I sometimes think the group noun for a gathering of chairs and chief executives should be a grumble of grandees. After-dinner conversations about the economy and government tend to turn gloomy, especially when wine has been taken.
One of the strongest narrative strands in the past year has been the UK’s unattractiveness as a place to live and do business. There are plentiful anecdotes about friends and neighbours who have left for sunnier and lower-tax climes such as Milan and Monaco — vignetterie that was given statistical underpinning by the relocation advisory firm Henley & Partners, which estimated that 9,500 millionaires quit last year, putting the UK second only to China in terms of outflows.
The most commonly cited reason you hear, alongside a stagnant economy and a generally high tax burden, is the inheritance-tax (IHT) component of Rachel Reeves’s non-dom rule tightening. But recently there has been a new and striking narrative, and that is one of talented people thinking about leaving America, a country built on immigration.
I was a guest at a fascinating dinner hosted by an American entrepreneur and philanthropist last month. Based on this person’s credentials, you might have imagined that he would be broadly pro-Donald Trump. But his main thought was that by focusing on trade imbalances in physical goods, culminating in last week’s “liberation day”, Trump was completely missing the point.
The single most important thing a country can do to succeed in the 21st century is to attract the best people. Our host had a flipbook of charts, one of which was a heat map illustrating flows of human capital. As per Henley & Partners’ numbers, the UAE was top last year — and, to be fair, the US was number two. But under Trump, there is a sense that momentum is starting to slow, no matter the $5 million “golden visa” dangled by the president. And it isn’t just because his tariff regime — which, after all, is exactly what he promised to deliver on the campaign trail — has crashed American stock markets.
The Trump White House’s ideological and financial shakedowns of opponents has sent fear through those who value the rule of law. The revanchist sacking of federal prosecutors who participated in cases targeting him was perhaps unsurprising. But Trump’s assaults on Ivy League universities including Columbia and Harvard, and top corporate law firms including Paul Weiss and Skadden, have been genuinely shocking.
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Equally so has been the way many buckled under pressure. There will be business leaders and entrepreneurs wondering whether they really want to spend the next four years, and possibly longer, in an environment where an orange thunderbolt can strike at any time. There will also be the counterfactual crowd who might have moved to the US but now choose to go elsewhere.
It might sound like a parochial response but this should be a moment of opportunity for the UK. It should be the natural Anglophone alternative. Even the rich aren’t entirely transactional about where they live. The UK’s culture, schools and timezone go a long way to compensating for a stodgy economy and a tax burden approaching a postwar high. But you do need to avoid actively repelling people, and that’s what the non-dom changes are doing.
There was cross-party consensus on ending the colonial-era tax perk, in that Jeremy Hunt stole Reeves’s policy and announced it before the election. However, Labour’s version, which comes into service today, will drag a person’s global assets, including anything held in previously protected offshore trusts, into the scope of the UK’s 40 per cent IHT rate after ten years. There is then a ten-year “tail” if that person leaves.
Lobbyists for non-doms have proposed a system with far higher annual fees than the old one, with individuals worth up to £100 million charged £200,000, and those with more than £500 million charged £2 million. Something along these lines, combined with a scrapping of the IHT raid on offshore trusts and an extension of the grace period from four to ten years, would draw the sting from the non-dom measures — and probably earn a lot more for the Treasury than the present plan.
Despite all the talk about the end of globalisation, the countries that win in the coming years will be those most open to talent. That means offering stability — and not pushing away wealth.
Valuable lesson for BP
Helge Lund has fallen on his own sword, or gone under his own oil drill. As noted in this column several times, it was not credible for the former Equinor boss to continue as chairman of BP after the strategic misadventures of the past few years.
The oil major overcommitted to the green transition at the peak of Covid euphoria, then gradually tacked back in the direction of fossil fuels as it was caught out by the post-pandemic recovery. The arrival of activist investor Elliott on the share register was a humiliatingly inevitable development.
Lund, 62, who also chairs Ozempic-maker Novo Nordisk, is a very nice man who showed himself to be very naive. The ultimate role of a chair and a board is to guide executives and hold them accountable.
BP needs a much more streetwise operator, and one who understands a factor that was until lately highly unfashionable — shareholder value.
