1 00:00:02,114 --> 00:00:05,594 This programme contains strong language 2 00:00:05,594 --> 00:00:07,954 'The super-rich are taking over.' 3 00:00:07,954 --> 00:00:13,754 Somebody like me earns 10,000, 20,000 an hour. 4 00:00:13,754 --> 00:00:18,034 85 people own the same wealth as half the world's population. 5 00:00:18,034 --> 00:00:20,754 You don't get this stuff at IKEA, do you, John? 6 00:00:20,754 --> 00:00:22,394 LAUGHTER 7 00:00:22,394 --> 00:00:24,274 How much are you worth? 8 00:00:24,274 --> 00:00:26,354 Around £250 million. 9 00:00:26,354 --> 00:00:29,354 Never before has money been so polarised. 10 00:00:30,874 --> 00:00:35,594 The 21st century will be the most unequal period in human history. 11 00:00:35,594 --> 00:00:39,394 'My name's Jacques Peretti and in this series, I'm going to find out 12 00:00:39,394 --> 00:00:42,394 'how the super-rich have changed Britain.' 13 00:00:42,394 --> 00:00:46,314 Explain how important Britain is as a tax haven for the super-rich. 14 00:00:46,314 --> 00:00:47,754 It's very important. 15 00:00:47,754 --> 00:00:50,754 It's the most attractive location now on the planet. 16 00:00:50,754 --> 00:00:53,874 But are they making us richer... 17 00:00:53,874 --> 00:00:57,034 We want more super-rich people here in England. 18 00:00:57,034 --> 00:01:01,554 ..or creating a more divided society? 19 00:01:01,554 --> 00:01:04,154 We went to see our local Labour mayor and he said to us, 20 00:01:04,154 --> 00:01:07,634 "If you can't afford to live in Newham, you can't afford to live in Newham. 21 00:01:07,634 --> 00:01:09,554 "What do you want me to do about it?" 22 00:01:10,954 --> 00:01:14,594 Human nature will always be a little envious 23 00:01:14,594 --> 00:01:17,994 of those who have more than they do. 24 00:01:17,994 --> 00:01:23,314 Who sold us the idea that the super-rich would make us better off? 25 00:01:24,914 --> 00:01:27,114 There have always been the haves and the have nots, 26 00:01:27,114 --> 00:01:29,914 but today, you have the haves, the have nots and the have yachts. 27 00:01:29,914 --> 00:01:33,914 This is the story of The Super-Rich...And Us. 28 00:01:45,874 --> 00:01:47,474 'As the rest of Britain struggles, 29 00:01:47,474 --> 00:01:50,034 'the super-rich have never had it so good. 30 00:01:51,954 --> 00:01:56,754 'Since the '08 crash, there's been £80 billion of austerity cuts. 31 00:01:56,754 --> 00:02:00,354 'The same amount bankers will have been given in bonuses. 32 00:02:05,354 --> 00:02:09,274 'At just over £180,000, this Lamborghini 33 00:02:09,274 --> 00:02:12,594 'costs the same as an average house in Britain. 34 00:02:15,954 --> 00:02:19,274 'Simon has flown in from Switzerland to buy a second-hand car, 35 00:02:19,274 --> 00:02:21,434 'but not like one you or I might buy.' 36 00:02:23,354 --> 00:02:27,314 You collect cars. How many cars have you got? Do you know? 37 00:02:27,314 --> 00:02:30,514 I don't know if my wife's listening, but let's say less than ten. 38 00:02:30,514 --> 00:02:31,954 - Less than - ten? Less than ten. 39 00:02:34,394 --> 00:02:38,074 'The super-rich are behaving as if the biggest recession since the war 40 00:02:38,074 --> 00:02:42,394 'didn't affect them, but it did, profoundly. 41 00:02:42,394 --> 00:02:44,194 'They made lots of money from it. 42 00:02:45,354 --> 00:02:47,914 'Hard to believe, until you hear it from the horse's mouth. 43 00:02:48,994 --> 00:02:52,474 'Michael Wainwright is the boss of diamond merchant, Boodles. 44 00:02:52,474 --> 00:02:56,194 'His family's reported £85-million fortune 45 00:02:56,194 --> 00:02:58,514 'is among the 1,000 biggest in Britain.' 46 00:02:58,514 --> 00:03:00,554 When the crash happened, did you think, 47 00:03:00,554 --> 00:03:02,474 "Oh, this is curtains for us," or... 48 00:03:02,474 --> 00:03:04,914 - What was your feeling? - Well, we were. 49 00:03:04,914 --> 00:03:07,634 It was very bleak for about for about three or four months. 50 00:03:07,634 --> 00:03:11,274 In spite of what's gone on in the world since '08, 51 00:03:11,274 --> 00:03:13,514 I think the wealthy probably have got wealthier. 52 00:03:13,514 --> 00:03:17,514 There was a bit of reticence to spend it to begin with after '08, but not now. 53 00:03:17,514 --> 00:03:20,034 They are definitely out to play again, yeah. 54 00:03:20,034 --> 00:03:22,074 'Michael might have had a bad few months, 55 00:03:22,074 --> 00:03:25,714 'but we've had seven years of austerity. 56 00:03:25,714 --> 00:03:27,354 'Our incomes have stagnated, 57 00:03:27,354 --> 00:03:31,034 'but last year alone, the top thousand saw their wealth rise 58 00:03:31,034 --> 00:03:33,434 'by £70 billion. 59 00:03:33,434 --> 00:03:36,474 'Making their wealth equal to the combined annual earnings 60 00:03:36,474 --> 00:03:40,514 'of Britain's entire full-time workforce. 61 00:03:40,514 --> 00:03:44,154 'The gobsmacking gap between us and the richest 1% 62 00:03:44,154 --> 00:03:47,154 'is returning us to a world we thought had gone away.' 63 00:03:48,394 --> 00:03:50,834 You know, when I was growing up in the 1970s, 64 00:03:50,834 --> 00:03:54,634 the idea that aristocracy ruled Britain had gone. 65 00:03:54,634 --> 00:03:56,234 They were finished. 66 00:03:56,234 --> 00:03:59,194 But now there's a new aristocracy who have taken over. 67 00:03:59,194 --> 00:04:02,954 And they're not the landed gentry, they're the super-rich. 68 00:04:04,514 --> 00:04:07,314 'Britain now has 104 billionaires. 69 00:04:07,314 --> 00:04:11,434 'That's more per head than any other country in the world. 70 00:04:11,434 --> 00:04:15,234 'But when you ask how their presence benefits the rest of us, 71 00:04:15,234 --> 00:04:18,314 'it turns out that the rich have a party line on that. 72 00:04:18,314 --> 00:04:20,674 'It's called trickle-down. 73 00:04:20,674 --> 00:04:22,954 'This is multimillionaire, Rob Hersov.' 74 00:04:22,954 --> 00:04:25,034 - Michael. - Great to see you. 75 00:04:25,034 --> 00:04:27,714 Are the rich good for Britain? 76 00:04:27,714 --> 00:04:28,994 Yes, very good for Britain. 77 00:04:28,994 --> 00:04:32,234 We want more super-rich people here in England. 78 00:04:32,234 --> 00:04:36,394 Why? Because if they invest here, 79 00:04:36,394 --> 00:04:41,274 if they hire people, if they use taxis, 80 00:04:41,274 --> 00:04:44,794 if they go to restaurants, they are creating wealth 81 00:04:44,794 --> 00:04:46,714 for people in England. 82 00:04:46,714 --> 00:04:49,554 It's not trickle-down, it's trickle-through. 83 00:04:49,554 --> 00:04:52,954 They are creating opportunities for other people. 84 00:04:54,794 --> 00:04:56,554 Trickle-down or trickle-through, 85 00:04:56,554 --> 00:05:00,674 the idea is that their spending will benefit all of us. 86 00:05:00,674 --> 00:05:02,314 But does it? 87 00:05:02,314 --> 00:05:06,794 I've come to a high-end showcase for super-watches to find out. 88 00:05:09,914 --> 00:05:11,874 That looks amazing! 89 00:05:11,874 --> 00:05:15,354 So, if I wanted to buy that, how much would that set me back? 90 00:05:15,354 --> 00:05:16,994 Only £215,000. 91 00:05:16,994 --> 00:05:19,914 - 215? That's a bargain(!) - Yes. I know. 92 00:05:19,914 --> 00:05:22,794 - Would you like to try it on? - Please. That would be great. 93 00:05:22,794 --> 00:05:24,434 - Please have a seat. - Thank you. 94 00:05:26,914 --> 00:05:31,074 So...here we have Metamorphosis II. 95 00:05:31,074 --> 00:05:33,274 - Metamorphosis II? - Metamorphosis II. 96 00:05:33,274 --> 00:05:35,434 What was Metamorphosis I like? 97 00:05:35,434 --> 00:05:37,314 Metamorphosis I was amazing 98 00:05:37,314 --> 00:05:39,434 - and this is now... - Better! 99 00:05:39,434 --> 00:05:42,154 ..on an even higher level. 100 00:05:42,154 --> 00:05:45,154 - We've separated the hours from the minutes. - Yeah. 101 00:05:45,154 --> 00:05:47,354 And then here, you actually have your dates. 102 00:05:47,354 --> 00:05:50,434 That's just insane! Now, how on earth can I tell the time? 103 00:05:50,434 --> 00:05:52,434 So at the moment, it's very simple, 104 00:05:52,434 --> 00:05:55,994 that we're now at 7:40. 105 00:05:55,994 --> 00:05:59,994 So in a way, right, the only people who understand how this watch works 106 00:05:59,994 --> 00:06:02,114 - are the people who own them, right? - Yes. 107 00:06:02,114 --> 00:06:05,194 - So it's a bit like a private club. - Exactly. It's a secret. 108 00:06:05,194 --> 00:06:07,554 - Can I try it on? - Of course you can. - Right. 109 00:06:13,714 --> 00:06:15,314 Wow! That is... 110 00:06:16,714 --> 00:06:18,794 - How does it look? - It looks really good. 111 00:06:18,794 --> 00:06:20,594 Really, really good. 112 00:06:20,594 --> 00:06:24,074 I think I might just make a move, all right? See you later. 113 00:06:24,074 --> 00:06:25,874 LAUGHTER 114 00:06:28,674 --> 00:06:31,754 And if you thought that was ostentatious, look at this. 115 00:06:35,154 --> 00:06:38,234 It's made of Zambian emeralds, 116 00:06:38,234 --> 00:06:41,354 White diamonds, white gold. 117 00:06:42,714 --> 00:06:45,754 'A snip at £2 million.' 118 00:06:45,754 --> 00:06:48,834 Looks a bit...tacky to me. 119 00:06:51,474 --> 00:06:55,114 Whatever you think of this watch, these items are trophy assets. 120 00:06:56,274 --> 00:06:58,114 Manufacturing them is unlikely 121 00:06:58,114 --> 00:07:01,674 to employ thousands in a factory here in the UK. 122 00:07:01,674 --> 00:07:06,434 So it's hard to see how this kind of spending benefits the rest of us. 123 00:07:11,874 --> 00:07:13,794 'This is a problem for Britain. 124 00:07:13,794 --> 00:07:15,994 'Many of the super-rich we are attracting 125 00:07:15,994 --> 00:07:19,114 'spend their money on such trophy assets. 126 00:07:19,114 --> 00:07:22,474 'Private helicopters, Learjets, or yachts. 127 00:07:30,994 --> 00:07:33,674 'The money stays pretty much in their world. 128 00:07:33,674 --> 00:07:38,034 'But for the seriously super-rich, only one thing will do. 129 00:07:39,314 --> 00:07:40,874 'A Premiership football club.' 130 00:07:45,154 --> 00:07:47,834 Tony, we're walking out on to the hallowed turf. 131 00:07:47,834 --> 00:07:50,634 - Yeah. It's expensive turf. - LAUGHTER 132 00:07:50,634 --> 00:07:53,834 I never thought a piece of grass would cost £1 million. 133 00:07:53,834 --> 00:07:58,914 'QPR was bought in 2011 for £35 million by this man, 134 00:07:58,914 --> 00:08:02,114 'Malaysian businessman, Tony Fernandes.' 135 00:08:02,114 --> 00:08:04,794 Asia's toughest job interview begins. 136 00:08:04,794 --> 00:08:07,594 Welcome to the most challenging interview of your life. 137 00:08:07,594 --> 00:08:10,354 He's the star of the Asian Apprentice. 138 00:08:10,354 --> 00:08:12,794 The Alan Sugar of the Far East. 139 00:08:12,794 --> 00:08:16,314 His net worth of £650 million 140 00:08:16,314 --> 00:08:20,514 makes him one of the richest men in both Britain and Malaysia. 141 00:08:20,514 --> 00:08:22,234 It's a monumental screw-up. 142 00:08:22,234 --> 00:08:25,034 For that reason, you're fired. You're fired. 143 00:08:25,034 --> 00:08:28,994 'The Apprentice Asia premieres tonight at 9.00...' 144 00:08:28,994 --> 00:08:30,794 You made your money from an Asian airline. 145 00:08:30,794 --> 00:08:32,514 Why did you buy a British football club? 146 00:08:32,514 --> 00:08:33,754 TONY LAUGHS 147 00:08:33,754 --> 00:08:36,514 When you buy a Learjet or a massive yacht, 148 00:08:36,514 --> 00:08:40,274 you know, it's generally for yourself, the occasional parties. 149 00:08:40,274 --> 00:08:44,914 But QPR, the feelings, I can't describe. 150 00:08:44,914 --> 00:08:46,514 Life is about experiences. 151 00:08:46,514 --> 00:08:48,834 So I'd rather do that 152 00:08:48,834 --> 00:08:52,794 than sit on a massive boat in the middle of the sea. 153 00:08:54,314 --> 00:08:57,194 Buying big things might be exciting for the super-rich 154 00:08:57,194 --> 00:08:58,834 and employ some people, 155 00:08:58,834 --> 00:09:00,834 but if trickle-down was working, 156 00:09:00,834 --> 00:09:03,954 the fact we have more super-rich than ever before in Britain 157 00:09:03,954 --> 00:09:06,394 should mean we are all getting richer. 158 00:09:07,794 --> 00:09:09,194 But we're not. 159 00:09:09,194 --> 00:09:12,554 Instead, the 1% share of wealth is rising. 160 00:09:12,554 --> 00:09:17,114 For the 99%, living standards remain at pre-crisis levels. 161 00:09:19,714 --> 00:09:22,194 Across the world, people are marching. 162 00:09:23,274 --> 00:09:25,954 This is a demonstration in Boston against low pay. 163 00:09:27,514 --> 00:09:31,314 In London, what began with an occupation outside St Paul's 164 00:09:31,314 --> 00:09:34,834 continued last year with a protest march against low pay 165 00:09:34,834 --> 00:09:39,034 and the growing chasm between the 1% and the rest of us. 166 00:09:42,394 --> 00:09:45,554 You know, me and my husband have worked all our life. 167 00:09:45,554 --> 00:09:48,074 We are on quite low pay, but, you know, still, 168 00:09:48,074 --> 00:09:49,194 we can't afford to live. 169 00:09:49,194 --> 00:09:52,274 Everybody's struggling. Well, apart from the 1%. 170 00:09:53,314 --> 00:09:56,874 For ten years, the average weekly income of a British family 171 00:09:56,874 --> 00:10:00,914 has stayed the same, £429. 172 00:10:02,394 --> 00:10:05,434 In the same period, the richest 1,000 people in Britain 173 00:10:05,434 --> 00:10:07,274 saw their wealth more than double 174 00:10:07,274 --> 00:10:12,114 from £200 billion to £500 billion. 175 00:10:12,114 --> 00:10:13,194 Do you think it's right, 176 00:10:13,194 --> 00:10:15,834 the idea that their wealth would trickle down to the rest of us? 177 00:10:15,834 --> 00:10:17,794 - Absolutely not. - It doesn't trickle down. - No. 178 00:10:17,794 --> 00:10:19,754 When has it ever? When have you ever seen that? 179 00:10:19,754 --> 00:10:23,594 You can see it's not worked! You can see it, it's not working, is it? 180 00:10:26,034 --> 00:10:29,554 Inequality has become the theme of epic Hollywood blockbusters 181 00:10:29,554 --> 00:10:31,194 like The Hunger Games, 182 00:10:31,194 --> 00:10:34,514 in which young people from outside the super-rich city 183 00:10:34,514 --> 00:10:36,674 fight to the death for survival. 184 00:10:38,394 --> 00:10:40,594 Happy Hunger Games... 185 00:10:40,594 --> 00:10:45,034 and may the odds be ever in your favour. 186 00:10:46,114 --> 00:10:47,914 But this isn't just science fiction - 187 00:10:47,914 --> 00:10:51,754 a recent us government report predicted a Hunger Games future, 188 00:10:51,754 --> 00:10:53,794 a world of elites and commoners. 189 00:10:56,754 --> 00:11:00,674 And inequality is a race to the bottom that Britain is winning - 190 00:11:00,674 --> 00:11:02,794 we're the only leading economy 191 00:11:02,794 --> 00:11:06,434 to have grown consistently more unequal this century. 192 00:11:07,794 --> 00:11:10,434 So how did we come to believe that attracting the super-rich 193 00:11:10,434 --> 00:11:12,274 would benefit everyone? 194 00:11:12,274 --> 00:11:15,434 Who sold us the idea - and why? 195 00:11:15,434 --> 00:11:17,074 MUSIC: Sunny Afternoon by The Kinks 196 00:11:17,074 --> 00:11:21,234 To understand, you need to go back to the 1960s. 197 00:11:21,234 --> 00:11:23,674 Britain's wealth had been built on empire, 198 00:11:23,674 --> 00:11:26,994 and the City of London was the hub. 199 00:11:26,994 --> 00:11:29,674 Now that was gone. 200 00:11:29,674 --> 00:11:33,074 But Britain had a plan to reinvent itself 201 00:11:33,074 --> 00:11:35,834 as a tax haven for the super-rich. 202 00:11:35,834 --> 00:11:39,234 We were no longer an empire - we were a casino. 203 00:11:39,234 --> 00:11:43,114 And the biggest high rollers were about to roll into town. 204 00:11:43,114 --> 00:11:45,034 MUSIC: Goldfinger by Shirley Bassey 205 00:11:51,394 --> 00:11:53,994 This was the era of the jet set, 206 00:11:53,994 --> 00:11:57,994 and leading the pack were the Greek shipping tycoons. 207 00:11:57,994 --> 00:12:00,434 # Goldfinger... # 208 00:12:00,434 --> 00:12:06,754 - PRESENTER: - These ships, and more, add up to 6,428,602 tonnes. 209 00:12:06,754 --> 00:12:10,594 Whatever "it" is, the Greek shipping industry obviously has it. 210 00:12:10,594 --> 00:12:12,634 They also had a problem. 211 00:12:12,634 --> 00:12:16,714 if they settled here, they would end up paying tax on the profits 212 00:12:16,714 --> 00:12:18,394 from their huge ships. 213 00:12:18,394 --> 00:12:20,234 But a compliant British government 214 00:12:20,234 --> 00:12:22,954 was happy for them to exploit a loophole. 215 00:12:24,874 --> 00:12:26,914 It meant they could avoid paying tax, 216 00:12:26,914 --> 00:12:29,074 and it was called the non-dom rule. 217 00:12:30,634 --> 00:12:33,794 The rule was a hangover from Britain's imperial past. 218 00:12:33,794 --> 00:12:37,354 It was designed to encourage wealthy British colonial magnates, 219 00:12:37,354 --> 00:12:39,354 rich from the spoils of empire, 220 00:12:39,354 --> 00:12:42,274 to come to Britain and spend their money. 221 00:12:44,474 --> 00:12:49,314 This 19th-century relic now turned into a 20th-century tax giveaway. 222 00:12:52,114 --> 00:12:55,034 The non-dom rule made Britain uniquely attractive 223 00:12:55,034 --> 00:12:58,474 to the super-rich - you could come here and avoid paying taxes 224 00:12:58,474 --> 00:13:02,074 simply through a family connection to a foreign country. 225 00:13:02,074 --> 00:13:04,074 They couldn't believe their luck. 226 00:13:05,514 --> 00:13:08,274 Grant Woods is a man who made the system work 227 00:13:08,274 --> 00:13:13,234 as a senior wealth adviser at Coutts, bankers to the super-rich. 228 00:13:13,234 --> 00:13:15,794 You place your profits in offshore centres, 229 00:13:15,794 --> 00:13:17,514 it can be managed there, 230 00:13:17,514 --> 00:13:22,234 you can live happily in London, enjoy all the facilities in London. 231 00:13:23,514 --> 00:13:25,674 Among the non-doms who came to Britain 232 00:13:25,674 --> 00:13:28,514 to reinvent themselves as pillars of the establishment 233 00:13:28,514 --> 00:13:32,994 were Czech-born Robert Maxwell - originally Jan Hoch - 234 00:13:32,994 --> 00:13:38,994 and German tycoon Tiny Rowland - Roland Fuhrhop to his friends. 235 00:13:40,554 --> 00:13:43,194 Grant Woods, whose job was to woo these people, 236 00:13:43,194 --> 00:13:46,714 saw tax breaks as the key tool. 237 00:13:46,714 --> 00:13:50,314 People kept testing the limits of what was acceptable 238 00:13:50,314 --> 00:13:53,714 and not acceptable because there were no rules laid down 239 00:13:53,714 --> 00:13:58,234 by the Inland Revenue specifically dealing with this situation. 240 00:13:58,234 --> 00:14:00,594 The rules were very, very loose. 241 00:14:00,594 --> 00:14:02,474 It was all very cosy. 242 00:14:02,474 --> 00:14:06,114 The non-dom loophole remained largely unscrutinised 243 00:14:06,114 --> 00:14:11,234 until the 1990s, when Tory donor multimillionaire Asil Nadir 244 00:14:11,234 --> 00:14:13,194 was found guilty of fraud. 245 00:14:13,194 --> 00:14:15,714 There are a large number of people who work in Britain, 246 00:14:15,714 --> 00:14:18,514 who earn their money in Britain, who don't pay much tax in Britain. 247 00:14:18,514 --> 00:14:20,954 And many of these people are millionaires who are using 248 00:14:20,954 --> 00:14:22,274 non-resident status, 249 00:14:22,274 --> 00:14:25,634 or non-domicile status to avoid their proper share of tax. 250 00:14:25,634 --> 00:14:27,554 Now, I'm going to close these loopholes. 251 00:14:27,554 --> 00:14:31,074 But guess what? Nothing happened for 15 years. 252 00:14:31,074 --> 00:14:38,354 In 2008, Alistair Darling finally imposed an annual charge of £30,000. 253 00:14:38,354 --> 00:14:41,274 - To someone who is a billionaire... - Yeah. 254 00:14:41,274 --> 00:14:44,794 ..how prohibitive is a £30,000 flat rate? 255 00:14:44,794 --> 00:14:47,914 Well, for someone who's super wealthy, 256 00:14:47,914 --> 00:14:51,834 it's the sort of money they'd spend on a party for one of their kids. 257 00:14:55,154 --> 00:14:59,354 Far from being a deterrent, £30,000 is peanuts to non-doms, 258 00:14:59,354 --> 00:15:01,914 whose numbers are now back on the increase. 259 00:15:04,154 --> 00:15:08,954 £30,000 is £3,000 more than the average salary in Britain. 260 00:15:10,034 --> 00:15:13,754 You could blow a year's pay on one visit to this salon - 261 00:15:13,754 --> 00:15:16,914 Oro Gold in High Street Kensington. 262 00:15:16,914 --> 00:15:19,994 - Hi, there. I've come for an appointment. - Hi, is it Jacques? 263 00:15:19,994 --> 00:15:22,314 - Yes. - My name's Lena, I'll be your therapist for today. 264 00:15:22,314 --> 00:15:24,154 - Hi, Lena. - Would you like to come with me? 265 00:15:24,154 --> 00:15:28,114 '£30,000 is also around the average deposit for a first-time buyer...' 266 00:15:29,434 --> 00:15:30,634 Hi, Lena. 267 00:15:30,634 --> 00:15:31,954 OK. What do you want me to do? 268 00:15:31,954 --> 00:15:33,754 If you just want to hang your robe up, 269 00:15:33,754 --> 00:15:35,594 - and you can lay down on the couch for me. - OK. 270 00:15:35,594 --> 00:15:39,154 '..and the current timescale to save for such a deposit 271 00:15:39,154 --> 00:15:41,074 'is 22 years. 272 00:15:43,634 --> 00:15:45,954 'So what do you get for this kind of money? 273 00:15:47,074 --> 00:15:49,954 'Something called a facial.' 274 00:15:49,954 --> 00:15:51,314 I'm a bit nervous, Lena. 275 00:15:51,314 --> 00:15:53,314 What's going to happen? 276 00:15:53,314 --> 00:15:55,434 Don't worry, you're in good hands. 277 00:15:56,554 --> 00:15:58,874 So, I'm just going to cleanse the skin now. 278 00:16:01,834 --> 00:16:04,394 The thing is, if you are super-rich, you know, 279 00:16:04,394 --> 00:16:06,354 this isn't that unusual a treatment. 280 00:16:06,354 --> 00:16:07,514 You're totally right, 281 00:16:07,514 --> 00:16:09,954 and usually it's not really a one-off treatment, 282 00:16:09,954 --> 00:16:13,154 they usually come for a series of treatments 283 00:16:13,154 --> 00:16:14,874 to get maximum results. 284 00:16:14,874 --> 00:16:18,194 - OK. - So, usually between six and 12 treatments 285 00:16:18,194 --> 00:16:19,914 on a monthly basis. 286 00:16:21,354 --> 00:16:24,754 It's a bit more expensive than an avocado all over your face. 287 00:16:24,754 --> 00:16:26,354 - Yes! - It's like 40p or something. 288 00:16:26,354 --> 00:16:27,994 Well, it is gold. 289 00:16:27,994 --> 00:16:29,714 'The full super-rich service 290 00:16:29,714 --> 00:16:33,194 'adds gold-flecked moisturisers to the gold mask, 291 00:16:33,194 --> 00:16:36,474 'with a caviar massage thrown in... 292 00:16:36,474 --> 00:16:38,234 'because you're worth it. 293 00:16:38,234 --> 00:16:40,074 'Or just because you can.' 294 00:16:41,114 --> 00:16:46,034 It's just particles of gold in a gel form. 295 00:16:48,754 --> 00:16:51,154 'Luxury services like Oro Gold 296 00:16:51,154 --> 00:16:55,034 'thrive thanks to the arrival of so many super-rich people in Britain.' 297 00:16:58,514 --> 00:16:59,994 In the 1970s, 298 00:16:59,994 --> 00:17:04,154 we were getting used to their presence for the first time. 299 00:17:04,154 --> 00:17:06,754 But while they enjoyed tax haven Britain, 300 00:17:06,754 --> 00:17:10,274 the home-grown super-rich were not amused. 301 00:17:12,154 --> 00:17:14,394 In 1974, the new Labour government 302 00:17:14,394 --> 00:17:17,394 promised a massive increase in welfare spending. 303 00:17:17,394 --> 00:17:22,914 To pay for this, they increased taxes on the wealthiest - to 83%. 304 00:17:22,914 --> 00:17:25,834 The top earners had had enough. 305 00:17:25,834 --> 00:17:30,834 # There's one for you, 19 for me 306 00:17:33,794 --> 00:17:36,194 # Cos I'm the taxman 307 00:17:36,194 --> 00:17:40,834 # Yeah, I'm the taxman... # 308 00:17:40,834 --> 00:17:43,234 But their saviours were at hand, 309 00:17:43,234 --> 00:17:46,794 in the unlikely form of two enterprising accountants, 310 00:17:46,794 --> 00:17:49,474 Roy Tucker and Ron Plummer. 311 00:17:49,474 --> 00:17:52,034 # Be thankful I don't take it all... # 312 00:17:52,034 --> 00:17:56,194 Spotting a gap in the market, they'd set up their own bank - 313 00:17:56,194 --> 00:17:57,914 called Rossminster. 314 00:17:57,914 --> 00:18:01,394 Its main purpose was the development of complex schemes 315 00:18:01,394 --> 00:18:03,594 for avoiding tax. 316 00:18:03,594 --> 00:18:05,794 The waiting room of the accountants' office 317 00:18:05,794 --> 00:18:08,714 resembled an extraordinary cocktail party - 318 00:18:08,714 --> 00:18:10,954 Led Zeppelin and Roger Moore were clients - 319 00:18:10,954 --> 00:18:13,594 and, most famously, two of The Beatles. 320 00:18:13,594 --> 00:18:16,634 - # If you get too cold - I'll tax the heat 321 00:18:16,634 --> 00:18:21,434 - # If you take a walk - I'll tax your feet... # 322 00:18:21,434 --> 00:18:23,634 Richard Brooks was a tax inspector 323 00:18:23,634 --> 00:18:26,954 who has investigated Rossminster's activities. 324 00:18:26,954 --> 00:18:30,674 They were promoting weird and wonderful schemes 325 00:18:30,674 --> 00:18:34,314 with names like "Exempt Debt Scheme", "Commodity Carry Scheme", 326 00:18:34,314 --> 00:18:37,314 "Non-Deposit Interest" - all kinds of wacky stuff. 327 00:18:41,514 --> 00:18:42,634 You, in. 328 00:18:42,634 --> 00:18:44,194 Attention. 329 00:18:44,194 --> 00:18:46,274 Things they didn't teach you in school... 330 00:18:46,274 --> 00:18:48,554 One of Rossminster's most unusual schemes 331 00:18:48,554 --> 00:18:51,874 was to use the losses from investments in British films 332 00:18:51,874 --> 00:18:54,594 to reduce customers' tax bills. 333 00:18:54,594 --> 00:18:57,034 One film dragged into this tangled web 334 00:18:57,034 --> 00:18:59,234 was the British cult classic Scum - 335 00:18:59,234 --> 00:19:01,634 a film about borstal. 336 00:19:01,634 --> 00:19:05,474 And trouble was now looming for Tucker and Plummer. 337 00:19:05,474 --> 00:19:09,074 On the 13th of July 1979, 338 00:19:09,074 --> 00:19:14,514 70 tax inspectors and 28 police officers raided Rossminster. 339 00:19:14,514 --> 00:19:18,634 Their offices here were closed, and their little party was over - 340 00:19:18,634 --> 00:19:22,834 but an even bigger party was just about to begin. 341 00:19:26,914 --> 00:19:29,794 Rossminster showed what you could do with the tax law - 342 00:19:29,794 --> 00:19:32,034 just how creative you could be with it. 343 00:19:32,034 --> 00:19:36,394 By the late '80s, you found the big accountancy firms 344 00:19:36,394 --> 00:19:40,194 devising tax-avoidance schemes and selling them very aggressively. 345 00:19:40,194 --> 00:19:43,434 Although Tucker and Plummer did not face criminal charges, 346 00:19:43,434 --> 00:19:45,234 things would never be the same. 347 00:19:46,434 --> 00:19:51,394 The men behind Rossminster marked the fundamental change in attitudes. 348 00:19:51,394 --> 00:19:55,794 From now on, they were saying, rules are there to be broken - 349 00:19:55,794 --> 00:19:58,274 but only if you're wealthy. 350 00:19:58,274 --> 00:20:00,674 MUSIC: Angel by Massive Attack 351 00:20:00,674 --> 00:20:05,354 Britain was now the tax-dodge capital of the world. 352 00:20:05,354 --> 00:20:07,274 And it's still happening. 353 00:20:07,274 --> 00:20:10,634 Last year it cost the rest of us £20 billion. 354 00:20:13,954 --> 00:20:17,914 One man who's experienced how tax avoidance works for the super-rich 355 00:20:17,914 --> 00:20:19,714 is billionaire John Caudwell. 356 00:20:21,554 --> 00:20:24,234 - John. - Hi, Jacques. How are you doing? - Nice to see you. 357 00:20:24,234 --> 00:20:25,794 - Thanks for your time. - Pleasure. 358 00:20:25,794 --> 00:20:27,954 It's a nice little place you've got here(!) 359 00:20:27,954 --> 00:20:30,314 It is, it's a phenomenal place. 360 00:20:30,314 --> 00:20:34,474 You don't get this stuff at IKEA, do you, John?! 361 00:20:34,474 --> 00:20:36,634 It's probably a good job, really. 362 00:20:38,354 --> 00:20:41,914 He built up Phones 4u from nothing, to a billionaire lifestyle 363 00:20:41,914 --> 00:20:45,874 of helicopters and a Jacobean pile in Staffordshire. 364 00:20:48,074 --> 00:20:50,194 But this is his latest acquisition - 365 00:20:50,194 --> 00:20:52,394 a pair of Mayfair mansions. 366 00:20:52,394 --> 00:20:56,234 Reported value - £250 million. 367 00:20:58,874 --> 00:21:01,154 It's a good place to entertain... 368 00:21:01,154 --> 00:21:06,474 Brilliant place to network with the rich and famous of London. 369 00:21:07,954 --> 00:21:10,234 So, how does this compare with where you grew up? 370 00:21:10,234 --> 00:21:13,074 THEY LAUGH 371 00:21:13,074 --> 00:21:16,394 - Oh, my gosh. - A little more spacious(!) 372 00:21:16,394 --> 00:21:17,874 Well... 373 00:21:17,874 --> 00:21:21,234 Well, my first home - first marital home, 374 00:21:21,234 --> 00:21:24,514 when I was....I was about 20, at the time, 375 00:21:24,514 --> 00:21:29,994 was a 14-foot Sprite Musketeer caravan on my mother's lawn. 376 00:21:29,994 --> 00:21:32,474 Caudwell's not like many of the super-rich - 377 00:21:32,474 --> 00:21:36,354 he actually pays his way, and as Britain's biggest taxpayer, 378 00:21:36,354 --> 00:21:41,634 he's handed over £200 million on the last five years. 379 00:21:41,634 --> 00:21:44,834 But has he ever been tempted to break the rules? 380 00:21:44,834 --> 00:21:47,874 John, have you ever been approached with mad schemes...? 381 00:21:47,874 --> 00:21:50,714 Well, I was approached all the time with mad schemes, 382 00:21:50,714 --> 00:21:53,954 and we DID take some of them up - you know, and I'm not proud of that. 383 00:21:53,954 --> 00:21:54,994 How does it work? 384 00:21:54,994 --> 00:21:57,274 You know, what's the conversation that's had? 385 00:21:57,274 --> 00:22:00,394 Oh, do you know, some of the schemes are so convoluted 386 00:22:00,394 --> 00:22:01,754 that I couldn't even... 387 00:22:01,754 --> 00:22:04,114 I wouldn't even begin to necessarily understand them. 388 00:22:04,114 --> 00:22:08,074 There's hundreds or even thousands of tax accountants, 389 00:22:08,074 --> 00:22:10,634 often recruited from the Inland Revenue, 390 00:22:10,634 --> 00:22:13,434 who were tax inspectors, to advise people 391 00:22:13,434 --> 00:22:17,434 on how to have the latest, barmiest, cutting-edge scheme. 392 00:22:17,434 --> 00:22:20,034 If I thought they were reasonably ethical, I'd do them, 393 00:22:20,034 --> 00:22:23,234 - but...they were wrong. - Mm. 394 00:22:23,234 --> 00:22:26,074 At the end of the day, I believe they were wrong. 395 00:22:26,074 --> 00:22:28,474 But this wasn't just about individuals. 396 00:22:28,474 --> 00:22:31,434 There was a culture in which cosy relationships developed 397 00:22:31,434 --> 00:22:34,394 between corporations and the tax authorities - 398 00:22:34,394 --> 00:22:38,594 with devastating consequences for the public purse. 399 00:22:38,594 --> 00:22:43,154 There was very much a system in which senior tax officials 400 00:22:43,154 --> 00:22:48,154 were rewarded in terms of promotions and bonuses - 401 00:22:48,154 --> 00:22:52,394 not for success in tackling tax avoidance, 402 00:22:52,394 --> 00:22:57,634 but success in fostering a partnership between the companies 403 00:22:57,634 --> 00:22:59,314 and the department. 404 00:22:59,314 --> 00:23:01,914 So it was about how well can you create a relationship 405 00:23:01,914 --> 00:23:02,954 with a company, 406 00:23:02,954 --> 00:23:06,274 rather than how much money can you actually get for the public 407 00:23:06,274 --> 00:23:07,474 out of that company? 408 00:23:07,474 --> 00:23:12,514 That's right. And if you ended up in a big dispute with that company, 409 00:23:12,514 --> 00:23:16,714 that would probably count against you in terms of your prospects. 410 00:23:16,714 --> 00:23:20,914 So, you're actually being promoted for not doing your job, essentially? 411 00:23:20,914 --> 00:23:24,674 - Many people... - Your job as a public employee is to raise revenue 412 00:23:24,674 --> 00:23:27,914 on behalf of the public, but actually they were working 413 00:23:27,914 --> 00:23:30,274 pretty much on behalf of the companies. 414 00:23:30,274 --> 00:23:34,394 Yeah, I think many senior tax officials, er, ten years ago 415 00:23:34,394 --> 00:23:36,794 would have said that's how they felt, yes. 416 00:23:41,034 --> 00:23:44,274 This toxic combination of tax breaks for foreigners 417 00:23:44,274 --> 00:23:47,554 and massive avoidance among the home-grown wealthy 418 00:23:47,554 --> 00:23:50,314 has changed Britain's role in the world. 419 00:23:50,314 --> 00:23:52,994 We were once an imperial superpower. 420 00:23:52,994 --> 00:23:54,754 Now we're a tax haven. 421 00:23:55,874 --> 00:24:01,034 Pippa Malmgren is a former economic adviser to President George W Bush. 422 00:24:01,034 --> 00:24:03,314 Can you explain how important Britain is 423 00:24:03,314 --> 00:24:05,514 as a tax haven for the super-rich? 424 00:24:05,514 --> 00:24:06,714 It's very important. 425 00:24:06,714 --> 00:24:10,234 That's the most attractive location now, I think, on the planet - 426 00:24:10,234 --> 00:24:13,994 and that's partly because the old tax havens in places like Switzerland 427 00:24:13,994 --> 00:24:17,074 are no longer open for business for new money. 428 00:24:17,074 --> 00:24:20,874 Do you think the super-rich and the super wealthy were surprised 429 00:24:20,874 --> 00:24:26,954 by how open Britain was as this new tax haven - this new Switzerland? 430 00:24:26,954 --> 00:24:30,354 Yeah. I think that they had assumed 431 00:24:30,354 --> 00:24:34,034 that they would be placing their money in, you know, Geneva 432 00:24:34,034 --> 00:24:36,594 and the Cayman Islands and places like that. 433 00:24:36,594 --> 00:24:38,154 MUSIC: Time by Pink Floyd 434 00:24:38,154 --> 00:24:41,314 These changes only happened because successive governments 435 00:24:41,314 --> 00:24:45,074 became convinced that trickle-down was the answer. 436 00:24:45,074 --> 00:24:47,594 It started in 1979. 437 00:24:48,874 --> 00:24:50,914 A Conservative government is elected 438 00:24:50,914 --> 00:24:53,154 on the assumption that Britain is broken, 439 00:24:53,154 --> 00:24:56,714 and the money of the wealthiest will help save us. 440 00:24:56,714 --> 00:25:02,154 Within weeks they slashed the top rate of tax from 83% to 60% - 441 00:25:02,154 --> 00:25:05,514 the biggest giveaway to the wealthy in decades. 442 00:25:07,754 --> 00:25:10,674 Tax avoidance was now government policy. 443 00:25:13,514 --> 00:25:17,234 The old world of heavy industry, unions and high taxes 444 00:25:17,234 --> 00:25:19,514 was no longer to be trusted. 445 00:25:19,514 --> 00:25:23,234 It had failed, and should be chucked on the bonfire on history. 446 00:25:23,234 --> 00:25:30,194 # Ticking away the moments that make up a dull day... # 447 00:25:30,194 --> 00:25:33,594 But there was serious concern about how this brave new world 448 00:25:33,594 --> 00:25:37,874 of lower taxes for the 1% would create inequality. 449 00:25:38,874 --> 00:25:43,874 It dominated Mrs Thatcher's first ever TV interview as Prime Minister. 450 00:25:52,874 --> 00:25:57,354 Is the price for our economic recovery and prosperity 451 00:25:57,354 --> 00:25:59,274 greater inequality in this country? 452 00:25:59,274 --> 00:26:02,194 You will get a more thriving society 453 00:26:02,194 --> 00:26:05,474 when people can rise to the limit of their talents, 454 00:26:05,474 --> 00:26:08,754 and out of the wealth they create, we shall all be better off. 455 00:26:08,754 --> 00:26:12,594 So a more unequal society, you think, is actually better for prosperity? 456 00:26:12,594 --> 00:26:17,674 A more opportunity society, which enables the able to earn more. 457 00:26:17,674 --> 00:26:19,834 But it does mean more inequality, does it not? 458 00:26:19,834 --> 00:26:21,994 It does mean more... Yes, indeed. 459 00:26:21,994 --> 00:26:25,834 If opportunity and talent is unequally distributed, 460 00:26:25,834 --> 00:26:30,194 then allowing people to exercise that talent and opportunity 461 00:26:30,194 --> 00:26:34,354 means more inequality, but it means you drag up the poor people, 462 00:26:34,354 --> 00:26:36,674 because there are the resources to do so. 463 00:26:36,674 --> 00:26:39,714 No-one would remember the Good Samaritan 464 00:26:39,714 --> 00:26:41,554 if he'd only had good intentions. 465 00:26:41,554 --> 00:26:42,914 He had money as well. 466 00:26:42,914 --> 00:26:44,514 Thank you very much, Prime Minister. 467 00:26:47,474 --> 00:26:51,674 This belief that lower taxes would stimulate growth 468 00:26:51,674 --> 00:26:53,074 came from the US 469 00:26:53,074 --> 00:26:57,834 with radical economists like this man, Arthur Laffer, 470 00:26:57,834 --> 00:27:00,834 an adviser to Republican presidential candidate 471 00:27:00,834 --> 00:27:02,754 Ronald Reagan. 472 00:27:02,754 --> 00:27:05,754 Laffer believed that business, not government, 473 00:27:05,754 --> 00:27:07,994 should be trusted to create prosperity, 474 00:27:07,994 --> 00:27:13,114 and to do this, the rich should be freed from the burden of tax. 475 00:27:13,114 --> 00:27:15,634 Rich people are different than most people. 476 00:27:15,634 --> 00:27:18,314 The rich is the one group of people where you lower tax rates, 477 00:27:18,314 --> 00:27:20,074 you will get more revenues - 478 00:27:20,074 --> 00:27:23,434 and every time we've raised those tax rates on the rich 479 00:27:23,434 --> 00:27:24,674 they've paid less. 480 00:27:24,674 --> 00:27:26,594 Laffer went further. 481 00:27:26,594 --> 00:27:30,554 He said taxing the rich would make society as a whole poorer. 482 00:27:32,394 --> 00:27:35,434 If you tax rich people and give the money to poor people, 483 00:27:35,434 --> 00:27:38,594 you're going to get lots and lots of poor people and no rich people. 484 00:27:38,594 --> 00:27:42,834 The dream is always to make the poor rich - not to make the rich poor. 485 00:27:45,034 --> 00:27:49,674 In Britain, Chancellor after Chancellor courted the super-rich 486 00:27:49,674 --> 00:27:51,754 in the belief that they would create wealth 487 00:27:51,754 --> 00:27:55,034 and trickle-down would be our reward. 488 00:27:55,034 --> 00:27:57,074 22 pence to 20 pence... 489 00:28:00,834 --> 00:28:04,194 But after three decades of devotion to lower taxes, 490 00:28:04,194 --> 00:28:08,114 a new breed of economists who have looked at the evidence 491 00:28:08,114 --> 00:28:10,314 are convinced we've got it wrong. 492 00:28:11,514 --> 00:28:14,114 Among them, one of the world's leading economists, 493 00:28:14,114 --> 00:28:17,154 Cambridge academic Ha Joon-Chang. 494 00:28:17,154 --> 00:28:21,594 Trickle-down economics, you know, in theory, is not a stupid idea. 495 00:28:21,594 --> 00:28:25,354 But the trouble is that, in reality, this prediction 496 00:28:25,354 --> 00:28:29,114 has not been borne out, because in countries like the UK, the US, 497 00:28:29,114 --> 00:28:31,474 that have used these policies, 498 00:28:31,474 --> 00:28:34,674 investment as a share of national income has fallen - 499 00:28:34,674 --> 00:28:37,594 economic growth has fallen, 500 00:28:37,594 --> 00:28:42,994 so where is that pudding, you know, that that we were promised? 501 00:28:42,994 --> 00:28:46,674 That, "Well, if you keep these people - more money, 502 00:28:46,674 --> 00:28:48,994 "they create more jobs, more income." 503 00:28:48,994 --> 00:28:51,354 They haven't done anything, you know? 504 00:28:53,674 --> 00:28:55,754 The pursuit of trickle-down in the UK 505 00:28:55,754 --> 00:28:59,514 means the rich have doubled their share of income since the 1980s. 506 00:29:00,754 --> 00:29:04,354 The last decade has seen incomes for most of us stagnate, 507 00:29:04,354 --> 00:29:07,154 further widening the gap. 508 00:29:07,154 --> 00:29:11,314 So, it's hard to see how trickle-down could not be linked to inequality. 509 00:29:11,314 --> 00:29:13,554 Unless you're Arthur Laffer, of course. 510 00:29:16,514 --> 00:29:20,154 What critics would say about your innovation - 511 00:29:20,154 --> 00:29:22,994 the moment at which economics is turned on its head - 512 00:29:22,994 --> 00:29:26,594 is that, essentially, it's a fig leaf for politicians 513 00:29:26,594 --> 00:29:28,514 to cynically create tax cuts, 514 00:29:28,514 --> 00:29:32,274 but with absolutely no economic rationale behind it whatsoever. 515 00:29:32,274 --> 00:29:35,754 - Oh, that's not true - come on! - Taxation at its most basic 516 00:29:35,754 --> 00:29:38,434 is raising revenue so a society can function. 517 00:29:38,434 --> 00:29:40,354 - Exactly. - To say taxation is bad 518 00:29:40,354 --> 00:29:44,074 - is to essentially say, "Everyone for themselves..." - No. 519 00:29:44,074 --> 00:29:47,514 "There is no such thing as society, and this is what the deal is." 520 00:29:47,514 --> 00:29:51,234 Of course the reason you tax is so that you can get those revenues 521 00:29:51,234 --> 00:29:54,634 and do good. The government can do what governments should do - 522 00:29:54,634 --> 00:29:58,234 - I mean, highways, schools, defence - all these wonderful things. - Mm. 523 00:29:58,234 --> 00:30:02,114 And when they've run out of things the government should do, you stop. 524 00:30:02,114 --> 00:30:04,114 But look what's happened in Britain - 525 00:30:04,114 --> 00:30:08,074 we have one of the lowest levels of taxation for the super wealthy, 526 00:30:08,074 --> 00:30:11,714 and our economy has, at a real level, stagnated. 527 00:30:11,714 --> 00:30:14,634 Do you think inequality has increased as a result? 528 00:30:14,634 --> 00:30:17,354 If by inequality declining you make everyone poorer, 529 00:30:17,354 --> 00:30:19,394 but you make the poor a little bit less poorer, 530 00:30:19,394 --> 00:30:22,074 then you make the rich a lot poorer - I don't like it. 531 00:30:22,074 --> 00:30:25,994 I like equality when everyone is benefitting 532 00:30:25,994 --> 00:30:28,954 and I don't want to see everyone reaching equality 533 00:30:28,954 --> 00:30:30,914 by everyone going to the basement. 534 00:30:30,914 --> 00:30:31,994 That's my view. 535 00:30:31,994 --> 00:30:36,034 So I think looking at equality as an issue by itself is nonsense. 536 00:30:41,554 --> 00:30:44,394 This conviction that taxes should be low 537 00:30:44,394 --> 00:30:46,914 is the super-rich mantra. 538 00:30:46,914 --> 00:30:50,874 But here in Seattle, one of them is breaking rank. 539 00:30:52,354 --> 00:30:55,114 Nick Hanauer is an internet billionaire 540 00:30:55,114 --> 00:30:57,874 who believes we've been duped. 541 00:30:57,874 --> 00:30:59,434 Trickle-down economics 542 00:30:59,434 --> 00:31:01,554 is as old as human civilisation, 543 00:31:01,554 --> 00:31:04,114 we used to call it "divine right". 544 00:31:04,114 --> 00:31:06,954 Now we call it "trickle-down economics" - 545 00:31:06,954 --> 00:31:11,674 it's simply the idea that I matter - and you don't. 546 00:31:11,674 --> 00:31:12,874 HE LAUGHS 547 00:31:12,874 --> 00:31:18,194 That what I do is indispensible, and what you do is extra. 548 00:31:19,474 --> 00:31:21,354 It's how we keep you in line. 549 00:31:23,234 --> 00:31:24,714 He agrees with the critics 550 00:31:24,714 --> 00:31:27,434 that the gross inequality we are now witnessing 551 00:31:27,434 --> 00:31:30,794 is the result of the wrong turn we took three decades ago. 552 00:31:32,834 --> 00:31:36,194 The great problem we face in Britain and the United States 553 00:31:36,194 --> 00:31:40,474 is that we have formed our economic policies 554 00:31:40,474 --> 00:31:43,794 on essentially believing the trickle-down idea 555 00:31:43,794 --> 00:31:45,794 of Reagan-Thatcherism. Right? 556 00:31:45,794 --> 00:31:48,074 The idea that if you make rich people richer, 557 00:31:48,074 --> 00:31:50,034 everybody's going to be better off. 558 00:31:50,034 --> 00:31:54,194 And, you know, that's just not true - it's not how the economy works. 559 00:31:54,194 --> 00:31:56,274 To use me as an example, I mean, 560 00:31:56,274 --> 00:32:01,714 I earn literally a thousand times as much per year 561 00:32:01,714 --> 00:32:07,354 as the median wage, essentially, in the United States, plus or minus. 562 00:32:07,354 --> 00:32:11,994 But I don't buy a thousand times as much stuff - 563 00:32:11,994 --> 00:32:17,074 I own three or four pairs of jeans, a couple of pairs of shoes... 564 00:32:17,074 --> 00:32:19,634 You know, we have a big, beautiful house, 565 00:32:19,634 --> 00:32:22,314 but I don't have a thousand houses here in Seattle, 566 00:32:22,314 --> 00:32:26,394 and so, no matter how much money I have, 567 00:32:26,394 --> 00:32:30,194 I cannot sustain a great national economy - 568 00:32:30,194 --> 00:32:32,514 only a robust middle class can do that. 569 00:32:34,034 --> 00:32:37,034 This is not simply about the failure of trickle-down. 570 00:32:37,034 --> 00:32:40,834 Inequality is threatening capitalism itself. 571 00:32:40,834 --> 00:32:43,914 Capitalism, which is the greatest social technology 572 00:32:43,914 --> 00:32:46,834 ever created for creating prosperity in human societies, 573 00:32:46,834 --> 00:32:49,074 does need some inequality - 574 00:32:49,074 --> 00:32:52,554 just like plants do need some water, 575 00:32:52,554 --> 00:32:57,274 but in precisely the same way that too much water kills plants 576 00:32:57,274 --> 00:33:01,554 by drowning them, too much inequality kills capitalism 577 00:33:01,554 --> 00:33:03,754 by drowning the middle class. 578 00:33:03,754 --> 00:33:09,354 The gains of the super-rich have come at the expense of all of us. 579 00:33:09,354 --> 00:33:12,274 Stagnation is touching parts of society 580 00:33:12,274 --> 00:33:14,354 that had previously avoided pain. 581 00:33:16,514 --> 00:33:21,394 Welcome to Twickenham - home of the middle classes for decades - 582 00:33:21,394 --> 00:33:24,474 who complained when shops like Lidl arrived. 583 00:33:24,474 --> 00:33:25,794 Not any longer. 584 00:33:25,794 --> 00:33:29,354 I wanted to see if they still felt secure as a class, 585 00:33:29,354 --> 00:33:31,554 or were suffering like everyone else. 586 00:33:32,634 --> 00:33:36,274 Since 2008, I haven't enjoyed an increase in pay, 587 00:33:36,274 --> 00:33:39,554 and yet inflation has run higher than my pay packet, 588 00:33:39,554 --> 00:33:43,714 so effectively, I am earning less now than I was in 2008. 589 00:33:43,714 --> 00:33:46,674 I think, generally, personal wealth is going to go down 590 00:33:46,674 --> 00:33:51,434 and down and down. I mean, my parents both have good pensions, 591 00:33:51,434 --> 00:33:55,234 you know, they get their winter fuel payments, 592 00:33:55,234 --> 00:34:00,754 they get a lot of freebies, but I'm not expecting to have a pension - 593 00:34:00,754 --> 00:34:03,074 I'm expecting to be much poorer when I'm older. 594 00:34:03,074 --> 00:34:05,434 - Mm. - Because the money isn't there. 595 00:34:05,434 --> 00:34:08,114 If I ever need continuing health care, forget it. 596 00:34:08,114 --> 00:34:10,514 I'll be off to Dignitas! 597 00:34:13,234 --> 00:34:16,074 But inequality isn't just about the middle class. 598 00:34:16,074 --> 00:34:19,074 It's about something fundamental. 599 00:34:19,074 --> 00:34:22,274 Here in Paris, ground-breaking research is being carried out 600 00:34:22,274 --> 00:34:25,394 which reveals that a seismic change is taking place 601 00:34:25,394 --> 00:34:27,314 in the structure of society. 602 00:34:31,314 --> 00:34:34,634 It was here at the Place De La Concorde in Paris, 603 00:34:34,634 --> 00:34:36,954 at the height of the French Revolution, 604 00:34:36,954 --> 00:34:39,794 that the original 1% had their heads chopped off. 605 00:34:41,274 --> 00:34:42,994 GUILLOTINE DROPS 606 00:34:42,994 --> 00:34:46,554 So, it's fitting that here in Paris, 200 years on, 607 00:34:46,554 --> 00:34:50,594 one man, an economist, is changing our very understanding 608 00:34:50,594 --> 00:34:52,314 of what's going on 609 00:34:52,314 --> 00:34:56,794 by analysing how the super-rich are transforming our world. 610 00:34:59,514 --> 00:35:02,954 The man in question is the world's most influential economist - 611 00:35:02,954 --> 00:35:04,274 Thomas Piketty. 612 00:35:05,914 --> 00:35:07,274 The middle class, 613 00:35:07,274 --> 00:35:09,274 it's very important for the economy, 614 00:35:09,274 --> 00:35:14,194 because this is what also allows us to develop mass consumption, 615 00:35:14,194 --> 00:35:17,994 to develop mass investment in construction, 616 00:35:17,994 --> 00:35:21,034 and it has started to shrink, to some extent, 617 00:35:21,034 --> 00:35:25,834 in the past 20 or 30 years, and I think it will be a major threat 618 00:35:25,834 --> 00:35:30,394 to our democracies if it was to continue shrinking 619 00:35:30,394 --> 00:35:32,514 in the coming decades. 620 00:35:35,194 --> 00:35:37,994 And Piketty puts the blame for this shrinking middle class 621 00:35:37,994 --> 00:35:41,834 on the growing concentration of wealth in the hands of the rich. 622 00:35:43,394 --> 00:35:45,594 Are we going to continue in this direction 623 00:35:45,594 --> 00:35:47,554 of a shrinking middle class? 624 00:35:47,554 --> 00:35:49,954 It's difficult to know how far this can go. 625 00:35:49,954 --> 00:35:55,234 What is sure is that in recent years what we observe in Britain 626 00:35:55,234 --> 00:36:00,674 and across countries is that very top wealth holders, billionaires, 627 00:36:00,674 --> 00:36:05,194 have been rising much faster than average wealth 628 00:36:05,194 --> 00:36:07,954 and much faster than the size of the economy. 629 00:36:07,954 --> 00:36:11,074 You can see that if this continues for several decades, 630 00:36:11,074 --> 00:36:13,754 the share going to the middle class could decline. 631 00:36:15,514 --> 00:36:19,314 If we believe that a more equal society represents progress, 632 00:36:19,314 --> 00:36:21,994 this is under threat. 633 00:36:21,994 --> 00:36:25,314 Piketty points to one form of wealth in particular 634 00:36:25,314 --> 00:36:29,154 as a key to understanding his argument - property. 635 00:36:30,634 --> 00:36:32,954 # Grab your coat and get your hat 636 00:36:32,954 --> 00:36:36,794 # Leave your worry on the doorstep... # 637 00:36:36,794 --> 00:36:40,834 For much of the 20th century, Britain's property market worked. 638 00:36:40,834 --> 00:36:42,714 Home ownership grew, 639 00:36:42,714 --> 00:36:46,074 and wealth was spread across society in the process. 640 00:36:46,074 --> 00:36:50,034 # Leave your worry on the doorstep... # 641 00:36:50,034 --> 00:36:53,234 In fact, it was the biggest wealth transfer 642 00:36:53,234 --> 00:36:56,674 from the rich to the rest of us in British history. 643 00:36:56,674 --> 00:37:01,634 - JOHN BETJEMAN: - Along the serried avenues of Harrow's garden villages, 644 00:37:01,634 --> 00:37:08,194 households rise and shine and settle down to the Sunday morning rhythm. 645 00:37:08,194 --> 00:37:12,674 In the 1970s, when John Betjeman made his film about Metro-land, 646 00:37:12,674 --> 00:37:16,274 he was reflecting on a story of quiet triumph. 647 00:37:16,274 --> 00:37:19,594 Wealth spreading as the suburbs grew. 648 00:37:25,074 --> 00:37:26,514 HE INHALES 649 00:37:27,634 --> 00:37:30,754 The healthy air of Harrow in the 1920s and '30s, 650 00:37:30,754 --> 00:37:33,834 when these villas were built. 651 00:37:34,954 --> 00:37:39,074 You paid a deposit and eventually, we hope, 652 00:37:39,074 --> 00:37:43,234 you had your own house with its garage and front garden 653 00:37:43,234 --> 00:37:44,994 and back garden. 654 00:37:44,994 --> 00:37:49,274 Variety created in each facade of the houses, 655 00:37:49,274 --> 00:37:52,154 and in the colouring of the trees. 656 00:37:52,154 --> 00:37:54,794 # On the sunny side of the street... # 657 00:37:54,794 --> 00:37:57,234 But there was no fairy tale ending. 658 00:37:57,234 --> 00:37:58,514 I grew up in Harrow, 659 00:37:58,514 --> 00:38:02,754 and my parents were part of that revolution in home ownership. 660 00:38:02,754 --> 00:38:06,314 Many of my generation followed them onto the property ladder, 661 00:38:06,314 --> 00:38:09,954 but, since 2003, home ownership has stalled. 662 00:38:15,914 --> 00:38:17,714 This is Oxford. 663 00:38:18,754 --> 00:38:22,514 But we're far from the dreaming spires here. 664 00:38:22,514 --> 00:38:24,834 In this city, homes used to cost 665 00:38:24,834 --> 00:38:27,434 three times the average local salary. 666 00:38:27,434 --> 00:38:32,514 But now an average home costs 11 times local salary, 667 00:38:32,514 --> 00:38:36,634 making Oxford one of the least affordable places in Britain. 668 00:38:41,114 --> 00:38:42,954 Oxford professor Danny Dorling 669 00:38:42,954 --> 00:38:45,314 agrees that the decline in home ownership 670 00:38:45,314 --> 00:38:48,194 is at the heart of the growth in inequality. 671 00:38:49,834 --> 00:38:52,834 How important was the idea of the owning property 672 00:38:52,834 --> 00:38:56,074 to actual relative economic equality? 673 00:38:56,074 --> 00:38:57,994 I mean, this was incredibly important. 674 00:38:57,994 --> 00:39:00,954 We went from a position of 90% of us renting, 675 00:39:00,954 --> 00:39:03,514 and only those who were moneyed owning 676 00:39:03,514 --> 00:39:05,554 to a position where it was absolutely normal 677 00:39:05,554 --> 00:39:07,754 for the middle class to buy property - 678 00:39:07,754 --> 00:39:10,874 my mum and dad bought a house here for £4,000 in the '70s - 679 00:39:10,874 --> 00:39:14,994 to a position where it was normal in the working class to do this. 680 00:39:14,994 --> 00:39:17,354 You know, we had building societies set up 681 00:39:17,354 --> 00:39:21,794 to help you borrow money to get a friend to build you a house. 682 00:39:21,794 --> 00:39:23,914 "My house." 683 00:39:23,914 --> 00:39:26,434 You know, I can't get used to saying that? 684 00:39:26,434 --> 00:39:28,234 "Have you seen my house?" 685 00:39:28,234 --> 00:39:30,674 "Why don't you all come round to my house?" 686 00:39:30,674 --> 00:39:35,274 Oh, Bob, I can't wait to move in. 687 00:39:35,274 --> 00:39:39,314 In the '70s, popular sitcoms such as The Likely Lads 688 00:39:39,314 --> 00:39:42,474 reflected the reality of an upwardly mobile society. 689 00:39:42,474 --> 00:39:45,434 MUSIC: In Every Dream Home A Heartache by Roxy Music 690 00:39:45,434 --> 00:39:49,994 But today's likely lads are more likely to live in a rented flat, 691 00:39:49,994 --> 00:39:53,954 spending twice as much renting as they would on a mortgage. 692 00:39:56,034 --> 00:39:59,914 # In every dream home a heartache 693 00:40:01,234 --> 00:40:04,154 # And every step I take 694 00:40:04,154 --> 00:40:06,354 # Takes me further... # 695 00:40:06,354 --> 00:40:08,794 And there's nowhere that this crisis is more evident 696 00:40:08,794 --> 00:40:10,914 than here in London. 697 00:40:10,914 --> 00:40:14,354 They're building - but it's the super-rich who are buying. 698 00:40:16,154 --> 00:40:19,314 And developers are chasing their cash 699 00:40:19,314 --> 00:40:22,914 with extraordinary developments like this... 700 00:40:24,274 --> 00:40:26,674 ..showcased in this highly polished promo... 701 00:40:26,674 --> 00:40:29,834 'One Hyde Park represents a valuable investment.' 702 00:40:29,834 --> 00:40:32,954 ..in which developers sell potential buyers the dream 703 00:40:32,954 --> 00:40:36,554 of living a celebrity lifestyle in the centre of London. 704 00:40:36,554 --> 00:40:39,114 'To the south, Knightsbridge, one of the finest...' 705 00:40:39,114 --> 00:40:42,114 The cheapest flat is £6.5 million. 706 00:40:43,474 --> 00:40:48,514 On average income it would take 250 years to buy it... 707 00:40:48,514 --> 00:40:52,194 if you just went to work and slept 708 00:40:52,194 --> 00:40:55,954 and never had children or holidays...or food. 709 00:40:57,394 --> 00:40:59,954 Thanks in part to super-rich investments, 710 00:40:59,954 --> 00:41:04,274 London prices have increased by 25% in a year. 711 00:41:04,274 --> 00:41:07,594 'One Hyde Park offers legendary service. 712 00:41:07,594 --> 00:41:11,514 'A new global benchmark for luxury residential living. 713 00:41:11,514 --> 00:41:15,314 'Representing a secure investment in the current economic climate, 714 00:41:15,314 --> 00:41:18,274 'some existing owners have already seen a substantial 715 00:41:18,274 --> 00:41:22,154 'increase in capital value, in excess of 80%. 716 00:41:22,154 --> 00:41:25,234 'Own the legacy - experience the exceptional.' 717 00:41:27,594 --> 00:41:31,274 Few people have changed London's skyline like Peter Rees. 718 00:41:32,474 --> 00:41:35,234 The former head of planning at the City of London, 719 00:41:35,234 --> 00:41:37,274 he now blames foreign speculation 720 00:41:37,274 --> 00:41:40,634 for driving prices out of the reach of ordinary Londoners. 721 00:41:42,034 --> 00:41:43,994 We have a housing bubble in London 722 00:41:43,994 --> 00:41:47,154 that is fuelled by an almost limitless wave 723 00:41:47,154 --> 00:41:49,194 of international capital. 724 00:41:49,194 --> 00:41:51,234 There's no end to that supply - 725 00:41:51,234 --> 00:41:54,154 it's constantly being generated in Russia and China 726 00:41:54,154 --> 00:41:55,434 and in the Middle East. 727 00:41:55,434 --> 00:41:58,794 How do foreign investors view the properties they're buying in London? 728 00:41:58,794 --> 00:42:00,434 Do they see them as homes? 729 00:42:00,434 --> 00:42:04,194 Investment in the residential real estate market in London 730 00:42:04,194 --> 00:42:06,794 is perceived as even better than gold bricks, 731 00:42:06,794 --> 00:42:09,194 which you have to hide in a vault, and you can't see. 732 00:42:09,194 --> 00:42:11,634 These things are out there, piled up, 733 00:42:11,634 --> 00:42:13,754 and you can actually keep an eye on them. 734 00:42:13,754 --> 00:42:18,114 But, of course, inside they are just containers for the same capital 735 00:42:18,114 --> 00:42:20,314 that you would otherwise put in a bank vault, 736 00:42:20,314 --> 00:42:24,194 which is why I refer to these as piles of safe deposit boxes. 737 00:42:24,194 --> 00:42:29,794 # Us... 738 00:42:29,794 --> 00:42:33,514 # And them... # 739 00:42:33,514 --> 00:42:37,714 Battersea Power Station, once a symbol of industrial power, 740 00:42:37,714 --> 00:42:41,514 seen in this glossy ad, is being redeveloped for flats. 741 00:42:41,514 --> 00:42:45,474 Of the first 866 flats sold, 742 00:42:45,474 --> 00:42:48,354 80% went to foreign buyers. 743 00:42:49,874 --> 00:42:54,114 70% of all new-built residential property in central London 744 00:42:54,114 --> 00:42:57,514 is now being bought by foreign investors. 745 00:42:57,514 --> 00:43:00,034 So, what does this mean for ordinary people? 746 00:43:00,034 --> 00:43:01,794 For us? 747 00:43:01,794 --> 00:43:04,114 The enclaves of the very rich are spreading 748 00:43:04,114 --> 00:43:06,354 over larger and larger areas - 749 00:43:06,354 --> 00:43:10,034 and not even areas where the uber-rich are living, 750 00:43:10,034 --> 00:43:12,234 but areas where they're simply investing. 751 00:43:12,234 --> 00:43:13,794 How far can this go? 752 00:43:13,794 --> 00:43:17,674 How much do we give over to this desert of wealth 753 00:43:17,674 --> 00:43:20,114 before London ceases to work? 754 00:43:24,354 --> 00:43:29,354 This is creating a new class of economic refugees. 755 00:43:29,354 --> 00:43:33,874 In Newham, this group of single mums are being removed from their homes 756 00:43:33,874 --> 00:43:36,354 to make way for a new development. 757 00:43:36,354 --> 00:43:37,994 But they've refused to go - 758 00:43:37,994 --> 00:43:41,954 what's happening here is being called social cleansing. 759 00:43:41,954 --> 00:43:44,634 It's obvious what's happening - 760 00:43:44,634 --> 00:43:47,234 all these council homes and places 761 00:43:47,234 --> 00:43:50,074 are being demolished and built into glass buildings 762 00:43:50,074 --> 00:43:53,434 that are luxury apartments that nobody in the local area can afford. 763 00:43:53,434 --> 00:43:54,994 There's one being built just there - 764 00:43:54,994 --> 00:43:57,434 it's a stone's throw from where we are standing right now. 765 00:43:57,434 --> 00:43:59,074 - Yeah. - Yeah, that's Stratford Plaza - 766 00:43:59,074 --> 00:44:02,554 - and before that was even halfway up it was already bought off. - Yeah. 767 00:44:02,554 --> 00:44:04,794 We went to see our local Labour mayor, 768 00:44:04,794 --> 00:44:07,714 and he said to us, "If you can't afford to live in Newham, 769 00:44:07,714 --> 00:44:10,914 "you can't afford to live in Newham. What do you want me to do about it?" 770 00:44:10,914 --> 00:44:14,394 And that's the response that we've had from our MPs, councillors, 771 00:44:14,394 --> 00:44:16,874 - and our mayor. - How does that make you feel? 772 00:44:16,874 --> 00:44:20,114 That you're being made to move out of where you live. 773 00:44:20,114 --> 00:44:22,994 It's really upsetting, because, obviously, 774 00:44:22,994 --> 00:44:25,314 all of our family and support networks are here. 775 00:44:25,314 --> 00:44:29,194 - Has anyone shown you any support? - No! Why would they? - No. 776 00:44:29,194 --> 00:44:31,754 We're a thorn in their fucking side for all they care. 777 00:44:31,754 --> 00:44:33,154 We're an embarrassment to them, 778 00:44:33,154 --> 00:44:36,594 because we're proving something that they're saying is not happening. 779 00:44:36,594 --> 00:44:38,914 After a public outcry, 780 00:44:38,914 --> 00:44:44,354 Newham Council did eventually reprieve 40 out of 434 homes, 781 00:44:44,354 --> 00:44:47,234 and apologised for the treatment of the women. 782 00:44:47,234 --> 00:44:49,954 But the fact that they are just fighting for a place to live 783 00:44:49,954 --> 00:44:52,394 shows how far expectations have dropped. 784 00:44:53,434 --> 00:44:57,354 For this generation, buying a property is a ridiculous dream. 785 00:45:00,074 --> 00:45:04,914 By 2032, Britain will be a country in which the majority are renters. 786 00:45:08,314 --> 00:45:11,234 Getting hold of that key piece of wealth - property - 787 00:45:11,234 --> 00:45:14,314 will become ever more difficult. 788 00:45:14,314 --> 00:45:17,434 ..and no key worker accommodation. 789 00:45:17,434 --> 00:45:19,634 That is a SHAME! 790 00:45:19,634 --> 00:45:23,434 We should not be collaborating with developers 791 00:45:23,434 --> 00:45:27,754 and excluding ordinary people from housing. 792 00:45:27,754 --> 00:45:31,674 This demonstration is taking place outside a property fair 793 00:45:31,674 --> 00:45:32,914 in London's Olympia. 794 00:45:36,554 --> 00:45:39,154 But this fair isn't just about London. 795 00:45:39,154 --> 00:45:43,674 Cash-strapped councils from all over Britain are selling off land. 796 00:45:43,674 --> 00:45:45,194 Hi, there. 797 00:45:45,194 --> 00:45:46,874 If I was an investor coming here 798 00:45:46,874 --> 00:45:50,634 and I said I've got 15 billion to spend, OK? 799 00:45:50,634 --> 00:45:54,354 - We've certainly got plenty of space for 15 billion. - Have you? OK. 800 00:45:55,434 --> 00:45:59,674 Foreign investors are now circling property markets across the country. 801 00:46:01,714 --> 00:46:03,114 It's unbelievable. 802 00:46:03,114 --> 00:46:06,394 They're all just here flogging off, basically, what they own 803 00:46:06,394 --> 00:46:09,634 to private investors from abroad. 804 00:46:11,154 --> 00:46:14,914 I'm from Tokyo, on a business trip, for about a week. 805 00:46:14,914 --> 00:46:17,114 And I'm in the property business. 806 00:46:17,114 --> 00:46:21,474 - We have a portfolio of 180 million. - 180 million? - Currently. - OK. 807 00:46:21,474 --> 00:46:22,754 180 million. 808 00:46:22,754 --> 00:46:26,274 So, it's kind of a little bit of money to spend(!) 809 00:46:26,274 --> 00:46:28,874 We have many investors interested in UK properties, 810 00:46:28,874 --> 00:46:32,154 and that's why I'm here today - just to meet people in the same industry 811 00:46:32,154 --> 00:46:34,394 and to find out what are the opportunities here. 812 00:46:38,354 --> 00:46:41,634 But what is now becoming clear is the type of properties 813 00:46:41,634 --> 00:46:43,434 these new investors are after. 814 00:46:44,514 --> 00:46:47,034 They want more and more of us to rent. 815 00:46:49,914 --> 00:46:53,234 And that's increasingly what the market will supply. 816 00:46:54,754 --> 00:46:57,674 MUSIC: For The Love Of Money by The O'Jays 817 00:46:57,674 --> 00:47:01,314 But it's not just super-rich foreign investors exploiting this trend - 818 00:47:01,314 --> 00:47:04,114 properties are being swept up by a growing class 819 00:47:04,114 --> 00:47:07,034 of British super-rich property investor - 820 00:47:07,034 --> 00:47:08,874 the buy-to-let baron. 821 00:47:08,874 --> 00:47:11,634 # Money, money, money, money... # 822 00:47:11,634 --> 00:47:15,114 And this man is the biggest buy-to-let baron of them all - 823 00:47:15,114 --> 00:47:16,994 Kevin Green. 824 00:47:18,914 --> 00:47:23,274 After the count of three, we're going to say, "Yes, yes, yes," 825 00:47:23,274 --> 00:47:24,874 in really quick succession. 826 00:47:24,874 --> 00:47:27,754 One, two, three... 827 00:47:27,754 --> 00:47:30,074 - ALL: - Yes, yes, yes! 828 00:47:30,074 --> 00:47:32,634 Brilliant! Give a high-five to the person next to you. 829 00:47:32,634 --> 00:47:34,714 He owns 700 properties, 830 00:47:34,714 --> 00:47:39,874 but he also gives wealth seminars on how to be a buy-to-let millionaire. 831 00:47:39,874 --> 00:47:42,834 If you worry about what people say about you, 832 00:47:42,834 --> 00:47:45,754 you ain't going to become a very successful entrepreneur. 833 00:47:45,754 --> 00:47:47,394 Does that make sense? 834 00:47:47,394 --> 00:47:49,554 Kevin's business is doing very well, 835 00:47:49,554 --> 00:47:53,234 but he's gaining at the expense of one group in particular - 836 00:47:53,234 --> 00:47:55,274 first-time buyers. 837 00:47:55,274 --> 00:47:58,234 By value, buy-to-let lending is growing faster 838 00:47:58,234 --> 00:47:59,994 than first-time mortgages. 839 00:47:59,994 --> 00:48:02,834 It seems as though in Britain there are two worlds being created, 840 00:48:02,834 --> 00:48:06,474 and one is the buy-to-let market which is booming, 841 00:48:06,474 --> 00:48:08,274 and then on the other half is everyone else 842 00:48:08,274 --> 00:48:10,114 who's trying to get on the property ladder, 843 00:48:10,114 --> 00:48:12,634 and just simply can't afford to get on the property ladder - 844 00:48:12,634 --> 00:48:17,794 and they're related, because your world is forcing everyone else 845 00:48:17,794 --> 00:48:19,594 from not being able to buy anything. 846 00:48:19,594 --> 00:48:21,634 So how do you feel about that? 847 00:48:21,634 --> 00:48:23,754 Yeah, I mean it's a fair comment, there. 848 00:48:23,754 --> 00:48:26,234 Property, if you're into it, does - if you do it right - 849 00:48:26,234 --> 00:48:28,074 get you in a very wealthy position. 850 00:48:28,074 --> 00:48:29,834 Generally there is a split, 851 00:48:29,834 --> 00:48:32,834 and it's getting harder for first-time buyer to come in. 852 00:48:32,834 --> 00:48:35,434 Whether that's because of investors is arguable. 853 00:48:35,434 --> 00:48:39,834 We then had a payment of £31,000 tax free. 854 00:48:39,834 --> 00:48:42,034 Hands up who'd like that? 855 00:48:42,034 --> 00:48:44,114 These people aren't mega landlords, 856 00:48:44,114 --> 00:48:49,114 but every one that succeeds could push out one more first-time buyer. 857 00:48:49,114 --> 00:48:51,914 If everyone becomes a buy-to-let landlord 858 00:48:51,914 --> 00:48:54,554 there won't be any property left for anyone else - 859 00:48:54,554 --> 00:48:58,514 it's going to just exacerbate the problem, make things even worse. 860 00:48:58,514 --> 00:49:01,314 Probably that problem has already been realised, 861 00:49:01,314 --> 00:49:02,994 and we've reached that point. 862 00:49:02,994 --> 00:49:07,594 Our housing crisis is Kevin's business opportunity, 863 00:49:07,594 --> 00:49:10,554 as we become a nation of renters. 864 00:49:12,394 --> 00:49:14,514 When I get up every morning 865 00:49:14,514 --> 00:49:16,994 I do something which is a little bit different - 866 00:49:16,994 --> 00:49:18,714 cos sometimes, as an entrepreneur, 867 00:49:18,714 --> 00:49:22,314 it's good to be a little bit crazy and a little bit different, isn't it? 868 00:49:22,314 --> 00:49:25,514 What I do is, I instil self belief. 869 00:49:25,514 --> 00:49:30,754 I go, "If I wasn't me, I would SO want to be me!" 870 00:49:30,754 --> 00:49:34,354 You know? And then I feel better already, do you know what I mean? 871 00:49:34,354 --> 00:49:39,034 Once you've got that sweet taste of success that starts coming, 872 00:49:39,034 --> 00:49:40,994 then you just want more. 873 00:49:40,994 --> 00:49:44,234 After three - one, two, three... 874 00:49:44,234 --> 00:49:48,634 - ALL: - If I wasn't me, I would SO want to be me! 875 00:49:48,634 --> 00:49:51,154 Brilliant! Give yourself a round of applause. 876 00:49:51,154 --> 00:49:53,714 Property equals wealth in Britain. 877 00:49:53,714 --> 00:49:56,194 It's at the heart of ballooning inequality, 878 00:49:56,194 --> 00:50:01,074 increasing wealth for the super-rich and taking it away from us. 879 00:50:05,074 --> 00:50:06,234 And as we struggle, 880 00:50:06,234 --> 00:50:09,434 the party only gets better for the wealthiest in Britain. 881 00:50:09,434 --> 00:50:13,354 I'm on my way to a private event at Prince Harry's favourite club, 882 00:50:13,354 --> 00:50:18,554 Mahiki, thrown by diamond seller to the super-rich Vashi. 883 00:50:18,554 --> 00:50:20,954 - How's it going, Vashi? - Mate, it's just unbelievable. 884 00:50:20,954 --> 00:50:23,794 As you can see, we've got about 150 people already here. 885 00:50:23,794 --> 00:50:26,674 - So it's just going better than expected. - Yeah. 886 00:50:35,474 --> 00:50:37,834 For Vashi, business is booming. 887 00:50:37,834 --> 00:50:42,234 This is Stephanie, the wife of a Russian multimillionaire in London 888 00:50:42,234 --> 00:50:45,874 who wants to spend a lot of money on diamonds. 889 00:50:45,874 --> 00:50:49,314 So, in terms of the jewellery, what were you looking for? 890 00:50:49,314 --> 00:50:52,434 - I would like to surprise people with something. - Yeah? Great. 891 00:50:52,434 --> 00:50:53,834 Let's take it out. 892 00:50:55,114 --> 00:50:56,914 What's the most ridiculous thing 893 00:50:56,914 --> 00:50:59,034 that you've been asked to cover in diamonds? 894 00:50:59,034 --> 00:51:02,914 Well, we had the other day someone buying a bra crusted with diamonds. 895 00:51:02,914 --> 00:51:07,234 That's the only way that you can buy a bra that's worth £10 million. 896 00:51:07,234 --> 00:51:10,994 Buying diamonds isn't simply an extravagance for the super-rich - 897 00:51:10,994 --> 00:51:14,274 like gold or watches, they're an investment, 898 00:51:14,274 --> 00:51:17,714 insulating their wealth in case the economy goes belly up again. 899 00:51:17,714 --> 00:51:19,434 - Can I take one more? - Yes, please. 900 00:51:19,434 --> 00:51:23,514 After a bit of polite horse trading, they agree on a price. 901 00:51:23,514 --> 00:51:26,074 Altogether 54, 55, so we can do it for 50. 902 00:51:26,074 --> 00:51:28,034 - Thank you very much! - It's a pleasure! 903 00:51:28,034 --> 00:51:30,794 - Thank you, Stephanie. - Thank you. - Great doing business with you. 904 00:51:30,794 --> 00:51:32,794 Mwah! Mwah! Mwah! 905 00:51:36,634 --> 00:51:39,714 For decades, as we've seen, government after government 906 00:51:39,714 --> 00:51:43,834 pursued an economic policy to attract the super-rich to Britain. 907 00:51:43,834 --> 00:51:46,514 It was all based on a flawed idea - 908 00:51:46,514 --> 00:51:49,554 that their wealth would trickle down to the rest of us. 909 00:51:49,554 --> 00:51:50,954 It didn't. 910 00:51:50,954 --> 00:51:53,434 Economists believe it actually trickled up, 911 00:51:53,434 --> 00:51:55,914 from us to the super-rich, 912 00:51:55,914 --> 00:51:59,314 into their giant reservoir of private wealth. 913 00:51:59,314 --> 00:52:02,594 So you think, in a way, trickle-down was almost a way of duping us 914 00:52:02,594 --> 00:52:06,354 into redistributing wealth from all of us 915 00:52:06,354 --> 00:52:08,154 to the richest members of society? 916 00:52:08,154 --> 00:52:11,114 Yes, I can only describe it like that, 917 00:52:11,114 --> 00:52:13,714 because, especially in the US and the UK, 918 00:52:13,714 --> 00:52:15,514 back in the late 1970s, 919 00:52:15,514 --> 00:52:19,794 the top 1% used to take about 10% of total income - 920 00:52:19,794 --> 00:52:26,074 on the eve of the 2008 financial crisis this rose to 23%. 921 00:52:26,074 --> 00:52:29,514 There is now a growing consensus that this trickle-up effect 922 00:52:29,514 --> 00:52:31,474 needs to be reversed. 923 00:52:32,874 --> 00:52:35,154 We have indeed made rich people richer - 924 00:52:35,154 --> 00:52:38,114 I am testament to that - but clearly 925 00:52:38,114 --> 00:52:40,754 everyone else isn't better off. 926 00:52:40,754 --> 00:52:45,794 And it's both immoral but also economically idiotic. 927 00:52:47,074 --> 00:52:50,394 The super-rich have the money and we need it - 928 00:52:50,394 --> 00:52:52,394 so how do we get it off them? 929 00:52:52,394 --> 00:52:54,594 Thomas Piketty has a radical solution - 930 00:52:54,594 --> 00:52:56,994 instead of increasing income tax, 931 00:52:56,994 --> 00:52:59,994 directly target the wealth of the super-rich. 932 00:52:59,994 --> 00:53:04,074 It would be better, actually, to have an annual tax on wealth. 933 00:53:04,074 --> 00:53:05,954 This is just a matter of common sense - 934 00:53:05,954 --> 00:53:08,234 you know, this is not a matter of just left or right. 935 00:53:08,234 --> 00:53:11,634 When you have booming property values at the top 936 00:53:11,634 --> 00:53:15,154 and booming top wealth portfolio at the top, 937 00:53:15,154 --> 00:53:18,554 you know, it would be crazy not to ask a little bit more 938 00:53:18,554 --> 00:53:20,194 to these people. 939 00:53:21,794 --> 00:53:23,714 But guess who disagrees... 940 00:53:23,714 --> 00:53:26,154 the super-rich themselves. 941 00:53:27,594 --> 00:53:31,674 I'm very, very much in favour of very low taxation 942 00:53:31,674 --> 00:53:33,794 right the way across the board. 943 00:53:34,914 --> 00:53:37,434 I think we don't need to be taxed any more - 944 00:53:37,434 --> 00:53:38,674 we are paying a lot of tax. 945 00:53:38,674 --> 00:53:41,674 if I gave you, Jacques, my tax bill you'd probably have a heart attack. 946 00:53:41,674 --> 00:53:44,794 So this approach of robbing the rich to pay the poor, 947 00:53:44,794 --> 00:53:46,354 I don't agree with it. 948 00:53:46,354 --> 00:53:49,474 If somebody's done well for themselves through hard work 949 00:53:49,474 --> 00:53:52,594 and effort, why should they be taxed through the eyeballs? 950 00:53:54,114 --> 00:53:56,394 The super-rich don't want higher taxes - 951 00:53:56,394 --> 00:54:00,754 but low taxation does not necessarily equal higher growth. 952 00:54:00,754 --> 00:54:05,034 Since 1980, countries which have reduced tax rates for the wealthy, 953 00:54:05,034 --> 00:54:09,154 such as Britain and the US, have not grown any quicker 954 00:54:09,154 --> 00:54:12,274 than Denmark or Sweden, which kept them higher. 955 00:54:14,834 --> 00:54:16,954 We need to change the discourse here, 956 00:54:16,954 --> 00:54:21,394 because if low tax was good in itself, 957 00:54:21,394 --> 00:54:23,674 why doesn't everyone move to Jamaica? 958 00:54:23,674 --> 00:54:27,354 The highest income tax rate in Jamaica is 5%. 959 00:54:27,354 --> 00:54:30,274 If you look at the Scandinavian countries, 960 00:54:30,274 --> 00:54:33,114 the system is that you tax everyone heavily, 961 00:54:33,114 --> 00:54:36,674 but then you spend that for everyone quite heavily. 962 00:54:36,674 --> 00:54:40,794 88% of Danish people say they are happy to pay 963 00:54:40,794 --> 00:54:44,354 what tax they are paying, this is quite amazing. 964 00:54:45,954 --> 00:54:49,674 We, in Britain, have a low-tax culture, instilled in us 965 00:54:49,674 --> 00:54:54,194 through 30 years of driving taxes down for the super-rich. 966 00:54:54,194 --> 00:54:55,954 But it hasn't worked. 967 00:54:55,954 --> 00:54:58,914 The economy would be 20% bigger 968 00:54:58,914 --> 00:55:03,754 had the gap between the rich and poor not widened since the 1980s. 969 00:55:03,754 --> 00:55:07,954 Now even the rich believe things must change. 970 00:55:07,954 --> 00:55:10,794 Nobody wants to live in a society where your society is gated, 971 00:55:10,794 --> 00:55:13,114 where you have to live behind barbed wire, 972 00:55:13,114 --> 00:55:15,834 where you can't walk down the street. 973 00:55:15,834 --> 00:55:17,874 You know, people who are very wealthy, 974 00:55:17,874 --> 00:55:22,434 billionaires and zillionaires of every stripe, do need to wake up. 975 00:55:22,434 --> 00:55:26,514 The price that you have to pay in higher taxes 976 00:55:26,514 --> 00:55:28,994 for a safe, civil society 977 00:55:28,994 --> 00:55:32,234 where everybody is happy and doing better 978 00:55:32,234 --> 00:55:36,474 is very, very low - it's just not that big a deal. 979 00:55:36,474 --> 00:55:39,794 But it would be a massive struggle to convince any government 980 00:55:39,794 --> 00:55:42,594 to seriously hammer the super-rich. 981 00:55:42,594 --> 00:55:46,474 The drive is to attract more of them here than ever before - 982 00:55:46,474 --> 00:55:48,594 and there's a surprising reason why. 983 00:55:50,474 --> 00:55:53,074 Economist Matt Whittaker has been crunching the numbers 984 00:55:53,074 --> 00:55:57,114 on the super-rich and come to a startling conclusion. 985 00:55:57,114 --> 00:55:59,674 It turns out the super-rich do have a vital role 986 00:55:59,674 --> 00:56:01,234 to play in our economy - 987 00:56:01,234 --> 00:56:03,794 just not the one we were told they were playing. 988 00:56:03,794 --> 00:56:05,874 Take the activities of the super-rich away, 989 00:56:05,874 --> 00:56:08,074 particularly in finance and in business services 990 00:56:08,074 --> 00:56:11,034 and our GDP figures simply would not have looked as good. 991 00:56:11,034 --> 00:56:14,474 So the super-rich have played a role in our economy 992 00:56:14,474 --> 00:56:18,074 in terms of window dressing the economic figures. 993 00:56:18,074 --> 00:56:21,074 You can certainly see the attraction to Chancellors of the Exchequer 994 00:56:21,074 --> 00:56:23,914 of attracting the super-rich to the UK. 995 00:56:23,914 --> 00:56:26,834 But clearly, for the majority of people in the UK, 996 00:56:26,834 --> 00:56:30,354 actually what the super-rich have done is simply mask over the fact 997 00:56:30,354 --> 00:56:32,354 that economic growth has not been as strong 998 00:56:32,354 --> 00:56:35,194 as it would otherwise have been in recent years, 999 00:56:35,194 --> 00:56:39,234 and living standards haven't improved for a significant number of people, 1000 00:56:39,234 --> 00:56:40,914 even in the pre-crisis years, 1001 00:56:40,914 --> 00:56:44,994 and I think that a model which is based on a top 1% 1002 00:56:44,994 --> 00:56:49,194 generating and consuming all of the growth simply isn't sustainable. 1003 00:56:49,194 --> 00:56:51,074 So if I gave you an option of, 1004 00:56:51,074 --> 00:56:54,834 "Were the super-rich good for Britain, yes or no?" 1005 00:56:54,834 --> 00:56:57,194 which one of those two words would you go for? 1006 00:56:57,194 --> 00:56:58,234 I'd say no. 1007 00:57:00,434 --> 00:57:03,434 When we first began to woo the super-rich to Britain, 1008 00:57:03,434 --> 00:57:05,634 there was no pretence that we'd benefit. 1009 00:57:06,634 --> 00:57:09,594 But then, with the collapse of manufacturing in the '80s, 1010 00:57:09,594 --> 00:57:12,754 we were told that these people would be the saviour 1011 00:57:12,754 --> 00:57:14,874 of the British economy. 1012 00:57:14,874 --> 00:57:18,074 But it was a lie. We've ended up poorer. 1013 00:57:18,074 --> 00:57:21,594 It was not even us, nor even really the super-rich 1014 00:57:21,594 --> 00:57:23,954 who ultimately benefited most, but government, 1015 00:57:23,954 --> 00:57:27,274 allowing successive Chancellors to hail economic growth 1016 00:57:27,274 --> 00:57:31,674 when the reality for us was a decade of stagnation. 1017 00:57:31,674 --> 00:57:36,634 The super-rich were a massive PR exercise - and we bought it. 1018 00:57:36,634 --> 00:57:38,274 But not any more. 1019 00:57:40,594 --> 00:57:44,954 Next week, we travel into the world of the global super-rich. 1020 00:57:44,954 --> 00:57:49,554 How the billions that fuelled their fortunes were made from our debt... 1021 00:57:49,554 --> 00:57:51,674 Finance just means other people's debts. 1022 00:57:51,674 --> 00:57:53,834 So, you yourself didn't bring about the crash, 1023 00:57:53,834 --> 00:57:55,874 but you created the mechanics for it to happen. 1024 00:57:55,874 --> 00:57:57,034 That's true. 1025 00:57:57,034 --> 00:58:01,114 ..and, as luxury booms, we reveal how job insecurity has been 1026 00:58:01,114 --> 00:58:04,594 turned into a super-rich business opportunity... 1027 00:58:04,594 --> 00:58:06,954 Employment as we know it traditionally 1028 00:58:06,954 --> 00:58:09,594 has made people quite lazy, in many ways. 1029 00:58:09,594 --> 00:58:13,754 ..but increasing inequality is going to change our world. 1030 00:58:13,754 --> 00:58:15,874 And the super-rich are worried. 1031 00:58:15,874 --> 00:58:17,994 So, are the pitchforks coming? 1032 00:58:17,994 --> 00:58:17,994 If things keep going the way they are, for sure they're going to come.