Lord O'Neill Warns PM Burnham: Capital Gains Tax Hike 'Stupid' for UK Growth

A prominent former Conservative Treasury minister, Lord O’Neill of Gatley, has issued a strong warning to Prime Minister Andy Burnham against increasing capital gains tax, branding such a move as "stupid." Lord O’Neill, who previously served under former Prime Ministers Cameron and May and now sits as a crossbencher in the House of Lords, believes that raising taxes in the upcoming Budget on October 28 would contradict the government's claims of prioritizing economic growth.

In an interview, Lord O'Neill expressed his concern that such a decision would signify that ministers are not genuinely focused on growth, but are rather "scared and lazy and constrained in dealing with the sacred cows." He cautioned that an increase in capital gains tax could paradoxically lead to a reduction in Treasury revenue. His reasoning is that business owners, faced with higher taxes, would likely defer selling their companies or move their assets abroad to circumvent the tax.

Lord O’Neill, who also revealed he declined a role as the Prime Minister’s economic adviser, highlighted the current difficulties faced by businesses, including the aftermath of Brexit, changes in national insurance, and shifts in the labour market concerning zero-hours contracts. He argued that adding a capital gains tax hike, alongside potential inheritance tax changes, would be yet another burden on an already struggling economy, especially given the country's weak growth rate.

Drawing on his nearly two decades of experience as a venture capital investor, Lord O'Neill emphasized the inherent risks in business. He stated,

The thing that Andy's done so well is create this spirit of, 'I'm going to be a happier kind of positive person'. It's against that.

He praised Prime Minister Burnham for fostering a more positive atmosphere and setting out a clear vision for the country.

However, he stressed that "hard choices" await when Parliament reconvenes next week for the critical Budget discussions.

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