BUSINESS owners have reacted with frustration to revelations that the work and pensions secretary sent a message to Lord Mandelson saying Labour was asking “who can we tax in order to pay benefits to others” – with one saying “we are rearranging deckchairs on a very expensive, heavily-taxed ship”.
Pat McFadden, who is now work and pensions secretary, described conversations he had with other Labour politicians about the welfare system and public spending.
He wrote to Lord Mandelson in May 2025: “Every meeting I have is ‘who can we tax in order to pay benefits to others’.”
He added: “They’re asking the wrong questions.”
A spokesperson for McFadden, who was running the cabinet office at the time of the comments, said “Pat has fully complied with the Humble Address and handed over all messages.
“His only contact with Peter Mandelson since he left government has been to urge him to think about the victims in all this and apologise to them.”
Business owners have shared their thoughts on these revelations, with many criticising Labour for continuing to seek ways of raising taxes rather than work out a way of making the pie bigger in the UK economy.
Taxation has become the default policy response to almost every challenge
Paul Denley, CEO at London-based Oakham Wealth Management, said we are “rearranging deckchairs on a very expensive, heavily-taxed ship”.
He added: “Every government inherits problems. The test is whether it reaches for the same tired tools or has the imagination to do something different. Too often, the focus seems to be on redistribution rather than growth, innovation and wealth creation.
“The concern is that taxation has become the default policy response to almost every challenge. Successful economies do not become more prosperous by continually redistributing a fixed pool of wealth. They grow by encouraging enterprise, investment and productivity.
“At some point, the conversation has to shift from how we divide the pie to how we make it bigger. Otherwise, we risk managing decline rather than creating prosperity. Without a stronger focus on growth, we are simply rearranging deckchairs on a very expensive, heavily-taxed ship.”
Graham Nicoll, Financial Planner, Chartered FCSI at NCL Wealth Partners, said business owners are frustrated at the comments.
He added: “Pat McFadden’s reported comment reflects a frustration many business owners recognise, the perception that as the government faces fiscal pressure, businesses, entrepreneurs, investors and higher earners are often seen as the first source of additional tax revenue.
“The concern is not necessarily about paying tax, but about the cumulative impact of repeated tax increases and policy changes that impact confidence, the attractiveness of investing and growth in the wider economy. Small businesses create jobs, generate tax receipts and drive local economies.
“By exacerbating a system that rewards inactivity and can encourage unemployment, the balance is wrong. The government needs to focus on promoting people to upskill, to aspire to contribute to get rewarded and on driving growth rather than stifling it.”
This neatly encapsulates the economic illiteracy of this government
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said Labour had made mistakes in the two years they have been in power.
He added: “This neatly encapsulates the economic illiteracy of this government. They are not in the least concerned with wealth creation.
“The cost of this myopia is stark: a record number of young people not in work or education, record-high taxation, an economy on its knees, unemployment at 5% and rising, and government borrowing costs that recently reached levels exceeding those that triggered the Liz Truss meltdown of 2022.
“The Tories deserved a good kicking at the last election, but the country does not deserve this shambolic excuse for a government. Two years into Labour’s first term in office in 15 years, they are behaving like a Manchurian candidate – hell-bent on destroying the UK from the inside out.”
Michelle Lawson, Director at Fareham-based Lawson Financial, also criticised Labour.
She added: “This makes me sick to the core. Millions of people in the UK of all ages get up every day to go to work – and some have multiple jobs to pay the bills.
“Labour bleat on with their rhetoric on the importance of business but this shows their lack of knowledge and understanding of the basics. In two years they’ve managed to do what no other government has done – become the most unpopular and be the most despised, yet the Prime Minister still hasn’t got the memo.
“With all the notes in these papers, there must be plenty to just give him the push he and the Chancellor need. The damage they have done is still repairable but comes with other concerns. Rather than taxing just about every possible morsel, looking at the systemic root cause of these problems and a good financial review of their spending may help. Another fine mess this shambolic lot have put us in.”
Steven Greenall, Director at Greenall Estate Planning, simply added: “Labour are doing their utmost to talk themselves out of winning the next election.”
Photo by Young Shih on Unsplash.
