The Murdochs’ next move: Rightmove

Next month’s Budget tax raids on capital have provoked a festival of creative doom-mongering on the fringes of Labour’s conference as well as in the columns of the business press. Most frequently voiced is the prediction that the 2,000 or so denizens of London’s private equity community who benefit from the ‘carried interest’ tax wheeze will pack their Louis Vuitton bags into their Chelsea tractors and form a convoy down the M20 towards continental tax havens. A recent addition to the litany is a warning from the London Stock Exchange chief Dame Julia Hoggett that the ‘ongoing viability’ of the Aim market for smaller companies is at risk if the Chancellor abolishes ‘business relief’ from inheritance tax – which is a prime motivation for many investors to hold Aim-listed shares.

Both claims deserve closer examination – but the threat to Aim is, I suggest, the more convincing. The once-fertile junior market has already seen its board shrink from 819 listed companies to 704 since 2020 and their combined capitalisation fall by 40 per cent, as the hottest UK tech ventures seek higher valuations and broader horizons via the Nasdaq exchange in New York.

I’ve written repeatedly that London’s public capital markets are in dire need of new impetus at all levels – and Dame Julia is surely right that a sudden exodus of tax-conscious investors could send Aim into a downward spiral. Without a reliable public supply of capital, the small- to medium-sized businesses most likely to drive the economic growth which Labour ministers ardently desire are more likely to sell themselves to foreign owners – or fall into the jaws of private equity. I phrase it in that way (rather than, say, ‘enjoy the blessings of…’) because, tax benefits aside, private equity habitually gets a bad rap in the UK, as much from scarred investee companies as from armchair critics like me.