Chancellor Rachel Reeves signals budget will increase tax for businesses

Reeves sat down with ITV News Business and Economics Editor Joel Hills

Roll up, roll up! “Britain is back at the global table”.

That was the pitch and the prime minister delivered it to a room full of global business leaders at the government’s International Investment Summit.

In the audience was the chair and chief executive of DP World, Sultan Ahmed Bin Sulayem, and the transport secretary who upset him last week in an interview with ITV News.

When businesses invest, Keir Starmer told the summit, economic growth increases and everyone wins.

“Growth is higher wages, growth is a more vibrant high street, growth is public services back on their feet, it’s less poverty,” he said.

“And, of course, for any business, it means a bigger market, higher demand, a more secure and prosperous future”.

As is customary on these occasions, the government trumpeted £63 billion of business investment that has been announced since the election - which it said would create 38,000 jobs in the UK.

Those investments included £1.1 billion from Manchester Airports Group to expand Stansted.

And £1 billion from DP World - investment the company had been threatening to pull.

We approached the chair of DP World and asked him why he had changed his mind but he wasn’t keen to answer questions.

I asked the chancellor, Rachel Reeves, if the government had offered Bin Sulayem an apology,

“Well, conversations, as you know, happened at the weekend to encourage them to make that investment,” Ms Reeves replied, cryptically. That’s not a denial.

The government has been on quite a journey in the last few days.

Last Wednesday, it considered P&O Ferries, DP World’s subsidiary, to be “a rogue operator”

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The transport secretary, Louise Haigh, said as much, using language that had been signed off by Number 10.

DP World complained, threatened to withdraw its investment and now the government has changed its view.

Last week, Ms Haigh told ITV News she wouldn’t travel with P&O Ferries. Today, Ms Reeves told me she would.

In opposition, Sir Keir called on Boris Johnson’s government to boycott P&O Ferries and DP World, for behaviour that he said made his “blood boil”. Now, he wants to do business with them.

It’s not clear what has changed.

P&O Ferries still hasn’t complied with a legal obligation to file its UK accounts for 2022 - they are nine months overdue.

Meanwhile, the Insolvency Service is still investigating P&O and its directors for potential breaches of UK civil law relating to the sacking of 786 British seafarers in March 2022.

Happily, the government’s broader message on investment is coherent and consistent.

Increasing the amount of money businesses spend on projects in the UK is a very good way to lift economic growth and living standards.

Tom Wagner, an American businessman whose Knighthead Capital Management owns a controlling stake in Birmingham City Football Club, was at the Investment Summit.

He wants to spend £3 billion developing a “Sports Quarter” in the area around the St Andrews stadium, creating “1000s of jobs” and new homes.

And he wants the government to support him to do it.

“I think the key things are faster planning, the certainty of reasonably priced energy and, ultimately, better transport,” he told ITV News.

He added: “[The UK government] is saying all of the right things. And the key with any political statement or initiative is what follows. Action is the critical element”.

Today was about backslaps and smiles between ministers and billionaires. However, the bonhomie may not last.

Today, the chancellor signalled that her budget in two weeks time will increase taxes for businesses.

Ms Reeves told me that if, as expected, she hikes what employers pay to the government in national insurance she would not be breaking a manifesto promise not to “increase national insurance”.

The chancellor explained that it was “really clear in black and white” that the pledge applied “to working people” and did not extend to companies.

That’s not how many firms interpreted it.

Today the government was in charm mode, trying to woo businesses. In two weeks time, Ms Reeves will deliver a Budget that may upset them.

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