Who Would be the Best Prime Minister for Startups?

August, 2022

The race to be PM has at times seemed like a cross between Love Island and Neighbours albeit without the added glamour of an appearance by Kylie. Nevertheless, we are down to two candidates, each with their own vision of what their premiership would bring. But which would be the best for start-ups? Find out what our founder, Michael Buckworth [MB] thinks.

Liz Truss

Liz Truss has been open about her desire to cut taxes “from day one”, even if that means increasing government borrowing. She has also promised to:

  • Reform business rates and introduce low tax and regulation investment zones.
  • Cut red tape, drive regulatory divergence from the EU and review all EU laws to consider whether they should remain on the statute books.
  • Tackle labour shortages – particularly in the farming sector – by introducing a short term expansion to the seasonal worker visa scheme.

She has long been an advocate for women entrepreneurs and is also the founder
of the Free Enterprise Group of Conservative MPs which has the aim of advocating for less employment laws and a more entrepreneurial economy.

[MB] “Tax cuts would be welcome to SMEs, but unfunded tax cuts backed up by increased borrowing should be of concern to businesses. So long as Liz Truss can reduce the tax burden in a sustainable manner without resorting to increased borrowing, her position on taxation is good news for start-ups. Whilst cutting red tape is always welcome, any material divergence from EU rules could well lead to a loss of equivalency with the EU. This will potentially impose greater regulatory burdens on UK businesses who trade with Europe. It’s positive that Liz Truss acknowledges that the current approach to immigration isn’t working in the farming sector, but concerning that she seems unaware of broader issues in the wider economy. Boris Johnson’s oft-trumpeted success of reducing rates of unemployment masks a lack of available talent across a range of sectors holding back the British economy. Truss needs to acknowledge that and propose a solution”.

Rishi Sunak

Rishi Sunak gave away a lot of money during the pandemic in pursuance of the furlough scheme, Eat Out to Help Out, business rates grants and reliefs, the Future Fund and the various COVID loan schemes, but has since increased the tax burden to one of the highest since the Second World War. He is sticking to his plans to increase corporation tax to 25% and to leave in place the increase in National Insurance Contributions, but has now promised to reduce the rate of corporation tax to 16% in 7 years time. He has also:

  • Promised to scrap or reform “all of the EU law, red tape and bureaucracy that is still on our statute book and slowing economic growth”.
  • Proposed the introduction of a new visa system to allow talented entrepreneurs to live and work in the UK.
  • Proposed scrapping EU Solvency II rules which require pension funds and insurers to set aside capital to prove they can withstand a major shock to enable them to invest more in start-ups and infrastructure.
  • Pledged to cut the number of boarded up shops by 2025 by making it easier for local authorities to take control of empty commercial properties so they can be repurposed.


[MB]
“It’s a tough sell to argue that raising taxation is the only way to resolve the cost of living crisis, but Rishi is broadly sticking to his guns. The promise of a corporation tax cut in 7 years time can be dismissed. A week is a long time in politics and, at the rate the Conservatives get through prime ministers, 7 years is several premiers into the future. The 25% corporation tax rate will be extremely hard for SMEs and will have a dramatic cooling effect on the economy. Rishi Sunak’s policies on cutting red tape give rise to the same potential problems as with Liz Truss. His proposal to help local authorities repurpose empty commercial premises will do little to revitalise high streets. Mr Sunak’s championing of a new visa system for entrepreneurs is welcome, but he too seems not to acknowledge the fact that a lack of qualified staff is an issue across a whole range of sectors”.

The verdict

[MB] “The candidates are pretty similar when you look at most of their policies. Where they differ is their approach to taxation. Significant tax rises are simply untenable at the moment and Sunak is on the wrong side of the argument. Promises of tax cuts in 7 years don’t help people today and Sunak seems really out of touch with the cost of living crisis. Truss hasn’t been able to persuade me yet that her promises of immediate tax cuts are funded, or that tax cuts won’t add to already sky-high inflation. But I do believe that tax cuts are needed and should lead to growth and in that I think her instincts are right. Moreover, Truss seems to believe in a small state and trusting business to take the right decisions to grow the economy – core principles of the Conservative Party. In contrast, Sunak has presided over a massive increase in the size of the state and is planning dramatic tax rises rather than seeking to reduce the size of the state as things return to normal. I believe that Truss is the best option for start-ups and my vote will go to her.”

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