and interests has been circumvented by the way that new money has again bulldozed to one side the closed doors of class.
While the idea of an establishment is not redundant, it has in many ways been refashioned by the presence of a newer, internationalised and cosmopolitan group whose wealth is akin to that wielded by the belle epoque capitalists of the late nineteenth and early twentieth centuries. The wealth of those groups was eroded and straitened over the last century by massive wars and the partial triumph of labour and social democratic governments. But a resurgence of class and capital interests can be observed in the way that London in particular has been managed as part of a strategy to restore and maintain power among the wealthy. This restoration and the growth in numbers of the rich themselves have been enabled by a deregulated land and labour market, cuts to the public sector, fewer border constraints or taxes on capital, as well as an enabling environment for international investors and buyers of property. These regulatory aspects of the city, designed to lure the rich, have been supplemented with what amounts to a kind of recorded welcome message from a series of mayors (such as Boris Johnson’s claim that London is to billionaires what the jungles of Sumatra were to orang-utans) and other influencers that is played to anyone with bags of cash looking to invest or live in the city.
The key formations seeking to attract the rich are embodied by central and London government (including the thirty-two London boroughs, many of which either by choice or necessity have welcomed international capital) and the City, which sits at the centre of massive corporate flows (including enormous illicit wealth channels) and has sucked in capital via the post-colonial development of the world of offshore finance. Whether during apparent booms or periods of economic crisis, the power of finance has been assured through the ingestion of the logic of money by government.
One important means by which wealth has been retained by potentially footloose wealthy individuals is known as the non-domicile, or non-dom, tax rule. Where trusts have proved useful as a key vehicle for protecting old money, money from overseas or inherited wealth (the tax code can be inherited) was encouraged on the promise that it would remain largely untaxed. It remains possible to live in Britain and hold enormous wealth overseas, with only a very partial tax applied to income brought to the UK. This can get very complicated very quickly. The non-dom tax rule itself goes back to 1799, when the measure was brought in to help rebuild state resources following a series of wars and enormous losses. At the time many wealthy British citizens were living abroad and the question arose of how to tax their foreign holdings of estates, wealth and business operations without putting them off from returning to the UK. To encourage their return the government proposed that so called non-doms be exempt from paying tax on their assets and foreign income.
The rules changed in 2017 when non-doms were asked to pay income tax on their earnings in the UK, but they could still avoid paying any tax on their foreign assets and income as long as these were not paid back to them in the UK. The point here is that one might choose to retain operations overseas and build up a war chest that could be accessed by, say, retiring to France, Bermuda or wherever. The rules also create a series of inheritance tax, business investment and other tax reliefs that UK citizens cannot access. An added complication is that it is possible to pay a charge (the ‘remittance basis charge’) on income and gains held overseas.
The latest figures show that there are 52,900 non-doms registered in London (2019 HMRC data). This is a group that, somewhat curiously, reside in the city but don’t live there (to reduce their tax burden); they are the Schrodinger’s cats of the tax world. For wealthy ‘non-doms’ the city is defined in law as a kind of incomplete home, despite its clearly being their preferred location to live. London non-doms paid £5.3bn in income tax in 2018 (roughly 80 per cent of the total amount paid by all of the UK’s 90,000 non-doms). This sounds like a decent enough contribution until we divide it by the total number of non-doms, which then gives us an average take of £100,000 per head. This may still sound like a lot, but then an average school head teacher earning £55,000 would pay around £16,000 in income tax, while a ‘low’ paid university vice chancellor earning £170,000 would pay a comparable amount of tax (£70,000), this is also equal to the level of pay that a quarter of a million Londoners earn. Since we know little or nothing about the scale of the non-doms’ offshore holdings, it is not possible to estimate how much tax is lost by these arrangements. Many think the UK government’s tax inspectors should do much more. It is also worth remembering that this group does not include the numerous wealthy ‘onshore’ citizens who have used offshore savings and investment funds to evade or reduce their tax bill.
The existence of the non-doms is the source of much heated debate. We know very little about who these people are, with the exception of some well-known individuals – such as Mark Carney, the former Governor of the Bank of England, Roman Abramovich, Lewis Hamilton, Sigrid Rausing, Viscount Rothermere (owner of the Daily Mail who inherited the exemption from his father) and Lakshmi Mittal – many of whom are among the richest in London. The list also includes entrepreneurs like James Caan, private equity and finance managers, resource and retail magnates and numerous CEOs of major global corporations including a string of UK banks and pharmaceutical and insurance companies.
The non-doms have become a serious point of contention since many have lived for years in London and clearly benefit from living here. The non-dom issue highlights rules that are a legacy of empire and landed interests that permeate through to the life of the contemporary city. This is another good example of the many ways in which capital finds all manner of schemes by which its demands to escape the rules placed on the little people are enabled by a compliant state.
The general impression is of a rotten colonial legacy that serves the interests of the rich, who are able to run rings around tax collection agencies. The fear often peddled by some commentators is that imposing a greater tax burden on them might drive away important contributors to the UK economy. Yet it seems unlikely that long-term residents of the alpha city would be put off living there by a levelling of the tax playing field.
It is clear that London retains a powerful hold on the imaginations, wallets and lives of the global super-rich. In this sense there is reason to be confident that fair and transparent tax rules might not see a significant exodus of the city’s rich because they would not be able to access the host of desirable aspects of living there, even if they do so only for part of the year. An obvious dividend of introducing such measures would be the clear message that tax rules applied fairly to all, with the extra revenue used to address problems like the availability of affordable housing in the city.
The new rich of the alpha city are exemplified by wealthy individuals like Evgeny Lebedev (owner of the Evening Standard), Sir Cameron Macintosh (entertainment), Dickson Poon (owner via an investment company of Harvey Nichols), Michael Bloomberg (politics and media), Anthony ‘Yachtie’ Bamford (heavy plant), Anne-Marie Graff (diamonds), Bernard Lewis (retail), Charlene de Carvalho-Heineken (brewing), Ashok Hinduja (steel), Richard Desmond (media), Bernie Ecclestone (sport), Duncan Bannatyne (leisure) and Christian Candy (real estate). Banking and finance also figure prominently. Perhaps the most interesting thing about the lists of London’s wealthiest is the unrecognisability of the bulk of their names – those with enormous wealth are for the most part obscure, anonymous individuals.
Also significant are those who provide opportunistic processing and investment of other people’s money, the fund managers such as Crispin Odey, Ken Griffin (who spent nearly £200m on two homes in London), Michael Platt and John Beckwith among many others. Among this group, proximity to the City is important, but so too is the key hedge fund district of Mayfair, which has long been deemed a more comfortable and sociable base for those working in high-end finance. The idea that proximity is no longer important in finance is inaccurate – personal deal making, face-to-face meetings to build trust, and the soft infrastructure of watering holes and restaurants are also crucial elements here.
Over the last twenty years or so the internationalisation of the city’s wealthy has become increasing evident; this has included groups like the Russians, Turks, Nigerians and Chinese, alongside the longer-term
