Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: Rachel Reeves, the UK Chancellor of the ex Checker Chancellor, welcome.
Speaker 2: It's great to have you with us today Bloomberg TV
Speaker 2: and Radio. Just to start with this. You're in New
Speaker 2: York and Toronto for that matter, to help drum up
Speaker 2: investment in the UK. A lot of folks are looking
Speaker 2: at these images of riots over the past couple of days,
Speaker 2: and I wonder your thoughts as investors try to consider
Speaker 2: the impact of these riots as they consider the UK
Speaker 2: as a destination for investment.
Speaker 1: Those responsible for the disorder that we've seen these last
Speaker 1: couple of days in the United Kingdom, they don't represent
Speaker 1: the vast, vast majority of people. They are a tiny minority,
Speaker 1: and as our Prime Minister, Keir Starmer says, they will
Speaker 1: be met with the full force of the law and
Speaker 1: they will feel the consequences of their actions. But it's
Speaker 1: been great for me as Chancellor to be here in
Speaker 1: New York today with US investors to send the message
Speaker 1: lad and clear that Britain is back in business and
Speaker 1: we are open to business under this new government led
Speaker 1: by Keir Starmer. We won the election just over a
Speaker 1: month ago with a mandate to grow the economy. Number
Speaker 1: one mission of this new government is to bring economic
Speaker 1: growth and jobs and productivity to all parts of the
Speaker 1: United Kingdom, and that's a message that I've been really
Speaker 1: pleased to share with investors here in New York today.
Speaker 3: Well, Chancellor, of course, trade has a big impact on
Speaker 3: the economy, and we have an election of our own
Speaker 3: here in the US coming up just a few months
Speaker 3: from now. When it comes to a potential US UK
Speaker 3: trade agreement, do you think that's more likely to happen
Speaker 3: under a future Harris or second Trump administration.
Speaker 1: Well, it's up to the people of the United States
Speaker 1: to choose who they want as their president. But the
Speaker 1: UK government, whether that's Labor or a conservative government in
Speaker 1: the UK, has always worked with whoever's the White House
Speaker 1: and whoever is in Congress, and that will continue to happen.
Speaker 1: The US doesn't have a greater friend than Great Britain.
Speaker 1: We are the closest of friends and allies, and already
Speaker 1: Britain's largest trading partner is the United States, of course,
Speaker 1: who want to build on that and make it easier
Speaker 1: for Great British businesses to export to the United States
Speaker 1: and to make it easier for great American businesses to
Speaker 1: export to the United Kingdom, so we want to strengthen
Speaker 1: and deepen those trade ties. Trade is good for countries,
Speaker 1: and especially when it's between countries that share each other's
Speaker 1: values in the way that the UK and the US do.
Speaker 2: Well as long as Joe Biden is the president. There's
Speaker 2: a debate underway, and I suspect that will continue if
Speaker 2: Kamala Harris becomes the next president about what to do
Speaker 2: with the Trump era tax cuts from twenty seventeen. There's
Speaker 2: an effort by Republicans to extend them or make them permanent.
Speaker 2: Democrats here say we can't afford it because of the
Speaker 2: impact that we're we have on our debt and deficit.
Speaker 2: President Biden goes further to say the super rich need
Speaker 2: to pay their fair share when it comes to taxes.
Speaker 2: Is that something you agree with?
Speaker 1: I think people should pay their fair share of tax
Speaker 1: and one of the challenges we have in the UK
Speaker 1: is a gap between what should be collected by His
Speaker 1: Majesty's revenue and customs and what is actually collected. But
Speaker 1: we made a commitment in our manifesto that we'll be
Speaker 1: sticking to, which is that we don't want to increase
Speaker 1: taxes on working people, and we will be keeping income tax,
Speaker 1: National insurance and value added tax at the rates they
Speaker 1: are for the duration of this parliament. I would like
Speaker 1: taxes on working people to be lower, but I believe
Speaker 1: that you can't make promises without being able to say
Speaker 1: where the money is going to come from. But the
Speaker 1: tax burden in the UK has got too high. The
Speaker 1: tax burden in the UK is a seventy year high.
Speaker 1: I want to bring that tax burden high down because
Speaker 1: I want to make Britain the best place to start
Speaker 1: and grow a business and I want working people to
Speaker 1: keep more of their own money in their pockets. And
Speaker 1: that's what people will have with this new labor government.
Speaker 1: And it's why it's so important that we grow the
Speaker 1: economy because the last few years in the UK, there's
Speaker 1: been lots of debate about what level of taxation and
Speaker 1: what level of spending, but it's missed the bigger picture. Yeah,
Speaker 1: and the bigger picture is growing the economy. And that's
Speaker 1: why I'm here in New York today and tomorrow and
Speaker 1: then in Toronto later in the week to drum the
Speaker 1: bang the drum for Britain and to say loud and
Speaker 1: clear that Britain with this new government, is open for business.
Speaker 3: Well, as you mentioned income taxes there Channel story, I wonder,
Speaker 3: given the revenue it potentially could generate, if you're tempted
Speaker 3: to bring capital gains taxes in line with the income tax,
Speaker 3: is that something you're considering.
Speaker 1: We've got a budget on the thirtieth of October and
Speaker 1: we'll set out our policy then. But it's always important
Speaker 1: when you're deciding tax policy to strike the right balance.
Speaker 1: Of course, you need to bring in the revenue to
Speaker 1: fund vital public services, but we've also got to grow
Speaker 1: the economy, and I want do anything that makes it
Speaker 1: harder to achieve that economic growth and prosperity, because in
Speaker 1: the end, the only way we're going to lift living
Speaker 1: standards for working people and have the money that we
Speaker 1: need to invest in our public services, whether that is
Speaker 1: our health service or our schools, or indeed our police
Speaker 1: and our armed forces, is by growing the economy. And
Speaker 1: so I am determined to ensure that when we set
Speaker 1: all of our policy, including tax policy, that we're not
Speaker 1: doing anything that will deter the investment and growth that
Speaker 1: we need to see in the UK economy. But we'll
Speaker 1: make decisions around tax and around spending at the budget
Speaker 1: and the spending review later this year.
Speaker 2: As you consider those decisions, you've said that private equity
Speaker 2: firms that co invest on deals might receive more favorable
Speaker 2: tax treatment. What would those favorable rates look like.
Speaker 1: Well, we've just announced a consultation at the end of
Speaker 1: July into the treatment of carried interest to make sure
Speaker 1: that the system works fair. Of course, if you put
Speaker 1: in your own capital, if you've got capital at risk,
Speaker 1: I think it is right that you benefit from a
Speaker 1: more generous form of tax relief. But if it's not
Speaker 1: your capital at risk, then that's not right that you
Speaker 1: receive those tax breaks. So that's why we've launched this consultation,
Speaker 1: and we will in the budget later this year on
Speaker 1: the thirtieth of October, bringing forward the changes that we
Speaker 1: need to see to our tax system around the carried
Speaker 1: interest for private equity.
Speaker 3: Well, and of course private equity I would imagine is inclusive.
Speaker 3: In some of the meetings that you're having while you're
Speaker 3: here in the US, we understand you've been meeting with
Speaker 3: the likes of Steve Schwartzman or Gene Fraser. What have
Speaker 3: you heard from them, Have they made any commitments in
Speaker 3: regard to the UK Investment Summit, for example, or are
Speaker 3: think looking for certain things from your government.
Speaker 1: It's been great to meet some of the private equity
Speaker 1: and venture capital firms here today in New York, and
Speaker 1: I'll be doing more of that tomorrow. There's so much
Speaker 1: money that we think we can unlock for the UK
Speaker 1: economy and ensure then that British firms, startup firms, scale
Speaker 1: up firms, can grow and access that long term patient
Speaker 1: capital that private equity and venture can often bring to
Speaker 1: the table. And what I've been hearing loud and clear
Speaker 1: from the private equity bosses that I've had a chance
Speaker 1: to meet with today is that they welcome the change
Speaker 1: of approach that they've seen from this new labor government,
Speaker 1: where a relentless focus on growing the economy, the reform
Speaker 1: to the planning system, reforms to our pension system to
Speaker 1: unlock the long term patient capital, the creation of a
Speaker 1: National Wealth Fund to leverage in private sector investment, as
Speaker 1: well as building and resetting our relations with our nearest
Speaker 1: neighbors and trading partners in the European Union, which is
Speaker 1: really important for US businesses when they're deciding where in
Speaker 1: Europe to locate and headquarters. So it's been really useful
Speaker 1: having the frank exchange of views with private equity and
Speaker 1: venture capital today. And as you say, we're going to
Speaker 1: be hosting an international investment summit in the UK on
Speaker 1: the fourteenth of October, and I hope that many of
Speaker 1: the businesses that I've had a chance to meet with
Speaker 1: here in the States will be over in London for
Speaker 1: that investment summit in October.
Speaker 3: All right, Chancellor, thank you so much for spending some
Speaker 3: time with us this evening here at Bloomberg. That's Rachel Brieves,
Speaker 3: UK Chancellor of the Exchequer. We appreciate it.