If anyone is fed up with being battered by Britain’s tax and regulation environment and is weighing up if they want to stay or head for pastures new, I have some advice: stay and be a part of the solution.
Andy Burnham stood outside Downing Street at the start of last week and said Britain needs to ‘regain our stability once again’. Few would dispute this. But unfortunately, the people who should be part of fixing the country, the wealth creators, are increasingly voting with their feet and moving.
It seems this Labour government believes that the wealthy will always stay put. They won’t. Anyone deciding where to base a business today isn’t choosing between London and Manchester, but between London, Singapore, Dubai and New York. And at the moment, they aren’t choosing to stay in this country. We now have the lowest number of sterling millionaires since the financial crisis, down 7 per cent in a year, according to the Adam Smith Institute. In 2021 there were more than a million of these high earners, now only 442,000 remain. Some of that is due to asset prices depreciating, a good deal of it is people simply leaving the country.
Entrepreneurs and wealth creators are where our growth has to come from, and there’s nothing stopping us from being a country they want to be in
When millionaires leave, they take not only their money but their skills and talent, their understanding, their energy and their entrepreneurship. They also give up any claim to be listened to about how Britain is run, when the country, and its new government, desperately needs to listen and draw from their expertise.
Entrepreneurs and wealth creators are where our growth has to come from, and there’s nothing stopping us from being a country they want to be in.
Tax matters to these people, obviously. But at the moment our tax regime is inherently hostile to them. Our non-dom system is gone, inheritance tax now applies to pensions and family businesses, and we’ve had a whole summer of wealth-tax speculation to unsettle people further. We’re also almost alone in Europe in charging overseas visitors VAT on what they buy. We scrapped tax-free shopping, then wondered why wealthy tourists stopped coming.
The government rhetoric does as much damage as the tax. We spent years making Europeans and non-doms feel unwelcome, and now we are doing the same to our own wealth creators. Take the VAT raid on school fees, which was sold as a blow against privilege. This all contributes to an overall atmosphere of hostility to wealth. No wonder so many millionaires are already leaving.
This is not only about the very wealthy. The young founders who would have built the next Revolut are leaving as well because they no longer believe the opportunities are here for the ambitious and hard-working. When they go, another country collects the tax when they create successful businesses.
Which brings me to the argument we hear so much of from our new Prime Minister: that 40 years of free markets and trickle-down economics have failed. It is lazy rhetoric and it isn’t true. Britain has instead experienced a run of shocks – the financial crisis, years of stasis around Brexit, the costs of Covid, the wars in Ukraine and Iran, and on top of it a welfare bill growing faster than the economy paying for it. Wealth creators haven’t caused Britain’s economic woes, but they are key to fixing them.
If free markets were the problem, look at the countries that backed away from them. At the financial crisis, the European economy was slightly larger than America’s – $16.2 trillion against $14.7 trillion. This year America is projected to have a GDP of $31.8 trillion and the EU, $22.5 trillion, roughly 40 per cent behind. Europe fell back because it stopped growing. We’ve spent the same period doing much the same.
So much for the problem. I am hopeful though about what comes next if we do manage to keep wealth creators in the country. When millionaires stay, they often end up giving back to the local community. I grew up in Grimsby, where my family were part of the fishing and food industry. It was the area’s key business – you were never far from someone working in it – but it was perilous. I was taught as a child that our family had a duty and responsibility to this community and I’ve tried to maintain those values since.
Grimsby’s values of civic pride rubbed off on me and having done well from it, I wanted to give something back to it. That is why I am sponsoring four academies in Grimsby and chairing the Great Grimsby regeneration board. Drive out millionaires and areas like Grimsby lose the valuable contributions of the very people they helped to create.
Britain’s cultural life depends in no small part on people who did well in business and gave something back. But it has to work both ways. There are things this government could do quickly that would cost almost nothing. For starters it could rule out a wealth tax for this Parliament and say so plainly. It could replace the non-dom mess with something simple and competitive. And it could give overseas visitors a reason to shop here again. More than anything else, it should change its tone – and return to the environment of my youth, when we celebrated entrepreneurship and decided wealth creation was a force for good.
That Britain ought to attract and keep the people who create jobs, wealth and opportunity should be beyond dispute. I’d rather put my energy into sorting this country out than walk away from it. But those of us who feel that way need to hear something from Andy Burnham, and soon.
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