ALEX BRUMMER: Labor’s tax plans would undermine British growth

Who couldn’t support Keir Starmer’s plans for the NHS?

Labor wants to reduce youth suicides, tackle heart disease and speed up cancer care.

With an NHS budget of £180.2 billion, digital transformation and artificial intelligence (AI), this could all be possible in the longer term.

Starmer, in his round of breakfast interviews staged in front of rows of parked ambulances in Essex, was clear that income tax and national insurance increases were off the table.

Labour’s big idea for stepping up the training of British doctors and other NHS professionals is to abolish non-domiciled status for wealthy individuals who choose to live in Britain.

Gamble: Labor leader Kier Starmer (pictured) wants to abolish non-domiciled status for wealthy individuals who choose to live in Britain

Gamble: Labor leader Kier Starmer (pictured) wants to abolish non-domiciled status for wealthy individuals who choose to live in Britain

This would generate £3bn in additional revenue for the Treasury, according to Labor.

There are a number of problems. The first is that Labor has already spent some of the £3 billion on pledges to provide free school meals.

The bigger mistake is to think there is a permanent pot of gold. All the abolition of non-dom does is drive away some of Britain’s most enterprising individuals.

Labor talks all the time about closing tax loopholes. One of the favorites for Shadow Chancellor, Rachel Reeves, is the tax break on fossil fuels for exploration and production in the North Sea, increasing the revenue from the windfall tax.

Perhaps no one has noticed that at $74 a barrel for Brent, supercharged profits are disappearing and well-off North Sea investors like Jim Ratcliffe of Ineos have other choices that would undermine energy security.

As for non-stupids, chasing them away could make us much poorer. Britain may not be able to get their hands on their overseas revenue, but the latest government data shows that the 68,300 non-doms, a declining tribe, still paid £7.8 billion in tax on British income.

Non-doms are already on the move, and numbers are dropping year after year. As the next election approaches, a stream of departures could turn into a flood.

There’s no shortage of other choices, with Portugal and Greece offering advantageous tax status, and Italy joining in. That’s one of the reasons Milan is a hot spot for mobile investment bankers.

The Tories are already self-harming the upscale retail, design and hospitality industries by ending the VAT tax credit for foreign visitors, giving Paris, Madrid and Milan the advantage.

Starmer’s ideas of squeezing the wealthy would negate any ambition to put the UK back at the top of the Group of Seven’s growth league.

NatWest Legacy

The rescue of Credit Suisse by rival UBS was managed without Swiss authorities recapitalizing the merged bank.

If the group’s new CEO, Sergio P. Ermotti, has any illusions about the task ahead, he might want to take a look at NatWest.

Some 15 years after Labor pumped £45.5bn into the bank, took an 84% stake and parachuted Stephen Hester into emergency boss, the government still has a hefty stake.

In the latest ownership change, NatWest CEO Alison Rose is spending £1.26bn on a share buyback, reducing HMG’s stake from 41.4 per cent to 38.6 per cent.

Any pretense that taxpayers could escape the shadow of disgraced former Royal Bank of Scotland boss Fred Goodwin without incurring a loss has vanished.

The contrast between the recovery of the top US banks and the time it has taken to reassemble Humpty-Dumpty in Europe is stark.

Deutsche Bank is profitable again, but still faltered last month. UBS has a long journey back and Italian banks rely heavily on subsidies from the European Central Bank.

Meanwhile, Americans have had plenty of time to foment another crisis among tech and regional lenders.

Last tango

There are many obstacles to getting a UK banking license for Revolut, not the least of which is technology investor Softbank’s unwillingness to give up its preferred stock without compensation.

Soft bank boss Masayoshi Son has a habit of playing hardball, as the UK learned to its detriment after a London listing for Arm Holdings.

Revolut’s bosses want the London license to take cheap, insured deposits and apply them to the valuable US banking market.

Chief executive Nik Storonsky believes that if it fails with the Bank of England, French authorities will welcome it with open arms. Paris is bent on eroding the city’s influence as a financial center.

But not, one imagines, with a risk to financial stability.

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