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‘Stability is the key’

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Last month I spent two days in Luxembourg, one of Britain’s major rivals when global financial institutions consider where they should establish their European HQ

The country’s finance minister and professional advisory firms spelt out the crucial argument for a Luxembourg base. Not secrecy, which has long fallen to EU transparency requirements. Not tax – some taxes are high. The answer was stability. Set up in Luxembourg and you know exactly how your business will be regulated and taxed next year – and in five or 10 years’ time. What is more, if there’s an election and the government changes it won’t make any appreciable difference.

Alas, that is not the perception of businesses in the UK. Whatever the merits of Labour’s talk of intervening to fix energy prices, forcibly breaking up the banks and reverting to a 50p tax rate, such measures would greatly affect the profitability of any corporate venture.

Investing in Britain brings many unknowns. Not many of us would fix our mortgage rate knowing that imponderable political factors a year off might double or treble outgoings. In 1997, the certainty promised by Tony Blair and Gordon Brown over the next five years reassured business sceptics.

Few business leaders will want to alienate their potential political masters, but continuity and predictability are the key preconditions for productive investment.

Commonwealth ‘cousins’ shut out

Like many people living and working in the UK today, I am the grandson of a man who – along with many others – travelled from this country to fight for Britain in the Boer War. Many of them, and their descendants, served under the Union Jack in two world wars, and maintained a close association with the UK throughout their lives, making a huge contribution to business and British society.

Many FTSE companies, government departments and institutions are still led by Australians, New Zealanders, South Africans and Canadians with an emotional commitment to Britain as well as to the countries of their birth.

Yet the treatment of Commonwealth visitors – particularly young people wishing to work in the country with which their home history is intertwined – is shabby and mean-spirited. It is also self-defeating; those who live here make a huge contribution to the economy and rarely become dependent on the state. It is disgraceful that the number of visas issued to South Africans has been reduced by 90 per cent, and tragic that the number of Australian and New Zealanders arriving here to work has been halved.

If today’s migration policies had been in place 30 or 40 years ago, Britain would have been deprived of many of its most distinguished law lords, vice-chancellors, scientists, business and military leaders.

The UK has a natural affinity with the Anglosphere states, and the movement of people for work and study benefits our economies, promotes trade and boosts diplomatic links. For centuries, Britain’s strength has been based on its position as an open trading nation. It is worrying that the UK is shutting out people from the Commonwealth who want to work here.

Scottish conundrum

As the Scottish referendum draws closer, it is fascinating to think of the ‘what ifs’ should voters choose independence. If there is a yes vote, Scotland will move towards independence in 2016. But the country’s full quota of 59 MPs will still be elected in the 2015 general election.

The vast majority of those seats are likely to be won by Labour. Supposing Labour wins with a majority of, say, up to 40: the Scottish MPs who provide that majority will lose their seats as soon as independence arrives – meaning that the Conservatives will be back in power.

Constitutional lawyers will have a field day given that any government holding office on a technicality, waiting for its majority to evaporate, is unlikely to command much moral authority.

Hapless minister

It was bad luck that Mark Harper, by general consent a conscientious immigration minister, felt obliged to resign when it was discovered that his own cleaner was working in Britain illegally. Rather than snorting with derision at the failings of politicians, one can see a different lesson here. It can be difficult to establish the legality of someone’s working, or living, arrangements. It is not their job to enforce immigration laws and penalising them when they get it wrong is oppressive.

About author

Simon Walker

Simon Walker

Simon Walker served as director general of the IoD from September 2011 until January 2017, having enjoyed a career spanning business, politics and public service. From 2007 to 2011 he was chief executive of the BVCA, the organisation that represents British private equity and venture capital. Walker has previously held senior roles at 10 Downing Street, Buckingham Palace, British Airways and Reuters.

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