Champagne – but no socialism – as Square Mile gets set to celebrate


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Of all the arguments that George Osborne could present to the House of Commons in favour of reducing the 50p tax band, public opinion was not one of them. A recent poll revealed that the vast majority of Britons across the social scale wanted it to remain in place. Even most Conservative voters backed the 50p tax.

In the City yesterday, however, there was a mixture of relief and jubilation among high earners. Liz Green, 39, who works in financial insurance, pays the 50p tax. She summed up the mood in the Square Mile as "Delighted!" and said they would "all be out in the wine bars celebrating".

John Gully, who is retiring from the same sector, agreed that champagne would be flowing in the Square Mile. "And I think there needs to be a levelling out of tax," he suggested, with "ideally" a move towards a flat tax.

Like many other financial workers, he felt this was a big step in the right direction. Sue Brown, a 47-year-old who works in insurance, described a sense of "relief," adding: "It's about treating everybody fairer." Other City professionals hinged their arguments on the alleged failure of the tax to generate revenue and its impact on entrepreneurship.

Christian James, a 44-year-old banker who pays the 50p tax rate, said the news was "fantastic, brilliant. The higher rate doesn't create any higher revenues, and wealth creators are working to create jobs. We need more carrot and less stick."

Some argued that the tax had driven the wealthy to foreign shores. Thirty-four-year-old banker Adrian Thompson agreed. He claimed to know a number of business people eligible for the tax who had left the country.

But despite paying the top rate himself, he stayed put in London. "I'm not rich enough to make it cost-effective to go elsewhere, but it's also because of lifestyle reasons, and because I've got family here."

A common sentiment expressed in the Square Mile was that those paid £150,000 or more were not particularly wealthy. "I wouldn't say £150,000 was rich," argues 38-year-old financier Mark Smith. But there was real confusion about how many people are really eligible to pay the tax. Nick Morgan estimated that "up to 10 per cent" of the population were impacted by the tax rate: the actual figure is around 1 per cent.

And while the alleged impact on enterprise is a popular argument against the 50p tax, not all experts are convinced. Eileen Burbidge, a venture capital investor, doesn't think that the young entrepreneurs she works with have any interest in the top rate of tax. "They're not in that high bracket, it doesn't affect them," she argues. "They're more interested in whether there are people who want to support the kind of things they want to do. Getting to the level where the top rate of tax comes into force would be a nice problem to have for most of them".

While most City workers were happy with the reduction in the top rate of tax, there was unease about Osborne's hiking of stamp duty on homes costing more than £2m to 7 per cent.

"Prices have risen in London, and if it includes houses worth £2m, then people are going to be stung," said Tom Carey.

But, overall, few in the Square Mile felt they had much to worry about from Osborne's Budget. "Many people are happy about the reduction in the top rate," as Adrian Thompson put it. "Whether it's fair or not is a matter of debate."