Belgravia housing costs were part of the ‘no more boom and bust bubble”caused by uncontrolled property lending permitted by the pathetic non supervision of the banks.AND if you welcome in 2 million adults to your country,are you surprised by the law of supply and demand?Which party increased income inequality by it’s income tax take of the bottom 20 percent?

  19. Murray Rothbard

    “One person’s wealth is often based on the poverty of another. For example, Sir Philip Green is number 13 in the Rich List, but the Evening Standard revealed in March that his staff in Dorothy Perkins received just £6 per hour”

    Of course, all we need to do to eliminate poverty is increase wages so that private profit is eliminated. Perhaps a basic lesson in economics might help here?

    What exactly is the fair share of taxes that the rich should pay?
    http://www.libertarianview.co.uk/millionaires-tax-loopholes-fair-shares/

  20. The Equality Trust

    RT @One_Society: The Rich List are getting richer at our expense. Our blog on @leftfootfwd http://bit.ly/mJanXr

  21. Spir.Sotiropoulou

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc

  22. Matthew Sinclair

    You should be a little careful with your statistics.

    The average in that Income Data Services report is heavily distorted by a few exceptional raises. If you take out three people then the average for the other ninety-seven falls from 55% to 8%. There is more here:
    http://dofonline.co.uk/blogs/the-edge/executives/ftse-100-345345435/

    Equally, best to be wary of citing the Spirit Level, which seems to have made some rather amateur mistakes in its empirical work:
    http://www.taxpayersalliance.com/spirit-level-debate-summary

    Given their low numbers, what is the evidence that the super rich make a significant difference to the balance of supply and demand in the rest of the housing market?

    And are you concerned about lags in your point about economic performance?

    Best,
    Matt

  23. Maria Adebowale

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up: http://bit.ly/mJanXr writes @One_Society's Duncan Exley

  24. Charity Supporter

    Rich List 2011: Charity down and inequality up: However, the problem with charity is that it can divert attentio… http://bit.ly/m3xaOj

  25. Rachel Hubbard

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc

  26. Duncan Exley

    Hi Matt

    Re the IDS stats:
    In some ways the “exceptional” figures are important (e.g because they set a benchmark for other companies’ CEO’s to aspire to etc). Of course, if we take out the three bottom people (to balance up your suggestion of removing the top 3), then the average for the remaining 94 rises above the level of your 97, but whatever the figure, even 8% is well above a level which would reflect company performance, inflation etc.

    Re The Spirit Level:
    I suspect that not everyone would regard the Taxpayer’s Alliance as entirely neutral in the summary you linked to. I’m aware that the Equality Trust has also produced rebuttals to rebuttals (http://www.equalitytrust.org.uk/resources/other/response-to-questions ). I suspect that the Taxpayers’ Alliance has rebuttals to rebuttals to rebuttals, but I should point out that there are also a large number of peer-reviewed academic studies finding correlations / causations between inequality and a range of health and social problems.

    Re housing:
    I’m tempted to make a flippant point about the fact that although there are not many super-rich people, they do tend to have more houses than the rest of us. More seriously, there are knock-on effects throughout the housing market, and if one looks at the impact of the wider group of rich people (say the top 10%), then the impacts increase.

    Re lags:
    I don’t think there’s much difference however you slice the calendar.

    Best regards,

    Duncan

  27. NoBigGovDuh

    RT @leftfootfwd: Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc

  28. Dave Citizen

    Well done Duncan – the serious damage extreme wealth inequalities do to a society are increasingly beyond reasonable doubt. Your piece is spot on in dismissing the two usual apologies for all this damage: the myth that super rich “entrepreneurs” are instrumental to the process of increasing real national wealth and the idea that charitable donations are a meaningful way to undo such harm.

    Adam Smith too was sceptical about the economic merits of the super rich:

    “All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” (Wealth of Nations Bk3 ChpIV)

  29. Ben Bradley

    RT @politicsinbrum: : Rich List 2011: Charity down and inequality up http://bit.ly/jZQutc
    "One person’s wealth is often based on the po …

  30. Mr. Sensible

    Alright for some…

  31. PSE2010Team

    RT @One_Society: The Rich List are getting richer at our expense. Our blog on @leftfootfwd http://bit.ly/mJanXr

  32. Murray Rothbard

    Why is it that socialists only ever complain about one type of inequality ?

    http://www.libertarianview.co.uk/the-importance-of-equality-questions-for-socialists/

  33. BenM

    Murray Rothbard – an extreme libertarian loon who thinks he can reduce complex moral choices made by social democrats down to whether they drink a cup of coffee or not.

    In other words, not worth engaging with.

  34. Rachel Hubbard

    RT @leftfootfwd: Rich List 2011: Charity down & inequality up http://bit.ly/jZQutc #HardestHit DisabilityProtest SirPhilipGreen MinimumWage

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