If I Were a Rich Man
Quinten Massys, Moneychanger and His Wife, dated 1514, oil on panel, 74 x 68 cm. Musée du Louvre, Paris,
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With the Government's benefit spending cut plan rejected by the Commons, a £6 billion budgetary shortfall looms. Most agree this is likely to lead to further tax hikes in the Autumn Budget.
A 2% annual levy on assets above £10 million has been mooted by former Labour leader Lord Neil Kinnock. In other words, a wealth tax. He suggested this could raise as much as £11 billion for the Treasury.
While both Number 10 and the Treasury have steadfastly ruled out increases to income tax, National Insurance, and VAT, their refusal to explicitly dismiss a wealth tax has sustained speculation that all options are being considered.
The idea was welcomed by those on the left, including members of the SNP and Plaid Cymru. Concerns were raised by Conservative MPs Neil O’Brien and Shadow Business and Trade Secretary Andrew Griffith. O’Brien argued that "if we tell business people and wealth creators that their money will get taxed if they leave it in this country, we drive even more investors away". Griffith added that "even if this measure is not ultimately put in place, over the next couple of months the speculation about a wealth tax itself will drive investment away from this country".
A recent YouGov poll found that about three‑quarters of adults back higher taxation on the richest over deeper spending cuts. That support rests on three beliefs: that wealth inequality is rising, that the current burden on high‑net‑worth individuals is too light, and that a wealth tax would bring reliable revenue for public services.
However, in reality, a wealth tax is likely to cause much more harm than good. The Institute for Fiscal Studies argues that while taxing wealth more is needed, taxing "stocks of wealth as opposed to flows of income, profits, and gains derived from it is exceptionally challenging".
Among the 38 OECD members, only four (Norway, Spain, Switzerland and Colombia) still levy a net‑wealth tax. A dozen others have abandoned theirs since 1990 because the tax receipts were insignificant compared to the cost of policing. Germany abandoned its wealth tax in 1997; France followed suit in 2018, acknowledging it had driven away more capital than it had ever collected. Even in Switzerland, often cited as a success case, net‑wealth tax yields amounted to about 1.2 percent of GDP in 2022.
For the UK’s start‑up economy the stakes are high. A wealth tax would jeopardise London’s role as Europe’s largest venture capital hub and founders already cite tax uncertainty as a reason for moving headquarters elsewhere.
A key issue lies in the immense difficulty and cost of accurately valuing an individual's total assets, particularly illiquid ones like equity, which lack easily discernible market prices.
For founders, a blanket annual levy on these unrealised private company shares could create a crushing cash flow problem, forcing founders to pay tax on paper values but with no cash inflow, compelling distress sales of company shares or even hindering their ability to reinvest in growth. This is after the already damaging changes that were made to the non-dom regime and an increase in capital gains tax.
The constant threat of an unpredictable, annually assessed tax would loom large over both investors and founders alike. This would undoubtedly deter both domestic and international investment. Much like France, we'd likely witness a mass exodus of capital and talent, fleeing to more advantageous shores.
Ultimately, a wealth tax, especially one that snags illiquid business assets, could well choke the very innovation and job creation that the venture capital ecosystem so brilliantly delivers, jeopardising the long-term economic prosperity the Government is striving to achieve.
Without further ado, let’s get into this week’s Folgate Signals.
Artificial Intelligence
Science and Technology Secretary Peter Kyle spoke at the Google Cloud Summit to announce a new strategic agreement with Google, which he says will “liberate” public services from legacy IT contracts. The deal includes expanded collaboration between DeepMind and government AI teams, Google Cloud support for a new digital centre of government, and plans to train 100,000 civil servants in cloud and AI tools by 2030.
The partnership builds on early use cases like “Extract,” a Gemini-based AI tool converting handwritten planning documents into structured data to support housing delivery. Kyle also pledged a “national digital exchange” to give UK tech SMEs a larger slice of the £21bn public sector IT spend.
The Government has launched a £1 million Open-Source AI Fellowship in partnership with Meta and the Alan Turing Institute. The 12-month programme seeks to embed top AI engineers in public sector teams to build open-source tools that improve planning, national security, and service delivery. However, compensation is only up to £85,000. It’s being referred to as a “tour of duty” in Government.
Defence
The UK Government unveiled a set of recommendations from the Defence and Economic Growth Taskforce aimed at driving job creation and unlocking the full economic potential of the defence sector.
Central to the report is a new “Team UK” approach, to align private capital with public procurement reform, aiming to turn defence into a growth engine. The plan prioritises “dual-use” technologies and includes new regional Defence Growth Deals, an SME hub, and a Defence Exports Office.
The announcement coincided with Helsing’s £350m investment in an AI submarine plant in Plymouth.
Cambridge Aerospace, a stealth UK startup founded in late 2024, has raised ~$100 million to develop low-cost drone and cruise missile interception systems.
Its first product, Skyhammer, aims to provide sovereign aerial defence for the UK and allies. The company has backing from Accel, Lux Capital, and Lakestar and is chaired by former defence secretary Grant Shapps
At the Ukraine Recovery Conference, the UK confirmed a £2.5 billion UKEF-backed financing deal to supply over 5,000 Thales air defence missiles, creating and safeguarding 900 UK jobs. The government also pledged £283 million in bilateral assistance for 2025–26, including £10.5 million for governance reform and £1 million for Ukraine’s green transition.
Health
The UK and Japan have signed a Memorandum of Cooperation to boost reciprocal investment, with biotechnology and healthcare identified as key sectors for UK capital expansion into Japan. The agreement complements broader initiatives like CEPA and CPTPP, and aligns with the UK’s new Industrial Strategy, which prioritises long-term transformation of health-related innovation and services.
This means smoother regulatory and institutional pathways for UK healthtech and biotech startups - a huge growth sector - looking to scale in Japan.
Climate & Energy
The Department for Energy Security and Net Zero has launched a 16-member Science and Technology Advisory Council to provide expert, evidence-based input on delivering clean power by 2030. Co-chaired by Prof. Paul Monks (DESNZ) and Prof. David Greenwood (Warwick), the panel includes leading voices in decarbonisation, energy networks, AI, and systems engineering from Cambridge, Imperial, UCL, and industry.
The UK government has rejected localised pricing in favour of reforming the single national electricity market, aiming to cut bills, accelerate grid upgrades, and deliver clean power by 2030. The plan includes a new Strategic Spatial Energy Plan (2026), a review of transmission charges with Ofgem, and reforms to reduce £4bn/year in constraint payments.
Great time to invest in battery and energy storage technologies.
Dan McGrail, former CEO of Siemens Engines and RenewableUK, has been confirmed as the permanent CEO of Great British Energy after serving in the interim role. Based in Aberdeen, he will lead the publicly owned utility in scaling up strategic investments across the UK’s clean power supply chain—including £1 billion already earmarked for offshore wind and cable infrastructure
Other stories
The government has tabled amendments to the Employment Rights Bill that will ban the use of non-disclosure agreements (NDAs) to silence employees subjected to harassment, sexual misconduct or discrimination. The reform will void any confidentiality clauses used to prevent victims—or witnesses—from speaking out, and is backed by Deputy PM Angela Rayner and campaign group Can’t Buy My Silence .
At the 37th UK - France Summit, the two governments launched the first ever bilateral Industrial Strategy Partnership, securing over £1 billion in French investment into UK advanced manufacturing, clean energy, defence and AI. Confirmed deals include £70m from Veolia for plastics recycling in Shropshire, £40m from Thales for AI R&D, and £888m from Ardian to expand its stake in Heathrow. EDF, LVMH, Comand AI, and others also announced UK expansion plans.
State-backed industrial partnerships like this one de-risk hard tech and AI infrastructure plays
The Government has launched a new scheme to help up to 500 SMEs secure their IP and sensitive data from cyber and insider threats, with particular concern for state-backed industrial espionage. Companies in sectors like AI, life sciences, semiconductors and renewables can apply for subsidised “Secure Innovation Security Reviews” via Innovate UK.
As part of the government’s Plan for Change, the British Business Bank will deploy £500 million to support underrepresented entrepreneurs, specifically women, ethnic minorities, disabled founders, and individuals from deprived areas.
£100 million is earmarked for female-led VC funds, and the remainder will be split across three strategies: funding diverse fund managers, supporting micro-funds, and backing partners to make smaller bets on emerging talent.
The UK Space Agency has launched a £75.6 million call for proposals for its first Active Debris Removal (ADR) mission, targeting two defunct UK-licensed satellites in low Earth orbit. The project, expected to launch by 2028, will likely be awarded to ClearSpace, which has already completed key development milestones and received £11 million in prior contracts.