Darling 'has lost City confidence'

The criticism follows controversy over a planned non-domicile tax

Tuesday, 12, Feb 2008 12:00

The City has less confidence in chancellor Alistair Darling than it had in his predecessor Gordon Brown, a former lord mayor has said.

Comments from Sir Michael Savory, now chief executive of business charity Young Enterprise, follow proposals yesterday of the introduction of a non-domicile tax.

The Treasury has launched a consultation on whether or not to charge rich foreign businessmen living in Britain an annual £30,000.

This has sparked angry reactions from those fearing a mass exodus of 'non-doms' as a result. The Conservatives have urged Mr Darling to accept their proposals to avoid a scenario similar to the 1970s 'brain drain'.

Sir Michael believes the announcement is motivated by opportunism from the government.

He told the Today programme: "What we have now seen is a snap decision based on the implications that there is perhaps a lot of money circulating around this country that has not been taxed.

"The reality is that investors who come over here and businessmen who are based here can move anywhere in the world if they want to."

Sir Michael expressed doubts about the chancellor's ability to fully withdraw from non-dom tax plans. He said this was the latest in a series of confidence-damaging issues for the Treasury, including the Northern Rock saga and changes to capital gains tax.

"Confidence is a fickle thing and one remembers that Gordon Brown when he was chancellor had those mottoes of 'prudence' and 'stability'.

"We have clearly been lacking that in the chancellor's approach to taxation in the last six months. That is affecting confidence in the City."

Shadow chancellor George Osborne has warned Mr Darling not to go ahead with the non-dom tax plans. A letter written yesterday concluded: "It is not too late to abandon your ill-thought out and badly conceived plans."