LONDON’S BUSINESS NEWSPAPER
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THURSDAY 8 DECEMBER 2022
ISSUE 3,905
CITYAM.COM
FREE
ALMOST QUARTER OF A MILLION DRAGGED INTO HIGHER RATE EXCLUSIVE
JACK BARNETT AND CHARLIE CONCHIE NEW ANALYSIS suggests that almost a quarter of a million Londoners will be dragged into the higher rate tax band as a result of Jeremy Hunt’s decision to freeze income tax thresholds in the Autumn Statement. Some 213,165 workers in London, and 122,543 more across the wider south east, will pay the 40 per cent rate as soon as this April as a result of the level at which it kicks in not being uprated with inflation or average pay, per analysis by Investec Wealth and Investment. Wonks warned the Treasury was at risk of “killing the goose that lays the golden egg” if the capital was squeezed too tightly. It means that more than a third of Londoners, 36.1 per cent, will be paying the higher rate. Investec Wealth & Investment’s Faye Church said “workers in London... are taking the biggest hit” from the Treasury’s push to refill the country’s postpandemic coffers.
Hunt also reduced the top rate of tax threshold from £150,000 to £125,140. Church said “given the number of high earners working in the City, it stands to reason that they will be amongst the hardest hit” by the threshold cut. Hunt’s move to cut the threshold came just weeks after former Chancellor Kwasi Kwarteng announced plans to scrap the top rate of tax altogether, only to U-turn after political pressure and a market reaction to his wider ‘growth plan’ package. Last night think tank leaders in the capital said the Treasury’s reliance on London and the south east could be counter-productive. “The country’s stark over-reliance on
London’s success to balance the books is plain for everyone to see,” Nick Bowes, chief executive of the Centre for London, told City A.M. last night, arguing that plans to ‘level up’ the country could potentially relieve some of the pressure on the capital. Bowes said the tax changes meant “the country’s economic health is dangerously reliant on the capital firing on all cylinders, but it would be foolish to take for granted that London’s success will just continue into the future regardless. “If the city sees reduced investment in the infrastructure and public services London needs to thrive, this could kill the goose that lays the golden egg, leaving the whole nation poorer,” he continued. The average Londoner already pays double the national average in income tax, according to the most recent official figures. The Treasury has previously said that “we have been honest about the difficult decisions we face and are asking those with more to contribute more”.
SUNAK THE STRIKE BUSTER Prime Minister promises powers STEFAN BOSCIA RISHI SUNAK is looking at new widespread strike-busting legislation as the UK gets ready for a winter of disruption. Sunak ratcheted up his rhetoric against union barons yesterday as he told MPs that “I have been working for new tough laws to protect people”, with Number 10 confirming it would go further than just protecting against transport strikes. Number 10 said “work is ongoing at speed” on the new legislation, with Sunak’s spokesperson refusing to rule
out banning ambulance drivers from striking. It comes as nurses, rail staff and other key workers are set to go on strike this month as a part of industrial action expected to cause chaos over Christmas. Yesterday Border Force officials announced they would go on strike at airports including Heathrow over the Christmas period. Trades Union Congress (TUC) chief Frances O’Grady said “ministers have seemed more interested in sabotaging talks than trying to resolve disputes”.
Reeves warns on investment as Labour prepares to woo Square Mile leaders EXCLUSIVE
STEFAN BOSCIA SHADOW CHANCELLOR Rachel Reeves warned last night that French President Emmanuel Macron is “eating the UK’s lunch” when it comes to attracting global investment in an exclusive interview
with City A.M. Reeves said that France was successfully stealing investment away from British startups post-Brexit, with the shadow chancellor promising to help pension funds unleash billions of pounds of long-term capital into the economy. Reeves and Sir Keir Starmer will launch Labour’s start-up review in a
Canary Wharf event today, with the party promising a “radical plan to make Britain the high growth, startup hub of the world”. “Macron is trying in his country’s national interest to get more of the VC money into his country. The US through the US inflation reduction act is trying to get investment
into the green industries of the future in their country," Reeves told City A.M. “This is not a static environment – it’s a dynamic one and we have to compete globally for our share of investment.”
The probe was called to address the UK’s stagnating levels of Venture Capital (VC) investment into British start-ups, which review chair Lord Jim O’Neill – a crossbench peer and former Goldman Sachs economist – called “dreadful”. £ CONTINUED ON PAGE 2
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