Only 22 workdays until Christmas, folks! Not that we needed to wait until then for presents—the last month has been the gift that keeps on giving. We are delighted that we closed the sale of Schoolblazer to HNG, a listed Australian business and Semmco, a specialist Aviation manufacturer to HAKI, a Swedish listed business just before budget day.
Some may see the following headlines as less positive gifts: a Halloween budget, a Trump victory, and so many England close losses to the southern hemisphere rugby titans. That said my thoughts are with my Welsh friends and neighbours following their record consecutive 11th loss. Sorry Tim, but my money is on a 12th tomorrow.
Interesting fact: In March 2010, when Alastair Darling stood at the dispatch box, total government revenue for that year was £541bn. Almost 15 years later, this has spiralled to £1,139bn following Rachel Reeves’ budget. Tax as a percentage of UK GDP has gone from 36.7% to 40.9%, an increase of 4.2%, or £114bn. That is almost exactly the education budget before VAT (£135bn – yes, I know VAT is only applied to private education).
No wonder we all feel (and are) more taxed than at any time in recorded British history! There is a relentless march of the state as we expect it to do evermore for us—indeed, 44% of the population’s income, 30 million people, is determined by the government; I expect this is not what Nye Bevan anticipated. Given where we have got to, it is little surprise that many Labour and Conservatives leaders have not come from business backgrounds but from State institutions, which I believe is at the root of the UK’s leadership problem. Those in power simply do not understand what drives the private sector.
I am sure Rachel Reeves is a brilliantly clever economist, but her budget shows she and her advisers do not appear to understand what makes the majority of business owners tick—confidence. We need to feel confident that when we make decisions, the system won’t change against us. We need to feel confident that if we make some profit, we can invest it in people, IT, and equipment and reap the rewards for taking the risk. We expend energy and background brain power living our businesses and planning how to improve, flex, survive, and thrive. Likewise, farmers get up at the crack of dawn, with their kids involved—no minimum wage, no working hours regulation—it is a way of life. Taxing owners and farmers when they die will mean lower confidence and lower investment.
The good news was that CGT was not raised to punitive levels, so hopefully, the Treasury has proved that to maximise the tax take, we need to be allowed to be rewarded for risk and time.
One of the big success stories of the last 25 years has been the development of the UK’s software and technology sectors. There is barely a business that has not embraced and benefited from this change. Polestar has seen this shift in the nature of our work and is now almost wholly focused on the knowledge economy. For all of us to develop further, we will doubtlessly be looking at how to leverage AI, software integration, and improved customer communication and acquisition. Even farmers are embracing this counterweight to government intervention.
