Entrepreneurs on strike

I met a successful entrepreneur the other day who told me he was on strike. He built up a good company, ran ir for many years, and sold out. He is young enough, energetic and wise enough to be able to run another good business. He has no current intention of doing so. He finds the tax and regulatory background now too hostile. He asks, why should people like him bother when the government is so keen to pile ever more burdens on them? They accuse him of being rich. They don’t encourage him to work hard. They just see his past success as something to raid to pay for their mistakes.

Some people have enough money to be able to live by just investing their cash in portfolio investments. Some even have enough money to be able to stay in the UK and pay all the taxes. Others are now leaving. One of the most important sources of new funds and management talent to create and build new businesses and to turn round old businesses is the talent pool of people who have done it before and made a go of it. They think income tax is too high. CGT has been changed against them, regulations have multiplied and employing people has been made dearer by National Insurance hikes.

We need an entrepreneur’s package, so more stay here and more invest and work again here. We need tax rates and regulatory burdens that still make it worthwhile to accept all the aggravation of running a business. As my contact on strike said, he remembers what hard work it was running the business. He felt very responsible for all the people working in it, for the quality of the product and for the customers. He did not wake up every morning dreaming of great riches. He woke up every morning thinking of the next problem he had to surmount to keep the jobs and keep the clients happy. If you are fighting the government at the same time, it can be enough to put people off doing it again. We are going to need all the entrepreneurs we’ve got – and more besides – if we are going to earn our way out of this debt crisis.

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70 Comments

  1. Ian Jones
    Posted January 10, 2010 at 8:58 am | Permalink

    We also need the Govt spending and workforce to be cut. Without it, the private sector is competing against the Govt for both capital and employees where the Govt can borrow more cheaply and give higher wages.

  2. Thatcher-right
    Posted January 10, 2010 at 9:30 am | Permalink

    This is the scenario described in the book "Atlas Shrugged" by Ayn Rand

  3. tapestry
    Posted January 10, 2010 at 9:33 am | Permalink

    Good post, John. I agree. I quit running a business a while ago. It was fun doing it in the 1970s and 1980s but once Maastricht was signed the whole atmosphere changed. The regulators equipped with unstoppable powers became the enemy overnight. It was the most shocking experience of my life. I never believed such things could happen in a free country.

    I lasted about five more years then retired aged 44. I had built the business from scratch to 125 employees, but the endless nightmare of government departments full of missionary zeal to eliminate risk-taking ultimately succeeded.

    Incidentally the UK Government has a large book on a subject called Risk Assessment. In this risk is defined entirely negatively, as the chances of something bad happening. A businessman is defined accordingly as a risk-creator. Charming.

    Risk is actually the situation of life, where there is a complex mix of potential outcomes, both good and bad. Risk come from risqere meaning to dare. You dare to engage with the potential for bad to get some of the good. And by management you reduce the potential of the bad, and derive the benefits.

    maybe the government could be encouraged to relook at its fundamental definitions which are wrong. Risk is not good or bad but both. We cannot achieve anything without engaging with it.

    • Lola
      Posted January 11, 2010 at 5:10 pm | Permalink

      Yeah. being as how risk drives return, risk is your friend, not your enemy. I am 'regulated' by the FSA. Just you try to get them to understand that!

      • tapestry
        Posted January 11, 2010 at 9:43 pm | Permalink

        I engaged in correspondence with HM Treasury where the Risk Assessment philosophy and programme were organised, at the time working informally for an official at the Institute Of Directors.

        If you want David Cameron to do us all a favour, and drive French Regulators back into the sea, I would suggest that a battle as to the definition of risk is a good place to begin.

        For some reason the people running the programme for HM Treasury were a French couple. It must be all of ten years ago. They refused to alter their definition, although a similar correspondence with the Oxford English Dictionary did yield some improvements to their various versions of the definition of risk.

        Once the government adopts a better definition, it might be easier to talk these people, and persuade them to take one step into the real world.

        • Lola
          Posted January 12, 2010 at 10:06 pm | Permalink

          Generally, the public, do not really understand 'risk' as applied to investing. Risk as in volatility of returns that is. They see risk to mean only absolute loss. My experience indicates that most MP's see it like the public, as do bureaucrats but for a different reason. Bureaucrats use risk as absolute loss as it justifies their interference in freedom and markets.

  4. David Cooper
    Posted January 10, 2010 at 9:55 am | Permalink

    Not just a sad tale for the times we live in – it also sounds exactly like the central theme of Ayn Rand's "Atlas Shrugged". I do hope Douglas Carswell will cross-refer to it.

  5. Mick Anderson
    Posted January 10, 2010 at 9:55 am | Permalink

    I'm self-employed not because I want to work to give ever-increasing taxes to the Chancellor, or because I have a grand plan to be rich (engineers should learn to expect to be poor). It's because I'm both a rubbish employee, and quite good at what I do (all those clients can't be wrong, surely!)

    Over the last few years I have been doing much less paid work. Instead, I have tried to help friends and collegues with problems within my sphere of knowledge, just for the fun of doing it. It's far more satisfying, and means you don't pay more tax.

    The thing to avoid is giving financial help. If money changes hands, the Government notices and commandeers some of it, seemingly even if there is no profit involved. Financial support is also an easy way to lose friends (yes, I'm aware of the various witicisms).

    My lifestyle has improved by more than if I had earned money for doing these things. Not everyone is in a position to do this, but if you can, please try. You might surprise yourself.

  6. Javelin
    Posted January 10, 2010 at 9:57 am | Permalink

    Small businesses are what gets a country out of recession. Large corporates provide stability but they ride the economy rather than grow it. Governments should be there to support companies good aspects and control their bad aspects. The UK will grow but only slowly because of high taxes and regulation.

  7. John Tyler
    Posted January 10, 2010 at 10:02 am | Permalink

    Common sense really, I was horrified when I read your …

    "They just see his past success as something to raid to pay for their mistakes."

    … horrified because of the truth.

    … an excellent post.

  8. Ruth
    Posted January 10, 2010 at 10:33 am | Permalink

    It is a fact that over the last decade, Labour has made things much more difficult for those who want to grow businesses. I used to work in Human Resources but after 10 years of having to learn to deal with new employment legislation every year, all of which made it more difficult to employ people and manage them in the business, I decided enough was enough.

    I gave up and went to running my own business. I will never employ anyone again, as it is simply too difficult, too risky (you are taken to tribunal at the drop of a hat these days) and too expensive. So I make a lot less money than I did but I also have the satisfaction of knowing that my hard-earned cash is not being spent supporting the many insane projects this government had hitherto been spending my cash on.

    Of course, the downside for the government if lots of other people do this or take the course you describe is that tax revenues collapse. So yes, we do need to rebalance things massively if we want to rebuild the economy.

  9. Norman
    Posted January 10, 2010 at 11:06 am | Permalink

    And Mr Darling and Lord Mandleson think that they can make a statement a few months before the election stating how much they support entrepreneurship and it will make it all better. They've had 12 years to encourage people and failed miserably and since Mr Brown has taken full control of things they have gone even further and now discourage initiative.

    They must think that we were born yesterday.

  10. Graham Thomas
    Posted January 10, 2010 at 11:11 am | Permalink

    I can back that up with my own experience. I have recently sold a bed manufacturing business that I started myself. Prior to that I ran a property development business. Both of those businesses are now uneconomic for me to run and not just because of the recession/depression. Staff costs and taxation coupled with much too much regulation, mostly from the EU, mean I am better off buying and selling stuff online with no employees, no rent and no hassle.
    I have investigated over a dozen other businesses, new and existing that would each employ people but not a single one would make me any money. Why bother?
    If it were not for personal circumstances I would certainly move abroad. A decade of nu labour has ruined this country and now the only people making a good living are those in public sector non jobs that can spin a good line in bu****it.

  11. Richard Roney
    Posted January 10, 2010 at 11:20 am | Permalink

    A most interesting post. Did your entrepreneur say anything about a tax revolt? There seems to be a groundswell against having to pay taxes for items that taxpayers strongly disagree with. In this internet age it would easily be possible to allocate one's payment to a specific area of expenditure. Allowing this would increase the power of the electorate to control government – an unarguable democratic benefit.

  12. waramess
    Posted January 10, 2010 at 11:23 am | Permalink

    No suprise then that whilst our most profitable and mature companies are being bought by foreigners, we have precious few new large corporates in the pipeline ready to replace them.

    With oil running low and gas now being imported where will our growth come from?.

    Lets hope Camerons reported flirtation with the left of the economic spectrum will not leave us up the proverbial without a paddle.

    Particularly in this age of high budget deficits and high debt servicing requirements we need low corporate taxes and an administrative regime that encourages the development and growth of new businesses, not more taxes.

  13. alan jutson
    Posted January 10, 2010 at 11:31 am | Permalink

    Your contacts thoughts are mirrored by many, many thousands of people who run small businesses in this Country at the moment.

    For most people, running your own business is bloody hard work, for in many cases, not a huge reward.

    Many people do it because of the sense of freedom and flexibility one can have over your own time and direction in your working and family life.

    With Government taking more and more control with ever increasing regulation, and the Inland Revenue culture of endless form filling (Construction Industry CIS Scheme of monthly returns for instance) and fines, until you can prove yourself innocent culture, many now think its not worth the hassle.

    I am now near to retirement age. Would I start up my own business again?

    Not given the current Regulations, Health and Safety culture, Tax, Employment, and the basic overhead cost of keeping even a small Business running.

  14. Stuart Fairney
    Posted January 10, 2010 at 11:39 am | Permalink

    I hate to say it but "Atlas Shrugged" much?

  15. Stewart Knight
    Posted January 10, 2010 at 11:48 am | Permalink

    Tip of the iceberg John but the point is well made.

    There are a notional 8 million self employed in the UK, and I can tell you with a degree of certainty that most will avoid tax and regulation at every turn and opportunity. They will also not bother investing in people.

    How many billions are lost? Who cares when they are giving us a socialist Utopia?

    And 30 percent, apparently, still intend to vote for them…

  16. JimF
    Posted January 10, 2010 at 12:04 pm | Permalink

    Unless I misheard, Mr Cameron didn't mention the E word once on The Marr Programme today. All questions relating to figures were dodged. John, I think you have to reach a stage soon where these blogs are aimed at the Conservative leadership, not just the other lot.

    But you are right, as a betting man and an entrepreneur, if one's losses are privatised and gains are 50% socialised, it's a deal rarely worth making.

  17. JimF
    Posted January 10, 2010 at 12:15 pm | Permalink

    PS
    Somebody here has just corrected me to something I had already forgotten; there was a reference on Marr by DC to allowing tenants of social landlords to start businesses in their homes. I have to say we didn't fall off our chairs at this one.

    Why not resurrect the BES scheme from the late eighties/early nineties?

  18. Alfred T Mahan
    Posted January 10, 2010 at 1:26 pm | Permalink

    I couldn't agree more, having set up a number of new companies myself. At every turn there are more and more obstacles. My motivation hasn't been to get filthy rich – although that would have been nice – but more to do something my way and not be a cog in a wheel. The more bureaucracy there is, the less I'm independent, the more frustration there is in not being to do something my way, and the less incentive to set up something new.

    As I write, I'm ready to invest in a new business for which I know there is demand (public sector, but demand none the less), but for which overcoming the initial regulatory hurdles means the delay between initial investment and getting positive cash flow is so great as to make it hardly worthwhile. Why bother?

  19. Patrick
    Posted January 10, 2010 at 1:47 pm | Permalink

    Atlas Shrugged.

  20. Matt
    Posted January 10, 2010 at 1:51 pm | Permalink

    I realise that you’re wanting to look forward rather than to the past in your excellent idea of an “Entrepreneur’s package.”

    Labour has made the entrepreneurs’ prospects poorer with the 50% tax hike, regulatory conditions, and the increases in National Insurance and as most entrepreneurs probably operate their pension through a SIPP, the abolition of ACT relief on pensions has been detrimental.

    In the area of CGT Mr Brown has made things a lot easier for the entrepreneur. Most of these people are motivated by an exit, a trade sale or flotation, rather than shorter term income.

    I think it was Mr Lawson who raised CGT, to 40% … parity with income tax. It remained at 40% during the time of the last Conservative government. (Unless you were a certain age approaching retirement)

    The incoming Labour government reduced this to 10% – with taper relief and then wrapped it up at 18% I think
    .
    I got hit by this 40% tax on a floatation and again selling a 2nd house and it was painful.

    So it hasn’t all been one way for entrepreneurs.

    • Bob
      Posted January 11, 2010 at 2:04 pm | Permalink

      Matt,

      "I got hit by this 40% tax on a floatation and again selling a 2nd house and it was painful."

      Haven't you ever heard of "Flipping".

      • Matt
        Posted January 12, 2010 at 12:01 am | Permalink

        I wish that I had such powers Bob

  21. Andrew Gately
    Posted January 10, 2010 at 2:26 pm | Permalink

    Ahead of the game as usual John, I wonder how long it will take the status quo to realise the common good provided by entrepreneurs.

  22. 555PPS
    Posted January 10, 2010 at 2:34 pm | Permalink

    I know how he feels and am doing the same.

  23. Donna W
    Posted January 10, 2010 at 2:37 pm | Permalink

    And what's Cameron done … announced that the UK belongs in the EU, the chief source of all the anti-enterprise regulations we are suffering from.

  24. THE ESSEX BOYS
    Posted January 10, 2010 at 2:45 pm | Permalink

    We watched DC with Andy Marr this morning and see why the commentators say that he has not yet ‘closed the deal’.
    Nice enough bloke, particularly compared with boastful barmy Brown, but he’s not fast enough on his feet in interviews.

    I’ve just had a phone around to my Essex Boy colleagues for reactions. We are ordinary middle/working class blokes and DC needs to speak to the VIEWERS, like ourselves, and not just to the interviewer from the Westminster bubble.

    Q: “Just what do you and the Conservatives stand for Mr Cameron?”

    A: “Your viewers are fed up to the back teeth with government plans that don’t work, introduced by ministers who have never had a real job via expensive consultants we cannot afford and who haven’t any proper experience of the job in hand.
    Those viewers are looking for the same British COMMON SENSE they use in their own everyday lives and you can bank on us to use that yardstick with EVERY plan that comes across my desk. COMMON SENSE!”

    “The second thing your viewers want is COMPETENCE. This government does not have the experience or ability to DO what they say they will. My team have been in their shadow jobs for 3 years and know their briefs far better than the regularly reshuffled Labour ministers. How many Secretaries of State have we had for Health, Education, Pensions or the Home Office in the past 12 years? Plenty. I have a settled, knowledgeable team with business experience outside Parliament. Even if we had to put LABOUR policies into place WE would do it twice as well as them! On top of that we have common sense policies that will work.”

    Andrew Adonis came on afterwards and used the Common Sense term 6 times in 2 minutes. He’s got to be kidding of course but don’t let Labour make the term theirs Mr Cameron because you can show how very much Labour has been lacking in it since they came to office. And devoid of competence too!

    Cameron fast on his feet? When the call came for another UK salt mine it didn’t need Galton & Simpson to see the quip that it would be a place for voters to send Brown and his inept team after the general election!

    Wise up Mr C, think faster and start using the voters’ lingo…or find yourself a writer who can!

    • THE ESSEX BOYS
      Posted January 11, 2010 at 11:47 am | Permalink

      …Maybe John Redwood even!

  25. Kenneth
    Posted January 10, 2010 at 3:21 pm | Permalink

    Entrepreneurs on strike? Sounds like Atlas Shrugged!

    I think the big problem is that most people have a negative attitude towards businessmen/women and see them as being greedy for profit and unconcerned for their employees.

    If people could see that it is much better for the country to have successful businesses which create jobs, provide great products and boost the economy, then maybe we could have a shift in policy regarding business.

    Some good ideas include:

    * Slashing Corporation Tax to 10%.

    * Reducing Red Tape Across the board.

    * Cutting Employer National Insurance Contributions.

    * Giving Better Business Education at School (Unfortunately many teachers look down on Business as being 'Non-Academic' and this rubs off on pupils)

    * More Small Business Loans from Goverment.

    * Creating A Culture Which Values Successful Businesspeople.

    * Comprehensive Business Further Education Provided Online By Getting Government to hire top Businessmen to provide advice, etc.

    I think implementing these changes would bring a lot of Entrepreneurs out of Galt's Gulch and back doing what they do best: creating wealth for themselves and for the Nation.

    • Bob
      Posted January 11, 2010 at 2:19 pm | Permalink

      How about not having employers NICs at all?
      After all, it's just a stealth tax designed to hide the truth from the workers about how much tax they are paying.

      Make it "trans parent" (as Gordon Goldfinger would say), so that every worker knows how much tax is paid in his name.

      Likewise, the duty and tax on fuel, alcohol and tobbaco should be printed separately on receipts to make the proletariat aware of the true extent to which they are being taxed.

  26. Matt
    Posted January 10, 2010 at 3:31 pm | Permalink

    I'm not surprised that people with the means leave Britain. Are there any statistics to show how mant actually leave? There are many anecdotal stories about this happening when taxes rise but I'd be interested to see some numbers. If the numbers leaving really do go up significiantly as taxes rise this is a damining endictment of a tax the rich policy – and I imagine self defeating in terms of overall tax revenues.

    • alan jutson
      Posted January 11, 2010 at 8:07 pm | Permalink

      Matt

      The ones who leave usually have money.

      Many who come in, do not. NUFF SAID.

      Like you I would be pleased to see the figures, but that does not really tell the whole story without the above.

      • OurSally
        Posted January 13, 2010 at 9:33 am | Permalink

        We who have left didn't take large amounts of capital with us, we took our education and Protestant work ethic. We went to places where these are still appreciated and rewarded.

        I lost a packet by emigrating. I had to sell the house and car, and get my stuff moved. Still, I would do it again, and recommend it to any one of you. Kids adapt, and if you have a brain you can learn the lingo in a few weeks.

        How many? Wikipedia estimates the British diaspora to be about 5,6 million.

        • alan jutson
          Posted January 13, 2010 at 1:00 pm | Permalink

          Sally

          Ah, but you had wealth in a different form, and you have invested in the new Country of your choice.

          We here do not ask anyone to invest anything, they just come, and many (not all) just take.

          I do not blame them, it is our system that is wrong.

          The EU is part to blame, but many also come from Non EU Countries.

          Yes though about emigration myself many, many years ago, tough decision to leave family ties.

          Do know a number who have, and all but a few, are now pleased and well established.

          Me. Now far too old I am afraid, and health considerations are a priority if you are going somewhere else in your latter years.

  27. a-tracy
    Posted January 10, 2010 at 4:17 pm | Permalink

    The error a socialist government makes is that they don't believe what your aquaintance has told you. Too many assumptions are made about the entrepreneurs intelligence levels because many didn't stay on at school, about their "greed" rather than ambition and their lack of professionalism. They think they left the system purely for money but most entrepreneurs I know set out alone for self control and self determination reasons and didn't like being saddled with other people's limitations and fears of change.

  28. Dr Bernard Juby
    Posted January 10, 2010 at 4:43 pm | Permalink

    Dear John,

    Please talk to the FSB – the National Federation of Self-Employed & Small Businesses (Not the Russian Secret Service!). They have some 210,000 members (more than the CBI,IoD & Chambers put together). Our National Chairman was awarded the CBE this year. We have been telling politicians of all colours both here and in the EC what is wrong and what needs to be put right for years and years but no-one seems to listen to all that we have to say. Please download our Policy Manifesto or pick one up from our London Westminster Office. It's all there. It just needs putting into law!
    Regards
    (Dr) Bernard JUBY, Past National Chairman, FSB
    (We last met in Yardley on the late David Bevan's "Battlebus" when he kept calling you Greenwood!)

  29. Dr Bernard Juby
    Posted January 10, 2010 at 4:45 pm | Permalink

    P.S. Like many fellow entrepreneurs you mention I'm now an expatriot voter. The more often I visit the UK the sadder it becomes.

  30. Matt
    Posted January 10, 2010 at 4:47 pm | Permalink

    I meant flotation.. rather than the buoyant floatation!

  31. Martin
    Posted January 10, 2010 at 5:18 pm | Permalink

    I well recall the dreaded SSP (Statutory Sick Pay) introduced by a previous Conservative government.

    The convoluted paper work and the pathetic amount of the benefit are bad enough for Big Business who can afford fancy lawyers and accountants to keep them right about "waiting days" and such like but a complete nightmare for small firms etc. I'd be pleasantly surprised if the forms were easier under the present Labour government.

    My advice to any government of whatever type is to remember small business and keep it simple.

  32. Matthew Reynolds
    Posted January 10, 2010 at 5:48 pm | Permalink

    We have got to end the 50% tax band & income threshold for basic personal tax allowance claw-back.Capital Gains Tax and stamp duty on shares must be killed off while corporate taxes are slashed to one 18% rate.That should keep enterprising types in the UK and perhaps attract others into the country.Tax competitiveness is the key to getting talent into the UK by stimulating wealth creation.That would reduce avoidance and boost productivity and thus raise the extra tax revenues needed to slash the fiscal deficit.

    That kind of enterprise revolution would get private sector job growth going so that you reduce unemployment while cutting public sector non-jobs in a bid to wipe out the bloated PSBR.We need people doing productive jobs in the private sector as opposed to non-jobs in Brown's Client State.

    The best stimulus is to move funds away from the drag on growth known as the Client State and towards the wealth creating private sector.In short we need more enterprising folk and fewer QUANGO employed jobs-worths.

  33. Steve Tierney
    Posted January 10, 2010 at 5:50 pm | Permalink

    Didn't Ayn Rand suggest something like this could happen in the Atlas Shrugged 'plot'?

    : )

  34. William Grace
    Posted January 10, 2010 at 5:54 pm | Permalink

    Yeah right help people start a business, like anyone in the government is ever going to do that?

    I have done, my business is less than 6 months old, and its killing me, tax stuff is insain, its writen by morns it must be, you read one thing, then when you keep reading it says to do it a different way.

    I might just give up, I want a job with a council I see how much road painters get, I could do that job honest, and I would go to work every day as well, not like some of those I know who do 3 day weeks and take time off for a bad back.

    Oh yeah, I want to work, that counts me out in England doesn't it….

  35. Guinevere
    Posted January 10, 2010 at 5:58 pm | Permalink

    Very good article – bashing the rich is certainly a very popular theme for the Left, which conveniently likes to forget that it is not the Government, but the taxes paid by companies and individuals, that pay for the things we generally consider good, like schools and hospitals. Moreover, the spirit of enterprise will only keep going if there are successful individuals and businesses to inspire the future generation. The current Government is not one of 'aspiration', more of 'mediocre' and 'dumped down'. I fully agree with your striker – starting a company in the current climate would be madness.

  36. Stronghold Barricade
    Posted January 10, 2010 at 6:12 pm | Permalink

    I think that you'd better start outlining which pieces of legislation you aspire to repeal, and how the short fall in funding for the government finances will be made up.

    I do, however, agree with your entrepreneurial friend

    Throw in the problems with banking and funding, linked to asset backed securities and you probably have much greater unwillingness to "invest"

  37. Ex Liverpool rioter
    Posted January 10, 2010 at 6:36 pm | Permalink

    John
    At present my order book is ZERO, i do expect some work from Feb on, but a fraction of what we had. I can't see any easy way out……..In the end the market will do it for us…massive devaluation, am i am not talking about "Pound in your pocket" 16%……..am seeing 40% !

    Mike

  38. Jim
    Posted January 10, 2010 at 6:58 pm | Permalink

    Its like no-one ever wrote Atlas Shrugged isn't it?

  39. Kevin Peat
    Posted January 10, 2010 at 7:37 pm | Permalink

    I agree entirely and I have the utmost respect for the entrepreneurs within my own circles and owe them a debt of gratitude.

    This interference and tax burden doesn't just apply to entrepreneurs though. Throughout the so-called 'boom' I've felt cash-strapped – I suppose this is because I wasn't prepared to use my house as a cashpoint machine to soften the stealth taxes. Government has forgotten that it's meant to serve us – instead we get harvested and bossed around. No wonder Brown is desperate to stoke another housing boom – it's under this smoke screen that he turns Britain into a corrupt, crime ridden and debt burdened cesspit.

  40. Andrew Johnson
    Posted January 10, 2010 at 7:44 pm | Permalink

    This is the tragedy of Britain after 12 years of Labour government and 12 years of ineffective oppostion by Conservatives and Liberal Democrats.
    Massive discrimination and disincentives against the very people who can create the wealth that will enable the country to regroup and rebuild.
    I am increasingly concerned, even dismayed by David Cameron's public pronouncements. Just who is advising him?
    It's obviously not you John.
    Just because Alistair Darling has now stated the blindingly obvious, that deep cuts will have to be made, even by a Labour government, doesn't mean that David C has to up the anti.
    You have consistently outlined the sensible conservative economic policies and strategy the Conservative party should be adopting and promoting. This is not just about the Conservative party winning the coming election, it's about the future economic ability of Britain to maintain our current economic position in a rapidly changing and competitive world.

  41. Kenneth Martin
    Posted January 10, 2010 at 8:04 pm | Permalink

    After having employed staff for the last 3 years, I must admit that I wonder at times if it is worth the hassle. Life was much easier and I felt more successful when I ran a very profitable one man business.

    Perhaps it is the entrepreneur in me that keeps me ticking!

  42. Max Van Horn
    Posted January 10, 2010 at 8:30 pm | Permalink

    Your friend is absolutely correct.There is no longer a carrot on the end of the stick.Capital taxes and inheritance tax have removed the old incentive of trying to better the lot of the generations to come.The sheer daily punishment of running your own business is something that professional politicians(excluding yourself) and bureaucrats have no grasp of whatsoever.We need a fundamental shift in the way the public sees business.
    Years and years of socialist tripe,'workers in mill',nasty landowners, thieving bankers etc the list just goes on and on, and at the root of it is the Marxist bunkum that has been taught in Universities and schools since the 1950s.Unless these attitudes are changed this country has nothing to look forward to other than crippling poverty.

  43. FaustiesBlog
    Posted January 10, 2010 at 8:35 pm | Permalink

    Precisely the situation in which the productive found themselves in Atlas Shrugged.

    Levelling the playing field does not require 'equality' legislation, a la Harperson – but equality of opportunity. Only then can we have a productive, meritocratic society which enriches the nation and all its people.

    Or at least, those prepared to think and to work.

  44. Mike Stallard
    Posted January 10, 2010 at 8:50 pm | Permalink

    When I first started teaching, before decimalization, I asked my Head of Department (an outstanding man and a fine teacher who voted Labour) why he didn't do night school.
    "For every pound I earn," he said, " I am taxed at 19s 6d in the pound."
    Have these people never heard of the economic miracle that was worked by General Pinochet and the Chicago School?
    Hey, wait a minute…..

  45. Ex Liverpool rioter
    Posted January 10, 2010 at 9:06 pm | Permalink

    BLAST!
    Looks like Gordon will get away with it!:-
    http://business.timesonline.co.uk/tol/business/economics/article6982298.ece
    Mike

    • Lola
      Posted January 11, 2010 at 5:13 pm | Permalink

      Yes, Brown will probably get away with it but WE won't. WE'LL have to pay for it. Anyway UK debt is already trading at AA prices, so the market has already downgraded it; whatever the ratings agencies say.

  46. Peter Corbett
    Posted January 10, 2010 at 9:57 pm | Permalink

    I totally agree with the sentiments expressed by your entreprenuer. For 20 years I ran a successful software business employing over a hundred people in well paid jobs. I took on graduates and launched them into successful careers, I recruited others towards the end of their careers when they still had much to offer.

    But by 2006 I couldn't go on any longer. The burden of regulations was too much; my customers were reluctant to invest in anything that didn't give an immediate payback; and the government's open door policy towards migrant workers meant that my rates were always being underut and my margins eroded. The end result was I sold the profitable arm of the business and shut down the rest. I now take a salary from an American corporation which just seems so much easier.

    I too never expected riches from my venture, just keeping it going was satisfaction enough. I would do it all again but I cannot imagine doing so when the government's attitude towards my efforts is so openly hostile. I really hope that this becomes a top priority when the Conservatives form the next government and I hope that you are up there playing a leading role in creating an environment where entreprenuers can start taking us forward again as they did in the 80s and 90s

  47. Robert K, Oxford
    Posted January 11, 2010 at 11:24 am | Permalink

    Interesting that this is one of JR's most-responded to blogs recently. Neither this government nor the next has a clue about incentivising the successful, or more properly put, making sure they don[t put obstacles in the way of the successful. Why, indeed, should an entrepreneur set up in business in this country rather than one where the regulatory and tax environment is less fickle and abusive?

    • Lola
      Posted January 11, 2010 at 5:36 pm | Permalink

      No mainstream political party has the guts, or the understanding or the philosophical committment (New Labour) that admit that essentially all they have to do to set off wealth creation is to GET OUT OF THE BLOODY WAY! All of them still talk about 'running the economy', which, as recent history teaches us, is just what they cannot ever do. They might just be able to run sound money (not Brown, obviously), reinforce the rule of law, act as umpire not player, run a small State with low (very) and certain taxes and provide for national defence (Not Brown….). But 'run the economy'? No.

      It looks to me that none of them have developed the language, or have the courage, to say that freedom and markets work and everything else doesn't and that ultimately, Dear Mr & Mrs Voter, it is up to you.

      Some of the parties deliberately set out to create a client base by fostering State dependency either from benefits or employment. Some parties are too scared of this embedded client State to say that eventually all this will end in tears. They pin their hopes on putting off the final reckoning by joining in with the ultimate unaccounatble quango, the EU, in the vain hope that there will be some magic cure from that incestuous superstate. Well, lads, let me tell you, it gonna happen. The rest of the World will get on with it and your cowardince will lead us into ever decreasing actual and relative wealth.

      Mind you I am also very suspicious of the apparent success of China et al (including that 'geat home of free enterprise' the US of A). A 'success' that has more to do with mercantilist policies and protectionism than free trade. That also is a blind alley as if you rob your customers blind, or seek to destroy their wealth creating ability by subsidising your own industries, or run protectionist polices to prevent them selling to you, you will end up impoverishing yourself as much as them.

      • Robert K, Oxford
        Posted January 13, 2010 at 10:45 am | Permalink

        Yes to much of this.
        It is interesting to note how Western governments are so happy to patronise the rapid growth in China. The implicit assumption is that when China’s economy reaches the grand maturity of the West it will slow down to the more manageable pace that we “enjoy”. Why should we look at the pace of change in China in awe when our civilisation could evolve just as rapidly if only, as you so eloquently put it, Western states “got out of the bloody way”. If markets were to be truly free, investment would increase, innovation would thrive and there would be huge, if currently unknown, improvements to the human condition. Such a condition might feel chaotic at times, even anarchic, but that is natural when mighty change is underway. But this is hardly likely to happen when there are planning wonks in Westminster who think they should nationalise the distribution of grit for the roads (to use one current if simplistic example).

        • alan jutson
          Posted January 13, 2010 at 1:06 pm | Permalink

          Lola, Robert

          Another solution would be for us to export Gordon Brown to China.

          He would soon B….r up their growth with so many regulations, taxes, elf n safety, and state workers that we would automatically be more competitive.

          On a serious note agree, take the brakes off and unleash the frustration that many of us have with State Control.

        • Lola
          Posted January 13, 2010 at 7:09 pm | Permalink

          Plus of course we cannot compete because we carry an implicit and actual embedded overhead cost os 50% before we even start to cut metal or turn on the PC.

          I can, today, provide two jobs. One take up a redundant person and two, take on a graduate. They are both on, or will shortly be on benefits. But I can't. Why? Because I have to pay a huge wodge of tax on 31st Jan. Half of what I in tax will pay is wasted in epic inefficiency in state organisations. And half of the remaining half is spent on stuff the State doesn't need to do anyway. Wealth destruction on a stick.

          (PS I'll probably take on the poeople anyway, and argue with the taxman for as long as possible).

  48. Bob
    Posted January 11, 2010 at 2:53 pm | Permalink

    Based on the many references to "Atlas Shrugged" I will have to get a copy. I had a look at the description on Wikipedia and it looks evocative of Brown's Britain.

    "Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or the looters who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil? … Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into bread you need to survive tomorrow. … Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values… Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes marked: 'Account Overdrawn.' "

    Couldn't have put it better myself.

  49. Socrato
    Posted January 12, 2010 at 3:36 am | Permalink

    I totally agree with your post and most of the comments. I think the message is really coming through here. But I don't think the message is coming through to the voters in terms of concrete policy measures. Of course, we can understand why cuts might want to be downplayed – but in terms of positive policy to rectify the shambolic incentive structure facing entreprenuers in this country – we don't really have any costed measures and alternatives. I really don't understand why this still isn't the case. As I have said here before – working and middle class people need something to vote for – a proper structural plan to rebuild the economy from the grass roots – changing incentive levels at every level, from private to public – they know that is what is required, but I think find difficulty in seeing it in policy proposals. Taxpayers need to get value for money – thats a given – and of course policy needs to drive towards that end. But the nation as a whole needs a COSTED vision. What would it cost to reduce corporate taxation to competitive levels? What would it cost to make it attractive for companies to hire workers – what incentives could be offered to this end and what sort of reduction in red tape could make it all attractive. We need to wake up and embrace flexibility and mobility in the workplace – that is our post-industrial reality and we need to organise our society around those contemporary needs – not outmoded and largely irrelevant mass-industrial practise. Labour law is way too onerous – what can be done to relax that? Of course there is a European dimension to all of this – but surely some policies pointing toward intentions to mitigate the worst effect of this will attract more voters and make people less likely to vote for Eurosceptic alternatives, resulting in less of a potential split in the conservative vote. Bank based intermediation is not really working – even in the nationalised sector. Market based forms of intermediation are only really relevant for companies that have reached a certain size already. So there is a gap. What can be done to ease this? And what would it cost?

    The economy needs a top-to-bottom refresh. That is what is required. Most people, would recognise the above as non-controversial statements. A clear division needs to be put between Labour's past spending priorities and their results. What is less clear is what conservative spending priorities would be. You could make clear distance between the two parties in a positive sense. If people are to face cuts in public sector – they need to be reassured that you do have workable policies to ensure labour market flexibility so they wont starve and can see a way how it will work. Labour cannot offer this of course having created the whole problem in the first place. Job done as it were. I think voters will understand this sort of message and feel reassured by it. In the private sector – to run a company a business plan is required. Isn't at least the same required to run a country? Where is it and why am I not hearing more about it. I hear plenty of the broad-based rhetoric that we are all so fed up with. I would like to ask why it is so hard to put across positive, costed policy statements.

    • Robert K, Oxford
      Posted January 13, 2010 at 10:52 am | Permalink

      The message that needs to come across is that cuts in public spending mean corresponding increases in private sector spending or investment. As the private sector is manifestly more efficient in its spending and investment decisions, this means that every pound cut from public spending produces a pound-plus from the private sector, leading to far higher standards from all the services that the state currently provides. What we need is people on the national stage who can articulate this. As Lola puts it, all the state has to do is get out of the bloody way.

  50. David Price
    Posted January 12, 2010 at 8:54 am | Permalink

    But at what point has the situation gone too far, that no amount of promises from politicians can tempt these productive people back? The "looters" and "moochers" and "parasites" of Atlas Shrugged are always with us and sooner or later government ramps up it's looting and if it was Labour/Liberal it's mooching.

    Unfortunately, the current conservative leadership also appear to be looters and moochers. What is a productive to do?

  51. Adrian Peirson
    Posted January 12, 2010 at 9:10 am | Permalink

    What surprises me is how many are surprised by this, the powers that be want total and absolute control over the lives of others.
    I'm not talking a little control, I mean absolute life and death control to the point where if they decide they do not like you you can be liquidated.
    At the moment this is financial liquidation, carried out by beurocratic regulation.
    But as their deathly grip increases it will move on to more physical liquidations.
    This should come as no surprise, History is littered with examples, Stalin, Mao, look at the Mid East, Africa.
    You do not have control over peoples lives by allowing them to be independently wealthy, or able to barter their goods and services to others.
    This is why the Kulak farmers were starved to death under Stalin in their millions, they produced goods, food, which could be bartered for other goods and so create a state independent of the State's Totalitarian control.
    This is where we are going with all this, the Global Warming myth is just one way they are going to implement this.
    This is all laid out in the Communist manifesto, the Wall coming down was simply a ruse to get the Free West to drop it's gaurd.

  52. Dave
    Posted January 12, 2010 at 11:04 pm | Permalink

    I'm half way through reading "Atlas Shrugged" (for the second time), and it's uncanny how similar this is.

    What have we come to?

  53. alan jutson
    Posted January 13, 2010 at 1:19 pm | Permalink

    John

    Your post has gained many comments.

    Whilst the response in numerical terms is quite small (large for a sensible political blog) All respondents seem to agree that running your own Business is now hardly worth the effort in financial terms.

    This should be very, very worrying for the Country and for all Politicians, as it is private business which funds ALL of Government expenditure, as all Public Sector Employees are funded out of taxation, the Government has no money.

    I am aware that you are involved in the running of a number of Businesses, and so are to a degree aware of some of the frustrations ouitlined, although you are probably a little far removed from the day-day problems.

    Can I ask you:

    Did you expect such a one sided post from all of the people who have responded.

    Not one person so far has said.

    I think the risk is worth the reward.

  54. Ian
    Posted January 30, 2012 at 9:18 pm | Permalink

    When I stopped running a high technology company in order to start my own, I deliberately switched from exporting to importing, simply because the DTI (sorry – BIS) were taking so long to respond to export license applications. One application remained unanswered for over a year with no response despite many requests. When finally I wrote and promised to take the matter to the national papers if I had no response within 2 days, approval magically appeared the next morning. My problem was not with receiving export license refusals, it was receiving no response for so long that the customers got fed up and bought from foreign competitors.

    Talking with German and French competitors, they were exporting into laboratories that were refused by the DTI, and exported into labs that we had been refused.

    I also decided to defer employing for as long as possible, and to employ as few as possible, after an employment law experience as MD of my previous company, in which an employee who wanted to leave, but with as much cash as possible, brought a claim which both lawyers and HR consultants dubbed “purely vexatious”. The same lawyers and HR consultants advised me to pay a huge sum of money to get rid of the problem, even though they both said that the company had behaved throughout in an exemplary way and any tribunal would throw the case out. (“Do you really want this person as an employee for more than a year – because that is how long it will take to come to tribunal – causing serious disruption?”) We paid. I use subcontract and agency so far as possible.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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