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Why Entrepreneurs Are Cautious of Corbyn

21/09/2015 11:34 BST | Updated 18/09/2016 10:12 BST

Well, he's done it. Jeremy Corbyn, the left-wing outsider who scraped onto the leadership shortlist with odds of 200/1, has accomplished what many believed impossible - laughable even, for some.

And yet the Islington North MP, whose campaign subsequently electrified the leadership election, now sits at the helm of the Labour Party. Within his first 48 hours, he had appointed trenchant leftist John McDonnell as shadow Chancellor, was criticised for giving male MPs too firm a grip on top cabinet posts, and controversially refused to sing our national anthem. Not since Thatcher has a figure in British politics been so divisive: even those on the left have called for Corbyn to appoint a spin-doctor.

But arguably the greatest controversy surrounds the 66-year old's economic ideas. If Labour under Ed Miliband's direction was socialism-lite, under Corbyn we can anticipate a return to "socialism proper". Of course, it would be wrong to criticise any specific policies before they are announced, though we can expect a return of ideas that former leaders - Thatcher, Major, Blair and Brown - had rightly consigned to the dustbin of history.

His calls in the past for new taxes on excessive bank profits, a renationalising of the railways, printing money to pay for new infrastructure, and increasing government spending have led some business leaders to accuse Corbyn of wanting to "drag Britain back to the 1970s," a time when the UK was "strangled by high taxes and an inflexible labour market". Such comparisons warrant concern: if we look historically at those countries creating most jobs and seeing the greatest rise in living standards, they exact far fewer tolls on companies than Corbyn is proposing.

Likewise, UK entrepreneurs are far from convinced. On the one hand, Corbyn's plans to freeze business rates for small businesses have been warmly welcomed, and his pre-election pledge to address the skills gap through a National Education Service was encouraging. But we can also expect policy announcements that will shift the burden of taxation from consumption to income and wealth. This might make sense from a redistribution perspective, but taxing wealth, capital and savings doesn't make economic sense. It's distortionary, pushing people to consume now what they would otherwise save and invest - which is bad for entrepreneurs and the process of wealth creation. As Jeff Lynn, the entrepreneur behind online crowdfunding platform Seedrs points out: "a Labour government under the leadership of someone who understands the role that wealth creation plays in social progress could be good for entrepreneurship". The fear is, that someone isn't Corbyn.

And there has been little talk of helping growing companies by easing rules and regulations - despite a survey this week revealing that the cost for small businesses of complying with red tape is soaring ahead of inflation. Rather than celebrating the spirit of entrepreneurship, the main focus of the leader's policies appears to be large corporations - with talk of cutting tax reliefs and subsidies to the corporate sector, which Corbyn's team (boldly) estimates at £93bn.

But Astus Group co-founder Frances Dickens touched on an important point earlier this week when she wrote: "Most [small businesses] want to be big businesses when we grow up, so Corbyn's apparent antipathy towards large corporates worries us." At a time when national governments are cheering for foreign entrepreneurs, the UK cannot afford to be perceived as anti-business. Making the UK a hotbed for innovation, entrepreneurship and business growth will guarantee our global competitiveness and should be a priority for any leader. With small businesses (those with fewer than 49 employees) accounting for almost half of all private sector employment, Corbyn must remember that what's good for entrepreneurship is good for Britain.