Now we can be clear — despite Labour’s endless pledges not to raise taxes, Keir Starmer and his Shadow Chancellor, Rachel Reeves, will pile on the agony if they are voted into government on July 4.
Not only that, they plan an assault on Britain’s entrepreneurs which makes a nonsense of their pledges to be business-friendly and generate investment.
Far from being the party of wealth creation, there is a high risk that Labour’s old-fashioned socialist agenda will actually drive enterprise overseas and so destroy consumer and business confidence.
Labour has spent much of the past year wooing company executives over breakfast in what has been dubbed a ‘smoked salmon and scrambled egg offensive’.
But it is fascinating to note that, as the possibility of a Labour victory has loomed ever larger, not one single boss from a FTSE100 company has offered public support to Starmer.
‘Keir Starmer (pictured) and shadow chancellor Rachel Reeves will pile on the agony if they are voted into government on July 4’, writes Alex Brummer
Labour’s Rachel Reeves (pictured) has spent much of the past year wooing company executives over breakfast
One senior banker told Alex Brummer (pictured) yesterday that he fears a combination of higher taxes on enterprise and Britain’s obsession with regulation will drive new wealth away from the UK
One senior banker told me yesterday that he fears a combination of higher taxes on enterprise and Britain’s obsession with regulation will drive new wealth from East Asia and the Middle-East to New York and other financial centres.
Now that we have seen both Conservative and Labour manifestos, it is clear that there is only one party that understands the need for lower taxes — and that’s the Tories.
I accept that Rishi Sunak’s election campaign has been deeply flawed. A pledge to take one or two pence off the rate of income tax, for example, would have cut through more effectively than his promise to cut a further two percentage points from employees’ National Insurance.
But whichever way one looks at it, the Conservatives’ promise of £17 billion of further tax cuts to drive aspiration, enterprise and employment is light years ahead of Starmer’s ‘squeeze the pips of the well-off’ manifesto.
Labour’s new-look ‘triple lock’ — a promise not to increase VAT, National Insurance and income tax — is smoke and mirrors. The reality is that its obsession with ‘closing loopholes’ is simply taxation by the back door.
F or one thing, Labour’s ridiculous class war against independent schools involves an immediate breach of its own pledge because it means imposing a 20 per cent VAT surcharge on every student’s fees — a clear assault on educational excellence.
Labour Party leader Sir Keir Starmer and deputy Labour leader Angela Rayner following the launch of his party’s manifesto
A heckler being ejected as Labour Party leader Sir Keir Starmer launches his party’s manifesto
Labour Party leader Sir Keir Starmer with his shadow cabinet
The tragedy is that three successive economic shocks — the great financial crisis, the pandemic and Russia’s war on Ukraine — have pummelled the public finances. Successive Chancellors have felt there was no alternative but to raise tax.
Now standing at 37 per cent of the total output of the economy, this is the highest level of taxation since the 1940s.
Moreover, the overall burden is scheduled to keep rising, thanks to the freeze on inflation-proofed tax allowances until 2028-29 and the jump in the main tax paid by corporations from 19 per cent to 25 per cent introduced in the aftermath of the pandemic.
But the Tories, at least, are demonstrating they truly believe in bringing these horrendous rates down as the economy recovers.
In contrast, Labour’s manifesto is festooned with higher levies.
Some £5.2 billion will be raised by a further attack on ‘non-doms’ — those who spend significant time in Britain but have their main home abroad — and those who have used perfectly legitimate tax-avoidance methods.
What Labour fails to understand is that wealth — such as that controlled by non-doms — is footloose.
Not only will its policies drive cash and savings into the tax havens, we should remember that many countries, including Portugal, now offer tax-free homes to the rich in the hope of encouraging new investment. Why would they stay here?
Shadow secretary of state for climate change and net zero Ed Miliband during the unveiling of plans for a “Mission-Led” Labour government
Labour Party Leader, Sir Keir Starmer delivers a speech during the unveiling of plans for a “Mission-Led” Labour government
Reeves and Labour would like us to believe that clamping down on tax-avoiders is a painless exercise. And that it’s rich tax ‘cheats’ who can afford expensive advice who will pay the majority of the shortfall. The reality is different. The real target of HMRC will be small businesses and sole traders whose lives are already made a misery by pernickety VAT inspectors.
In contrast, the Conservatives are seeking to give Britain’s self-employed entrepreneurs a break by abolishing their National Insurance contributions.
This paper has often been critical of private equity, of the destruction visited on companies such as Debenhams and care home provider Southern Cross.
Yet for every failure, there are private equity successes such as the financial group Worldpay, spun out of NatWest after the 2008 banking crisis, and the shopping chain Pets At Home.
Much of the Continent’s private equity industry has chosen to make its home in London’s Mayfair and the Strand along with offshoots of American giants Blackstone and CVC.
Their presence brings a cascade of cash for London-based IT, business and financial advisers. They are among the reasons why the City of London is the world centre for wholesale banking, servicing large clients such as financial institutions, government agencies and corporations.
Labour Party leader Sir Keir Starmer talks to journalists on board his campaign battle bus
Labour Party leader Sir Keir Starmer holds a copy of his party’s election manifesto
Labour Party leader Sir Keir Starmer at the Mornflake Stadium
Labour’s manifesto opens the possibility of ending the current system, in which the private equity barons pay a maximum of 24 per cent capital gains tax on their earnings. It could amount to a grab of £565 million, which might easily persuade the private equity chiefs to head for new pastures.
Then take Britain’s oil and gas industries, which employ more than 200,000 people in the UK. The biggest players, Shell and BP, are among the largest investors in greener technologies, from EV charging stations to the development of hydrogen as an alternative source of energy.
These industries are already paying a vast 75 per cent of their income in windfall taxes and other levies. Yet Labour proposes to close what it calls ‘loopholes’ with a sweeping increase in levies, bringing the tax rate up to an eyewatering 78 per cent, allegedly raising a further £1.2 billion.
The consequence might well be to kill new drilling and send energy jobs offshore to cheaper venues.
Reeves has said she will not be rushed into an immediate budget if she moves into Downing Street on July 5. Rather, she will wait until the autumn.
Maybe. But the course of events is predictable. When she arrives at the Treasury — should Labour win — her officials will be armed with the latest projections, which are bound to show that if her spending aspirations are to be fulfilled, there will be no alternative but to raise taxes.
So, if taxes on ordinary working people really are to be avoided, then I suspect that all capital gains will then be targeted.
Tax reliefs on pension saving might also be attacked.
Yes, Sunak and the Tories could have been bolder in their attempts to cut our tax burden.
But they recognise that reducing the huge amounts of money we hand to the taxman is a powerful incentive to work harder, to rejoin the workforce, to invest.
Starmer’s claim that Labour are the real wealth creators is pure hooey.
Their policies will undermine investment, frighten businesses and risk killing endeavour, enterprise and entrepreneurship — the lifeblood of our economy.