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'Labour doesn't really seem to care about us'

Simon Evans
Sunday 14 October 2007 00:00 BST
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After six years in the City as a corporate financier for the likes of ING and Dresdner Bank, 34-year-old Nick Newbury decided to pursue his dream by setting up Original Travel, a firm specialising in weekend adventure trips.

After four successful years, during which revenue grew at an annualised rate of 61 per cent, he and his co-founders, Alastair Poulain and Tom Barber, decided to tap private equity investors for new growth capital. Earlier this year, they received a £1.2m boost from Hotbed, a private equity firm based in Milton Keynes.

The cash has already enabled Original to embark on an aggressive marketing campaign in Britain, while foreign expansion plans have also been outlined. Staff numbers have swelled to 17 and the firm has moved into bigger premises in south London. But under the rules announced by the Chancellor, things might have turned out differently.

"If the changes on CGT and taper relief had come in a couple of years ago, it could have seriously hampered our expansion plans," says Mr Newbury. "I think it's going to make investors think twice about putting cash to work with those firms at the smaller end of the spectrum."

His worry is that other benefits and incentives currently available to smaller businesses could also be for the chop in future. "The Government doesn't really seem to care that much about small firms," he says.

For Gary Robins, the chief executive of Hotbed, Mr Darling's tax changes will prove a big disincentive to investing in start-ups. "Taper relief was put in place to reward private investors for holding unlisted shares for longer periods," he says. "It was this that encouraged high net worth investors to back entrepreneurs trying to set up businesses and create jobs."

Mr Robins reckons the changes increase the likelihood of more companies going bust, while entrepreneurs might find themselves having to part with much bigger stakes in their businesses than has been the case so far.

For the team at Original Travel, the past four years have been an adventure, with turnover reaching £2.3m last year. A raft of launches are planned for the end of the year, building on the successful rollout of a joint venture in Russia. The company's new book, detailing 52 of the world's most original short holiday breaks, hits the shelves tomorrow.

But should Mr Newbury and his team need more cash, the outlook is now far less certain thanks to Mr Darling and his changes.

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