Sir Keir Starmer couldn’t have been more downbeat. ‘Britain,’ he said in yesterday’s pre-budget speech, must face up to the ‘harsh light of fiscal reality’. His financial prognosis was equally bleak – pain, and plenty of it.
The Prime Minister was, of course, softening us up for tomorrow’s budget, which is expected to be built around a tax grab of extraordinary proportions, including a damaging hike in employers’ National Insurance contributions as well as increases in capital gains, pensions and inheritance taxes and even increases in bus fares.
The political calculation made by Starmer and his Chancellor Rachel Reeves is that the British public will breathe a sigh of relief when it is revealed that the bulk of pain will be borne by somebody else.
That somebody, you will no doubt gather, will be British businesses. Employees may not notice the increase in their company’s National Insurance contributions on their pay slips, but this stealth rise is nothing less than a tax on jobs that will make job creation more expensive and leave less money for next year’s pay rises, for expansion, research and development.
Sir Keir Starmer couldn’t have been more downbeat. ‘Britain,’ he said in yesterday’s pre-budget speech, must face up to the ‘harsh light of fiscal reality’
The rise in capital gains and inheritance taxes is a tax on ambition and a further brake on Britain’s future prosperity, says Luke Johnson
For growth, in other words. Similarly, the rise in capital gains and inheritance taxes is a tax on ambition and a further brake on Britain’s future prosperity.
Without entrepreneurs, risk-takers and business owners there would be no economy, no profits and no wealth to tax.
In the 40 years or so I’ve been in business in this country, I’ve seen how London has been a magnet for talented, ambitious people from around the UK and, indeed, from around the world.
The calculation they have made is that they’re prepared to take a risk if the reward for success is tempting enough.
And here, with our traditionally light-touch regime, the risk-reward relationship has offered plenty of encouragement for decades.
Yet, now all I hear from friends, colleagues and fellow business people is that Britain is losing its hard-won reputation as a good place to do business.
A hike in National Insurance contributions as well as increases in capital gains, pensions and inheritance taxes and even increases in bus fares are expected to be announced at the Budget
In today’s connected world, ambitious entrepreneurs with good ideas can set up almost anywhere on Earth – and the talk in the City at the moment is that it’s time to start packing your bags.
The Confederation of British Industry has predicted that a tax raid on family businesses could see the UK lose out on £29 billion and around 400,000 jobs.
The reason for this despondent mood is clear: the anticipation of higher employment taxes, coupled with the union-friendly legislation Labour has pledged to introduce, will mean more ‘friction’ for businesses, more regulation and more time wasted in employment tribunals and the law courts.
In opposition, Starmer and Reeves were keen to talk up their business credentials, pledging to deliver budgets for jobs and growth. But actions always speak louder than rhetoric, and everything we’ve seen from this government so far suggests they know little of business – and care even less.
National Insurance rates are due to increase by two per cent in the Autumn Budget
A cap on bus fares in England is expected to rise by 50 per cent from £2 to £3
In fact, I don’t think anyone in the Cabinet has any real business experience, which is perhaps why the Government gives a clear impression it is happy to mollycoddle the 20 per cent of Britons who work in the state sector with bumper pay rises and immunity from increased pension taxes, while the 80 per cent who work for private companies are quietly disenfranchised.
And perhaps that lack of business instinct is why, at such a critical time for Britain’s economic future, all we’ve heard from Starmer and Reeves is funereal mood music – economic doom, fiscal gloom and bombshells about financial black holes and pain to come.
Where is the optimism of Tony Blair’s early years? Where is the encouragement for entrepreneurs to chance their arm and set up in business here, rather than take their vision abroad?
It is very difficult not to reach the conclusion that, far from being a budget for growth and renewal, the Reeves-Starmer budget will trigger a long-term spiral of national decline, compounded by a damaging brain drain of our brightest and best.
It is heartbreaking that Britain’s proud record of innovation, flexibility and business success is being thrown away thanks to that old knee-jerk Labour instinct of taxing success.
Once gone, that reputation of Britain being a good place to do business will take generations to win back.
– Luke Johnson is a director of Gail’s Bakery and Brompton Bicycle Co
