Why Rishi shouldn’t be the next PM

There are two minority groups which are fair game for journalists – those on benefits and those who are rich. Rishi Sunak is in the latter group, married to Akshata Murthy the daughter of Narayana Murthy, an Indian billionaire. She has a 0.93% interest in her father’s Indian IT services company Infosys.

Akshata came to live in the UK in 2015, and she has non-dom tax status, which means that her father’s home country is not the UK and Akshata has not chosen for the UK to be her permanent home. 

Allegedly Akshata received £11.6million in dividends last year, on which she paid no tax in the UK since she can legally avoid tax on her foreign income for 15 years from when she first came to the UK, so until 2030.

The caretaker of the block in which I live, Diego, is typical of many. He said, ‘Sunak paid £13,000 last year to heat his pool when most people have not got enough money to warm their homes this winter’. As Chancellor of the Exchequer, he has a difficult role to play. He cannot be seen to favour the rich by cutting taxes but is probably out of touch with what higher taxes actually mean for most people. His tax hikes together with the increase in the cost of living will mean that a further 1.3 million will be below the poverty line before the end of the year….

By his actions as Chancellor Sunak has raised taxes to the highest level since the 1940s at a time when the country is feeling the biggest squeeze in living standards. By being rich Sunak, is in an impossible position. If he lowers taxes he is vilified for helping his own – the rich, but if he raises taxes journalists say he is out of touch with the average man in the street.

Lowering taxes and getting back to traditional Conservative values seems to be the most popular theme of the new contenders. Take Jeremy Hunt who says that he wants to see ‘smart tax cuts that will grow the economy’. He says that the increase in corporation tax will mean that people won’t set up businesses. I am not sure I totally agree with him, those who want to set up businesses will still do so, - but not in the UK.

As we heard from David Nield on our Caroline’s Club meeting last week the pool of employees has fallen significantly since Brexit, because we can no longer tap into the Eastern European job market and people with international businesses are increasingly setting up sister hubs in either Holland, or Dublin in Ireland where the corporation tax is 12.5%.

Jeremy says that when he left university, he ‘set up in business because Nigel Lawson and Margaret Thatcher created a pro-enterprise environment. I want people to do that, but they won’t if we increase corporation tax to one of the highest tax rates, not just more than Japan and America but also more than France and Germany. These people won’t want to set up businesses’ at least not in the UK, which is outside of Europe, but still has many of the restrictions which were imposed while we were in it

Hunt is for a low-personal tax economy as well. ‘When you cut people’s personal taxes, what I passionately believe we must, it must be forever and that means it must be sustainable based on growth in the economy’

Of course, Hunt is not alone in spotting the opportunity of returning to the roots of the conservative dogma of low taxation, low regulation, and a low spending economy.

Tom Tugendhat has also come out in favour of tax cuts. He says what is needed is a ‘clean start’. ‘What is needed is a clean start for the UK, including for it to pave the way for a low tax economy. With a clean start you get the ability to look again at the economy and set out a 10-year economic plan that delivers a fairer economy’

These are nice sounding words, but does Tugendhat have the necessary experience and knowledge to deliver? Hunt on the other hand has been in business and is the longest serving applicant in cabinet.Liz Truss has now also come out with a low taxation mandate.

What I would like to see whoever comes into power is not necessarily a ‘clean start’ but a change in direction with some fresh ideas of how to motivate enterprise with reliefs and taxes which indicate incentive and fairness. For example: Murthy should not be encouraged to leave her millions in Switzerland or India but to bring her millions in dividends to be managed and invested in the UK.

The Investor visa which Priti Patel whooshed aside to stop Russians coming to the UK, also needs to be reinstated – because not only Russians come to the UK –  wealthy Ukrainians would also like to come to live and invest in the UK.

Whoever takes over from Boris needs to recognise that post Brexit we now have a trade disadvantage with our closest market, and we are no longer the powerhouse we once were, so we need to think of new incentives to include deregulation to make our country more attractive in which to do business and to come here to work.

Sir Kier Starmer – has got the right idea – ‘Make Brexit Work’ but I cannot see many new ideas just old rhetoric – but it’s early days.

In the meantime, you can join Caroline’s Club to meet people like you who have clients who are wealthy but not just from your own discipline but across the disciplines where as Filippo Noseda, partner of Mishcon de Reya said – a ‘club where our clients matter’

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