Does the wealth of prime ministers matter?
“Is Rishi Sunak too rich to be Prime Minister?” a Guardian headline asked when he put himself forward for the Conservative party leadership. Subsequent events have shown that this was a QTWAIN – a Question To Which The Answer Is No. Or in this case, Yes.
For journalists, QTWAINs are a convenient way of raising an issue which is not quite on the level – either because it is most unlikely (“Is God an Astronaut?” for example) – or because, as with Sunak’s riches, the question replaces a statement which the author would not want to commit to publically.
How much a public figure is worth remains a perennial topic of prurient interest, whipped up again by this Prime Minister’s voluntary decision to publish his income tax returns. They show that he made £4.7 million over the last three years, paying an effective rate of tax of 22%.
Sunak is exceptionally wealthy by almost all standards. Taken together with his wife, Akshata Murty, he is the first UK prime minister to make it onto The Sunday Times rich list, ranking 222nd in the UK, with an estimated net worth of £730 million. This may make him Britain’s richest ever Prime Minister. There is no one to compare him against since those nineteenth century aristocrats, Lord Salisbury, the Duke of Wellington and the Earl of Derby. Of these Tory Titans Derby is reckoned to be the richest – £444 million in today’s prices – and poorer than the Sunaks.
Rishi Sunak actually only accounts for around 1.5% of his family’s money himself. Accountants delving into his returns estimate that most of his personal income derives from around £11 million held in a blind investment fund based in the US. Ms Murty holds a 0.91% stake in the giant Infosys software company founded by her father. Her dividends alone dwarf her husband’s savings. Beyond their rented flat in Downing Street, the couples’ property portfolio includes a five-bedroom mews house and a flat in Kensington, an Ocean Avenue apartment in Santa Monica, and Kirkby Sigston Manor House in his Yorkshire constituency, with its now notorious indoor swimming pool.
Jibes at Sunak’s wealth – £14,000 to heat that pool, the 100k donation to his old school Winchester College – have become regular features of Sir Keir Starmer’s PMQs routine. Seldom saying it in so many words, Labour campaigners want to imply that a man so well insulated by cash must be out of touch with ordinary people. They have struck a nerve with their opponents. Bailing furiously on Sky TV, the Conservative party chairman Greg Hands excused that, while “wealthy”, Sunak “does not come from that sort of background. He comes from a background of immigration, parents who ran a pharmacy, one of his parents was a GP. It’s not a poor background but not an unusual background.”
Given the widespread media coverage of Sunak’s tax returns – illustrated by pictures of the Prime Minister wielding a cricket bat – charges fell flat that Number 10 was “burying bad news” by making his disclosure on the same day that Johnson faced the privileges committee and parliament backed the Windsor Framework. Indeed, the leader of the opposition only seems to have been spurred into honouring his complementary promise to publish his own tax returns by Sunak going first.
Starmer earned £360,000 over the past two years paying an effective tax rate of over 30%. His parliamentary salary accounts for the vast bulk of this, although he had a capital gain from a house he bought for his sister, a “poorly paid” care worker. His modest income and higher tax rate compared to Sunak qualify him to play the politics of envy if he so chooses. Doubtless to his embarrassment he also just scrapes into the top 1% of earners – traditionally targeted collectively by the left as fat cats, in spite of the vastly wide chasm the 1% includes, stretching from wage slaves like Starmer to billionaires.
Sunak’s tax rate is lower than Starmer’s because most of it is capital gains tax rather than income tax. In a reflection of the widespread ambivalence felt about tax and wealth, Starmer was challenged three times whether he planned to raise CGT to the same 40% tax paid by high earners, but refused to give an answer. A spokesperson later clarified Labour have “no plans”, to do so.
Provided they are open and honest and do not try to take unfair advantage of them, there is little evidence that the personal circumstances of Prime Ministers make much net difference to their standing with the voters. Mrs Sunak was well advised to give up her non-dom status once she moved to Downing Street.
According to the self-appointed websites which tot up these things, the UK’s last nine prime ministers were all, or became, net worth millionaires – much of it based on their property. John Major and Tony Blair both worked commercially after leaving office and head the table with an estimated £50 million each. David Cameron is next on £37 million. Gordon Brown and Margaret Thatcher, at death, are around £10 million, Liz Truss £8 million, Theresa May £5m. The much-married Boris Johnson is the poorest recent Prime Minister on £1.67m. Since leaving office last July he has topped that up with £4.8 million of declared outside earnings, mainly from speaking gigs and an advance on his autobiography.
Unless there is a global financial crash, the former Goldman Sachs banker Rishi Sunak will never need to prostitute himself after leaving office. Nor does this prime minister need to rely on friends and party donors to pay for home decorations and facilitate loans.
Prime Ministers’ own experiences tend to colour their views on wealth and earnings. Mrs Thatcher frankly admitted that she only got where she did in politics thanks to the material support from her husband Denis, an executive. She struggled to see why anyone should earn more than Denis Thatcher’s final salary at Burmah Oil.
David Cameron developed an obsession about public servants who earnt more than him. There are roughly 180 civil servants paid more a year than the Prime Minister’s current, £164,951, total MP and Ministerial salary. To the discomfort of their colleagues, both Gordon Brown and Tony Blair instructed the Cabinet to join them in foregoing scheduled pay rises.
What we earn and how we are taxed are always sensitive matters. Both Sunak and Starmer can be commended for setting a new precedent of openness. The United States is going backwards. Disclosure of returns used to be automatic there, until Donald Trump got to the White House.
If Prime Ministers find it all a bit awkward they have one of their own to blame. William Pitt the Younger introduced income tax in 1799. As Prime Minister he was paid £5,000 a year, a massive sum then, equivalent to around £500,000 today. It was not enough. Pitt died leaving massive debts which were eventually settled from the public purse. Obviously Pitt was not rich enough to be Prime Minister. That didn’t stop him.
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