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The friend dropped his bombshell. He was clearing off. He'd worked it out: soon he would be paying 50 per cent income tax as a high earner, the changes to personal allowances would add another 10 per cent and then there was VAT.
He reckoned £7 of every £10 he earned would go, one way or another, to the Government. And he wasn't prepared to pay.
He was off to Singapore where the tax take for him was 20 per cent. But what about your wife and children, I spluttered? "They're fine. We've got their names down for two schools."
Then I heard from another pal. He was away to Switzerland. HSBC has announced that Michael Geoghegan, its group chief executive, will move to Hong Kong in February.
The bank stresses that he is relocating for purely business reasons: the company wants to develop its strength in the emerging Asian markets. I know Geoghegan well and can vouch that he would not be the sort to make such a move for personal gain.
Nevertheless, one result of his being based in Hong Kong is that Geoghegan, who was paid £3 million in salary and bonuses last year, will be paying 17 per cent income tax rather than Labour's proposed 50 per cent.
Barclays, too, has disclosed that 35 of its executives are to buy out the bank's toxic assets in a deal funded by the bank. They believe they can turn them round. Where are they to reside? The Cayman Islands.
On Monday, the shareholders in another historic British financial name, Friends Provident, will meet to approve its takeover by investment vehicle Resolution. Where is Resolution's head office? The Channel Islands.
Here is a pattern the Government would be foolish to ignore. Gone are the days when businesses and their leaders needed to be in the UK.
Internet, Skype, video conferencing, mobile phones, BlackBerries and air travel all mean they can function just as usefully elsewhere.
Yes, a case can be made that only the most mercenary would swap the delights of London for Singapore or Zug.
But that's not so: they can return for 90 days a year and still enjoy the things they can't get in their new abode.
One leaver I spoke to didn't see why he couldn't be at Cheltenham and Ascot for the racing, same as ever.
If they have children, they will have to sacrifice British schools but is that such a loss? London schools are a nightmare to get into and more of them are offering the International Baccalaureate, same as overseas.
The Government is deluding itself if it believes high-earners who aren't tied down here won't go. The Centre for Economics and Business Research estimates that up to 25,000 business people could leave, once the top rate is introduced and they see what they're coughing up.
The think-tank puts the possible loss to the Treasury at £800 million a year. And it is thought that around two-thirds of those earning more than £150,000 a year and qualifying for the new higher band will do their utmost to avoid paying the full amount.
Tax planners are already working flat out to advise clients on schemes to circumvent the 50 per cent.
Last week, in Brighton, the new tax was hailed as a stroke of Gordon Brown-Alistair Darling genius. In the absence of physically being able to eat the rich, taxing them until they squeal will always play wildly to a Labour conference.
This, though, is a naive stance that ignores the realities of the age. In Geoghegan's Canary Wharf office, for instance, there is a plasma touch-screen. It shows the financial performance of HSBC and is updated every second of every day.
By pressing his finger on an item or clicking his remote he can dig down and down into the bank, one of the biggest on earth.
He can roam into countries, divisions and branches. He can go forwards to projections and backwards to results. In Hong Kong, there will be a screen on his wall, same as in London.
Every so often HSBC, like other major corporations, reviews its tax position. There's no suggestion the rest of the bank will accompany Geoghegan - quite the reverse, according to current pronouncements - but at some point the pressure to join the CEO is likely to intensify.
In which case, the loss to London in terms of tax receipts, jobs and prestige will be enormous.
This is the fire Brown and Darling are playing with. The other is that the public finances are shot to pieces and they are borrowing £175 billion this year and another £700 billion in the next five years. If Britain was a company it would be declared bankrupt (and Brown and Darling would have been fired long ago).
But if Britain was a company its bankers might, with the accountants' help, give it a breathing space on the basis that liquidation is final.
Usually in commerce the book-keepers take over. Costs are ratcheted down, spending reduced and the non-vital bits put up for sale.
What hardly ever happens is that the customer is screwed. Businesses in administration, by and large, don't jack up prices.
They try to become more efficient, better at extracting income from the payer but not charging more. In a competitive environment that may presage their doom.
Brown and Darling ignore the fact that thanks to advances in communications and technology (and that the foreign countries are often marketing like mad to encourage business people to leave here and to live there) Britain for the first time faces genuine competition.
If they suppose all high-earners need to be in Britain, they are deluding themselves. And let's get one thing clear: nobody stays for the weather.
It's true that high-rollers (read bankers and City types) are hardly popular. They've been blamed loudly for causing the recession and threatening the very stability of the financial system. So it's not only Labour activists who see them as fair game.
As they gather next week there will be Tories, too, who will urge David Cameron and George Osborne to crack down on the rich.
Cameron, though, is suggesting that he may scrap the 50p tax rate. "You don't have to persuade me that high marginal tax rates are a bad idea. I think they are a fantastically bad idea."
The Tory leader is wary, because he knows he must impose cuts which will lead to howls of protest and by keeping the higher levy he can say the rich are paying their fair share.
But if it doesn't lead to more revenue and, indeed, results in lower income for the Treasury, not to mention employers defecting abroad and taking with them jobs, what will it achieve?
At some point Cameron has to put distance between himself and Labour. If he retains the tax he is playing their game and not his own. His ought to be one that is built on expanding economic activity and raising revenue.
It's a brave call and he should make it. The long-term consequences for Britain and for the City - the place we should not forget that generated so much of our national economic wealth prior to the crash - could be dire.
Reader views (10)
Spot on Manny,these greedy gits are responsible for the financial crisis.Let them sling their miserable hooks.
- Colin, barking essex
My plan is to be out of UK plc to another European destination in 2 years or so. The simple maths of this must take precedent over the dogma of a 19th century reality in a non globalised world. We should not be surprised that the last people to get globalisation are the natural party of the public sector.
- Christian Ball, London, UK
Good Riddance to Toxic Waste....now we can descend upon Chelsea affordably.
- Liz, London
Politics of envy portrayed by many on this thread!
The 50% is designed to increase the tax take. If it transpires that the tax take is likely to go down then it must be scrapped. It will be too late once these people have already left, as they are very unlikely to return in the short term given the upheavel with family life etc..
It beggars belief that some people cannot seem to get their head round this basic fact: If people have skills that are in demand and they can work in a number of countries, then not only do we want to retain as many of them as possible (so they aer controbuting to our tax coffers!) but we also want to encourage people from other countries to live and work here.
That is a win-win for all sides.
- Ian Gilbertson, Newcastle
If we start to build a manufacturing and engineering base again, it would introduce a more acceptable financial culture to this country. The people in manufacturing and industrial areas of Britain, many now unemployed and slated as layabouts, would not only be earning. They and their children would have some prospects. The lack of a future, jobs, and the social communities they forged, has gone a long way to creating 'broken Britain'.
We became London-centric. The Financial services industry in the City of London has lead to an appalling outlook, and some debased values among some of those unable resist the corrosive effects of the financial culture. This sector unfortunately has left their corrosive effects too on our political culture. For many years our politicians have been submissively lead by the noses by the commercial sector.
Not simple, but having seen the devastating effects that a rogue financial culture has brought on us, and the country's standing in the world, we're at a cross-roads. The political classes have become a remote, closed shop to the populace. Across the two main parties, self interest and power has risen to become the raison d'etre for being in office. Politicians face having to remain kow-towers to big business and all the compromise that goes with it. Or to exert and regain the role of the politician where the people, the social fabric of the country and all that goes with it, once again becomes a focus of governing and good government.
- Geoffrey, London
Not nearly enough of them are leaving. They distort the property market in the South East, they never paid their fair bit of taxes in the first place, and worst of all they helped swell the banking industry to a point that we risked becoming a national who only "manufactured" figures, products that did not exist. The sooner we can ship them to Singapore, the better.
- Okonski, London
These high earners all know that it's an all but dead cert that a Conservative government will be in power in the UK within nine months. They obviously don't think that it will change anything or they'd be staying put.
- Tonyb, Melbourne, Australia
This article worries about the loss of tax revenues, jobs, and wealth when business moves abroad - and justifiably too.
Yet the odd thing about the debate concerning elements of the financial services and banking industries moving offshore is that another major industry moved offshore and we heard not a peep from people such as Chris Blackhurst. In fact, they seemed perversely to welcome it as if tax revenues, jobs, and wealth from it did not seem to matter. I am talking about manufacturing industry in a country that is still the 6th largest manufacturing country in the world.
Over the last 2/3 decades we have lost more than 2 million jobs in manufacturing as they have been exported to other countries. In many cases we have to buy from others the goods we used to make. It has lead to a continuous and growing trade deficit, which the income from finance and banking has been unable to cover with the country as a whole borrowing to fund the overall balance of payments deficit.
Amazingly, after all that destruction of manufacturing capacity, it still employs nearly 3 million people, constitutes some 13% of GDP. Compare that with finance and banking: 350k City jobs and about 850k jobs in the whole country and some 8% of GDP.
BOE and major economic commentators now realise that we had (like Iceland) too big a banking sector for the size of our economy. We hear nothing from Blackhurst on this, nor on other major industries in the UK and in London, such arts etc. Why?
- William, London
How much tax do these individuals actually pay in the UK? Given their access to financial planning and fiscal expertise, very little?
What other contributions do they make to life in Britain? They distort the London housing market by driving up prices and support some luxury goods shops and that is it.
Why are they leaving, because they are being asked to contribute but they do not wish to do so.
- Manny Goldstein, London, England
IMHO this is just the start, once the burden of public sector pensions kicks in in 1 decade or so, no one will want to live and work in the UK. Where once the City of London was the place to be, soon it will be the place to avoid. I've already left too.
- Andy Davids, London
