Thursday 15 October 2020 4:23 am

A message to Rishi from entrepreneurs: Forget tax hikes and let the go-getters get going

David Mercer is chief executive of LMAX Group

Rishi Sunak certainly deserves praise for his response to the pandemic — so far.

Because, as his recent statement to the Commons showed, the real test has only just begun. 

We have seen the chancellor take decisive action to avoid a bonfire of jobs, and he clearly has his eyes on the future. His speech at the virtual Conservative party conference certainly paid lip service to the idea that supporting job creators is high on his priority list. 

Read more: Think tanks warn Sunak not to hurt UK’s ‘tax competitiveness’

That must be music to the ears of the world-leading UK scientists who are leaving Britain because US investors have deeper pockets and are willing to take bigger risks. 

Look no further than the group of Britain’s best-known quantum computing scientists, who in June quietly decamped to Silicon Valley to found PsiQ, with the belief that they can produce a commercial quantum computer within five years. 

That should send a jolt of reality through all those dreaming of revolutionary new British industrial champions in artificial intelligence, machine learning, logistics, manufacturing, finance and clean energy. 

There is a simple code for building back better: unleash the full force of enterprise. 

At this critical economic moment, entrepreneurs should be being given all the help they require to build our economic future and create the jobs we desperately need.

Unfortunately, many fear that the government is not going to see it this way. March saw a significant scaling back in entrepreneurs’ tax relief. Later in the year we saw large-scale rises in capital gains taxes mooted for the coming Budget — whenever that is. Briefings from Whitehall suggest that entrepreneurs are seen as a painless way of getting more money through the door. 

There are few measures that could be more damaging to the national recovery. 

Such an assault on entrepreneurs would extinguish the spark of initiative at exactly the moment when it is most needed. It is notable that two former Tory chancellors have already publicly warned of the dangers of wrecking a recovery by launching a tax raid on businesses. 

The truth is that new jobs will come from startups, from the UK’s small and medium-sized enterprises — as they did after the financial crisis, when the then government boasted about 1,000 jobs being created a day. 

Time after time, studies show that small, high-growth firms are the engine of new job creation and pack the real economic punch. And — critically to the aims of this government — they are also perfectly placed to enable much-needed economic rebalancing, levelling up, and increasing exports and trade. 

It is too easily forgotten that, for a firm to exist, somebody has to take a risk and start it. In a hostile business environment, that simply will not happen.

We should recognise that businesses up and down this country are grappling with the most complex operating environment ever encountered. Yet they still pay their taxes, still throw their resources into adapting so they can keep employing people, still take the risks necessary to grow and thrive. 

It’s obvious — but occasionally needs repeating — that most entrepreneurs do not lay on the teak decks of multi-million pound yachts deciding how to maximise furlough rules for their own capital gain, or up sticks to a low-tax haven overnight. They are normal people, close to their staff, often living modestly, worrying about how to avoid placing even one employee onto the furlough scheme or making a single redundancy. 

Starting a business is one of the hardest, most pressurised things that anyone can do. It is also one of the most rewarding. Entrepreneurs have a passion for business and they want to see their company grow. That’s natural. 

At the same time, they know their place in society and they care. That’s natural too — because businesses are a part of society.

As the chancellor considers the long and arduous job of getting the economy back on its feet, he now has the opportunity to show he is on the side of everyone in this country who wants to create jobs and wealth. 

He can best do this by building a business environment that stirs people with a passion to create a business and see it grow. The startups, the go-getters, the risk-takers. Those with belief in their own talents, and boundless energy. 

Of course, there will be difficult choices, and in times of national emergency, it is fair that those with the broadest shoulders take on a heavier burden. 

But the best way the private sector can help is by being allowed to grow, free from the restrictions of excessive red tape and complex taxation.

With that in mind, it is time to switch our gaze from capital gains hikes to entrepreneurial answers: practical, pragmatic ideas, from enterprise zones to entrepreneurs’ visas. Remember, the next British Jeff Bezos or Jack Ma could be grappling with remote schooling or a virtual university course even as we speak.

I am still an optimist, and believe our best days are in front of us. We can recover, and create jobs, and spur hope — but only if we look at where those jobs are coming from. 

Rishi, on behalf of entrepreneurs across the country: forget capital gains tax hikes, and let’s go about getting the go-getters going.

Read more: Childcare, chores, and stereotypes: Breaking down the barriers to female entrepreneurship

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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