Conservative leadership election: Boris Johnson vs Jeremy Hunt – who’s better for small businesses?
The Tory leadership challenge is heating up, and we’re barely a week away from our next prime minister. But which candidate offers more for small businesses?
Whether you’ve found the whole thing riveting or repellent, the result of the Conservative leadership election between Boris Johnson and Jeremy Hunt will have serious consequences for small businesses.
If the polls are to be trusted, it’s now all but inevitable that Johnson will be the next UK prime minister – according to Oddschecker, 96.2% of Tory members intend to vote for Johnson.
That said, Tory leadership races have a history of turning out triumphant underdogs. So it seems the former London Mayor shouldn’t count his non-EU regulation chickens just yet.
We should know by July 23 who the next prime minister is, with the winner taking office the very next day.
But what impact will the new Tory leader have on UK enterprise? What policies have they pledged? What promises have they made? And what can their political record tell us about who’s likely to be better for small businesses?
We’ve conducted extensive research and spoken to businesses and experts across the country to answer these questions.
Who are the candidates?
After weeks of campaigning, sniping, and debating, 13 candidates have been whittled down to just two.
You might have heard quite enough about both, but let’s have a recap.
Other names: Boris Alexander Boris de Pfeffel Johnson, just Boris, BoJo
Known for: Being gaffe-prone, having affairs, and saying “F**k business!”
Surely the UK’s most contentious and well-known politician – and one of the few who can be identified by first name only – Johnson was a journalist pre-politics, writing for The Times, The Spectator, and The Telegraph (for whom he still writes a weekly column).
Following a stint as MP for Henley, two colourful terms as Mayor of London helped to build his popularity with people from across the political spectrum, before he was reelected to the House of Commons in 2015. He was made foreign secretary by Theresa May (remember her?) before resigning in protest at her Chequers deal.
His career has been dogged by blunders, controversy, affairs, and scandal. However, save for an unsuccessful stab at the leadership in 2017, it doesn’t seem to have halted his rise to the top.
Despite being the arch Brexiteer in the current contest, in 2016 it was revealed that he drafted two columns (one backing leave, one backing remain), before deciding to throw his weight behind leave. This added fuel to suspicions that his decision was a purely opportunistic move. Nevertheless, his hardline approach and fiery rhetoric have won him the support of the most vehement leavers.
Other names: Jeremy Richard Streynsham Hunt
Known for: Having his name mispronounced, accidentally saying his wife was Japanese in China, Lambada dancing
An admiral's son, Hunt was head boy at Charterhouse School and has served as MP for South West Surrey since 2005. He was appointed foreign secretary after the resignation of his leadership rival, and was previously the country’s longest-serving health secretary – a stint that was not without controversy.
Hunt was a successful entrepreneur (as he’s very fond of saying), co-founding and growing education publishing firm hotcourses, which he eventually sold. This gives him an obvious advantage when it comes to understanding the needs of small businesses.
Unlike Johnson, who it’s fair to say is oversupplied in the private life department, about the most interesting thing about Hunt is his passion for Lambada, a form of Brazillian dancing.
Hunt supported Remain in the referendum, but claims to have since switched his allegiance to Leave.
Popular opinion says that leaving the EU without a deal would be disastrous for the economy, trade, and british businesses.
Meanwhile, chancellor Philip Hammond recently warned that both Boris Johnson and Jeremy Hunt’s tax and spending plans would be impossible in a no-deal Brexit scenario.
With that in mind, what are our candidates Brexit policies? And what other policies do they have that might impact businesses?
It could be fighting talk, but Johnson has been consistent in saying that the UK will leave the EU on October 31, with or without a deal. He has also said he will refuse to hand over the £39bn ‘divorce bill’ until a new deal is agreed. However, he’s also said that the chances of leaving without a deal are “a million to one”.
Johnson intends to negotiate a new deal that will replace the Irish backstop with alternative arrangements.
Hunt is less enthusiastic about a no-deal Brexit, but has said he would back the option if necessary.
He’s also pledged to create a new negotiating team, who will decide by the end of September whether there is a realistic chance of a new deal, and will present a provisional no-deal Brexit budget in September.
Hunt has also said the Irish backstop has to go.
Johnson’s tax pledges are levelled more at the individual than businesses. He would raise the higher rate tax threshold from £50,000 to £80,000 – particularly good news for business owners paying themselves a salary above £50,000.
He will also raise the point at which workers start paying National Insurance Contributions, meaning your employees get more take home pay.
Read more about self-employment tax here.
Hunt’s big ambition is to turn Britain into the next Silicon Valley, and his tax policies are very business-friendly.
He wants to cut corporation tax from its current level of 19% to 12.5%, in a bid to encourage investment and business growth and stimulate the economy. However, economists have speculated that this wouldn’t make up for the estimated £13bn in lost taxes.
And there’s good news for retailers. Hunt has pledged to scrap business rates for 90% of high street shops.
Finally, he would increase the tax-free annual investment allowance – which allows businesses to deduct a certain amount from its taxable profits to invest in equipment – from £1m to £5m.
Hunt has also proposed scrapping tuition fees for entrepreneurs, though how this would work remains to be seen.
Wants to increase the National Living Wage – which currently stands at £8.21 per hour for anyone aged over 25 – to £7.70 for those between 21 and 24, and £6.15 for those between 18-20.
This could affect salaries for your employees, and means you may need to budget more for staff pay.
He’s also pledged more money for public sector workers, wants to “find the money” to recruit an extra 20,000 police officers by 2022, and wants full-fibre broadband in every home by 2025.
Read more: How much should you pay your staff?
Alongside the significant tax cuts for businesses, which look to put a sizeable dent in the public purse, Hunt is also promising some pretty lavish spending.
This includes an extra £15bn on defence over the next five years, building an extra 1.5 million homes, ongoing support for a third runway at Heathrow, and free TV licences for over-75s.
It seems both candidates have abandoned the Tory tradition of being the party of fiscal responsibility in service of winning.
Position on Brexit
Johnson was one of the leading figures in the Leave campaign during the referendum.
There was much anticipation ahead of his announcement about which side he would be supporting. Few were more surprised than friend and then prime minister David Cameron, who was rather expecting him to support Remain.
Indeed, many believe that his backing of the Leave campaign was nothing more than a Machiavellian plot to become the next Tory leader, despite his true beliefs. Three years later, whether through cunning or mere serendipity, it looks like that’s exactly what’s going to happen.
As recently as 2013, Johnson had used his Telegraph column to say that staying in the EU was, on balance, in the interests of the UK.
Nevertheless, since the start of the referendum campaign, his rhetoric has been decidedly more hostile towards the EU. This has often manifested in the form of spurious claims and ludicrous promises.
Hunt voted remain in the referendum in 2016, but has since claimed he would change his vote to leave in the event of a second referendum.
His position on Brexit has hardened, possibly as a result of being in direct competition with his hard-Brexiteer Tory leadership rival.
He’s said he would consider leaving without a deal if it looked like the only way to deliver Brexit. Is this just bravado to try to force the EU’s hand? Who knows. He’s possibly playing a dangerous game.
As we’ll see from our small businesses and experts, all signs point to a no-deal scenario being a disaster for businesses and the economy.
Looking at how our candidates have voted on business-related policies in the past should give us an indication of their current and future attitudes.
We’ve used TheyWorkForYou.com to assess our two contenders’ sympathies when it comes to small businesses.
From the limited information we can find, it looks like Johnson generally votes for policies that are seen as favourable to businesses.
Johnson’s voting record chimes with his current policies proposed as part of his leadership campaign. He has:
- Voted for reducing capital gains tax
- Almost always voted for reducing corporation tax
- Consistently voted for raising the threshold at which people start to pay income tax
- A mixed record on measures to reduce tax avoidance
You can find a more comprehensive list of Johnson’s voting record here.
As a former entrepreneur, Hunt’s voting record is, unsurprisingly, supportive of policies that encourage business growth and allow entrepreneurs to keep more of their hard-earned cash. He has:
- Generally voted for raising the threshold at which people start to pay income tax
- Generally voted for increasing the rate of VAT
- Generally voted against increasing the tax rate applied to income over £150,000
- Almost always voted for reducing capital gains tax
- Generally voted for reducing the rate of corporation tax
- Generally voted for stronger tax incentives for companies to invest in assets
- A mixed record on measures to reduce tax avoidance
Click here for a more detailed look at Hunt’s voting history.
What do small businesses have to say?
Andrew Jervis, co-founder and CEO of ClickMechanic:
“I'd select Jeremy Hunt as the best of a very average bunch, and there are two major reasons for this. Firstly, Jeremy was an entrepreneur himself before moving into politics, with the successful multi-million pound exit of a technology company. Understanding first-hand what it takes to build a business and its pain points can only be a good thing when deciding on the policies which will most positively impact small business owners.
“Secondly, all the major think tanks believe it's key that we do not step out of the EU without a deal, and I'm much more inclined to believe them than any Brexit hardliners wanting to leave at any cost. With this in mind, I would again opt for Jeremy. Boris's track record proves that he is not afraid to drive controversy – which is great – but I don't think he'd be afraid to push for a no-deal Brexit. In comparison, the more temperate and pragmatic Jeremy Hunt will manoeuvre to get a deal, even if it’s not the best.”
Andrew Dark, co-owner of Custom Planet:
“I think they both seem to have good policies that will help business. Personally, Boris will help small business owners by raising the tax threshold to £80,000, but I also like Jeremy’s business friendly policies to cut corporation tax and scrap business rates for high street shops.
“This will make a massive difference to us. I think a lot of this will come down to how Brexit goes, and I favour the more ‘deal-friendly’ option of Jeremy Hunt on Brexit. As we know all too well, there is a massive difference between what they are pledging to do and what they can actually get done once in power.”
Rita Trehan, HR professional and business transformation expert and CEO of Dare Worldwide:
“Boris has declared himself to be an “Evangelist” for business, however his vocal “f*** business” last year is likely to come back to haunt him, especially as he has yet to name any potential proposals for businesses, new and old. Johnson’s media-orientated background as a reporter, correspondent and editor also seem far less relevant or appealing than the self-proclaimed entrepreneur, Hunt. While some may argue his experience as Mayor of London, is an indication of his ability to create the conditions for London businesses to flourish, it is a somewhat tenuous link.
“Is Hunt any better? Even though Hunt has been flaunting his ‘entrepreneurial’ credentials, as well as his plans for UK jobs and the economy. Hunt has promised to cut corporation tax from 19% to 12.5% to “turbo charge the economy”, the cost to the government is approximately £136 billion, so it may not be as attractive a proposition as it first appears. Hunt has also vowed to cut taxes making them the lowest in Europe in the hopes it will attract foreign businesses and facilitate growth.
“He has admitted that his hard Brexit strategy could cost jobs but has said he will put spending plans on the back burner to further support UK businesses. The ex-double business owner states that his experience makes him the most qualified to take on not only the role as negotiator in Brussels, but the PM who cares about local businesses.”
Nicholas Harding, CEO of Lending Works:
“While neither candidate has covered himself in glory during the race for the Tory leadership, it would undoubtedly be Jeremy Hunt who gets our backing. It must be said that, while fraught with tremendous risk, the possibility exists that Boris Johnson’s present negotiating position might just yield some vital concessions from the European Union to get a new withdrawal agreement over the line – rather like if one was playing a game of Settlers of Catan.
“But, with so much at stake, this is a far cry from playing a board game, and it does appear that Mr Hunt is held in higher regard over in Brussels. And, setting aside the issue of Brexit, we believe he has shown himself to be more competent with respect to running a country – not to mention ostensibly more in tune with the plight of small businesses.
“His credentials as an entrepreneur are very impressive, and we welcome some of the innovative measures he has embraced during the campaign. The proposal he put forward on wiping tuition fees for entrepreneurs requires further scrutiny, but in principle, such an incentive could further strengthen Britain’s already impressive entrepreneurial base, and the dynamism it brings to our economy.
“We also whole-heartedly endorse his plans to exempt smaller firms from business rates on the high street, while his pledge to cut corporation tax is one which, if implemented sensibly, can give SMEs a timely boost in the face of uncertainty, without hurting the Exchequer. The growth in corporation tax revenues following recent rate cuts, and indeed the increased corporation tax revenues in countries such as Ireland, provide a blueprint for this.
“We also believe that Mr Hunt has shown himself to be a diligent Foreign Secretary, and while his time as Health Secretary was not without controversy, it was a post he held for a record six years, which is commendable in itself.
“It isn’t necessarily with great enthusiasm that Mr Hunt receives our backing, and we appreciate that he remains the underdog. But we do believe he is the better equipped of the two men in contention to lead our country into this next chapter.”
Lee McDarby, Managing Director of Corporate International Payments at moneycorp:
“Both Boris Johnson and Jeremy Hunt have indicated a willingness to accept a no-deal Brexit, although Hunt’s position is a little softer. Johnson has said Britain will leave the EU on October 31 ‘come what may’. By contrast, Hunt has indicated that he would be prepared to let that deadline slip, if it means getting a deal done.
“Every time that Britain edges closer to a no-deal Brexit, the Pound takes a tumble. In this respect, if Boris Johnson wins, we can expect to see Sterling slide. And, if his rhetoric towards the EU doesn’t soften once he becomes Prime Minister – especially as the Halloween deadline approaches – we can expect to see the Pound move even lower.
“The impact of this on businesses depends on their foreign currency exposure. If you’re an exporter, a weaker Pound helps; your goods or services become cheaper, and therefore more attractive to foreign buyers. In contrast, businesses reliant on imports might find things get a lot more expensive. Moreover, often businesses that look from the outside like exporters are actually dependent on imports – particularly manufacturers reliant on international supply chains – so can be hurt by a weak Pound.
“To mitigate against future currency fluctuations, businesses should consider a hedging strategy to manage their risk; moneycorp offer bespoke hedging solutions, which can protect an exporter’s budget rate whilst allowing potential participation in favourable market movements. Through proactively understanding their likely exposure to the foreign exchange markets, businesses can protect their bottom line, and even take advantage of movements in the market.”
David Morel, CEO of Tiger Recruitment:
“UK businesses have shown incredible resilience to the political chaos we’ve experienced so far this year, but they’re crying out for some stability in the political landscape – not the sort of “fly by the seat of your pants” approach we’ve had of late. This will then allow them to make well-informed plans for their medium to long-term growth.
“On the face of it, Hunt’s pledges to make Britain a ‘Hub of Innovation’ and slash corporation taxes might seem preferable to UK businesses – particularly when compared to Johnson, who made his ‘f**k business’ retort last year. That said, it all comes down to their ability to close the Brexit deal because, ultimately, a no-deal Brexit will inflict the most harm on UK businesses in the long term – regardless of their tax cut promises.”
Prime minister Boris Johnson most likely…
But it ain’t over ‘til the fat lady sings, and Hunt has certainly been putting up a fight. He’s also the preferred option amongst the general public, according to a recent poll.
Both candidates are currently cavorting around the country trying to drum up support amongst the approximately 160,000 Conservative party members that get a vote; doing stunts, making promises they can’t keep, making sausages.
Thanks to his history of entrepreneurship, pro-business policies, and (slightly) softer approach to Brexit, it looks like Hunt is the favoured option for UK small businesses – though there’s little enthusiasm behind their decision.
Whatever happens, the general consensus is that a no-deal Brexit would be a disaster for small businesses.
Next prime minister, whoever you may be, Startups urges you to do your best to avoid such a scenario!