This is a funny kind of ‘pro-business’ budget

Indeed the government has not discouraged speculation that capital gains and inheritance tax are the principal targets in its sights. Politically it has given itself little choice: during the election campaign Labour pledged not to increase the rates of any of the main sources of revenue (income tax, national insurance and VAT) paid by what it termed “working people”. So to try to make its sums add up, it is obliged to focus disproportionately on capital — the very thing that tends to inspire those who start businesses (but who seem not to count, by Labour’s definition, as “working people”).

Trouble is, capital is mobile, as are its owners — and 80 per cent of the exchequer’s CGT revenue comes from just 38,000 individuals. Asked last week by a reporter if he thought entrepreneurs might want to leave the UK as a result of reported tax increases, Starmer responded: “There is no reason for them to.” Unfortunately for the prime minister, that will be for them to decide.

It’s not as if, under the previous 14 years of Conservative-led governments, those with “the broadest shoulders” — to use the phrase of which Starmer is fond — have evaded the biggest burden. In the most recent tax year those in the top decile of incomes paid more than 60 per cent of total revenues; in 2010-11 this group paid 53.3 per cent of the total. This is not the result of a disproportionate increase in their share of pre-tax incomes: the gap between the earnings of the top decile and the median has narrowed over the past decade.

Meanwhile, the top 1 per cent of earners cough up 28 per cent of HMRC’s haul. The lives of the wealthy are much more enviable than those of the poor, and nobody need feel sympathy for the travails of the top 1 per cent. But, as the FT’s Chris Giles pointed out last week when warning Rachel Reeves to “think twice before raising their tax burden further”, part of their good fortune consists in being able to move abroad, retire early or both.

And what of the owners of small businesses? These were the people with whom Margaret Thatcher, the grocer’s daughter, most identified, and whom, during the election campaign, Starmer eulogised as “the beating heart of driving growth and creating jobs”. Last week even the government’s own “impact assessment” of the employment reforms led by the deputy PM, Angela Rayner, acknowledged that the cost to companies would fall “disproportionately” on small businesses. Hardly surprising, then, that Tina McKenzie of the Federation of Small Businesses described the 28 proposals (including “day one” protection against unfair dismissal and restrictions on zero-hour contracts) as “clumsy and chaotic”.

Larger businesses will be more concerned by the government’s decision — which, fair enough, was in its manifesto — to revoke the Conservatives’ Trade Union Act 2016. That imposed a requirement that for industrial action to be legal, at least half the membership of the relevant union should have voted, that no fewer than 40 per cent of members should be in favour and that employers should be given two weeks’ notice of any proposed strike.

It’s natural that the trade unions should have made these proposals the quid pro quo for their funding of the Labour Party. What is extraordinary is that the government’s impact assessment — drawn up by civil servants — claims not a single element of these changes demanded by the unions is overall “negative” for the country. It is all labelled “positive” or, at worst, “uncertain”. The document argues: “Unionised workers [will] benefit from the removal of legislative barriers to … taking effective industrial action.” This, it avers, more than outweighs the “possible negative effects on individuals not involved in industrial action if … the removal of legislative barriers causes more strike action than would otherwise have been the case”. If?

A cynic might observe it is not so surprising that civil servants would come up with such a favourable assessment: it is becoming clearer by the day that this is a government by the public sector for the public sector. Actually we discovered this at the outset, when the new administration bequeathed inflation-busting pay awards to public sector workers, with no productivity conditions, while removing the winter fuel payment from all but those on pensions credit — without conducting any “impact assessment”.

The most exasperating aspect is not that this is happening: Labour in government always favours the public sector, while Conservative governments look more fondly on the private sector. No, what truly infuriates is Starmer and Reeves claiming to be the saviours of private enterprise and indeed to know better than businesspeople what is in their own best commercial interests — when there is not a single person in the government who has any experience of running a company (although I suppose ministers could always talk to their benefactor Lord Alli).

Anyway, their interior decorating, in office, is more eloquent than words in expressing their true views. Starmer rapidly removed from its prominent position in No 10 the portrait of Margaret Thatcher (commissioned by Gordon Brown). And Reeves dumped the framed photograph of my late father, Nigel Lawson, which had hung in the chancellor’s office.

Actually my father would have appreciated that Reeves faces a difficult fiscal inheritance, and that her first budget is necessarily one to raise taxes rather than cut them. That was the situation facing the Conservatives of his generation as they took over from Labour in 1979, when Geoffrey Howe was the incoming chancellor with a more brutal challenge than anything Reeves has to contend with.

But I’m fairly sure both Thatcher’s long-serving chancellors would have regarded this lot’s claim to understand the dynamics of wealth creation as either outrageous dissimulation or alarming self-delusion.