Night night, Darling

In a post-Budget debate around the dinner table last Wednesday evening, my mother-in-law suggested that individuals earning £500,000 or more should be taxed at 90%. Alas, it is probably not the most ridiculous thing she has ever said. But then she is not Chancellor. Unfortunately, Alistair Darling is. The discussion arose in light of Darling’s second budget when, among other things, he unveiled a 50% income tax rate on those people whose earnings exceed £150,000. Some high profile individuals such as Hugh Osmond – the pubs-to-insurance entrepreneur who built up Pizza Express and Punch Taverns – have suggested they will leave the UK as a direct result. As Arsenal manager Arsene Wenger has pointed out it could also lead to an exodus of top talent from the Premiership, but aside from top football stars and the elite business entrepreneurs who earn millions it is the wider message that is most troubling. It is another ill-conceived, short-term move that is ultimately a tax on success. John Waples, business editor of The Sunday Times, summed it up well yesterday when he wrote: “Those who say it only captures a minority of the population miss the point. It is the message that the chancellor has sent out which is the most damaging element…in one fatal decision Darling has undone the entrepreneurial spirit that surrounded New Labour’s early days.” Waples continued: “I accept that for many there is a sense of justice about the new tax banding. It is penalising those whom they blame for creating the economic crisis we are now in. For an influential minority, however, this is another slap from a government that couldn’t manage its way out of a paper bag. It is this group that creates jobs and the next generation of businesses. “Darling says his government should not be seen as antibusiness. Sadly, it appears he is surrounded by a group of very able but chippy academics. They are too detached from the real world to recognise the message Darling sent out with his new tax.” And this government appears too to be detached. It remains to be seen what impact this will have but there is every chance that as a result of this punitive tax, more people will step out of the UK system and the income tax-take will fall. More importantly, young and mobile talent might decide to ply their trade in other parts of the world. Another area where tax revenue is likely to fall further is on alcohol duty – of course one of the biggest issues for this industry. Perhaps unsurprisingly given previous experience, its admirable campaign to axe planned increases fell on deaf ears – despite evidence that the duty rises would affect further volume falls, and ultimately result in lower tax income. The British Beer & Pub Association will release new figures this week confirming as much. But then this government has stopped listening. A surprise change to the tax regime for bingo – an industry whose world has more-or-less fallen in – was truly staggering. Bingo duty will rise from 15% to 22%. There was also a duty rise on gaming machines. The reason that the government doesn’t care is that this stuff does not cost votes – or at least that is the perception. The only way the industry can succeed is by making the future of pubs something that people are prepared to vote on. That is an incredibly demanding aspiration, but with two national institutions in beer and pubs, it is certainly possible. And as the pub industry looks for a new leader for the British Beer & Pub Association, that must be its ambition. If the good British public think that jobs and small family businesses are being lost directly because of government intervention, the whole thing becomes a hard political issue. Certainly, it is not hard to imagine people voting on an issue such as the endurance of community businesses, whether specifically brewers and pubs, or in a wider context. And this work must begin with a new government in mind, for this one is the living dead. Change is needed, and it is coming. If there was any doubt before last Wednesday, it now seems inconceivable that Labour will win a fourth term.