Back in the 1980/90s I spent a lot of time campaigning to the then Conservative Govt of Thatcher and Major to get the CGT rate reduced for founder/entrepreneurs. The rate was 60% in the 1980s. I received a letter from the Chancellor Kenneth Clarke in 1997 (when the rate was 40%) saying that ‘he was ‘not minded to do anything about it”. No wonder so many people went offshore when they sold their companies. In the run up to the 1997 General Election I well remember the surprise at receiving a call from Gordon Brown’s office asking for my evidence of the damage the rate was causing. I submitted it and, as we know, the Entrepreneur Tax Rate – first at 20% and then at 10% - was introduced in Labour’s first budgets.
Being that all my instincts are towards the Conservatives, this move did somewhat surprise me! Surely the Conservatives were meant to be the party of business and the entrepreneur?
In recent years I’ve been running similar campaigns against the injustice of EIS relief not being available to founders or the Entrepreneur CGT tax treatment not being available to most employees of start-up firms (you have to own >5% to qualify). I’ve also campaigned for ‘good citizenship’ to be a factor in the awarding of public sector contracts – eg entry-level jobs, apprendiceships, taxes paid in the UK, corporate charitable activities etc.
Many readers will know Bill Thomas– who lead EDS in the UK both before and after the HP acquisition. He’s now an NED at Xchanging. Must admit I was not aware that he was a Labour supporter until we had lunch recently and he sent me a copy of An Enterprising Nation – Report of the Small Business Taskforce which Bill chaired. The Report was launched last week.
When I read through the Report, I was pretty surprised to see that many of the policies I had campaigned for were now to be Labour policy; endorsed by Ed Milliband and Chuka Umunna.
Specifically:
- Expansion of EIS-like tax relief and other incentives for institutional funds
- Extending EIS relief to founders and reducing the threshold for Entrepreneurs relief to 1% (or lower) plus various other incentives for (S)EIS investors
- Redeploying apprentice subsidies towards training provided by employers.
- Update Treasury rules to encourage the consideration of wider economic benefit to a community (whether national or local) in the evaluation of tenders
- Promote a strong culture of rapid payment among large businesses and to require primes to pass down these payment terms to subcontractors.
On top of that the Report instances the Prince’s Trust as a model of what can be achieved helping youth unemployment in the areas of vocational work experience and enterprise. This was music to my ears.
There are some 100 recommendations of which the above are a tiny selection. I found it difficult not to support most of them
Perhaps the biggest recommendation of the report is a new system of regional banks to support small business based on the local Sparkassen model in Germany. Other recommendations are aimed at helping smaller firms to boost their exports including through new export hubs in overseas cities and an underwriting scheme to protect small business exporters, and encouraging“a new common sense approach to regulation”. Of course, it is all too easy to ask why they didn't do any of this in their many years in power.
My hope (although I am sure Bill will not agree! ) is that the current Coalition nick many of these ideas so we might get some of them implemented quickly. Indeed, I note that already the Report’s recommendation for stamp duty not to apply to AIM & ISDX share transactions was implemented in last week’s budget.
