The government is doing entrepreneurs no real favours right now.
Much like previous measures, such as the capital gains tax changes, I think the increase in the highest band taxation to a huge 50 per cent is going to cause some real problems down the line.
I know the initial reaction – and maybe the one the government policy-makers are relying on – is that the general population will not think that this will have an effect on them because they don’t earn over £150k. But I disagree. The big managers, directors and decision-makers most certainly do earn over this amount and, in the longer term, this will undoubtedly be a factor in decisions on where to locate company HQs and the great many jobs that go with them.
As a business, you want to be able to attract the best staff in your field. Many multi-nationals will fear that the top-level managers they want to recruit may be put off by the tax they’ll incur in the UK. It is yet another short-term measure from the government, without any recognition of the consequences for the UK. It stinks of a panic reaction. So what’s needed? Clearly, the banks must start operating as normal, by which I mean parting with money in the form credit facilities to allow businesses to trade. Like most people I have spoken to, I have been angry – but not surprised – to see that the money injected into saving the banks here in the UK has been held on to with a death grip by these institutions. Surely the government should have thought ahead, realised that this might have been the case, and put measures in place to ensure money flowed through the systems as a strict condition of receiving state aid.
I guess that’s just wishful thinking.
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