Amid a slew of unfunded pledges pouring out of No10, the UK's millionaire exodus will not go away, writes James Hodgkinson of the Adam Smith Institute

Britain’s wealth is in freefall. The number of millionaires in real terms has plummeted to just 442,000 – the lowest level recorded since the 2008 financial crash.

The decline has been rapid. Just four years ago, the UK was in the midst of a wealth explosion. The number of millionaires reached an all-time high and personal financial prosperity was on an upward march; even a global pandemic could not halt it. Yet the trend has gone from boom to bust in less than half a decade. Clearly, something has gone badly wrong.

Recent years have brought nothing but misery for personal finances. Sky-high interest rates, falling asset values, and the rising cost of living have all hindered families’ ability to save and become millionaires.

But successive governments have had to confront another uncomfortable reality. Britain’s wealthiest have legs. And when they are faced with spiralling tax bills, chronic uncertainty and politicians who consider their actions ‘morally reprehensible’, their reaction should not surprise. They simply get up and leave.

This sort of crisis does not happen in a vacuum. It is a direct result of choices made by our government. For decades, Britain positioned itself as a beacon of investment, enterprise and consumption. Today, our historic competitive edge has been almost completely dismantled.

Take the decision to scrap the "non-dom" tax status. For almost 200 years, the system existed to encourage successful people from across the world to invest, consume and reside in the UK. The premise was simple: money made abroad was taxed abroad and returns made in Britain were taxed by the Treasury. When the scheme was ended, people naturally wished to take their wealth elsewhere. With a myriad of nations courting this specific demographic, they were spoilt for choice.

The impact of an exodus like this goes far beyond the lost tax receipts. Britain’s wealthiest are our job creators, the biggest spenders and serial consumers. Losing them robs us of the investment and capital our nation needs. The Adam Smith Institute has estimated the cost of the abolition of the non-dom status will cost Britain £111billion in lost productivity and economic activity in the next decade alone. With growth languishing at 1 per cent, and youth unemployment at an 11-year high, this is something we cannot afford.

Of course, British business owners are not exempt from this malaise. Stuck in a quagmire of ever-growing regulation, and after two years of increases to national insurance and the minimum wage, the outlook is bleak. Insolvencies are 20 per cent higher than they were a decade ago and the number of Britons starting businesses has fallen to its lowest level since 2017. The incentives have disappeared and have instead been replaced by costs and liabilities. Sadly, Britain is no longer a nation of entrepreneurs.

Amid a slew of unfunded pledges pouring out of No10, the problem will not go away. Prime Minister Andy Burnham has already confessed he will have to "ask for a little more", but will not say from whom. With rumours of a wealth tax, income tax hikes, and even a death tax swirling around Fleet Street, uncertainty will prevail. Even more of Britain’s wealthiest will head for the door.

For those who remain, the arithmetic is unforgiving. Today, the top one per cent of earners generate 29 per cent of Britain’s income tax receipts. When they flee, the Treasury’s black hole will not disappear. Rather, it will expand. As our tax base shrinks, those further down the income scale will find themselves being told they have "broad shoulders". And on breakfast tables across the country, ordinary families will open letters from the taxman demanding they pay more.

As socialists so often find, instead of spreading prosperity, this crusade will spread a grim sort of fairness: families all across Britain will be poorer.