Labour MP warns Budget could force founders out of UK
A Labour backbencher has joined industry leaders and a left-leaning pressure group in warning that the Budget could kill the UK’s aspirations of building a competitor to Silicon Valley and force more firms to look for investment outside of the country.
In an open letter to Rachel Reeves, Sarah Edwards, a Labour MP who sits on the business and trade committee, said fixing the “valley of death”, which sees entrepreneurs hit a point where they struggle to raise sufficient funding to scale-up, should be a key growth priority at the Budget.
The letter, signed and organised by Good Growth Foundation director Praful Nargund, said the government should address the “inadequate” incentives in the UK economy.
It also said there was a “structural failure” with the investment climate in the country.
“This market failure inadvertently contributes to regional inequality, failing to translate local research excellence into good jobs and local prosperity.”
Other signatories to the letter, first reported by The Telegraph, included Joe Jervis, the head of the think tank Labour Renaissance, and SME4Labour leaders..
It adds to calls for the current Enterprise Investment Scheme (EIS) to be binned at the Budget.
“It does not send the powerful market signal necessary to channel capital effectively or to retain and grow UK-based companies,” the letter said.
Labour groups call for founder tax cut
The scheme would be replaced with a new regime costing £650m offering more generous tax breaks and reliefs to companies to incentivise entrepreneurs to keep their businesses in Britain.
“It is our collective conviction that the upcoming Budget must prioritise support for the hard grafters behind these businesses – the engines of aspiration, pride and opportunity in every corner of the country,” signatories added.
“By doing so, the government can deliver on its pledge to be on the side of workers, both the employed and the self-employed. When we grow, the economy grows.”
Reports have suggested that the government is planning to offer tax breaks to start-ups at the Budget in an effort to boost productivity levels and back small businesses.
Keir Starmer’s business adviser Varun Chandra, who hails from a background in venture capital, has lobbied the government to back British entrepreneurs with reforms to boost growth.
The Entrepreneurs Network, a group of founders, have also called on the government to change visa rules for high potential individuals and ease cost burdens for starting a business.
The government is considering changing the Global Talent visa to an invitation-based process based on a scheme in Australia, CityAM has previously reported. Reforms are not expected to come until next year.