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Keir Starmer’s effort to rally global support for investment in Britain’s cutting-edge pharmaceutical and technology industries is admirable.
Eli Lilly’s proposed return to Britain with the launch of Europe’s first Lilly Gateway Labs, promising to offer services to combat obesity, is hard to fault.
It should not be forgotten that the last time Labor was in power in 1997, Lilly closed vital facilities in Basingstoke, citing frustration at over-regulation.
Buzzkill: Prime Minister Kier Starmer and Chancellor Rachel Reeves, with their political hats on, tarnish business and consumer confidence
This time, he is no doubt looking for a path to the NHS and the opportunity to market his Ozempic double.
As is the case with several Investment Summit announcements, when you dig deeper, it’s not clear that such deals wouldn’t have happened anyway.
Renaming the National Infrastructure Bank’s Leeds headquarters as the National Wealth Fund is not going to quicken the pulse.
As desirable as the summit is, the timing is not right. Starmer and Chancellor Rachel Reeves, with their political hats on, cast a shadow over business and consumer confidence, and it is hard to believe that the Budget on 30 October will clear things up.
Indeed, Business Secretary Jonathan Reynolds appeared to give the game away at the weekend when he refused to rule out a tax on employer contributions to pension funds.
One of Labour’s think tanks, the Resolution Foundation, estimates the measure would raise £12bn. But would the manifesto promise not to tax “workers” be fulfilled?
Labor should have learned the lessons of the past. Gordon Brown took aim at private sector pensions in 1997, when he ended tax breaks for dividends paid by corporations to gold-plated pension funds.
It sowed the seeds for the destruction of the entire system and a withdrawal from investment in London-based stocks.
The Pensions and Life Savings Association, which represents £1.3 trillion of assets under management in the UK, is calling for tax credits on dividend payments to be reinstated. He also wants to end stamp duty to help reverse the trend away from UK stocks.
There is no tax that does not harm someone. Even before a surcharge on national insurance pension contributions was suggested, there were concerns that in many cases the defined benefit or money purchase schemes, which now dominate the private sector, were likely to be too stingy for provide a comfortable retirement.
Only in the public sector, where pensions are largely unfunded, have employer contributions equaled those before 1997.
Most likely, companies will not voluntarily accept the new tax and will instead seek to reduce employee benefits or simply stop hiring. Such measures would be counterproductive to an investment revolution.
black techno
Sarah Cardell may not be at the helm of big tech companies. The chief executive of the Competition and Markets Authority (CMA) has shown admirable strength when it comes to policing the ‘Magnificent Seven’ deals.
The CMA helped prevent Nvidia’s acquisition of Cambridge-based Arm Holdings in 2022. More recently, Cardell angered Microsoft president Brad Smith and Activision Blizzard when he placed major roadblocks around the giant’s acquisition of the games.
He recognized early on that Silicon Valley giants use their financial power and technological superiority to take over their rivals – when opportunities arise – and try to dominate upstart technologies like gaming.
US regulators are now catching up, with the Justice Department seeking to put an end to the unbridled power of Google, which has rigged search in its favor by paying extraordinary fees to potential competitors.
Starmer’s war on bureaucracy can help big infrastructure projects such as HS2 go ahead with less friction.
But he is wrong to target the competition regulator, which is all that stands between free and open markets and the unlimited power of Silicon Valley. The UK should not allow itself to become soft.
Singapore Honda
Frasers Group founder Mike Ashley has almost certainly done British luxury leather goods maker Mulberry a favour.
By pushing his £111m bid for full control, fearing a Debenhams-style debacle, he has reinforced the resolve of Singapore-based Ong Beng Seng, the majority shareholder through his Challice vehicle, to remain involved despite the losses. That’s a smart elevation.
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