Reeves can't continue to ignore the entrepreneurs fleeing Britain
An analysis by the Financial Times this week found that almost 3,700 company directors have left Britain over the last few months, almost double the number before the Budget. Given the time lags involved in filing data with Companies House, the total is likely to be far higher by now. We already had data suggesting that 16,500 millionaires have left Britain, the highest total in the world, while many high-profile non-doms have left, including Lakshmi Mittal, the founder of the steel empire ArcelorMittal, and Guillaume Pousaz, the founder of the fintech giant Checkout. Add it all up, and one point is clear. Entrepreneurs are leaving the UK.
It is not hard to see why. The non-doms are now subject to British taxes on their global income, including one of the highest rates of inheritance tax in the world. Meanwhile, British entrepreneurs face a punishing combination of corporation tax, dividend tax, and income tax on any money their business makes, and they can no longer leave their company to their children without paying 40 per cent of its value to the state. We have created one of the most hostile environments in the world for company founders.
And yet the Chancellor Rachel Reeves has remained completely silent on the issue, as has the Prime Minister. There are plenty of lines she could take. She could argue it doesn't matter and we don't need them. After all, we now have GB Energy and the National Wealth Fund, and they will create new industries. She could lambast the quitters as unpatriotic, shaming them for their reluctance to properly fund public services. Alternatively, she could slap an exit tax on them, as countries such as Sweden have done, to make it more expensive to leave than to stay. Or, most radically of all, Reeves could U-turn on some of her policies and offer some tax incentives to try and bring them back – or at least persuade any more from leaving.
Each option would be a credible response. But surely just ignoring the issue is no longer an option? Sooner or later Labour will have to acknowledge the crisis and try to do something to stem it. Or else within a few years the UK will have no businesses left beside a few state-controlled monopolies.
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