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Labour claims it wants Britain to be the best place in the world to run a business, but its actions hardly match the ambition, writes Susannah Streeter in today’s Notebook
Does Labour actually want entrepreneurs?
The Budget is behind us but the arguments about how Britain treats its entrepreneurs are far from over. The government claims it wants Britain to be the best place in the world to start, grow and run a business, but its actions hardly match the ambition.
There were some positives – there was no general increase in capital gains tax, no new exit tax for entrepreneurs, and there was a commitment to increase investment in women-led businesses. The proposed Founders’ Relief is welcome in principle, as it offers a 10 per cent capital gains tax rate on up to £10m of qualifying lifetime gains.
But the strings attached risk making the incentives difficult to unravel. Meanwhile, the lifetime limit for Business Asset Disposal Relief is being halved, leaving business owners who want to sell up and don’t qualify for the new scheme facing a bigger tax bill.
Unfortunately, there seems to be an increasingly narrow view of what counts as an entrepreneur. We need to back all varieties of business, not just the flavour of the month, as the country cannot run solely on the next big tech breakthrough.
One particularly glaring omission was the decision not to reverse the cut in upfront Venture Capital Trust income tax relief from 30 per cent to 20 per cent, introduced in April. If you want people to take more risk, reducing the incentive to do so is a very odd place to start.
Britain faces stiff competition from Europe to attract capital
The extent to which Britain is in competition with other countries to attract capital was drummed home as I chaired the Invest In Germany summit in Berlin with Chancellor Merz, Black Rock CEO Larry Fink and the formidable economy and energy minister Katherina Reiche. Germany’s focus is razor sharp on the potential for industrial AI and it’s abundantly clear we need to make Britain a place where scale-ups can thrive to compete. But there are real concerns that our ecosystem is fragile.
On Wealth Club’s Funders and Founders podcast Stephen Page of SFC Capital told me that entrepreneurs will go where they can raise money and sell their businesses, rather than stay in Britain out of loyalty, if the conditions are more attractive elsewhere. Andrew Wolfson, founder of Pembroke VCT, is concerned that repeated changes to the rules are eroding confidence. The people building businesses and the fund managers backing them are not asking for an endless stream of subsidies. They want stability, access to capital and a government that understands the long road between a bright idea and a successful international business.
Laser-sharp focus on growth
The experience of Lucy Goff, founder of LYMA, is a striking example of why Britain needs to double down on helping companies scale.
Goff has built a pioneering med-tech brand around LYMA’s laser technology and high-grade nutraceutical supplements, but she told me it was a huge struggle to get off the ground. The US now accounts for around 70 per cent of LYMA’s business, partly due to more agile regulation, and Goff believes America is much better at commercialising innovation. That should be a wake-up call. Britain is good at generating ideas, but too often struggles to turn them into businesses that can compete on the global stage. Above all, entrepreneurs and investors need to know that the rules will not be constantly rewritten just as they are making long-term decisions.
AI is beginning to bend the market out of shape
The AI revolution is no longer just sending valuations soaring. It is beginning to warp behaviour across the technology industry, with the sheer cost of computing power creating some unexpected casualties. PCs, long the bread and butter of Intel, are becoming more expensive, with companies holding off on mass upgrades. What investors want to see from the next crop of results is growth beating expectations without capital expenditure running away. Microsoft has shown that it is possible to deliver strong revenues while keeping a lid on investment, but has still announced voluntary buyouts for 60,000 staff as AI reshapes the workforce.
There lies a wider economic risk. If jobs are eroded faster than new ones are created, the spending power of middle America could take a hit. And, with AI-related investment and the wealth effect it is generating estimated to account for nearly half of core US growth, there is a lot riding on the technology delivering on its promises.
Raving George has grown up
After all last week’s Budget analysis, I headed to Ironworks on Thames Wharf, where Belgian superstar techno DJ Charlotte de Witte took over the decks on Sunday. It was quite a sight – a sell-out crowd, huge energy and a dance floor filled with ravers of a certain age, determined to make the most of a day out.
De Witte began her career performing as Raving George, having adopted a male-sounding pseudonym at a time when women in electronic music were still fighting for recognition. She no longer needs to hide behind it. She has become one of the biggest names in techno, commanding mega crowds in her own right.
Whether it’s a pioneering med-tech laser or peak-time techno, the ability to spot an opportunity and turn it into something people really want is what entrepreneurship is all about.’
Susannah Streeter is a financial commentator and the chief investment officer of Wealth Club
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