Labour must do more to stop the ‘millionaire drain’

As London drops out of the world’s top five richest cities, having lost more than 11,000 millionaires last year, the steady stream of non-doms taking their custom and their cash abroad sends a terrible signal about Britain being closed for business, says Chris Blackhurst

Perhaps we had it coming. London has dropped out of the world’s five richest cities, according to the annual study produced for advisory firm Henley & Partners – and is the only city in the top 50 other than Moscow to have fewer millionaires than a decade ago.

Culture secretary Lisa Nandy was quick to leap on to Brexit as the primary instigator, and said that the government is “taking the right approach” and “striking the right balance” when it comes to taxing wealth and supporting business.

Not that the UK’s departing millionaires would necessarily agree. London has lost more than 11,000 of them in the past year alone, 18 of whom have assets of at least $100 million – plus two billionaires. Labour’s tax increases and the fall in the value of the pound are reportedly among the biggest reasons when deciding to ship out and take your cash with you.

Certainly, chancellor Rachel Reeves has curbed the advantages once enjoyed by non-doms that allowed them to avoid paying British tax on their overseas earnings. As of Monday, wealthy foreigners who have lived in the UK for more than four years must now pay UK income and capital gains tax on their global earnings. The previous system, which allowed them to shelter their assets from British taxes for an annual fee of at least £30,000 has become a less generous one based on residence.

Last month, it was reported that steel tycoon Lakshmi Mittal had announced he was leaving the country following the government’s move against non-domiciled residents. Mittal has lived in the UK for three decades but has told colleagues he’s had enough, that he will go elsewhere since this administration clearly no longer wants and values his presence.

The UK’s seventh-richest person, Mittal is worth an estimated £14.9bn, according to the Sunday Times Rich List. He built up ArcelorMittal to become the world’s second-largest steel producer. It’s controlled by his son, Aditya. He could choose to live in any one of the properties he owns, in Switzerland and elsewhere in Europe, the US, Asia and Middle East or somewhere entirely new. There will be no shortage of countries willing to welcome him and his relatives.

The Mittal news reminded me of when, a few years ago, we had a family celebratory lunch for A-level results. We splashed out and went to Nobu in London’s Park Lane. There we were, just the four of us, when there was a sudden kerfuffle with the waiters rushing round, setting a large table. In came Lakshmi Mittal and his entourage. The bill was steep by our standards, but it was a treat; theirs, presumably a regular occurrence, must have been higher by several multiples.

‘Labour’s tax increases and the fall in the value of the pound are reportedly among the biggest reasons when deciding to ship out and take your cash with you’ (PA)

The restaurant, an adornment to the capital’s dining scene, beloved of celebrities and the wealthy, needs the patronage of billionaire Mittal, one of Britain’s richest people and folks like him. The place is a substantial employer. Without them, it would not survive, at least not in its present form.

If Mittal Sr goes, the loss will not just be felt by Nobu but by all the other restaurants he favours and those British locations where he and his relatives spend their money and opt to invest. According to the Institute for Fiscal Studies, the 60 wealthiest people in the UK contribute £3bn a year in income tax.

He will join the steady stream of non-doms taking their custom and their cash abroad. He employs people here; they depend on him for their jobs. Many of those quitting support British workforces; one has a staff of 80. But Mittal will have gone, along with his fellow leavers.

Equally significantly, their departure sends a global signal. Anyone thinking of following their lead and seeking non-dom status and settling in the UK may well have second thoughts. Our loss will be someone else’s gain.

That is the point. Reeves and her colleagues may be cracking down on them because they suppose Mittal and co are fair game, because they can and because non-doms tick an ideological box, but they are indulging in simplistic, narrow-minded politics. They are allowing their own views to fly in the face of reason and, by doing so, causing great national harm – more financial damage than the amount they would ever hope to raise in taxes by their reforms.

Fair enough, they do not have to appreciate them – these are not likely to be Labour voters, although Mittal was a major donor to New Labour, giving more than £2m when Tony Blair was in charge.

But then Blair, unlike Keir Starmer and Reeves, got it. He understood the value of attracting the international wealthy to Britain: that they might not pay so much tax here, but they would more than make up for it in the numbers they employed and with their spending and investing. As Blair’s then lieutenant Peter Mandelson said, the New Labour government was “intensely relaxed about people getting filthy rich”.

Doubtless Starmer and Reeves would claim something similar, but do they really mean it? Mittal believes he knows the answer, as do the rest of the millionaires and billionaires packing up and vacating their London mansions and offices.

Ministers should ask themselves, why do other nations want non-doms so much? Some – like Italy, UAE and the US – are making concerted efforts to woo them. Why? The States and Dubai are not exactly short of super-rich inhabitants as it is, but they want more. Donald Trump has announced the creation of a $5m “golden visa” for foreigners wishing to base themselves in his country.

Because they bring wealth with them, that’s why. Because they create further wealth wherever they call home.

They’re also leaders; in their own way, they are influencers – where they head, others follow. Britain must be good because they’re living here. Not anymore. Britain, to quote that hackneyed phrase beloved of politicians, must be “open for business”. No, it is not.

In her shortsightedness, Reeves may believe she is justified, that what she is implementing won’t hurt. Mittal and a quieter Nobu supply the answer.