No sombre music accompanied Rachel Reeves’s Budget, nor was there a reading from Corinthians. Yet, those details aside, one point is surely clear: Labour’s first Budget in 14 years was a requiem for entrepreneurial Britain. The four decades from the Thatcher reforms of the early 1980s, that turned the UK into one of the best places, at least in Europe, to start and build a company, are now officially over. Britain’s economy will be a lot poorer thanks to the Labour government.
In Labour land, entrepreneurs might as well not exist
True, the Budget might not have been quite as bad as some of the advanced speculation suggested. Even so, no one should be under any illusions.: this Budget was a full-on attack on entrepreneurs and small businesses.
The rate of Capital Gains Tax they will have to pay, even on the first £1 million they make from selling a company they have sweated blood to create, has been hiked considerably. The huge increase in employer’s National Insurance contributions, raising an estimated £25 billion, will hit fledgling businesses as they try to hire their first two or three people, even before they are making any profits; lowering the threshold at which it has to be paid means it will mostly be paid by smaller enterprises. To pile on the misery for small businesses, the increases in the minimum wage announced today will make it harder to employ people. Meanwhile, the tax raid on the Alternative Investment Market, on carried interest, and non-doms will make it harder to raise capital. Add it all up, and the government has a simple message for entrepreneurs: we don’t like you much, and we’re after your money.
Entrepreneurs hoping for something to soften the blow of Reeves’ Budget will be disappointed. There was not a single measure to make it easier to run a small business, or even start one, in the first place. Reeves droned on endlessly about Tory black holes, investment, and ‘working people’. But where was the praise for the risk-takers, the creators, or the mavericks with a bright idea, who are the lifeblood of a dynamic economy?
In Labour land, these folk might as well not exist. Politicians, even Labour ones, used to pay lip service to the idea that small, growing businesses were a good thing. Occasionally, they even offered a modest tax break to encourage them. That era is now over.
The Budget is a bad day for entrepreneurial Britain. Without new companies, we can forget about growth – and that will be the real cost of this Budget.
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