Ruth Sunderland: Labour must ditch the anti-rich angle and tax raids that backfire

Euan Blair, the nepo-baby son of former Prime Minister Tony, cannot exactly claim to be the kind of business owner who has come up the hard way.

His net worth is around £350m and his apprenticeship training business, Multiverse, was valued at just over $2bn after a funding round earlier this year, despite making losses since he founded it a decade ago.

The risks of entrepreneurship must have been smoothed by the wealth and connections of his father, who, incidentally, is sporting impressive gym-honed biceps at the age of 73.

Sympathy for him and his fellow multi-millionaires over the taxes imposed by his dad’s successors in the Labour Party may therefore be limited.

Yet Blair junior is correct when he says the UK is very near a tipping point where the tax burden will ‘cripple’ growth.

Labour’s war on the wealthy is driving tycoons to leave the country, including hedge fund manager Chris Rokos, one of the UK’s biggest taxpayers.

Betting mogul Fred Done, who along with his brother is the largest contributor in the land to HMRC coffers, is a genuinely self-made man, having started life in the backstreets of Salford.

He says he is too old to leave Britain but wouldn’t want to start out here now.

Veteran financial services billionaire Peter Hargreaves similarly says he is not leaving but fears others might.

The knee-jerk socialist response to this is ‘good riddance’.

Problem is, those dreadful capitalists do hand over an awful lot to HMRC: a reported £400m in the case of Fred Done and his brother Peter.

Attacks on tycoons are a smokescreen. The problem is not that some people are too rich, it is that the country is spending and borrowing too much.

Labour does not wish to confront this reality so instead casts around for wealth to snatch. The belief is that a socialist government has more right to the nation’s money than the people who actually made it.

Entrepreneurs, who are already being hit by changes to inheritance tax, are now faced with the threat that capital gains tax (CGT) will be hiked in the Budget.

CGT is charged on increases in value on assets such as shares, second properties and business disposals.

There is a whirl of speculation that Chancellor John Healey will raise rates to the level of income tax. This seems to chime with Andy Burnham’s belief that we under-tax wealth and over-tax income.

But to achieve his ambition of growth in every postcode, we need the City, which is being depleted by a swathe of overseas and private equity takeovers, to rediscover its animal spirits.

Labour claims to want to encourage private investors back into stocks and shares.

But the uncertainty over CGT could goad people into selling shares before the Budget, exactly the opposite effect to the one desired.

Turning back to Euan Blair, over the summer he and other tech founders wrote to Burnham warning that changes to CGT will stifle growth and deter start-ups.

Correct again.

The Chancellor should forget raising CGT. Instead, he should scrap Stamp Duty on share deals. He should also encourage the venture capital industry to back more female founders: many of their businesses would flourish with better access to capital.

He should speed up reforms so pension funds invest more in high growth UK companies and give incentives to the million NEETs to start their own businesses.

In other words, ditch the crude anti-rich propaganda and concentrate instead on helping a new generation of wealth creators.

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