Baroness Maclean of Redditch (Con)

My Lords, the Government have told us repeatedly that their number one priority is growth, and I am sure that every single one of us in this House would wholeheartedly back that aim. But I am afraid that there is a startling gap between those words and a real understanding of the people who create that growth. As we know on this side of the House, wealth is not created in Whitehall or No. 10 North; it is created when somebody takes a risk, when an entrepreneur decides to start a business, to put their own or their family’s capital at risk, to take on another member of staff, to buy a new plant or equipment or to make a new investment—or when an international investor chooses Britain rather than somewhere else. Increasingly, those people are looking around the world and making choices about where to invest. That matters because our public finances are extraordinarily dependent on a relatively small number of taxpayers. In our country, the top 1% of income tax payers contribute around 28% of all income tax. This is not the usual scare story about millionaires leaving Britain; I am not talking about that. I am talking about the fact that, when a wealthy person leaves Britain, we potentially lose a disproportionately large taxpayer, as well as an investor, employer or entrepreneur. The Office for Budget Responsibility itself has warned about this. It has warned of our increasing reliance upon this small and very mobile group of taxpayers. It has flagged it as a fiscal risk for the Government. The company BDO found that two-thirds of ultra-high-net-worth individuals surveyed had considered leaving the UK for tax reasons during the previous year. I know that many of us have seen that in our own personal lives. We all have friends and acquaintances and know young people who are thinking in that way, unfortunately. To me, the most interesting finding was not just that those people said their priority was having lower tax, but that they prioritised certainty and stable government. That really should tell the Government something. Part of the problem, unfortunately, is the lack of business experience. Private sector and entrepreneurial experience are at the heart of government. If your experience is just of politics and the private sector or NGOs, it is so easy to think about business as a cash cow that can be milked, as though it will not change its behaviour and will continue filling the Treasury’s coffers. Anyone who has run a business knows that there comes a point when the numbers do not add up, the investment is not made, the extra person is not employed. You do not get 40% of a greater pot; you just get a smaller pot, and the business goes bust and ceases to exist. We all agree that successful people should pay more tax, and they are. But there is a fundamental difference between taxing wealth once it has been created and creating the conditions for successful businesses to start in the first place, whereby people actually want to create that wealth. Capital is mobile; talented people do have choices. Every founder who chooses an overseas country is going to bring wealth and growth to that country, not ours. That is where we are losing out in revenues to our public sector. There are only two ways of improving our public finances: we can keep asking those people to pay more, or we can make the economy bigger. There is nothing bad about wealth creation; we should be encouraging it. It is the only way we get better hospitals, schools, roads and everything else people want to see. The Government say they want growth: they must demonstrate that they understand the people who create it.