NB: THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT: BECAUSE OF THE POSSIBILITY OF MIS- HEARING AND THE DIFFICULTY, IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY. ........................................................................ PANORAMA WINNER TAKES ALL RECORDED FROM TRANSMISSION: BBC-1 DATE: 7:11:04 ........................................................................ STEVE BRADSHAW: They are the runaway rich, the top 1% whose incomes are soaring away. They're making millions from the global economy. In the States George Bush is even cutting their taxes. Are the new elites good for us, creating jobs and wealth for everyone, or are we seeing a new kind of inequality, that we should stop before it's too late. Tonight Panorama investigates whether Britain is heading for an American style "winner takes all" society. Mayfair in London's West End and hairdresser to the New Elite Nicky Clarke. In charge of business – Lesley Clarke. Walk in price for a haircut, up to £500. LESLEY CLARKE Managing Director, Nicky Clarke Salons We start at £500 for a haircut. Nicky is £500 for a fast tack haircut, so if you're very rich and you can't wait three months for haircut, you pay extra, £500, and you get in within a week – money talks. It's the city people and they've always been around, and we've been open 13 years so we've had them from day one. But in the last five years I've seen more of the creative wealth coming in, younger people that are pop stars, fashion designers, artists and record producers working in the music industry and they definitely have a lot more money to spend and they are spending it. BRADSHAW: Across London in Soho Simon Woodroffe, Britain's first sushi multimillionaire. SIMON WOODROFFE Founder, Yo! Sushi Now it's okay to talk about making money. It's okay to say I'm a millionaire, in fact I do quite often, you know, because people get me into that situation. So it's okay, in fact they say: "Are you millionaire?" I go: "No, no, multimillionaire" and it's kind of okay. And instead of people coming up to me and going… you know.. "You bastard.. you know.. it's alright for you mate", all that, that used to happen years ago. Now it's "Good on yer, good on yer for doing that. Great." BRADSHAW: Close by in Barclay Square luxury car dealer H.R. Owen has always sold to dukes and duchesses. But in the last five years they report a dramatic flood of new money says director Rodney Turner. RODNEY TURNER Director, H.R. Owen I'm amazed how many clients come in here are earning well over £100,000 a year, and it just staggers me. I mean they're talking such mega sums of money and the millions of pounds they earn and the bonuses are such large sums of money, £100,000 is not a lot of money anymore. As soon as the bonuses are announced the chaps are on the phone, I've got 150-200 thousand pounds to spend, I want to buy myself what we call a 'toy' and we laugh about it but it is really a toy. BRADSHAW: Britain's top incomes include highest paid accountant – £2.9 million; highest paid lawyer over £3 million; highest paid chief executive £7.4 million. Most people in Britain earn less than £19,000 a year. Next, Kensington. One of Britain's leading estate agents has formed a department just for the so- called superrich. It's run by Lord Andrew Hay. HAY: We're in a three bed-roomed flat recently been refurbished in a modern style. It's two and a quarter million pounds which equates to rough a thousand pounds a square foot. A very good example of a starter home for a very rich man in central London. BRADSHAW: Starter home?! HAY: Starter home, first time buyer. BRADSHAW: A £2 million-plus start home? HAY: Yes. BRADSHAW: The income of Britain's top 1% is rising faster than anyone's. Over £400,000 of them average income of this elite group £200,000 pounds a year. Lord ANDREW HAY Super-Rich Team, Knight Frank One of the things we have noticed is that the top 1% of income earners have stretched away now compared to the rest of the buyers or investors within the market typically their salaries may at the top end ten years ago been a quarter of a million, now many of them are over a million pounds and some of them indeed over two million pounds and beyond with huge city bonuses being paid on top of that, whereas with the rest of the market, particularly further away from London, people's rewards have increased in line with inflation and modest rises, so that gap is now far wider than it would have been ten years ago. BRADSHAW: Has this surprised you? HAY: Yes, yes without doubt. I mean there's always been what one could call a superrich category but the way their wealth has now mushroomed is far beyond what we would have imagined a decade ago. BRADSHAW: When Mrs Thatcher came to power in 1979 just under 6% of national income was going to the top 1%. By the end of the 80s 9% of income was going to the top 1%. By the end of the 80s 9% of income was going to the top 1%, and the rise of the rich was now entering the culture. WALL STREET It was the age of yuppies, classically portrayed in the Hollywood film Wall Street with it's famous script line parodying their values. Twentieth Century Fox Director: Oliver Stone "Greed, for lack of a better word, is good. Greed is right, greed works, greed clarifies, cuts through and captures the essence of the evolutionary spirit." BRADSHAW: In Britain the high earners continue to progress. At the last count under Tony Blair 13% of national income was going to the top 1%, their share doubling in two decades. So are we seeing the start of a new elite? In East London at the Institute of Community Studies the new director is Geoff Mulgan. Till recently he was head of policy at 10, Downing Street. GEOFF MULGAN Head of Policy, Downing Street 2003-2004 The last few years in Britain for much of the population there has been actually relatively growing both equality and equality opportunity across much of the population. The real exception is the very, very top. The rich, a slice of the top 1% of the population who here, as elsewhere, seem to be getting richer and richer, also seem to be becoming more and more powerful in politics and probably also more influential in our culture. BRADSHAW: The new high earners are now altering the very landscape of Britain. The sheer scale of their success astounds Edward Soja, a world expert on how the superrich change cities. EDWARD SOJA Urban Planning, University of California, LA What we're seeing is an enormous concentration of wealth in 1% of the population. This elite is more strikingly visible in London than almost any other place I know. Coming from Los Angeles I jumped on the boat cruise down the Thames and was absolutely knocked over by what I call condo canyon, this whole stretch from the city to Canary Wharf and beyond, you lined with millions of pounds luxury apartments taking over the river, creating this channel of development exclusively for what, this global elite. You have a kind of Gold Coast along the Thames.. BRADSHAW: Right behind you. SOJA: Right behind me there, but that's a screen, that's a mask because right behind that you begin to get into the inner boroughs of London. You have Hackney and Tower Hamlets that are among the poorest areas of Britain. These are centres of poverty located in close proximity to this extraordinary wealth. BRADSHAW: But some claim we shouldn't be so hung up on inequality if everyone is getting better off. The ability group is helping build Condo Canyon, those luxury apartments by the Thames. It's boss is Andreas Panayiotou, he's rising fast up the Sunday Times rich list. In ten years he's estimated to have made some £500 million. He reckons everyone has benefited. A third of this development is reserved for local people at affordable prices. ANDREAS PANAYIOTOU Chairman, The Ability Group I was brought up in Mile End which is a matter of 3-4 miles away from here, and you would have been scared to walk around here 15 years ago. BRADSHAW: Adreas Panayiotou agreed the top 1% are changing the capital, but he says it's for the better. PANAYIOTOU: Well the area has grown so phenomenally, once you're here you wouldn't believe you're in East London, you would think you're in somewhere like Manhattan, and it's growing and growing and growing. The whole skyline is changing around here. Phenomenal growth. BRADSHAW: Andreas Panayiotou pays himself about £300,000 a year. His answer to worries about inequality – he came from those poor areas behind Canary Wharf, and he reckons there's nothing wrong with ambition. PANAYIOTOU: Well greed is a good thing if it's used in the right way. You could say.. you know.. in my business The Ability Group, you could say to me well that's greed. But if you ask the 2000 people that rely on The Ability Group, they'll disagree that it's greed. How can it be a greed thing? It's a positive thing. BRADSHAW: Andreas is not only part of the highest earning 1% he's also part of the wealthiest 1% who own almost a quarter of Britain's personal wealth. It's not just in London where the superrich are changing Britain's landscape. Take the north east of England, Seaham is an old mining community. Tom Maxfield was a working-class kid from Sunderland who became sales director in software company Sage. It became a global business selling software across the world, and his shares became worth rather more than a small fortune. Can I be blunt and ask you what you think you're worth? TOM MAXFIELD Chief Executive, Tom's Companies Maybe 40 million, 50 million, something like that, I really don’t count it. BRADSHAW: Tom Maxfield also reckons his success can help regenerate the region he grew up in. MAXFIELD: It's absolutely 5 star plus. No compromise, no expense spared, and a complete indulgence. BRADSHAW: He's built a world-class luxury spa hotel, Kubla Khan Xanadu, in an old British coal town. It's an enchanted world, underground in Seaham now not miners' lamps but mood lighting. MAXFIELD: There's no natural light which is why we've created this light therapy wall and the idea is that you can match the colour of the wall to the mood you feel if you feel vibrant and up for it you can have this colour or less so or maybe you want a relaxing jade or a cool blue, or back to vibrant. I think what we've done in creating the hotel and the spa as a destination means that people who come here don’t regard Seaham as a rundown coalmining community past it's sell by date, they say: "What a fantastic spa, what a fantastic hotel, what a fantastic area, what great views." BRADSHAW: But that's no consolation to a teenage kid who's dad was a miner and can't find a job. MAXFIELD: I think there are opportunities everywhere. I think if what we're providing is a catalyst for growth, and I think that's proven in the local area, there are lots more industries striking up. We lit a spark and it became the case. BRADSHAW: The 1% is a catalyst for growth. It's the latest big idea to revive Britain's old industrial cities, and on Tyneside they're doing everything they can to attract them. The Sage Gateshead Music Centre, a new art gallery, high style architecture, all meant to attract the creative superstars you need to kick start new businesses in today's creative economy. The 1% are already turning Tyneside around says the boss of the software company Sage, Paul Walker, and he's one of them. He's made millions of pounds from stock options over the years on top of his annual pay. PAUL WALKER Chief Executive, Sage I'm paid probably around about £700,000 a year including my performance bonuses which is probably about the medium for this type of company. BRADSHAW: Are you worth it? WALKER: Well we've delivered outstanding growth for 20 odd years so I guess we've delivered value to our shareholders and we should participate in that value. BRADSHAW: We shouldn't just rely on old style bureaucracies and subsidies to revitalise Britain's cities, so the theory goes. Tyneside also needs winners. WALKER: What the Quayside says to me is that it's a very prosperous area, it's modern, it's innovative, it's got features that people want, and I think the winners for these one percenters that is very attractive and very important for our area, we do need winners, we need people who want to strive or be part of these 1% earners and they're the ones that are going to make the difference to the continued success of the north east. BRADSHAW: So why is Britain's new 1% elite earning so much? Well Sage itself offers a clue. Whereas Newcastle's old industries had to ship heavy stuff like tanks and coal around the world, now companies like Sage can reach a global market at the touch of a button. You can reach a bigger market faster with incomes to match in today's globalised world. WALKER: One percenters are the sort of the wealth of the United Kingdom or of the world nowadays, and they are people who have been remarkably successful in setting up businesses and creating wealth not just for themselves but I think for the wider community, but I think the way they global economy works today people can make large sums of money that take them into that stratosphere very easily. BRADSHAW: Big Mutha Truckers is a best selling video game in stores around the world. It was created in Gateshead. Eutechnyx is one of a cluster of companies following in the steps of Sage. Paul Jobling is becoming a software superstar himself. Inside this knowledge factory 70 blue denim workers. PAUL JOBLING Marketing Director, Eutechnyx We are a global business, we work primarily for Californian companies but we sell these products all over the world. But the video games market is now bigger in Hollywood so our market is absolutely enormous. We spend about two years here producing intellectual property which culminates in either one CD or one DVD. BRADSHAW: One CD! JOBLING: Either one CD or DVD which weighs an ounce or ten grams. BRADSHAW: It's the weightless economy with potential superstar rewards for the winners. It includes not just software but financial services, TV shows, telecoms and so on, those knowledge industries that can make so much money. And, as the superstars compete for the top prizes, we all benefit. So argues world renowned guru of the weightless economy Professor Danny Quah. Professor DANNY QUAH London School of Economics We get better pharmaceutical products, we get better music, we get better video entertainment, we get better science, we get better computer software. It benefits all of us. BRADSHAW: Professor Quah is also a gold medallist in Taiquando, he reckons the contest to be a winner, improve standards in sports and the economy alike. Professor DANNY QUAH At the Olympics every four years Olympic records fall, every four years we have a performer like Kelly Holmes that all of us can take collective national pride in. [Athens 2004] Kelly Holmes, going for two gold medals, it's going to be an historic second…. QUAH: Athletic performances improve from competing for the same prize when all of us are already benefiting from advances in technology, advances in the state of science and knowledge that are being pushed forward by this top 1%. It is to the benefit of all of us the advance the state of technology in society, they push economic growth and we all draw benefit from that. BRADSHAW: In the USA the winners are racing away faster than ever, and some fear that under President Bush its winner takes all society is out of control. For Leo Hindery, competing in the American La Mans is a rich man's hobby. He made millions as a media entrepreneur. But even this natural born American winner reckons it's all gone too far. LEO HINDERY Chairman, HL Capital You're setting up a class system the likes of which we've never seen in the world. The most obvious historical precedent is the French revolution where the gap between the extremely wealthy and the middle class grew to be so acute that civil unrest, social unrest, ensued. BRADSHAW: Now Leo Hindery's angry top earners have got a new boost, around a third of the cash released by President Bush's tax cuts going to the top 1% of American families. HINDERY: I can't imagine an environment, political, economic or otherwise, in the world that has so aggrandised that top 1% as we find here in the United States. BRADSHAW: Leo Hindery's office is in New York's Chrysler building, a classic temple of capitalism. He doesn't mind risk-taking entrepreneurs making millions, they always have in the USA. What he objects to is that some Americans are now getting huge rewards through their pay packets. Two decades ago America's top bosses were getting on average 40 times workers pay. Now it's 300 times as much. HINDERY: It's just destructive to aspirants in the middleclass who look up and they don’t even see the top anymore. You can't conceive of yourself moving into that level of stratosphere, you have to pay somebody millions and millions of dollars to play athletics, you have to pay a chief executive 300 times his average worker. BRADSHAW: Last year the highest paid US chief executive received $148 million including stock options. Superstar basketball players' notoriously high income though is capped at $44 million. In contrast to modest rises for most American families the incomes of the top 1% have doubled in real terms over a quarter of a century, and the runaway rich are now having a direct effect on people's lives – so says the economics professor who made the phrase "winner takes all society" famous, Robert Frank. ROBERT FRANK: We're richer now than before, but because there's so much inequality compared to what we had before life has just become gratuitously nasty for many people in the middle. There are problems that people have to deal with now that didn't exist before. BRADSHAW: Robert Frank says you can see what he means down on New York's 5th Avenue. And he has another phrase to sum it up – luxury fever. He says the luxury lifestyle of the elite sets a standard that drags everyone's spending up, often to a level they can't afford. Professor ROBERT FRANK Author "The Winner Take All Society" This is where the top 1% shop, there's no doubt about that. We don’t see too many working class people actually buying anything in these shops. But what the people at the top buy does, none-the-less have an effect indirectly on what people in the middle buy so if somebody buys a $50,000 watch from one of these shops on 5th Avenue the people in the middle don’t say oh my goodness I need to get a $40,000 watch, but there are people just below the top who, if they want to sort of be a player in the same game now they've got to spend a little more, and then there are people just below them who spend more, and so step by step it cascades all the way down the income ladder, and so now to mark a special occasion, your spouse retires, maybe ten years ago a $200 gift watch would have been an appropriate way to mark that occasion, now you've got to spend a $1000. We see people in the middle who feel like they can't participate in their social groups if they can't spend 3 or 4 dollars on a cup of coffee and that's a lot more than people used to spend. BRADSHAW: So what kind of problems are we creating in Britain if we start aspiring to the winners lifestyle? At a London fashion show the headlines suggest everyone is catching luxury fever. Are places like this just for the rich? JODIE KIDD Oh no! Oh good god no. BRADSHAW: So what sort of people…. KIDD: What a strange question. BRADSHAW: But is it such a strange question? How many people really can afford that top price £500 haircut in Mayfair? LESLEY CLARKE Managing Director, Nicky Clarke Salons I would say that the £500 haircut is the aspirational haircut that everybody would like to be able to spend that amount of money on a haircut and we do have quite a few that are able to do that. BRADSHAW: What's an aspirational haircut? CLARKE: An aspirational haircut is buying into luxury, buying into that Hollywood glamour lifestyle, and I think if you come in here and you have a £500 haircut you think you're part of that elite. BRADSHAW: At Seaham Hall Spa you could spend a thousand pounds on a luxury weekend. TOM MAXFIELD Chief Executive, Tom's Companies The pool it's a 20 metre ozone cleanse pool so there's a complete absence of chlorine, and when you swim in it, it feels like silk on your skin. If you swallow it, it's probably as good as Evian. BRADSHAW: But it's not just pitched at the 1%. MAXFIELD: This is a special occasion venue, and if you've got a wedding anniversary, a special birthday and you live on Tyneside or fairly locally you can come here, you might only come once a year. BRADSHAW: But it's a luxury and aren't people going to be probably borrowing to be able to afford to come here if they're local? MAXFIELD: I suspect they probably borrow more for a foreign holiday or for a new car or to send their kids to university. BRADSHAW: Luxury fever, people getting themselves into debt? MAXFIELD: It's not our experience here, and I think that there are plenty of luxury things where people can be tempted but I think in the end mostly commonsense prevails. You can go crazy and buy Gucci and Louis Vuitton and haute couture clothes, but people aren't that stupid really. BRADSHAW: While the winner takes all society has been soaring away, so has personal debt – now over a trillion pounds – and there could be a connection says Tony Blair's former adviser. GEOFF MULGAN Director, Institute of Community Studies I think some winners are clearly taking it all, and I think we're also seeing people lower down the scale trying to keep up with the spending and lifestyle patterns of the very rich and finding they can't do that and therefore getting deeper and deeper into debt, and the fact that we've seen simultaneously a celebrity culture, a winner takes all economy, and a rise of household debt is probably not a coincidence. BRADSHAW: And there may be other downsides to the winner takes all society, for all its glamour. We're at the launch party for the British Luxury Club which promotes luxury brands. Welcome to the world of luxury cars of exquisite jewellery and legendary champagne, all here this evening, all are on parade and all are best of breed. BRADSHAW: Most people will never be part of this glittering elite, but that may not stop them trying. So what if too many people try to imitate not just the winners' lifestyle but their careers? If too many people get sucked into the winner takes all market then what's the downside if too many people are trying to be David Beckham or Madonna? Professor ROBERT FRANK Author "The Winner Take All Society" We've got fewer people available as engineers, as classroom teachers, as people to design ordinary products that people use. There are other tasks to be done, rather than being a superstar. We are going to give up a lot of valuable services that those people could have produced in other areas, these are very talented people. BRADSHAW: Wouldn't it be better for the rest of us if, instead of trying to imitate David Beckham's superstar winner takes all salary, our kids trained to be dentists or plumbers? Professor DANNY QUAH London School of Economics Well clearly that would be better for the rest of us for society that these kids do so. One thing that we need to take into consideration is that if we don’t allow people to participate in this winner takes all type of an economy, then we've shut doors in their face, we've not allowed them to reach possibly their full potential. I don’t see that that would be something that benefits society. BRADSHAW: But what scares some people about the winner takes all society is that it may be something darker and deeper than an accident of the global economy, it may be a change in values. One of President Bush's most lacerating critics is world renowned economist Paul Krugman. He says America should be seen as a warning. Professor PAUL KRUGMAN Economics, Princeton University I don’t think people in Britain or in much of.. certainly in western Europe would trade places with their counterparts in the US if they understood how risky and how mean and harsh US society is becoming and appears to be likely to become even more so in the decades ahead. BRADSHAW: What Paul Krugman fears is that we're going back to the extreme inequalities of the past. KRUGMAN: In the 1920s there was enormous inequality, there were gigantic mansions on the north shore of Long Island, The Great Gatsby if you're literarily inclined. Film Trailer 1926 KRUGMAN: When I was growing up those great mansions were alternative to nursing homes or whatever, now some of them have been converted back to private residences and other even bigger, more modern mansions have gone up, so we are in many ways feeling like the society that we had in 1928, 1929, and you know the numbers you can actually.. the parameter that measures the income distribution, by god, it's right back to what it was in 1929. UNIVERSAL NEWSPAPER NEWSREEL Starving thousands fill bread line in unemployed crisis _______ New York City 1930 BRADSHAW: After the boom that ended in 1929 came America's great depression. You could see inequality on the streets, two million hungry and homeless. It was the kind of poverty that inspired America's new deal and Britain's welfare state. Attempts to make society less harsh and unequal, but what if that more caring kind of society was just an interlude? KRUGMAN: Maybe what we thought of as what America is like, maybe what you thought of as what Britain is like, was actually a kind of accident brought on by the great depression of World War II and now we're going back to that form of society where a small number of people control a very large fraction of the wealth which is the norm for capitalism. I thought that broadly middle class society that we had in the 1960s which, when I was growing up, was a good society, and this is ugly, this is disturbing. BRADSHAW: Convinced? Well that just could be because you haven't met the honorary consul, yes Britain does have one in California's Silicon Valley, home of the digital revolution and Scots born Bill Elder says the pessimists couldn't be more wrong. Listen to them, he says, and you'll never have a lifestyle like his. The reward of building a global semiconductor company which he reckons he could not have done in the Britain he left behind. BILL ELDER Chairman, Genus So this is my tower, and to the right here is the theatre. The tennis courts… we have a cabanya which is where we do a lot of our entertainment, a swimming pool and just a spectacular view of Silicon Valley. I was raised in Glasgow. I was from a working class family. I arrived in the United States with a thousand dollars in my pocket and you can see I've multiplied it considerably. I never really count how much I'm worth at any point in time. It's not a number that I look at. BRADSHAW: What would you guess? ELDER: What would I guess? Oh in the 15-20 million range probably. BRADSHAW: Don’t people get jealous, don’t people feel angry and envious of these enormous returns on the stakes? ELDER: No. You know.. the politics of envy which I think are very prevalent in the UK, in many areas of the UK, don’t exist in the United States, people embrace success. And you see some of my cars, Firebird 83, Mercedes 380, we've got the runabout day car for getting groceries, and this is one of my favourites, this is my Mini Cooper 63, and as you can see, its number plate is WEEMINI. BRADSHAW: So when people say look, you in Britain have got to make sure you don’t go down this road of superstar salaries, winner takes all society, what do you say? ELDER: I would say the worst thing you could do is embrace that kind of thinking and stay back in the world where you are. You've got to move forward and think globally. BRADSHAW: Can't you have globalisation without these enormous inequalities. ELDER: But is there major inequalities? I think everybody's lifestyle and quality of life is improving, and as long as everyone is improving, then I think that's win win for everybody. BRADSHAW: Shouldn't we be following the American example in Britain when America, it seems, is the most prosperous, successful economy in the world? KRUGMAN: Well you know, we’re not all that prosperous and successful if you get beyond the top few percent. Many Americans don’t have health insurance or live in desperate fear of not having health insurance. Our life expectancy is at the bottom, not at the top of the advanced world. Our infant mortality is at the top, not the bottom of the advanced world, and those things seem to be getting worse. BRADSHAW: So America's winner takes all society, romance and opportunity or danger and doom? Tony Blair has warned that opportunities must be spread beyond what he's called a small circle of winners, but he doesn't see any need to cap the huge rewards available in the global economy. Newsnight June 2001 JEREMY PAXMAN: Do you believe that an individual can earn too much money? TONY BLAIR: I don’t really.. it's not a.. no it's not a view that I have. What, you mean that we should sort of cap someone's income? PAXMAN: Mmm. BLAIR: Not really. No. Why, what's the point? You can spend ages trying to stop the sort of highest paid earners earning the money and actually, in an international market today you'd probably just drive them abroad. What does that matter? Surely the important thing is to level up those people that don’t have opportunity in our society. BRADSHAW: Tony Blair's government has had some success in tackling inequality, especially child poverty. But with top income tax rates still at 40, Downing Street's former policy adviser reckons that government could do more. GEOFF MULGAN Head of Policy, Downing Street 2003-2004 The challenge for people like Tony Blair and Gordon Brown and their equivalents in other countries in some ways it's actually proved easier to improve the lot of the relatively poor and indeed of the middle income groups in society than it has been to rein in, as it were, the runaway super elites who just seem to become richer and richer. So there are things which can be done, whether a 50% or a 60% rate is the key, I think is a matter for debate. I think it would be probably mad for any government to go back to the marginal tax rates of 80% or 90% which did at one point exist in the UK and did drive many people.. many productive people, enterprising people to relocate the case elsewhere, but as between 40, 50, 60 percent there's not much difference, and certainly that's been the European experience of the last 20 years. BRADSHAW: The argument is, people who can afford to buy Bentleys can afford a bit more tax. But how might they take it? RODNEY TURNER Director, H.R. Owen I do, when I get a chance to talk to our clients ask them about their.. what they feel on the tax side; 50% to them is not going to be a major problem, but their obvious concern is if it suddenly goes from 50 to 60 or 70 then it is a serious concern, and I think we'll get back to the old business of being off shore for tax reasons which will have a dire effect on certainly the high street, this area with Bond Street, and it just would be a disaster all round. BRADSHAW: Any government will have to be wary of annoying Britain's new elite. After all, the top 1% of taxpayers contribute 22% of all income tax, yes, almost a quarter of all income tax. So it's in the government's interest to encourage their success, not penalise it say free market economists. DeAnne Julius used to be on the Bank of England's Monetary Policy Committee. DeANNE JULIUS Chairman Chatham House The particular success of the high earning 1% is something that in many cases we should be pleased about. DeANNE JULIUS Monetary Policy Committee Bank of England 1997-2001 It's a very short-sighted approach to tax people with money to tax them heavily because these are also usually the most mobile people and as soon as a country gets a reputation for taking a very heavy tax bludgeon towards its successful people, then that is not a country that most successful people want to either stay in, to build their career in or to come to. So you're are on very tricky ground, as a government, if you decide that you want to go after the high income earners with very high taxes. BRADSHAW: Winners, superstars, celebrities, millionaires, we don’t envy them, it seems, we love them, even though for most of us their rewards remained realistically out of reach. But could it be we've somehow been conned into accepting this 'winner takes all' Britain? GEOFF MULGAN Director, Institute of Community Studies Every time in the past, when there's been a big surge in the power and wealth of the very rich, and it has happened again and again throughout history, there's usually been a backlash, people have become envious, they've turned to politics or often sometimes just turned to rioting to try and put it right. What's surprising about the last 10 or 20 years is that hasn't really happened, and I think part of the reason may be the rise of the celebrity culture, the idea of big brother which is that anyone can become a celebrity, can take part in this Hello or Okay world, and this appears to have insulated them from both some of the scrutiny but also some of the envy which there has been in the past. I'm not sure that it was a conscious strategy but it's been hugely successful for the top elite in protecting them from things like higher levels of marginal taxation. BRADSHAW: The winner takes all society shows no sign of ending here. Andreas Panayiotou has bought two private jets to hire out to the superrich, especially the very top 50,000, incomes over £339,000 a year, and rising faster than anyone's. It's a pretty different experience from flying on Easy Jet or British Airways. PANAYIOTOU: Yes, that's right. Well are you enjoying this trip? (laughing) BRADSHAW: Today he's flying to Italy, he's building a new boat. ANDREAS PANAYIOTOU Chairman, The Ability Group It's going to have 7 double bedrooms, 15 permanent crew, there's a glass lift going to all five floors. The Ability is actually twice the size of this. Huge isn't it. It's got a big a big Steinway piano here, remember when we ordered in the West End. And we're looking at approximately 200,000 sterling for a week, and that is just for the chartering of the boat and the crew. Everything else, food, beverages and so on is all extra. This is pure luxury and it's there and it's one of the most expensive, luxury weekends or week break that you could do. There's no hotel you can go and spend £200,000 - £300,000 sterling in a week. BRADSHAW: Ultimate luxury. PANAYIOTOU: Ultimate luxury. BRADSHAW: So should we stop the winner takes all society before it's too late, or should we applaud society's new winners, the top 1% with the runaway incomes? Professor DANNY QUAH London School of Economics We will all be a happier society when we celebrate the triumphs of those who are successful around us. BRADSHAW: So you think our attitude to today's winners should be…? QUAH: One of celebration. BRADSHAW: Simple as that? QUAH: Absolutely. GEOFF MULGAN Head of Policy, Downing Street 2003-2004 The risk is it will actually become quite an unpleasant society in which to live, one in which people care less about each other, understand less about each other and in which at some point in the future what at the moment is perhaps admiration will actually turn into bitter envy. BRADSHAW: Whether you're a pessimist or an optimist, the winner takes all society is getting hard to ignore. Today's global economy is offering new rewards for us all, but it's also bringing a new kind of inequality. Next week Panorama asks whether the first genocide of the 21st century is occurring in Sudan. Hilary Anderson travels behind rebel lines to unreported areas of Darfur to uncover new evidence of systematic killings on a horrifying scale. _________ www.bbc.co.uk/panorama CREDITS Reporter STEVE BRADSHAW Camera NEIL HIGGINSON SIMON FANTHORPE ANDY GREENWOOD ROSS KEITH Sound GEORGE KIDSON JOHN DUVALL PERCY URGENA Online Editor BOYD NAGLE Dubbing Mixer ROWAN JENNINGS Production Co-ordinator KAREN HOOPER Web Producer ADAM FLINTER Film Research KATE REDMAN Research AMANDA VAUGHAN BARRATT Graphic Design ALEC EVES DIMITRI KEVGAS Post Production Co-ordinator LIBBY HAND Production Manager GINNY WILLIAMS Production Executive EMANUELE PASQUALE Film Editor GERAINT EVANS Assistant Producer FIONA BLAIR MUKUL DEVICHAND Producer MICHAEL RUDIN Deputy Editors ANDREW BELL FRANK SIMMONDS Editor MIKE ROBINSON 2 _____________________________________________________________________________________________ Transcribed by 1-Stop Express, 3 Southwick Mews, London W2 1JG Email: panorama@bbc.co.uk