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As Gordon Brown takes his entire cabinet to Birmingham today to show the Government is connecting with the majority of the electorate, businesses are voting with their feet.
A trickle of firms announcing they are relocating abroad has not become a flood but the level is increasing. So far, Shire pharmaceuticals, United Business Media, financial services groups Henderson, Regus and Charter, and Brit Insurance have declared their intention to quit. Now Krom, an up-and-coming hedge fund, is following suit.
HSBC, our biggest bank, is reviewing its options. The likelihood of HSBC going is slight - every three years, the board of the bank examines whether it's right to remain here. A £750 million corporation tax bill is a major factor in their thinking. When asked why they're off, the companies cite too much tax as the main reason. Other factors - suffocating petty regulation, the cost of doing business and living in London - are frequently mentioned.
They fear they're sitting ducks for more taxes - either directly or indirectly. They feel the mood of the Government has changed from one that was pro-business to one that says it still is but in its actions displays a markedly different stance.
As the UK's financial position weakens, they believe they could be sitting targets for an administration that must raise more revenue but is unwilling to increase individual taxes. Already, they've noticed tax inspections getting tougher. Labour, they suspect, sees business levies as a source of extra cash and appealing to the rump of the party who regard profit as a dirt word.
Brown and his colleagues have done little to assuage this view. Quite the reverse: witness the call from some senior party figures for a windfall charge on energy suppliers.
Ministers must realise this is a very altered world from the one in which they grew up. Vastly improved communications, technology and transport links mean firms can be based pretty much anywhere. There are plenty of nations lining up to have them - where taxation, both corporate and personal, are minimal.
London and with it, Britain, may be the world's number one financial centre but it must not take that preeminence for granted.
Reader views (1)
The worst lie is that people want to live in London. They don't and no one wants to move there - high violent crime, dirty, poor housing stock, poorly educated work force, antagonistic and incompetent government, poor arrogant service, rip off prices - and yes, awful weather like you would not believe. Really, no one wants to be in London if they don't have to... life is too short.
- Kr, Cap Ferrat FRANCE, 09/09/2008 00:14
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