Former Treasury minister calls capital gains tax increase a “stupid” decision
A former Conservative Treasury minister has cautioned Andy Burnham against increasing capital gains tax, labelling it a “stupid” decision, reports BritPanorama.
Lord O’Neill of Gatley, who served as a Treasury minister under Cameron and May, now sits as a crossbencher in the House of Lords.
In an interview with The Times, Lord O’Neill stated that raising taxes in the Budget on October 28 would demonstrate ministers are not “thinking about growth as sincerely as they claim they are.”
He added: “They’re just being scared and lazy and constrained in dealing with the sacred cows.”
Lord O’Neill asserted that raising capital gains tax would ultimately cost the Treasury more, as business owners might defer selling their companies or move their money abroad to avoid the tax.
“I do think it would be stupid,” he stated. “At a time where a lot of business still struggles from Brexit and struggles from the changes in national insurance and the labour market changes to zero hours – to have that and inheritance tax, it’s just like it would be yet more, and obviously at a time where the country’s growth rate has been so weak.”
He noted, “I think there is some evidence that if you push it up too much you end up losing money, because it’s such a deterrent to the ongoing activities of business owners that they just don’t sell anything. So the revenues go down.”
With nearly 20 years’ experience as a venture capital investor, he acknowledged the inherent risks involved. He remarked, “The thing that Andy’s done so well is create this spirit of, ‘I’m going to be a happier kind of positive person’. It’s against that.”
While praising Mr Burnham’s efforts as Prime Minister in creating a positive atmosphere and articulating a vision for the country, Lord O’Neill emphasized that there are “hard choices” to make when Parliament reconvenes from the summer recess next week.
Furthermore, he warned that Burnham’s promise to deliver “growth in every postcode” may need reevaluation, urging him to “focus on London” and other regions capable of driving economic growth, such as the West Midlands and the Northern Powerhouse area, which includes Manchester, Liverpool, Sheffield, and Leeds.
“You’ve got to focus on London. London is still as big as the next eight most important urban places put together. So if London were to continue showing trend-softening you can’t get the GDP numbers to rise,” he explained.
He identified the Northern Powerhouse as a potential “national game-changer,” while acknowledging that certain regions, such as Cornwall, might express discontent. “That’s going to be tricky for them politically, not least because Andy said we want to have growth in every postcode. He’s got to think about the reality and hard choices,” he added.
Lord O’Neill also shared that he declined to join the government as either a minister or an adviser because, as a crossbench peer, he was unwilling to take the Labour whip. He did not wish to place his business interests into a blind trust, which would require external management to avoid conflicts of interest in an official role.
