Rachel Reeves has mounted a charm offensive on small business owners this evening after a furious backlash against rumoured plans to hike capital gains tax and national insurance at the Budget this month.
At a summit of executives and start-up founders in Downing Street, the Chancellor is expected to bang the drum for more investment in Britain’s start-ups and claim entrepreneurs “have a friend in me”.
However, the dinner follows a volley of warning shots from entrepreneurs in recent weeks over reports Treasury officials have been modelling the impact of lifting capital gains tax as high as 39 per cent, in a move that some groups have warned will erode the appeal of the UK to found a business.
In a letter the the Chancellor on Monday, 500 entrepreneurs, including the founders of fintech firms Zopa and Oaknorth, warned the changes “jeopardise the success of our country’s startup ecosystem by enormously weakening the incentive individuals have to build businesses”.
The Chancellor is now reportedly said to be targeting £40bn worth of tax hikes and spending cuts at the budget, the Financial Times reported today.
Both Reeves and Keir Starmer have stoked anger further in recent days by failing to rule out a rise in national insurance payments from companies, despite suggesting they would not change the levy in their election manifesto.
Speaking with business chiefs this evening, Reeves looked to assuage the concerns and told those in attendance that “growth is driven by the private sector, and by entrepreneurs like those in this room tonight”.
“You’ve got a friend in me, and in the Treasury I run,” she said. “We will do all we can to see you succeed; for jobs, for opportunities, and for growth.”
The Treasury said that among the small business chiefs in attendance were Alex Kendall, whose autonomous driving firm Wayve bagged over $1bn dollars earlier this year in the biggest fundraise for any European AI company, and Benjamina Bollag from artificial meat firm, Uncommon. The Treasury did not respond to questions over which small businesses attended the dinner.
Reeves’ comments come amid a push from the government to reset its relationship with business after a shaky few weeks plagued by speculation over its tax plans and a slide in business confidence.
At the International Investment Summit in the City, the government trumpeted some £63bn worth of commitments from international investors, though some deals had been announced weeks before it took place.
Under the plans, the BBB will operate a new ‘British Growth Partnership’ designed to coax more pension money into smaller companies.
“The Chancellor wants to drive up investment and ensure that smaller businesses get the capital they need to scale-up, addressing a funding gap that costs the UK economy hundreds of billions of pounds a year,” the Treasury said in a statement tonight.
