UK Entrepreneurs

Lord Leong Excerpts

Wednesday 4th December 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare my interests as set out in the register.

[Lord Leong (Lab)]

My Lords, the Government continue to provide support for entrepreneurs, including through start-up loans via the British Business Bank and programmes such as growth hubs across England and the Help to Grow: Management course across the UK. The Government will also publish a small business strategy next year, which will outline our vision for boosting scale-ups and helping all types of small businesses to thrive and grow, empowering entrepreneurs to innovate, export and create jobs across their regions.

[Lord Londesborough (CB)]

I thank the Minister for his response and I am delighted to see a fellow entrepreneur on the Front Bench—unlike in the other place. Fundraising for start-ups, in the quarter to September, dropped by almost 50% to a six-year low. Both start-ups and scale-ups have been hit by the toxic trio of measures: hikes in capital gains tax, hikes in employers’ national insurance, and hikes in the minimum wage running at three times the rate of inflation. First, on behalf of entrepreneurs, I ask: when will we see meaningful measures to encourage, rather than punish, job creation and risk-taking? Secondly, whatever happened to the Chancellor’s pledge to run

“the most pro-growth Treasury in our country’s history”?

[Lord Leong (Lab)]

I thank the noble Lord for his kind words. We have something in common in that we both founded our respective publishing companies in the 1980s, in the tail-end of the recession and through very challenging economic times. The difference is that he went on to build a huge business empire, compared with mine.

There were definitely fewer funding rounds for start- ups in the last quarter. The age of FOMO—the fear of missing out—on investment, which caused a spike in the last couple of years, has to a certain extent come and gone. However, angel investment, such as EIS with tax rebates of 30% to 50%, remains robust and I am pleased that the Chancellor has now given certainty that this will stay in place until 2035.

The Government’s new modern industrial strategy—

[Noble Lords]

Oh!

[Lord Leong (Lab)]

Well, the noble Lord asked a pretty long question so I am trying to respond to him. The Government’s new modern industrial strategy— Invest 2035—for high-growth areas such as advanced manufacturing, AI, creative industries, life sciences and others, will drive our growth mission. The Government will publish a small business strategy next year, which will include further measures to encourage greater entrepreneurship and provide a strong business environment.

[Lord Clarke of Nottingham (Con)]

Does the Minister agree that the best way to attract investment to this country is for the Government to demonstrate some economic competence and fiscal discipline? Will he therefore agree that the Government should stop promising that in no circumstances will they ever raise the basic taxes of this country, which provide most of our revenue, and will stop piling on additional debt, which it is their duty to begin to get under control? If we continue to simply freeze our tax revenues and pile on more debt, very few people will find this a very attractive country to come to.

[Lord Leong (Lab)]

My Lords, most of the 95% of UK businesses, which employ something like 16 million people, will not be affected by any of the tax rises. I do not wish to remind noble Lords of the black hole we inherited, but we had to make difficult decisions to restore economic stability and fund our public services. We are doing the hard job early and fixing the foundations in one. After all the chopping, changing and chaos of the last few years, we now have a stable, pro-business, pro-worker Labour Government, offering certainty, consistency and confidence. That is what investors, businesses and entrepreneurs want.

[Lord Sahota (Lab)]

My Lords, in spite of Black Friday and the run-up to Christmas, many small high street businesses report low footfall and a concern about their continued viability. Many of those businesses will be looking forward to the Government’s business rate reform. Could the Minister outline what other steps will be taken to support Britain’s high streets and to safeguard their place at the heart of our communities?

[Lord Leong (Lab)]

My Lords, high streets are the beating heart of our communities, but for far too long, too many of them have been neglected and more and more empty lots are boarded up. We are giving local councils the tools to take back control, putting local communities first, re-energising town centres and driving local communities and opportunities. New measures were announced in the Budget to freeze the small business multiplier for most properties; to lower business rates for leisure, retail and hospitality; and to provide access to finance, committing some £250 million in 2025-26 for small business loans. Now shutters on our great British high streets will be lifted, delivering real action across the board.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, when the Minister answered the noble Lord’s original Question, some of it got missed—happily, that was what I was planning to ask. Most entrepreneurs start as small or medium businesses before they become big, powerful businesses. It is very clear that the rise in NIC has hit those businesses disproportionately. As a result, there is less money for them to invest for growth and innovation. When the Treasury was considering that rise, it must have traded off future growth for short-term tax revenue. Was that the view of the Treasury at the time and why was it the view of the Treasury at the time?

[Lord Leong (Lab)]

My Lords, as much as I would love to indulge the noble Lord with an answer, I had best leave all Treasury questions to my Treasury colleagues. As I said earlier, most small businesses will not be affected by the employers’ national insurance rise. At the end of the day, we need confidence and to attract investment to this country, and to allow small businesses to have access to funds. I mentioned the tax reliefs earlier. The EIS, SEIS and VCT are tax reliefs where investors can gain 30% to 50% tax relief immediately and pay no capital gains tax. Those are the tax reliefs that businesses want; and to scale up, there is access to funding from the alternative market and from crowd- sourcing funds, such as Republic Europe and Crowdcube.

[Lord Brownlow of Shurlock Row (Con)]

My Lords, I declare an interest in having started several businesses, the first of which went on to pay £2 billion in tax. I have learned a bit about starting businesses. I would have liked to hear something from the Minister that did not include the phrases “fixing the foundations” or “the £22 billion black hole”. Given all that he has said, why has market and business confidence collapsed since 4 July?

[Lord Leong (Lab)]

My Lords, I thank the noble Lord for his question. The Government are committed to attracting investment. That was illustrated in our recent International Investment Summit, where £65 billion was pledged in this country, showing confidence in the Government. I remind noble Lords that in the past few years, FTSE 100 companies have been sitting on a gross cash pile of close to £160 billion, with pre-tax profits ranging from £500,000 to around £2 billion. Shareholders’ dividends have been rising three times faster than wages. We should pay staff well and pay suppliers on time. If more money is spent, companies will make bigger profits—it is a win-win situation.

[Baroness Neville-Rolfe (Con)]

I have listened to the Minister. Does he acknowledge that the measures announced in the Budget, such as the increase in capital gains tax, make the UK look like a less attractive place for entrepreneurship?

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, I am afraid that I do not agree. Are we saying that entrepreneurs, before starting a business, will ask themselves, “Am I not going to invest and start a business because national insurance has gone up?” No, they will not. They know that this country is still the best place to start a business. This country is the start-up capital of Europe and attracts the best people to start their businesses here—and it is best place to start them now.