Wealth creators are right to be nervous

The Chancellor insisted yesterday that the proceeds of economic growth must be “felt by the many,” in a line that echoed the commitment made by David Cameron 15 years ago to “share the proceeds of growth.”

Rachel Reeves would not be comfortable with such a comparison, and as if to make that very point she assured the Labour party conference that there will be “no return to austerity” and that public spending will increase in real terms during this Parliament.

Let nobody claim the Chancellor doesn’t like a challenge.

City analysts are scratching their heads in an effort to square this circle. Is it really credible to rule out cuts to public spending, insist on no new taxes on “working people” and pledge a full-throated commitment to wealth creation, all at the same time?

No wonder AJ Bell’s Tom Selby says these positions add up to “a confused picture,” and that “it’s hard to see how the Chancellor can raise the money she says she needs without undermining at least one of these pledges.” In other words, something’s got to give. With commendable understatement, Rachel Griffin, tax expert at Quilter, says the “daunting task” that Reeves has set herself “is likely to result in a complex package of measures and will require careful navigation.”

Alas, it seems the destination is set; the government is planning a squeeze on capital gains, pensions, inheritance and probably dividends, too.

They also have pretty strong views on how businesses ought to be run, and they intend to legislate in this space. In this context, the country’s actual wealth creators are right to be nervous.

Some are more outspoken than others (raise a glass to the chairman of Revolution Bars, Luke Johnson, who doesn’t shy away from voicing the concerns of many industry leaders) but there is a palpable sense of alarm among large parts of the business community – not least in the City – as it dawns on them that the new government has quite radical instincts.

Before the election, many people clung to the comforting view that Keir Starmer’s Labour would be pretty benign, probably a bit more interventionist but on the whole more competent than the Tories.

With just over a month to go before the Budget, that characterisation simply no longer holds and the business community now waits with bated breath to see exactly how radical Reeves and Starmer intend to be.