Labour’s punitive tax raid will devastate family businesses

Secretary of State for Business Jonathan Reynolds has criticised Amazon
Secretary of State for Business Jonathan Reynolds has criticised Amazon - Andy Rain /Shutterstock

At the Budget, the Chancellor cut the relief entrepreneurs can claim when passing their company on to their children, meaning that those inheriting firms face a 40 per cent tax bill on half of everything above £1 million.

This punishing change would bring a small chain of family butchers, bakers or barbers into the bounds of the death tax for the first time ever. Many will not be able to afford an unexpected tax bill running into hundreds of thousands of pounds.

This punishing change will syphon money away from wages, investment and the profits which fuel growth in the UK. There has already been an outcry from industry warning of job losses and shuttered businesses as a result.

Industry leaders have warned the tax raid will hit 140,000 family businesses, with some going as far as to accuse Rachel Reeves of “economic illiteracy” over the change. We should have known Labour’s prawn cocktail offensive was only the first step in their war on business.

Small and medium sized businesses, who employ around 16 million people in the UK, are key to driving the growth to which this Government professes to aspire. They are the backbone of the economy. It is in Labour’s, and the country’s, interests to support them. So why are they dogmatically pursuing policies which seem laser-focused on doing the exact opposite of fostering prosperity?

Anyone who has any grasp of how business works would realise this politically motivated change will render British businesses uncompetitive with foreign ones, and provide a good incentive to wind down. But Labour Ministers do not seem to know or care about the knock-on effects of their policies.

Instead, they arrogantly take to telling businesses what is good for them, despite having no knowledge of how they work. Just take the example of the business secretary telling the world’s most valuable and productive business, Amazon, how he (a man who’s only experience outside politics is three years as a solicitor) knows more about workplace productivity.

Cabinet Ministers have zero business experience and it shows. They remain unflinching in the face of reports showing billions of damage to the economy. Even their own analysis for the Budget which shows their changes will lower growth and cost businesses £5 billion leaves Labour ministers unmoved. As Churchill said, some “look upon private enterprise as a cow that they can milk”. Never has it been more true of this Labour Government.

In a remarkably short period of time, we have seen the burdens on business balloon. On top of this Left-wing change, Labour’s “Employment Rights Bill”, will hand over power to the unions and give employees day one rights.

Much like this change, Ministers have not realised that this will stifle wage growth, limit productivity and deter investment. In an ideological crusade against employers, it is employees and consumers who will pay the price.

Family enterprise is at the heart of what has made Britain a great country. A successful family businessman knows that you can get on through hard work, opportunity and talent. The more Labour exclusively meet with unions to decide these punishing new policies, the more they will validate the claim that they are against these values, central to the idea of Britishness.

In my new role as shadow business secretary, a big part of my task will be to remind people that it is the Conservatives who are the natural home of private enterprise. We are on the side of giving a helping hand to hard working people, while Labour want to tax them into oblivion.

Whilst that perception seems to have been lost during the General Election, everyone can now see the deep blue water between Kemi and Keir in how they approach business. This is just one example helping to remind people why Labour always leave office with the economy in a worse state than when they found it. It is now my job to make the case for the alternative.


Andrew Griffith MP is the Shadow Secretary of State for Business and Trade