Top industrialists warn a return to high taxes and union militancy will cripple the British economy

One of the UK’s most respected industrialists warned Labour this weekend against returning to “the bad old days” of the 1970s, with rampant unionisation and high wealth taxes.

John Neill, 77, who this week announced his retirement as executive chairman of manufacturing giant Unipart, said it would be a “disaster” if the country returned to the union conflicts that plagued him early in his career at British Leyland.

There are already fears that the party is losing control of industrial relations, as the railway unions announced fresh strikes shortly after being offered a significant pay rise.

He added that wealth taxes – a cornerstone of Labour’s plans to close the government finance gap – would drive away talent and harm the economy.

Chancellor of the Exchequer Rachel Reeves is expected to impose hefty wealth taxes in her October budget to plug what she says is a £22 billion a year hole in the government’s finances.

Economists said last week that much of the alleged deficit comes from money the government has set aside for pay rises for public sector workers.

Reeves claims she has been left with the worst economic legacy since World War II, despite official figures on Thursday showing robust growth. Neill joined British Leyland in 1974, five years before the Chancellor was born. Neill became managing director of the car parts division at just 29.

When British Leyland collapsed, he orchestrated a rescue and transformation of his division, which is now a successful business with a turnover of £1bn and 22,000 staff. When he took over in 1977, Unipart was mired in an 11-week strike.

Despite his young age, Neill immediately confronted the militants.

“When I joined, the company was union-run,” he said. “I felt they needed to understand that I was the boss, not them. I had gotten to know the cleaners, so I asked one of them what to do about it and she said, ‘Fire them.’

He warned that a return to such industrial unrest would torpedo the economy. He said: ‘I hope we don’t go back to the bad old days. It would be a disaster if it happened and I hope it doesn’t.

‘The government must be careful that we can only improve public services by growing the economy. So we need to be competitive, agile and innovative and radically improve productivity.

‘We need to ensure that business and unions work together and do not get into conflict again.’

He added that if rich people are taxed heavily and “feel they can’t keep the money they’ve earned,” they will leave the country, as many did in the 1970s.

‘There is a populist argument, you tax the rich, but in the real world you need rainmakers. You need them in football, in financial services, in all sectors. You want the best people to come here and create the jobs. Taxing people heavily is not the way to create wealth and encourage entrepreneurship.

“It’s talent that makes the economy grow. Spend as much as you want on public services, but it won’t make the economy grow as much. Just raising taxes won’t work.”

Neill was also concerned that 9.4 million working-age Britons are economically inactive. He said: ‘The best social programme is a job.’

Employee-owned Unipart has 12,000 employees and a turnover of £1bn last year. It is the only independent car maker left from the troubled 1970s. Neill led a management buyout of Oxford-based Unipart in 1987.

At the time of the takeover, Thatcherite capitalism was at its height and the Japanese car industry was emerging. Neill studied Japanese manufacturing techniques. He codified his knowledge into a set of principles called the Unipart Way, which forms the basis of how he has run the company. Today he worries about competition from the Chinese car industry.

He said: ‘They have incredibly innovative products, made in state-of-the-art factories with artificial intelligence, innovative designs – and they’re 30 to 50 per cent cheaper than we could make them. We have to compete or we’ll be left behind.’