This programme contains strong language
'The super-rich are taking over.'
Somebody like me earns 10,000, 20,000 an hour.
85 people own the same wealth as half the world's population.
You don't get this stuff at IKEA, do you, John?
LAUGHTER
How much are you worth?
Around £250 million.
Never before has money been so polarised.
The 21st century will be the most unequal period in human history.
'My name's Jacques Peretti and in this series, I'm going to find out
'how the super-rich have changed Britain.'
Explain how important Britain is as a tax haven for the super-rich.
It's very important.
It's the most attractive location now on the planet.
But are they making us richer...
We want more super-rich people here in England.
..or creating a more divided society?
We went to see our local Labour mayor and he said to us,
"If you can't afford to live in Newham, you can't afford to live in Newham.
"What do you want me to do about it?"
Human nature will always be a little envious
of those who have more than they do.
Who sold us the idea that the super-rich would make us better off?
There have always been the haves and the have nots,
but today, you have the haves, the have nots and the have yachts.
This is the story of The Super-Rich...And Us.
'As the rest of Britain struggles,
'the super-rich have never had it so good.
'Since the '08 crash, there's been £80 billion of austerity cuts.
'The same amount bankers will have been given in bonuses.
'At just over £180,000, this Lamborghini
'costs the same as an average house in Britain.
'Simon has flown in from Switzerland to buy a second-hand car,
'but not like one you or I might buy.'
You collect cars. How many cars have you got? Do you know?
I don't know if my wife's listening, but let's say less than ten.
- Less than - ten? Less than ten.
'The super-rich are behaving as if the biggest recession since the war
'didn't affect them, but it did, profoundly.
'They made lots of money from it.
'Hard to believe, until you hear it from the horse's mouth.
'Michael Wainwright is the boss of diamond merchant, Boodles.
'His family's reported £85-million fortune
'is among the 1,000 biggest in Britain.'
When the crash happened, did you think,
"Oh, this is curtains for us," or...
- What was your feeling? - Well, we were.
It was very bleak for about for about three or four months.
In spite of what's gone on in the world since '08,
I think the wealthy probably have got wealthier.
There was a bit of reticence to spend it to begin with after '08, but not now.
They are definitely out to play again, yeah.
'Michael might have had a bad few months,
'but we've had seven years of austerity.
'Our incomes have stagnated,
'but last year alone, the top thousand saw their wealth rise
'by £70 billion.
'Making their wealth equal to the combined annual earnings
'of Britain's entire full-time workforce.
'The gobsmacking gap between us and the richest 1%
'is returning us to a world we thought had gone away.'
You know, when I was growing up in the 1970s,
the idea that aristocracy ruled Britain had gone.
They were finished.
But now there's a new aristocracy who have taken over.
And they're not the landed gentry, they're the super-rich.
'Britain now has 104 billionaires.
'That's more per head than any other country in the world.
'But when you ask how their presence benefits the rest of us,
'it turns out that the rich have a party line on that.
'It's called trickle-down.
'This is multimillionaire, Rob Hersov.'
- Michael. - Great to see you.
Are the rich good for Britain?
Yes, very good for Britain.
We want more super-rich people here in England.
Why? Because if they invest here,
if they hire people, if they use taxis,
if they go to restaurants, they are creating wealth
for people in England.
It's not trickle-down, it's trickle-through.
They are creating opportunities for other people.
Trickle-down or trickle-through,
the idea is that their spending will benefit all of us.
But does it?
I've come to a high-end showcase for super-watches to find out.
That looks amazing!
So, if I wanted to buy that, how much would that set me back?
Only £215,000.
- 215? That's a bargain(!) - Yes. I know.
- Would you like to try it on? - Please. That would be great.
- Please have a seat. - Thank you.
So...here we have Metamorphosis II.
- Metamorphosis II? - Metamorphosis II.
What was Metamorphosis I like?
Metamorphosis I was amazing
- and this is now... - Better!
..on an even higher level.
- We've separated the hours from the minutes. - Yeah.
And then here, you actually have your dates.
That's just insane! Now, how on earth can I tell the time?
So at the moment, it's very simple,
that we're now at 7:40.
So in a way, right, the only people who understand how this watch works
- are the people who own them, right? - Yes.
- So it's a bit like a private club. - Exactly. It's a secret.
- Can I try it on? - Of course you can. - Right.
Wow! That is...
- How does it look? - It looks really good.
Really, really good.
I think I might just make a move, all right? See you later.
LAUGHTER
And if you thought that was ostentatious, look at this.
It's made of Zambian emeralds,
White diamonds, white gold.
'A snip at £2 million.'
Looks a bit...tacky to me.
Whatever you think of this watch, these items are trophy assets.
Manufacturing them is unlikely
to employ thousands in a factory here in the UK.
So it's hard to see how this kind of spending benefits the rest of us.
'This is a problem for Britain.
'Many of the super-rich we are attracting
'spend their money on such trophy assets.
'Private helicopters, Learjets, or yachts.
'The money stays pretty much in their world.
'But for the seriously super-rich, only one thing will do.
'A Premiership football club.'
Tony, we're walking out on to the hallowed turf.
- Yeah. It's expensive turf. - LAUGHTER
I never thought a piece of grass would cost £1 million.
'QPR was bought in 2011 for £35 million by this man,
'Malaysian businessman, Tony Fernandes.'
Asia's toughest job interview begins.
Welcome to the most challenging interview of your life.
He's the star of the Asian Apprentice.
The Alan Sugar of the Far East.
His net worth of £650 million
makes him one of the richest men in both Britain and Malaysia.
It's a monumental screw-up.
For that reason, you're fired. You're fired.
'The Apprentice Asia premieres tonight at 9.00...'
You made your money from an Asian airline.
Why did you buy a British football club?
TONY LAUGHS
When you buy a Learjet or a massive yacht,
you know, it's generally for yourself, the occasional parties.
But QPR, the feelings, I can't describe.
Life is about experiences.
So I'd rather do that
than sit on a massive boat in the middle of the sea.
Buying big things might be exciting for the super-rich
and employ some people,
but if trickle-down was working,
the fact we have more super-rich than ever before in Britain
should mean we are all getting richer.
But we're not.
Instead, the 1% share of wealth is rising.
For the 99%, living standards remain at pre-crisis levels.
Across the world, people are marching.
This is a demonstration in Boston against low pay.
In London, what began with an occupation outside St Paul's
continued last year with a protest march against low pay
and the growing chasm between the 1% and the rest of us.
You know, me and my husband have worked all our life.
We are on quite low pay, but, you know, still,
we can't afford to live.
Everybody's struggling. Well, apart from the 1%.
For ten years, the average weekly income of a British family
has stayed the same, £429.
In the same period, the richest 1,000 people in Britain
saw their wealth more than double
from £200 billion to £500 billion.
Do you think it's right,
the idea that their wealth would trickle down to the rest of us?
- Absolutely not. - It doesn't trickle down. - No.
When has it ever? When have you ever seen that?
You can see it's not worked! You can see it, it's not working, is it?
Inequality has become the theme of epic Hollywood blockbusters
like The Hunger Games,
in which young people from outside the super-rich city
fight to the death for survival.
Happy Hunger Games...
and may the odds be ever in your favour.
But this isn't just science fiction -
a recent us government report predicted a Hunger Games future,
a world of elites and commoners.
And inequality is a race to the bottom that Britain is winning -
we're the only leading economy
to have grown consistently more unequal this century.
So how did we come to believe that attracting the super-rich
would benefit everyone?
Who sold us the idea - and why?
MUSIC: Sunny Afternoon by The Kinks
To understand, you need to go back to the 1960s.
Britain's wealth had been built on empire,
and the City of London was the hub.
Now that was gone.
But Britain had a plan to reinvent itself
as a tax haven for the super-rich.
We were no longer an empire - we were a casino.
And the biggest high rollers were about to roll into town.
MUSIC: Goldfinger by Shirley Bassey
This was the era of the jet set,
and leading the pack were the Greek shipping tycoons.
# Goldfinger... #
- PRESENTER: - These ships, and more, add up to 6,428,602 tonnes.
Whatever "it" is, the Greek shipping industry obviously has it.
They also had a problem.
if they settled here, they would end up paying tax on the profits
from their huge ships.
But a compliant British government
was happy for them to exploit a loophole.
It meant they could avoid paying tax,
and it was called the non-dom rule.
The rule was a hangover from Britain's imperial past.
It was designed to encourage wealthy British colonial magnates,
rich from the spoils of empire,
to come to Britain and spend their money.
This 19th-century relic now turned into a 20th-century tax giveaway.
The non-dom rule made Britain uniquely attractive
to the super-rich - you could come here and avoid paying taxes
simply through a family connection to a foreign country.
They couldn't believe their luck.
Grant Woods is a man who made the system work
as a senior wealth adviser at Coutts, bankers to the super-rich.
You place your profits in offshore centres,
it can be managed there,
you can live happily in London, enjoy all the facilities in London.
Among the non-doms who came to Britain
to reinvent themselves as pillars of the establishment
were Czech-born Robert Maxwell - originally Jan Hoch -
and German tycoon Tiny Rowland - Roland Fuhrhop to his friends.
Grant Woods, whose job was to woo these people,
saw tax breaks as the key tool.
People kept testing the limits of what was acceptable
and not acceptable because there were no rules laid down
by the Inland Revenue specifically dealing with this situation.
The rules were very, very loose.
It was all very cosy.
The non-dom loophole remained largely unscrutinised
until the 1990s, when Tory donor multimillionaire Asil Nadir
was found guilty of fraud.
There are a large number of people who work in Britain,
who earn their money in Britain, who don't pay much tax in Britain.
And many of these people are millionaires who are using
non-resident status,
or non-domicile status to avoid their proper share of tax.
Now, I'm going to close these loopholes.
But guess what? Nothing happened for 15 years.
In 2008, Alistair Darling finally imposed an annual charge of £30,000.
- To someone who is a billionaire... - Yeah.
..how prohibitive is a £30,000 flat rate?
Well, for someone who's super wealthy,
it's the sort of money they'd spend on a party for one of their kids.
Far from being a deterrent, £30,000 is peanuts to non-doms,
whose numbers are now back on the increase.
£30,000 is £3,000 more than the average salary in Britain.
You could blow a year's pay on one visit to this salon -
Oro Gold in High Street Kensington.
- Hi, there. I've come for an appointment. - Hi, is it Jacques?
- Yes. - My name's Lena, I'll be your therapist for today.
- Hi, Lena. - Would you like to come with me?
'£30,000 is also around the average deposit for a first-time buyer...'
Hi, Lena.
OK. What do you want me to do?
If you just want to hang your robe up,
- and you can lay down on the couch for me. - OK.
'..and the current timescale to save for such a deposit
'is 22 years.
'So what do you get for this kind of money?
'Something called a facial.'
I'm a bit nervous, Lena.
What's going to happen?
Don't worry, you're in good hands.
So, I'm just going to cleanse the skin now.
The thing is, if you are super-rich, you know,
this isn't that unusual a treatment.
You're totally right,
and usually it's not really a one-off treatment,
they usually come for a series of treatments
to get maximum results.
- OK. - So, usually between six and 12 treatments
on a monthly basis.
It's a bit more expensive than an avocado all over your face.
- Yes! - It's like 40p or something.
Well, it is gold.
'The full super-rich service
'adds gold-flecked moisturisers to the gold mask,
'with a caviar massage thrown in...
'because you're worth it.
'Or just because you can.'
It's just particles of gold in a gel form.
'Luxury services like Oro Gold
'thrive thanks to the arrival of so many super-rich people in Britain.'
In the 1970s,
we were getting used to their presence for the first time.
But while they enjoyed tax haven Britain,
the home-grown super-rich were not amused.
In 1974, the new Labour government
promised a massive increase in welfare spending.
To pay for this, they increased taxes on the wealthiest - to 83%.
The top earners had had enough.
# There's one for you, 19 for me
# Cos I'm the taxman
# Yeah, I'm the taxman... #
But their saviours were at hand,
in the unlikely form of two enterprising accountants,
Roy Tucker and Ron Plummer.
# Be thankful I don't take it all... #
Spotting a gap in the market, they'd set up their own bank -
called Rossminster.
Its main purpose was the development of complex schemes
for avoiding tax.
The waiting room of the accountants' office
resembled an extraordinary cocktail party -
Led Zeppelin and Roger Moore were clients -
and, most famously, two of The Beatles.
- # If you get too cold - I'll tax the heat
- # If you take a walk - I'll tax your feet... #
Richard Brooks was a tax inspector
who has investigated Rossminster's activities.
They were promoting weird and wonderful schemes
with names like "Exempt Debt Scheme", "Commodity Carry Scheme",
"Non-Deposit Interest" - all kinds of wacky stuff.
You, in.
Attention.
Things they didn't teach you in school...
One of Rossminster's most unusual schemes
was to use the losses from investments in British films
to reduce customers' tax bills.
One film dragged into this tangled web
was the British cult classic Scum -
a film about borstal.
And trouble was now looming for Tucker and Plummer.
On the 13th of July 1979,
70 tax inspectors and 28 police officers raided Rossminster.
Their offices here were closed, and their little party was over -
but an even bigger party was just about to begin.
Rossminster showed what you could do with the tax law -
just how creative you could be with it.
By the late '80s, you found the big accountancy firms
devising tax-avoidance schemes and selling them very aggressively.
Although Tucker and Plummer did not face criminal charges,
things would never be the same.
The men behind Rossminster marked the fundamental change in attitudes.
From now on, they were saying, rules are there to be broken -
but only if you're wealthy.
MUSIC: Angel by Massive Attack
Britain was now the tax-dodge capital of the world.
And it's still happening.
Last year it cost the rest of us £20 billion.
One man who's experienced how tax avoidance works for the super-rich
is billionaire John Caudwell.
- John. - Hi, Jacques. How are you doing? - Nice to see you.
- Thanks for your time. - Pleasure.
It's a nice little place you've got here(!)
It is, it's a phenomenal place.
You don't get this stuff at IKEA, do you, John?!
It's probably a good job, really.
He built up Phones 4u from nothing, to a billionaire lifestyle
of helicopters and a Jacobean pile in Staffordshire.
But this is his latest acquisition -
a pair of Mayfair mansions.
Reported value - £250 million.
It's a good place to entertain...
Brilliant place to network with the rich and famous of London.
So, how does this compare with where you grew up?
THEY LAUGH
- Oh, my gosh. - A little more spacious(!)
Well...
Well, my first home - first marital home,
when I was....I was about 20, at the time,
was a 14-foot Sprite Musketeer caravan on my mother's lawn.
Caudwell's not like many of the super-rich -
he actually pays his way, and as Britain's biggest taxpayer,
he's handed over £200 million on the last five years.
But has he ever been tempted to break the rules?
John, have you ever been approached with mad schemes...?
Well, I was approached all the time with mad schemes,
and we DID take some of them up - you know, and I'm not proud of that.
How does it work?
You know, what's the conversation that's had?
Oh, do you know, some of the schemes are so convoluted
that I couldn't even...
I wouldn't even begin to necessarily understand them.
There's hundreds or even thousands of tax accountants,
often recruited from the Inland Revenue,
who were tax inspectors, to advise people
on how to have the latest, barmiest, cutting-edge scheme.
If I thought they were reasonably ethical, I'd do them,
- but...they were wrong. - Mm.
At the end of the day, I believe they were wrong.
But this wasn't just about individuals.
There was a culture in which cosy relationships developed
between corporations and the tax authorities -
with devastating consequences for the public purse.
There was very much a system in which senior tax officials
were rewarded in terms of promotions and bonuses -
not for success in tackling tax avoidance,
but success in fostering a partnership between the companies
and the department.
So it was about how well can you create a relationship
with a company,
rather than how much money can you actually get for the public
out of that company?
That's right. And if you ended up in a big dispute with that company,
that would probably count against you in terms of your prospects.
So, you're actually being promoted for not doing your job, essentially?
- Many people... - Your job as a public employee is to raise revenue
on behalf of the public, but actually they were working
pretty much on behalf of the companies.
Yeah, I think many senior tax officials, er, ten years ago
would have said that's how they felt, yes.
This toxic combination of tax breaks for foreigners
and massive avoidance among the home-grown wealthy
has changed Britain's role in the world.
We were once an imperial superpower.
Now we're a tax haven.
Pippa Malmgren is a former economic adviser to President George W Bush.
Can you explain how important Britain is
as a tax haven for the super-rich?
It's very important.
That's the most attractive location now, I think, on the planet -
and that's partly because the old tax havens in places like Switzerland
are no longer open for business for new money.
Do you think the super-rich and the super wealthy were surprised
by how open Britain was as this new tax haven - this new Switzerland?
Yeah. I think that they had assumed
that they would be placing their money in, you know, Geneva
and the Cayman Islands and places like that.
MUSIC: Time by Pink Floyd
These changes only happened because successive governments
became convinced that trickle-down was the answer.
It started in 1979.
A Conservative government is elected
on the assumption that Britain is broken,
and the money of the wealthiest will help save us.
Within weeks they slashed the top rate of tax from 83% to 60% -
the biggest giveaway to the wealthy in decades.
Tax avoidance was now government policy.
The old world of heavy industry, unions and high taxes
was no longer to be trusted.
It had failed, and should be chucked on the bonfire on history.
# Ticking away the moments that make up a dull day... #
But there was serious concern about how this brave new world
of lower taxes for the 1% would create inequality.
It dominated Mrs Thatcher's first ever TV interview as Prime Minister.
Is the price for our economic recovery and prosperity
greater inequality in this country?
You will get a more thriving society
when people can rise to the limit of their talents,
and out of the wealth they create, we shall all be better off.
So a more unequal society, you think, is actually better for prosperity?
A more opportunity society, which enables the able to earn more.
But it does mean more inequality, does it not?
It does mean more... Yes, indeed.
If opportunity and talent is unequally distributed,
then allowing people to exercise that talent and opportunity
means more inequality, but it means you drag up the poor people,
because there are the resources to do so.
No-one would remember the Good Samaritan
if he'd only had good intentions.
He had money as well.
Thank you very much, Prime Minister.
This belief that lower taxes would stimulate growth
came from the US
with radical economists like this man, Arthur Laffer,
an adviser to Republican presidential candidate
Ronald Reagan.
Laffer believed that business, not government,
should be trusted to create prosperity,
and to do this, the rich should be freed from the burden of tax.
Rich people are different than most people.
The rich is the one group of people where you lower tax rates,
you will get more revenues -
and every time we've raised those tax rates on the rich
they've paid less.
Laffer went further.
He said taxing the rich would make society as a whole poorer.
If you tax rich people and give the money to poor people,
you're going to get lots and lots of poor people and no rich people.
The dream is always to make the poor rich - not to make the rich poor.
In Britain, Chancellor after Chancellor courted the super-rich
in the belief that they would create wealth
and trickle-down would be our reward.
22 pence to 20 pence...
But after three decades of devotion to lower taxes,
a new breed of economists who have looked at the evidence
are convinced we've got it wrong.
Among them, one of the world's leading economists,
Cambridge academic Ha Joon-Chang.
Trickle-down economics, you know, in theory, is not a stupid idea.
But the trouble is that, in reality, this prediction
has not been borne out, because in countries like the UK, the US,
that have used these policies,
investment as a share of national income has fallen -
economic growth has fallen,
so where is that pudding, you know, that that we were promised?
That, "Well, if you keep these people - more money,
"they create more jobs, more income."
They haven't done anything, you know?
The pursuit of trickle-down in the UK
means the rich have doubled their share of income since the 1980s.
The last decade has seen incomes for most of us stagnate,
further widening the gap.
So, it's hard to see how trickle-down could not be linked to inequality.
Unless you're Arthur Laffer, of course.
What critics would say about your innovation -
the moment at which economics is turned on its head -
is that, essentially, it's a fig leaf for politicians
to cynically create tax cuts,
but with absolutely no economic rationale behind it whatsoever.
- Oh, that's not true - come on! - Taxation at its most basic
is raising revenue so a society can function.
- Exactly. - To say taxation is bad
- is to essentially say, "Everyone for themselves..." - No.
"There is no such thing as society, and this is what the deal is."
Of course the reason you tax is so that you can get those revenues
and do good. The government can do what governments should do -
- I mean, highways, schools, defence - all these wonderful things. - Mm.
And when they've run out of things the government should do, you stop.
But look what's happened in Britain -
we have one of the lowest levels of taxation for the super wealthy,
and our economy has, at a real level, stagnated.
Do you think inequality has increased as a result?
If by inequality declining you make everyone poorer,
but you make the poor a little bit less poorer,
then you make the rich a lot poorer - I don't like it.
I like equality when everyone is benefitting
and I don't want to see everyone reaching equality
by everyone going to the basement.
That's my view.
So I think looking at equality as an issue by itself is nonsense.
This conviction that taxes should be low
is the super-rich mantra.
But here in Seattle, one of them is breaking rank.
Nick Hanauer is an internet billionaire
who believes we've been duped.
Trickle-down economics
is as old as human civilisation,
we used to call it "divine right".
Now we call it "trickle-down economics" -
it's simply the idea that I matter - and you don't.
HE LAUGHS
That what I do is indispensible, and what you do is extra.
It's how we keep you in line.
He agrees with the critics
that the gross inequality we are now witnessing
is the result of the wrong turn we took three decades ago.
The great problem we face in Britain and the United States
is that we have formed our economic policies
on essentially believing the trickle-down idea
of Reagan-Thatcherism. Right?
The idea that if you make rich people richer,
everybody's going to be better off.
And, you know, that's just not true - it's not how the economy works.
To use me as an example, I mean,
I earn literally a thousand times as much per year
as the median wage, essentially, in the United States, plus or minus.
But I don't buy a thousand times as much stuff -
I own three or four pairs of jeans, a couple of pairs of shoes...
You know, we have a big, beautiful house,
but I don't have a thousand houses here in Seattle,
and so, no matter how much money I have,
I cannot sustain a great national economy -
only a robust middle class can do that.
This is not simply about the failure of trickle-down.
Inequality is threatening capitalism itself.
Capitalism, which is the greatest social technology
ever created for creating prosperity in human societies,
does need some inequality -
just like plants do need some water,
but in precisely the same way that too much water kills plants
by drowning them, too much inequality kills capitalism
by drowning the middle class.
The gains of the super-rich have come at the expense of all of us.
Stagnation is touching parts of society
that had previously avoided pain.
Welcome to Twickenham - home of the middle classes for decades -
who complained when shops like Lidl arrived.
Not any longer.
I wanted to see if they still felt secure as a class,
or were suffering like everyone else.
Since 2008, I haven't enjoyed an increase in pay,
and yet inflation has run higher than my pay packet,
so effectively, I am earning less now than I was in 2008.
I think, generally, personal wealth is going to go down
and down and down. I mean, my parents both have good pensions,
you know, they get their winter fuel payments,
they get a lot of freebies, but I'm not expecting to have a pension -
I'm expecting to be much poorer when I'm older.
- Mm. - Because the money isn't there.
If I ever need continuing health care, forget it.
I'll be off to Dignitas!
But inequality isn't just about the middle class.
It's about something fundamental.
Here in Paris, ground-breaking research is being carried out
which reveals that a seismic change is taking place
in the structure of society.
It was here at the Place De La Concorde in Paris,
at the height of the French Revolution,
that the original 1% had their heads chopped off.
GUILLOTINE DROPS
So, it's fitting that here in Paris, 200 years on,
one man, an economist, is changing our very understanding
of what's going on
by analysing how the super-rich are transforming our world.
The man in question is the world's most influential economist -
Thomas Piketty.
The middle class,
it's very important for the economy,
because this is what also allows us to develop mass consumption,
to develop mass investment in construction,
and it has started to shrink, to some extent,
in the past 20 or 30 years, and I think it will be a major threat
to our democracies if it was to continue shrinking
in the coming decades.
And Piketty puts the blame for this shrinking middle class
on the growing concentration of wealth in the hands of the rich.
Are we going to continue in this direction
of a shrinking middle class?
It's difficult to know how far this can go.
What is sure is that in recent years what we observe in Britain
and across countries is that very top wealth holders, billionaires,
have been rising much faster than average wealth
and much faster than the size of the economy.
You can see that if this continues for several decades,
the share going to the middle class could decline.
If we believe that a more equal society represents progress,
this is under threat.
Piketty points to one form of wealth in particular
as a key to understanding his argument - property.
# Grab your coat and get your hat
# Leave your worry on the doorstep... #
For much of the 20th century, Britain's property market worked.
Home ownership grew,
and wealth was spread across society in the process.
# Leave your worry on the doorstep... #
In fact, it was the biggest wealth transfer
from the rich to the rest of us in British history.
- JOHN BETJEMAN: - Along the serried avenues of Harrow's garden villages,
households rise and shine and settle down to the Sunday morning rhythm.
In the 1970s, when John Betjeman made his film about Metro-land,
he was reflecting on a story of quiet triumph.
Wealth spreading as the suburbs grew.
HE INHALES
The healthy air of Harrow in the 1920s and '30s,
when these villas were built.
You paid a deposit and eventually, we hope,
you had your own house with its garage and front garden
and back garden.
Variety created in each facade of the houses,
and in the colouring of the trees.
# On the sunny side of the street... #
But there was no fairy tale ending.
I grew up in Harrow,
and my parents were part of that revolution in home ownership.
Many of my generation followed them onto the property ladder,
but, since 2003, home ownership has stalled.
This is Oxford.
But we're far from the dreaming spires here.
In this city, homes used to cost
three times the average local salary.
But now an average home costs 11 times local salary,
making Oxford one of the least affordable places in Britain.
Oxford professor Danny Dorling
agrees that the decline in home ownership
is at the heart of the growth in inequality.
How important was the idea of the owning property
to actual relative economic equality?
I mean, this was incredibly important.
We went from a position of 90% of us renting,
and only those who were moneyed owning
to a position where it was absolutely normal
for the middle class to buy property -
my mum and dad bought a house here for £4,000 in the '70s -
to a position where it was normal in the working class to do this.
You know, we had building societies set up
to help you borrow money to get a friend to build you a house.
"My house."
You know, I can't get used to saying that?
"Have you seen my house?"
"Why don't you all come round to my house?"
Oh, Bob, I can't wait to move in.
In the '70s, popular sitcoms such as The Likely Lads
reflected the reality of an upwardly mobile society.
MUSIC: In Every Dream Home A Heartache by Roxy Music
But today's likely lads are more likely to live in a rented flat,
spending twice as much renting as they would on a mortgage.
# In every dream home a heartache
# And every step I take
# Takes me further... #
And there's nowhere that this crisis is more evident
than here in London.
They're building - but it's the super-rich who are buying.
And developers are chasing their cash
with extraordinary developments like this...
..showcased in this highly polished promo...
'One Hyde Park represents a valuable investment.'
..in which developers sell potential buyers the dream
of living a celebrity lifestyle in the centre of London.
'To the south, Knightsbridge, one of the finest...'
The cheapest flat is £6.5 million.
On average income it would take 250 years to buy it...
if you just went to work and slept
and never had children or holidays...or food.
Thanks in part to super-rich investments,
London prices have increased by 25% in a year.
'One Hyde Park offers legendary service.
'A new global benchmark for luxury residential living.
'Representing a secure investment in the current economic climate,
'some existing owners have already seen a substantial
'increase in capital value, in excess of 80%.
'Own the legacy - experience the exceptional.'
Few people have changed London's skyline like Peter Rees.
The former head of planning at the City of London,
he now blames foreign speculation
for driving prices out of the reach of ordinary Londoners.
We have a housing bubble in London
that is fuelled by an almost limitless wave
of international capital.
There's no end to that supply -
it's constantly being generated in Russia and China
and in the Middle East.
How do foreign investors view the properties they're buying in London?
Do they see them as homes?
Investment in the residential real estate market in London
is perceived as even better than gold bricks,
which you have to hide in a vault, and you can't see.
These things are out there, piled up,
and you can actually keep an eye on them.
But, of course, inside they are just containers for the same capital
that you would otherwise put in a bank vault,
which is why I refer to these as piles of safe deposit boxes.
# Us...
# And them... #
Battersea Power Station, once a symbol of industrial power,
seen in this glossy ad, is being redeveloped for flats.
Of the first 866 flats sold,
80% went to foreign buyers.
70% of all new-built residential property in central London
is now being bought by foreign investors.
So, what does this mean for ordinary people?
For us?
The enclaves of the very rich are spreading
over larger and larger areas -
and not even areas where the uber-rich are living,
but areas where they're simply investing.
How far can this go?
How much do we give over to this desert of wealth
before London ceases to work?
This is creating a new class of economic refugees.
In Newham, this group of single mums are being removed from their homes
to make way for a new development.
But they've refused to go -
what's happening here is being called social cleansing.
It's obvious what's happening -
all these council homes and places
are being demolished and built into glass buildings
that are luxury apartments that nobody in the local area can afford.
There's one being built just there -
it's a stone's throw from where we are standing right now.
- Yeah. - Yeah, that's Stratford Plaza -
- and before that was even halfway up it was already bought off. - Yeah.
We went to see our local Labour mayor,
and he said to us, "If you can't afford to live in Newham,
"you can't afford to live in Newham. What do you want me to do about it?"
And that's the response that we've had from our MPs, councillors,
- and our mayor. - How does that make you feel?
That you're being made to move out of where you live.
It's really upsetting, because, obviously,
all of our family and support networks are here.
- Has anyone shown you any support? - No! Why would they? - No.
We're a thorn in their fucking side for all they care.
We're an embarrassment to them,
because we're proving something that they're saying is not happening.
After a public outcry,
Newham Council did eventually reprieve 40 out of 434 homes,
and apologised for the treatment of the women.
But the fact that they are just fighting for a place to live
shows how far expectations have dropped.
For this generation, buying a property is a ridiculous dream.
By 2032, Britain will be a country in which the majority are renters.
Getting hold of that key piece of wealth - property -
will become ever more difficult.
..and no key worker accommodation.
That is a SHAME!
We should not be collaborating with developers
and excluding ordinary people from housing.
This demonstration is taking place outside a property fair
in London's Olympia.
But this fair isn't just about London.
Cash-strapped councils from all over Britain are selling off land.
Hi, there.
If I was an investor coming here
and I said I've got 15 billion to spend, OK?
- We've certainly got plenty of space for 15 billion. - Have you? OK.
Foreign investors are now circling property markets across the country.
It's unbelievable.
They're all just here flogging off, basically, what they own
to private investors from abroad.
I'm from Tokyo, on a business trip, for about a week.
And I'm in the property business.
- We have a portfolio of 180 million. - 180 million? - Currently. - OK.
180 million.
So, it's kind of a little bit of money to spend(!)
We have many investors interested in UK properties,
and that's why I'm here today - just to meet people in the same industry
and to find out what are the opportunities here.
But what is now becoming clear is the type of properties
these new investors are after.
They want more and more of us to rent.
And that's increasingly what the market will supply.
MUSIC: For The Love Of Money by The O'Jays
But it's not just super-rich foreign investors exploiting this trend -
properties are being swept up by a growing class
of British super-rich property investor -
the buy-to-let baron.
# Money, money, money, money... #
And this man is the biggest buy-to-let baron of them all -
Kevin Green.
After the count of three, we're going to say, "Yes, yes, yes,"
in really quick succession.
One, two, three...
- ALL: - Yes, yes, yes!
Brilliant! Give a high-five to the person next to you.
He owns 700 properties,
but he also gives wealth seminars on how to be a buy-to-let millionaire.
If you worry about what people say about you,
you ain't going to become a very successful entrepreneur.
Does that make sense?
Kevin's business is doing very well,
but he's gaining at the expense of one group in particular -
first-time buyers.
By value, buy-to-let lending is growing faster
than first-time mortgages.
It seems as though in Britain there are two worlds being created,
and one is the buy-to-let market which is booming,
and then on the other half is everyone else
who's trying to get on the property ladder,
and just simply can't afford to get on the property ladder -
and they're related, because your world is forcing everyone else
from not being able to buy anything.
So how do you feel about that?
Yeah, I mean it's a fair comment, there.
Property, if you're into it, does - if you do it right -
get you in a very wealthy position.
Generally there is a split,
and it's getting harder for first-time buyer to come in.
Whether that's because of investors is arguable.
We then had a payment of £31,000 tax free.
Hands up who'd like that?
These people aren't mega landlords,
but every one that succeeds could push out one more first-time buyer.
If everyone becomes a buy-to-let landlord
there won't be any property left for anyone else -
it's going to just exacerbate the problem, make things even worse.
Probably that problem has already been realised,
and we've reached that point.
Our housing crisis is Kevin's business opportunity,
as we become a nation of renters.
When I get up every morning
I do something which is a little bit different -
cos sometimes, as an entrepreneur,
it's good to be a little bit crazy and a little bit different, isn't it?
What I do is, I instil self belief.
I go, "If I wasn't me, I would SO want to be me!"
You know? And then I feel better already, do you know what I mean?
Once you've got that sweet taste of success that starts coming,
then you just want more.
After three - one, two, three...
- ALL: - If I wasn't me, I would SO want to be me!
Brilliant! Give yourself a round of applause.
Property equals wealth in Britain.
It's at the heart of ballooning inequality,
increasing wealth for the super-rich and taking it away from us.
And as we struggle,
the party only gets better for the wealthiest in Britain.
I'm on my way to a private event at Prince Harry's favourite club,
Mahiki, thrown by diamond seller to the super-rich Vashi.
- How's it going, Vashi? - Mate, it's just unbelievable.
As you can see, we've got about 150 people already here.
- So it's just going better than expected. - Yeah.
For Vashi, business is booming.
This is Stephanie, the wife of a Russian multimillionaire in London
who wants to spend a lot of money on diamonds.
So, in terms of the jewellery, what were you looking for?
- I would like to surprise people with something. - Yeah? Great.
Let's take it out.
What's the most ridiculous thing
that you've been asked to cover in diamonds?
Well, we had the other day someone buying a bra crusted with diamonds.
That's the only way that you can buy a bra that's worth £10 million.
Buying diamonds isn't simply an extravagance for the super-rich -
like gold or watches, they're an investment,
insulating their wealth in case the economy goes belly up again.
- Can I take one more? - Yes, please.
After a bit of polite horse trading, they agree on a price.
Altogether 54, 55, so we can do it for 50.
- Thank you very much! - It's a pleasure!
- Thank you, Stephanie. - Thank you. - Great doing business with you.
Mwah! Mwah! Mwah!
For decades, as we've seen, government after government
pursued an economic policy to attract the super-rich to Britain.
It was all based on a flawed idea -
that their wealth would trickle down to the rest of us.
It didn't.
Economists believe it actually trickled up,
from us to the super-rich,
into their giant reservoir of private wealth.
So you think, in a way, trickle-down was almost a way of duping us
into redistributing wealth from all of us
to the richest members of society?
Yes, I can only describe it like that,
because, especially in the US and the UK,
back in the late 1970s,
the top 1% used to take about 10% of total income -
on the eve of the 2008 financial crisis this rose to 23%.
There is now a growing consensus that this trickle-up effect
needs to be reversed.
We have indeed made rich people richer -
I am testament to that - but clearly
everyone else isn't better off.
And it's both immoral but also economically idiotic.
The super-rich have the money and we need it -
so how do we get it off them?
Thomas Piketty has a radical solution -
instead of increasing income tax,
directly target the wealth of the super-rich.
It would be better, actually, to have an annual tax on wealth.
This is just a matter of common sense -
you know, this is not a matter of just left or right.
When you have booming property values at the top
and booming top wealth portfolio at the top,
you know, it would be crazy not to ask a little bit more
to these people.
But guess who disagrees...
the super-rich themselves.
I'm very, very much in favour of very low taxation
right the way across the board.
I think we don't need to be taxed any more -
we are paying a lot of tax.
if I gave you, Jacques, my tax bill you'd probably have a heart attack.
So this approach of robbing the rich to pay the poor,
I don't agree with it.
If somebody's done well for themselves through hard work
and effort, why should they be taxed through the eyeballs?
The super-rich don't want higher taxes -
but low taxation does not necessarily equal higher growth.
Since 1980, countries which have reduced tax rates for the wealthy,
such as Britain and the US, have not grown any quicker
than Denmark or Sweden, which kept them higher.
We need to change the discourse here,
because if low tax was good in itself,
why doesn't everyone move to Jamaica?
The highest income tax rate in Jamaica is 5%.
If you look at the Scandinavian countries,
the system is that you tax everyone heavily,
but then you spend that for everyone quite heavily.
88% of Danish people say they are happy to pay
what tax they are paying, this is quite amazing.
We, in Britain, have a low-tax culture, instilled in us
through 30 years of driving taxes down for the super-rich.
But it hasn't worked.
The economy would be 20% bigger
had the gap between the rich and poor not widened since the 1980s.
Now even the rich believe things must change.
Nobody wants to live in a society where your society is gated,
where you have to live behind barbed wire,
where you can't walk down the street.
You know, people who are very wealthy,
billionaires and zillionaires of every stripe, do need to wake up.
The price that you have to pay in higher taxes
for a safe, civil society
where everybody is happy and doing better
is very, very low - it's just not that big a deal.
But it would be a massive struggle to convince any government
to seriously hammer the super-rich.
The drive is to attract more of them here than ever before -
and there's a surprising reason why.
Economist Matt Whittaker has been crunching the numbers
on the super-rich and come to a startling conclusion.
It turns out the super-rich do have a vital role
to play in our economy -
just not the one we were told they were playing.
Take the activities of the super-rich away,
particularly in finance and in business services
and our GDP figures simply would not have looked as good.
So the super-rich have played a role in our economy
in terms of window dressing the economic figures.
You can certainly see the attraction to Chancellors of the Exchequer
of attracting the super-rich to the UK.
But clearly, for the majority of people in the UK,
actually what the super-rich have done is simply mask over the fact
that economic growth has not been as strong
as it would otherwise have been in recent years,
and living standards haven't improved for a significant number of people,
even in the pre-crisis years,
and I think that a model which is based on a top 1%
generating and consuming all of the growth simply isn't sustainable.
So if I gave you an option of,
"Were the super-rich good for Britain, yes or no?"
which one of those two words would you go for?
I'd say no.
When we first began to woo the super-rich to Britain,
there was no pretence that we'd benefit.
But then, with the collapse of manufacturing in the '80s,
we were told that these people would be the saviour
of the British economy.
But it was a lie. We've ended up poorer.
It was not even us, nor even really the super-rich
who ultimately benefited most, but government,
allowing successive Chancellors to hail economic growth
when the reality for us was a decade of stagnation.
The super-rich were a massive PR exercise - and we bought it.
But not any more.
Next week, we travel into the world of the global super-rich.
How the billions that fuelled their fortunes were made from our debt...
Finance just means other people's debts.
So, you yourself didn't bring about the crash,
but you created the mechanics for it to happen.
That's true.
..and, as luxury booms, we reveal how job insecurity has been
turned into a super-rich business opportunity...
Employment as we know it traditionally
has made people quite lazy, in many ways.
..but increasing inequality is going to change our world.
And the super-rich are worried.
So, are the pitchforks coming?
If things keep going the way they are, for sure they're going to come.