Business | 2010.02.22
Overseas businesses put off by UK tax regime, Brown told
• Britain lags Europe in key areas, say foreign firms
• Infrastructure and taxes a deterrent to investment
The tax regime and infrastructure must be improved if Britain wants to continue attracting investment, Gordon Brown was warned yesterday as he launched a charm offensive for international companies.
The prime minister and business secretary, Lord Mandelson, welcomed 250 international leaders to a conference in central London to reassure them the UK remained a competitive place to do business despite the turmoil of the financial crisis and recession.
They promised a more predictable and transparent tax regime, a speeding up of the administrative permit process, openness and an educated labour force.
However, business leaders wanted more and said Britain lagged behind competitors in some key areas. "Britain has a stable government and good education and innovation, but it also has high taxes and the trains and roads are not as good as in continental Europe," said George Buckley, chief executive of 3M, the US-based conglomerate that makes Post-it notes.
A Briton himself, Buckley said the UK needs to "revitalise many of its industries" and reminded the government that multinational companies can go elsewhere. "Companies are not taxpayers, but tax collectors," he told the Guardian at the conference.
Spirits maker Diageo made headlines this month when it said tax increases in Britain could force it to consider moving its headquarters.
The consultation was aimed at other multinational companies including HSBC, Unilever, BP and Axa, which want clarity on Britain\'s tax measures to plan investment.
Business leaders were especially wary of taxes in a country where the fiscal system had been "blown off course" by an increase in the top rate of tax to 50% and the uncertainty caused by the ballooning budget deficit, said Neal Todd, a senior tax partner at City law firm Berwin Leighton Paisner.
"It is little wonder that multinationals are looking for reassurance that the UK will remain a competitive place to do business," he said. "The proof of this particular pudding of fiscal intention will very much be in the eating."
Brown also met Jin Liqun, chairman of the board of supervisors of the China Investment Corporation, the country\'s multibillion-pound sovereign wealth fund.
"We are very actively looking for opportunities in Britain, on a large scale," Liqun told the Guardian. "But we would not be involved in areas that are too sensitive. We want to be an investor who is welcomed. The UK is very open and transparent with low barriers of entry."
Liqun said Britain should focus on "improving its competitiveness", an idea also stressed at the conference by the Harvard University professor and adviser to governments Michael Porter. He said Britain should keep investing in education, infrastructure and innovation, resisting pressure from the markets to cut deficits.
"This radical, immediate deficit-cutting is a mistake, given the continuity of this crisis," he told the Guardian. "Investors are looking into the short term, of course bond investors talk like that, but the government must have a more considered policy."
Porter said companies such as bond investor Pimco, based near Los Angeles, should "make sure that what\'s good for the markets is also good for the economy". Pimco\'s fund manager, Bill Gross, recently said his company was staying away from UK bonds as they were resting "on a bed of nitroglycerine".
Porter praised the UK government for having a strategy, a contrast to the US. "I dearly wish our government worked this way," he said, adding that the US government "is fiddling around, wrapped up in policies".
But Porter urged Britain to increase its investment and develop regional business clusters, bringing together different industries in different regions. "London is a very rich city, but some other regions are behind. What makes the US work is decentralisation, no matter what the mess is in Washington," he said.
To improve competitiveness, the UK also needs to step up innovation, as "it\'s not where we\'d like it to be", Porter said. "We need to translate innovation into business services, with more commercialisation."
The private sector should also take responsibility for economic growth, he said, as "historically, this country has been very centralised and government-driven".Despite his praise, Porter\'s research and graphs showed Britain at the lower part of some charts, 3M\'s Buckley noticed, urging the government to invest more in education. "If you don\'t invest in the future, there won\'t be one," Buckley said.
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http://www.guardian.co.uk/business/2010/[...]investment-gordon-brown-tax-uk
