Lord Jim O’Neill, a close ally of Andy Burnham, has stated that businesses feel “beaten up” and has advised the Prime Minister against further tax increases on British companies. Speaking to the Treasury Select Committee, O’Neill reiterated his opposition to capital gains tax hikes, suggesting they could negatively affect business confidence and investment.
O’Neill, a former chairman of Goldman Sachs Asset Management and ex-Treasury minister, indicated he would not support taxes on banks, but expressed stronger opposition to higher capital gains rates. He commented that any tax increase, especially on capital gains, needs careful consideration due to the current sentiment among businesses.
The UK economy could be experiencing two per cent annualised growth, according to O’Neill, driven by a strong performance in the first half of the year. This level of growth has not been observed since before the 2008 financial crisis. He also suggested that forecasters might have misjudged productivity, noting that the Office for National Statistics reported productivity growth nearly double previous expectations for the period between 2009 and 2019.
O’Neill proposed that Rachel Reeves’ decision to increase national insurance contributions for businesses might have inadvertently boosted productivity by prompting employers to take new steps. He also appeared to support former Bank of England economist Andy Haldane’s call for tax incentives to be revised to encourage pension funds to invest in UK assets.
Chancellor John Healey is reportedly weighing measures to lower the cost of hiring individuals under 25. This week, it was reported that Healey would not seek to align capital gains tax rates with income tax rates, a proposal supported by some Cabinet ministers.