Entrepreneurs who signed an open letter warning about the impact of hiking capital gains tax “can’t be in any doubt” about Labour’s commitment to economic growth, Jonathan Reynolds told City AM.
The business and trade secretary was responding to a letter signed by a group of 500 British entrepreneurs, including the founders of Signal AI, Yonder and Zopa, who urged Chancellor Rachel Reeves against raising capital gains tax (CGT) at the Autumn Budget.
They warned that such a move “end up lowering the tax take”, and “jeopardise the success of our country’s startup ecosystem”.
But Reynolds hit back, arguing: “I don’t think any of those entrepreneurs could be in any doubt about the scale of Rachel’s commitment to growth and to prosperity.”
He insisted: “You couldn’t have a better or bigger display of unity from the new government, from the Prime Minister down to the Chancellor, myself and the rest of the cabinet, about where our priorities are.
“They lie in business investment, business creation, the kind of transformational prosperity that the country really needs before you even can consider funding of public services or any of the other questions that governments get put towards them.”
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Reynolds said the upcoming Budget was “clearly important” and that Reeves’ starting point “has got to be that the previous government made promises that it didn’t fund”.
He argued: “She’s got to address that as well as obviously put our key manifesto pledges forward.
“That is a challenge… there’s going to be speculation about what that will contain.
The Stalybridge and Hyde MP also stressed that his department “engages with businesses of every size”, highlighting the industrial strategy, the trade strategy, and Labour’s workers rights reforms.
“Businesses of every size recognise that the kind of prosperity we’re focusing on, the kind of growth we’re focusing on, has got to be built on firm foundations,” he said.
“I think they recognise that we have got this – as the Institute for Fiscal Studies (IFS) said – unenviable fiscal inheritance, and we’ve got to put stability in place to do that.
“They have also heard Rachel’s unequivocal commitment herself to growth, to a budget for growth, to things like long term investment that will make the biggest difference over time.”
The cabinet minister also rejected criticism of the government for holding the summit in advance of the Budget – and only appointing investment minister Poppy Gustafsson, former Darktrace CEO – just days ahead of the crucial gathering.
Asked if he accepted the timing was less than ideal, Reynolds insisted: “No, no, I absolutely reject that.
“The point of this summit is fundamentally to showcase to an international audience what the change of government brings… that’s a really compelling message.
“The sooner we could get that out, the better.
“The proof of [the summit] being the right thing to do can be felt in the audience and in the crowd here, where the buzz is palpable and real.”
On the City of London, Reynolds – who also launched the government’s draft industrial strategy, Invest 2035, and a consultation on it on Monday – said the financial district’s importance to the UK’s standing and ‘brand Britain’ is “huge”.
“I can speak as a Freeman of the City of London,” he joked, citing his and Reeves’ “personal commitment to [the Square Mile].”
“What does it mean for people? If you want people to have decent places to live, you need a strong mortgage industry; if you want people to have decent retirements, pensions are absolutely crucial to that.
“I’ve always believed we should sell it in those terms… we talk about how the City needs to change, but the asset it represents, and what that gives us on the global stage, particularly from a trade perspective, is huge.”