Read Murray Wells’ call for action, published exclusively on Realbusiness.co.uk:
Imagine Gordon Brown lumbering up the staircase of BBC2’s Dragons’ Den. He would then have to tell his potential investors that he needs to raise funding because his business intends to increase costs in the next three years while running at an ever-increasing annual loss. He would get a worse response than the chap who invented a sheet to keep married couples apart in bed.
Dragon’s Den has actually been a superb showcase for Britain’s rich entrepreneurial spirit. There is certainly no shortage of entrepreneurs in this country. Rather than venturing into the Den myself, I fought for funding through other more traditional avenues and Glasses Direct became one of thousands of new businesses that are successfully established each year.
But the economic mess we are in, and the response from this government to it, will not benefit entrepreneurs. Brown has adopted a scorched-earth policy to the national finances. The tax rises he says he needs to fund the stimulus and fend off rising unemployment will, in fact, do the opposite. The Taxpayers Alliance recently assessed that money would effectively be taxed at 92 per cent before an entrepreneur had any opportunity to invest it. Entrepreneurs are job creators and, while all investments contain some element of risk, a fiscal environment that supports entrepreneurial activity must be good for the whole UK economy. While Brown has been increasing the public sector workforce at the expense of private-sector jobs, Mandelson has been renewing an old Labour habit of trying to “pick winners” and using taxpayers money for that purpose. The historical record of that policy is hideous.
I eagerly await Cameron’s pitch to the Dragons of the electorate. It will have to be full of ideas to help business and encourage enterprise. I was pleased to hear about Peter Luff’s private members’ bill, which would bring in a Small Business Rate Relief Scheme. This would give automatic rate relief to small businesses, replacing the current system where businesses have to apply for it. It’s a simple and excellent idea. We need more of them.
I have no doubt that David Cameron would be significantly more polished in the Den than the Number Ten incumbent, but his pitch needs to convince the electorate that we are about to put into power a masterful, long-term strategist rather than just another short-term electioneer. Winning elections is only a means to an end; without clear, long-term aims, it is no service to the country, nor historically will the result be seen as successful.
In this environment, a Prime Minister needs a firm set of principles and the conviction to stand by them. There aren’t many politicians who believe in the freedom of the individual and who are prepared to put that principle into action by reducing the number of different taxes on the statute book. It may seem counter intuitive to reduce overall taxation when the pot is empty, but remember how Reagan and Thatcher both battled the effects of global financial meltdown, putting their countries on a path to economic success in the eighties by doing exactly that.
This country needs a bold Prime Minister who is happy for interest rates to rise so that saving and frugality come back into fashion. Cameron must be prepared to slash tax rates to motivate entrepreneurs and create jobs. This, in turn, would allow the deficit to be funded so that there’s more money in British Dragons’ pockets for entrepreneurs to draw upon. They need to hear a Cameron strategy that improves the environment for business growth, otherwise the only thing that the Dragons are likely to invest in will be overseas.
Cameron must become a champion of supply-side economics: pitching a government that stands back and allows a thousand flowers to bloom by reducing regulation as well as taxation, balancing the books by controlling expenditure, and in the process paying down debt.
A Conservative government will certainly slash many of the layers of regulation – although inevitably not enough. But the dismantling of Brown’s elaborate tax regime is vital. Entrepreneurs simply cannot flourish in a country where the top rate of tax is 50 per cent. I know many budding British businessmen who are taking advantage of the globalised world to set up shop elsewhere. Entrepreneurs are looking for a costed and realistic long-term proposal for tax cuts, and we understand that they will not be not be instantaneous. But, in the medium term, tax cuts must be at the core of any pro-entrepreneur government.
Perhaps the main problem that the Tories have is that the spoils of electoral victory are little more than a distressed purchase. The cupboard could hardly be more bare, to the extent that we will probably need to be bailed out by the IMF a couple of years down the road. This will be Gordon Brown and Tony Blair’s, (as Prime Minister and First Lord of the Treasury) legacy to Cameron. As someone who started a business from my bedroom, I know that austerity is a tough challenge but it shouldn’t be a terminal hindrance for a leader with the guts to stick to his long-term vision.
Jamie Murray Wells is founder and executive chairman of online glasses retailer Glasses Direct.