Labour’s 50% Gamble

Labour

Depending on your politics and point of view a 50% tax rate for those earning more than £150,000 per year may seem fair.

However, there is absolutely no economic sense in taxing the highest earners at this level as it leads to a fall rather than an increase in the tax take for the exchequer.

How can this be so? Well, at 45p in the pound a successful business owner or entrepreneur may wince a little, but psychologically they will live with it.

Once you tell someone you want half of their income, it is of little surprise that they start to aggressively investigate the many loopholes that exist to stop HMRC getting their mitts on their hard earned cash.

The other problem with the 50p rate though is that is does cap aspiration and ambition; it signals a culture of envy rather than enterprise; and most worryingly it prevents business owners from investing in growing their companies. What is the point of adding £500K to your bottom line if the return you get is likely to be less than 10% of that? It is a risk that is not worth taking.

That is why I think that Ed Balls announcement that a Labour government would re-introduce the 50p rate is wrong, and more ‘gesture politics’ than economically savvy.

Labour believes that the majority of us who can only dream of a salary of 150K support the measure and will vote accordingly.

I think it will enable the Tories to paint Labour as anti ambition, anti business and as the party of taxation. It was a road tried and tested by Neil Kinnock and John Smith in 1992, much to John Major’s delight.

It didn’t work for Labour then, and although scandals with banks and our big financial institutions means we are in a different place today, I doubt if it will work in eighteen months time when the country goes to the polls again.

Nonetheless, the battle lines have been drawn and it will be interesting to see if Cameron and Osborne take a gamble of their own by announcing a further cut in top rate tax to 40p; and how shadow business secretary Chuka Umunna convinces business leaders that Labour support his ‘British Dream’.

The British Dream

British Dream

I attended an event this week where Labour’s Shadow Business Minister Chuka Umunna talked about ‘the British Dream’.

He was describing how his view of entrepreneurs was of those people who wanted to work hard, get on and be their own boss. The British Dream exists but, in his opinion, unlike Americans, we are too reserved to talk about it too much.

True though this undoubtedly is, there are other differences between the UK and the States that we need to learn from if we are to create the enterprise culture or the ‘new generation’ of entrepreneurs that Chuka and other leading politicians from all party’s talk of.

Business failure is almost a necessity for someone who wants to go on to achieve success and is accepted as part of the entrepreneurial journey in America and is obviously an approach that we need to adopt and embrace.

The work that they have done in the States to encourage and support women to set up their own businesses is effective and innovative.

And the other big thing that America does so much better than us is celebrate success. And when they find a hero, the Yanks admire them; do what they can to support them; promote them; and on occasion ignore, or at least forgive, any behaviour that is not in keeping with their iconic status. Can you imagine a British Prime Minister enjoying the rehabilitation that Bill Clinton has enjoyed post Monica Lewinski for example?

There is much for us to learn from the American culture if the ‘British Dream’ is to translate into reality for more than the relatively few individuals in the North of England, who see starting a business, making a difference, making money and becoming an entrepreneur as a genuine route for them.

What would Scottish Independence mean for the North?

Scot Independence

2014 could see Scotland separate from the rest of the UK. The Independence referendum takes place in September, and having been way behind in early polling, the Scottish Nationalists appear to have gained some momentum in recent months with an effective charm offensive from its leader Alex Salmond, combined with a lacklustre approach from the ‘NO’ campaign which is being led by former Labour Chancellor Alistair Darling.

The resurgence of support for Independence reminds us once again of the importance of charisma and personality in modern politics. Salmond has both in abundance, and whilst Darling has a huge intellect he is hardly likely to match Scotland’s First Minister when it comes to rallying the troops.

In the end my gut instinct tells me that, despite Salmond’s best efforts, the Scots are too cautious to take a leap of faith into the unknown, and that the lack of economic clarity offered by the Nationalists, coupled with doubts over what Scotland’s relationship with the EU would be if they were to opt out of the union will see the status quo maintained.

Nonetheless, the discussion and debate in the run up to the autumn poll will be fascinating, and will continue to highlight the fact that, even without total independence, the Scots have enjoyed significant devolved powers through its own parliament for over a decade now. How long will it be before the regions of England begin to demand similar devolution that would enable the charismatic and big personality politicians to take on the Alex Salmond or Boris Johnson role in areas like the North West and Yorkshire?

That the North is still suffocated by London’s financial and political power is irrefutable. It is no good us moaning about London though. We have to take advantage of the fact that one of the most successful global cities is on our doorstep and demand the political tools that will help us do it.

Metro mayors, regional parliaments and county commissioners have all been debated and discussed. Perhaps it’s time for us to turn one or more of these ideas into reality?

2014 is going to be a good ‘un

2014

Unemployment down, inflation down, predictions of growth up and Everton riding high in the Premier League playing a brand of football not seen at Goodison Park sine the halcyon ‘school of science’ days, 2013 has ended up being quite a decent year – but I’ll predict that 2014 will be even better.

The economy has turned the corner, business confidence has returned, and during the next twelve months that confidence will deliver enterprise, jobs and growth for UK Plc and for the North of England.

In the regions where Downtown operates, there is even more reason to be optimistic.

Leeds will host the Tour de France, a tremendous coup for the city region and an event that will elevate Leeds’ international standing and generate significant interest in Yorkshire. With the new Trinity shopping mall now open, and a 13,000 seat arena, Leeds will be looking to build its visitor economy, whilst maintaining its position as a leader in the professional and advanced manufacturing sectors.

Lancashire has been working hard to put in place a business support package that is private sector friendly and can deliver for ambitious companies in the county. Its BOOST initiative is the most comprehensive project of its kind that I have seen, and Lancashire County Council and the Local Enterprise Partnership deserve huge credit for genuinely listening to business and establishing a programme that will really work for Lancashire firms.

Manchester continues to deliver major regeneration and infrastructure schemes, and its plans for Airport City will take the city to another level again. Greater Manchester continues to demonstrate the importance of good civic leadership, private-public sector partnership that work, and the ability to avoid complacency and continue to drive forward with visionary strategies that build on past successes. I expect Manchester to lead the pro HS2 campaign and lobby for the acceleration rather than cancellation of a project that will benefit the North, but arguably Manchester in particular.

Liverpool will host the biggest international business event the UK has seen since 1951. Max Steinberg and his team at Liverpool Vision are organising a six week jamboree of activities that will take place in June and July of next year, with Downtown holding a significant series of high profile events during the International Festival of Business’ ‘Cities & Enterprise’ week. Over 140 countries are already signed up to IFB, and some top speakers have been booked. Again as a showcase for what the Liverpool city region has to offer, it couldn’t get much better.

As for Downtown, well 2014 see’s us mark our tenth anniversary. As you can imagine we have a whole host of special events, parties and celebrations in store for you, so watch this space.

Have a fantastic Christmas – and look forward to an absolutely fabulous New Year.

We should all be concerned about decline of regional newspapers

The Liverpool Post

This week it was announced that a Liverpool institution, The Post, would be ceasing publication. The newspaper, which switched from a daily to a weekly in 2012, has been running for more than 158 years, and has been particularly good at business coverage, in depth reporting of some of the bigger issues that have affected the Liverpool city region and local sport, namely Everton and Liverpool.

In recent times, as with all regional papers, its quality has declined along with its circulation figures, but nonetheless it is a significant news platform that will be missed.

Its closure, though sad, was not entirely unexpected, and the city will still be served with a regional newspaper via the Echo, though this is more tabloid in its approach to reporting.

However, the Echo too has seen a significant drop in its circulation figures in recent years, and it seems that even giants like Trinity Mirror, who own a healthy chunk of the regional newspaper market, are struggling to find a way of overcoming the challenge of the World Wide Web.

Digital editions have been launched and scrapped, news teams have been cut back and dumbed down, increased amount of content is ‘scraped’ from other rival news agencies. The days of investigative reporting, considered and constructive analysis and local exclusives are, at best, hanging by a thread.

Readers of the Lancashire Evening Post, the Yorkshire Post and the MEN will be conscious of the decline in the quality of what they are reading in general news terms. As far as business news is concerned, it is pretty woeful.

Those journalists assigned to ‘do’ business often have several other roles within the paper and are increasingly reliant of PR agencies to fill their daily e bulletins or their weekly business supplements. Otherwise, it is those with the big advertising budgets that tend to enjoy lots of column inches.

Does this matter? I think it does. For a lobbying organisation like Downtown, we were highly reliant on the Post to shake things up in Liverpool when we launched nine years ago. The shambles of the management in the run up to Capital of Culture year, poor planning policy and too many QUANGOS were all issues that we were able to have debated and discussed through the pages of our local newspaper.

We have grown enough to be able to use other tools to raise such issues now, but are they as effective as print media to hit the wider community?

And in terms of the broader agenda, who will be holding to account our big Corporates regionally; speaking up for our towns and cities; highlighting the good and the bad; scrutinising what our local politicians and officials are up to? Is this an agenda that will interest the London centric press?

I think regional papers are caught in a vicious circle. To maintain economic viability in the short term, they cut overheads. In doing so they make their proposition less unique and less attractive. This leads to a fall in circulation. This leads to the next round of cost cutting. And so it goes on.

I believe there is a market for quality regional publications that have an agenda for good solid reporting, sticking up for their local area and providing good business coverage. There are few if any of the existing stable of regional newspapers that do this nowadays, and as a result I expect that the Post will not be the last one to be announcing closure.