MANY of the British Asian businessfolk who attended last Friday’s (15) gala dinner to launch Eastern Eye’s Asian Rich List would agree with the basic tenet of Jon Moynihan’s book, Return to Growth: How to Fix the Economy (Volume One).
He says, for economic growth, you cannot have a big state. You have got to have lower taxes, especially lower inheritance tax on family businesses.
Here are some of his recommendations: Corporation tax (back to 19 per cent); bank levy (abolish); offshore energy profits (abolish); income tax (abolish additional rate); employee national insurance (including self-employed) (abolish, one-third now, one-third later, onethird unfunded); business rates (drop by 30 per cent – half now, half later); green charges (abolish); apprentice levy (abolish); climate change levy (abolish); employer national insurance (abolish – onethird now, one-third later, one third unfunded); non-property capital gains tax (drop to 10 per cent from 20 per cent – pays for itself); inheritance tax (drop to 10 per cent from 40 per cent – pays for itself); stamp duty on shares (abolish); and stamp duty on land tax (abolish – half now, half later).
His is a pretty weighty book. I weighed it on the kitchen scales. It comes to 1.6kg. There are lots of charts in the book. These have to be printed on glossy art paper. In fact, all 481 pages are printed on the heavier paper.
Moynihan intended bringing out the first volume after the general election in the autumn of 2024, but he was caught out when Rishi Sunak went to the country in July. And the second volume, which takes in chancellor Rachel Reeves’s budget which runs contrary to most of Moynihan’s recommendations, is already with the printers.
But the book is weighty in another sense. His arguments are backed up with facts and figures.
Moynihan’s CV says he was born in Cambridge on June 21, 1948; was educated at Balliol College, Oxford, North London Polytechnic and MIT; worked for two charities in India – War on Want and Save the Children – in 1971 and 1972.
He spent 20 years in America with Strategic Planning Associates, Washington, and First Manhattan Consulting Group, New York. He returned to the UK and was CEO and then chairman of PA Consulting Group, London, from 1992-2013.
A boy vaccinated against cholera after the Orissa cyclone, November 1971He created over twenty companies, most of them in the science and technology fields. He is a former president of the Royal Albert Hall. He is married to the hat designer, Patricia Underwood. He sits in the House of Lords as Baron Moynihan of Chelsea after being given a peerage by former prime minister Liz Truss.
In his book, he sets out what he thinks is the fundamental problem with the British economy: “Western Europe, the original home of economic growth, has adopted an economic approach that is at odds with the success of previous centuries and at odds with the approach of most developing countries. As a result, it has descended into stagnation.
“To take the UK as an example, our economic growth is now close to zero. Had our economy continued to grow over the past twenty-three years at the same rate as it had in the 1960-2000 period, our real GDP would now be some 29 per cent higher than it is currently, and average annual earnings, currently £34,840 in 2023, would be £52,546 per year, assuming earnings had grown at the same rate over that period. This means the average UK citizen would have an extra £12,430 a year in their pocket, even if tax rates were kept at their current level, which they wouldn’t need to be because the government would be receiving more tax revenue.”
He says: “This book examines the reasons for this decline in growth, not just in the UK but across western Europe. The governments of the social democracies have adopted interlinked policies that have led to economic growth more or less grinding to a halt. We in the UK have, in the main, gone along with those policies. In particular, the size of their governments has increased too much to permit economic growth (which can, for the most part, only be created by the private sector).”
In his opinion, “spending lots of money and increasing the debt pile, far from providing a long-term solution, instead threatens our future further.”
People on the Asian Rich List might reflect on this sentence: “Balzac, the great nineteenth-century French novelist, was said to have coined the famous phrase ‘behind every fortune lies a great crime’. Nowadays, in the UK, there’s a flavour of that sentiment in most people’s attitudes towards the rich – wealthy people must be criminals or perhaps the descendants of criminals. It’s a stupid view….”
He writes about the flight of the rich from the UK: “Unfortunately, selecting richer people and business as the ideal victims to pay more tax does not work out as expected. The rich do not respond passively when actions are taken to make them pay more tax.
The cover of Return to Growth“The top one per cent of income taxpayers (some 320,000 individuals) pay 30 per cent of all income tax in the UK. How pleased are they when demands are made that they must pay more? How many might leave the UK as a result? What will the net impact on tax revenues be from their departure: positive or negative?
“Henley Partners say 1,500 millionaires left the UK in 2022 and the number rose to 4,200 in 2023; this year, they forecast it to more than double in one year, to 9,500. Worse than millionaires departing, the very rich are now leaving in droves. The Sunday Times, reporting in May 2024, stated that ‘this year’s [rich list] edition records the largest fall in the billionaire count in [its] 36-year history’. And leavers are not confined to millionaires or billionaires: a recent newspaper article was titled ‘The young high-earners deserting Britain and never coming back’.”
He also deals with the attack on private schools: “The private education sector in the UK certainly takes some of the strain from the state budget and gets good results: shrinking private education (eg by imposing VAT on private school fees) is going to further overload state schools, as parents who can’t afford the cost return their children to the state sector, thus imposing economic self-harm on the country.”
Moynihan states: “This book has been a plea, both to the electorate and to the elected, to take a fresh and different look at what’s important for both our future and for the future of our descendants. If, going forward, we do not grow the economy at a high enough pace – significantly faster than the growth in our population – then more people will get sick, will not be cured in such numbers as would otherwise be the case, and will likely die earlier, at a greater rate and with greater distress than would have been the case had our economy grown faster. If we don’t grow fast enough, our young people won’t be educated well enough. We won’t have sufficient housing to accommodate our growing population. The economy won’t be creating decent jobs for them. Wage earners won’t see a steadily rising standard of living and won’t get salary increases that make them optimistic about the future and optimistic about being able to bring happiness and fulfilment to their families.”
British Asian business folk will examine his recipe for a more prosperous Britain: “Growing the economy at a decent rate necessarily means our accepting that the state needs to have a smaller role than it does now. We need to accept that not all problems can or should be solved with state interference or state money; we should accept that calls for self-reliance must replace calls for ‘something must be done’ and ‘there should be a law’. As the smaller state, lower-tax economy brings benefits to wage earners, the approach I and so many others recommend, of people standing on their own feet, will become self-reinforcing. Taxes must be lower, especially taxes on business.”
In his interview with Eastern Eye, Moynihan talked about personal aspects of his life not in the book, notably his time in India. “I spent most of 1971 and half of 1972 in India,” he said.
“I went there originally because of the Bangladesh crisis,” he explained. “I went to work in the refugee camp for a charity called War on Want, which hooked up with Mother Teresa. There were 12 million refugees. She found us a couple of chicken runs outside the biggest refugee camp.”
There was “a very high death rate” because of cholera. “I made friends with Mother Teresa. I used to drive her around.”
Moynihan was asked to leave India after he gave an interview to Junior Statesman, a local magazine, when the Indian government “quite correctly” took offence at his suggestion that a “colonialist saviour had come to help the Indians”.
The official line was: “Stop glamourising this longhaired lout from London.”
Moynihan went on: “I went back to England, but within a week I was on a plane back having been hired by another charity (Save the Children), because there had been a tsunami in Orissa. 126 schools had been washed away by the tidal wave.”
When the Indian army went into East Pakistan, “I went in with a relief convoy because there was really desperate stuff the West Pakistani army had done to the local population. There were starving people who needed medical help. I spent some months in what became Bangladesh.”
He also has memories of visiting Sikkim. “It’s extraordinary because in an hour, you can go up a hill between three totally different micro climates, with different fauna and flora, different weather, different everything.” He talked of the demographic changes in India and in China and the consequences of the decline in the Chinese population.
Mother Teresa at her hospital“The Chinese have never been that expansionist, but they see now a way to expand with the ‘belt and road Initiative’ without military conquest, and that’s what they’re doing anyway. But they’re literally done for because in 75 years their population is going to be half that of India. Assuming that India continues to grow economically, which they have done in a more messy way than China, their economy is going to be far larger in the end than China’s. I am a great fan of India.”
His view of life was shaped by an experience he had in Orissa. Villagers had agreed to build schools after they were promised food and a supply of building material. But when he returned, he was cross when he found no school had been built. He was embarrassed when he was told that while he had been away, cholera had swept through the village, claiming the lives of a third of the men.
“I came from a world where something like this was impossible to imagine,” he admitted. “It was a formative moment for me.”
More than half a century later, he remembers Orissa when people in the UK say they cannot go to work because of mental health problems or push for a four-day week.
His thinking is: “What the hell are you complaining about? You have no idea what life can be like? Dude, you are competing against the whole world. If you want us to get poorer and poorer, if you want us to be uncompetitive with the whole world, insist on your lifestyle. But you’re not going to get an increase in salary every year. Your salary probably isn’t going to keep up with inflation. You won’t be able to look after your children if you have two or three children because you won’t have the money.”
His reasoning is that the state will have to impose more and more taxes to provide welfare without an increase in productivity.
A big problem for the UK is the growing number of wealthy non-doms leaving the country. For statistics, he has relied on Henley & Partners, who describe themselves as the “global leader in residence and citizenship by investment”.
“Anecdotally and talking to people, they seem to be spot on,” said Moynihan. “And, in fact, since I wrote volume one, the numbers gone up even more. In the past couple of months, there was an absolute flood of people leaving this country because they were terrified that Rachel Reeves would put an exit tax which can really kill you. She didn’t, but it was too late. By then they had left, and they’re not coming back.
Refugees fleeing East Pakistan, June 1971“For example, I know a chap who runs a highend members’ club here (in London), and he’s lost 700 members this year. Now these are people who are leaving the country and not coming back and not keeping a home here. Many of them will have three, four or five homes around the world, and it’s easy for them to leave. They just move over to another of their houses. If they’re giving up their membership of the club, it means they’re not planning to be here at all. And this is an absolute tragedy.
“Twenty years ago, we were Brit pop, and before that, swinging London. We were the place where anybody in the world wanted to come and live. It was a welcoming atmosphere. They wouldn’t try and soak you too much. You could be a non-dom, which meant that you would pay tax on anything you earned in the UK, but you wouldn’t pay tax on anything from businesses or earnings you had outside the UK. And they’ve abolished the whole non-dom thing now.
“So all of those who are non-doms have to consider, ‘Well, shall I leave or not?’ Tons of them did this year, and that example of the club is just an illustration. This really is happening. It’s not just made up. I know two billionaires, very rich people, who’ve left this country this year. Somebody I know has a customer who said, ‘I’m leaving the country.’ He called up the movers and said, ‘I need you to move all my furniture from my house and send it off to Dubai or wherever. We’re going.’ And the mover said, ‘You’ll have to wait because there’s a long queue.’”
As to why this policy is being pursued when it appears to be doing more harm than good, Moynihan replied: “It’s class warfare. It’s simple as that.”
He deeply regrets that leavers include young British people. “Above all, it’s young high achievers, high earners in their 20s who are leaving this country in floods. I have a friend who was in Dubai last week at a conference. He said there were literally hundreds of young Brits having a great time out there, starting their businesses, working for businesses, paying low tax, having much more freedom, all of whom could have been back here helping build the economy.”
He spoke of the bad old days in Britain: “When I was 25 they had the three-day week in the UK, which was an absolutely absurd thing. You were only allowed to go into work for three days. They wanted to save energy because the miners were on strike. I just said, I don’t want to be like this. I want to do well in my work. I want to work hard and achieve things. So I left the country just like they are doing now, and I didn’t come back for 20 years.
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