Jeremy Clarkson turned up at the Conservative conference in Birmingham earlier this month and said he could see no reason to start a business in Andy Burnham‘s Britain. He is a broadcaster rather than an economist, but the remark travelled because it is a blunter version of what a great many founders now say in private.
Few of them would argue that Britain is a bad place to start a company, because it remains one of the easiest places in the world to begin one. What has changed is the treatment of everything that follows, when a company grows, takes on staff and is eventually sold or handed on.
Business Asset Disposal Relief, which exists to reward someone who spends 20 years building a company and then sells it, was charged at 10% until April 2025 and now stands at 18%. Capital Gains Tax has risen, and Business Property Relief has been capped. Each was defensible on its own and announced on its own, and together they send a message nobody intended but everybody has heard.
The message is that Britain is pleased to have you start something here and rather less sure about you succeeding. That is how a country becomes world-class at incubating companies and poor at keeping them.
It falls hardest on the firms the chancellor most needs, because the founder in Makerfield with 30 staff, a lease and nobody whose job is tax cannot restructure around a change in the rules. Having spent my working life in a large company, latterly managing regulatory compliance, I know that big firms answer new obligations by hiring someone to handle them, while everybody else pays out of growth they hoped to reinvest.
The effect shows even in the least footloose part of the economy, where Make UK and the accountancy firm Bishop Fleming found last month that more than a fifth of family-owned manufacturers are weighing a sale to an overseas buyer rather than a handover to the next generation. These are not people with one foot in Dubai; they own factories and employ people in towns that need them.
Sitting on top of all this is the uncertainty that now precedes every budget. The chancellor went to Liverpool and promised fiscal discipline, as is his duty, but he announced nothing on tax and said he would not fuel speculation. The intention was to steady nerves, though a vacuum fills with rumour, and firms end up planning around the worst version of what they have read.
The loudest of those rumours concerns a wealth tax, which Labour‘s conference voted for again this autumn, and which the prime minister declined to rule out when he was asked.
For most of the people it would catch, this is not money sitting in an account. A founder’s wealth is shares in a private company, and those cannot be sold in slices. An annual charge on a holding like that is paid by selling the business, borrowing against it, or leaving, and none of those is what the government says it wants.
What would help costs the Treasury nothing, as Barclays found this month in reporting that four in five businesses would invest more if the budget gave them long-term certainty about economic policy. Certainty is the cheapest thing in the chancellor’s gift and the one he has so far withheld.
What the budget must show on 28 October is a change of direction rather than another set of offsetting gestures, because business will read the whole of it, not only the concessions. The British Chambers of Commerce has put it more bluntly, warning that piling further taxes on firms would be a road to ruin.
I am proud to be one of more than 160 founders, business leaders and parliamentarians who have signed Helm’s Stop the Creep letter, the shadow chancellor among them. It asks for an end to the steady accumulation of costs on the act of building something, not for favourable treatment.
I represent hundreds of firms built by people who started with very little, many now in the hands of a second generation deciding whether the family business has a future here.
The chancellor has said that the only long-term answer to the cost of business is growth, and he is right. Growth is made by people willing to build something here, and we are giving too many of them reasons to build it somewhere else.
