Post Budget 2024 analysis - Why we fall for the same 'influence' tricks every time

Honestly, is there anything sexier than talking about Capital Gains Tax (CGT)?

For the last 4 to 6 weeks, no subject has had more column inches and LinkedIn rhetoric than speculation about the possible rise of CGT and the impact on entrepreneurs' relief.

And the LinkedIn posse has absolutely wallowed in the joy of it all.

Open letters have blossomed with views from business owners berating the government for something it hadn't done yet.

Petitions have spread like wildfire.

The 'demands' of high-profile entrepreneurs spouting forth on any potential change have done wonders for their 'thought leadership' efforts and building connection with new and existing followers.

From a cult-building perspective, anti-business policies are a beautiful Enemy for LinkedInfluencers that keep on giving being both rational and emotional in their effects.

And the best thing is it doesn't even matter what actually happens. As long as it might happen.

(If you want to discover how to use Enemies to gain attention and build connection, check out my free 7-step course on building a cult-like following for your brand here)

But this article is not about cults. It's about how, time and again, the government and ministers use some of the classic persuasion techniques outlined in Robert Cialdini's seminal text,?Influence.

How we all got hooked by the CGT 'anchor'... again

Despite how many times we see it coming, it gets us every time.

In anticipation of any potential tax hike in the UK budget, we fall for the headlines.

We see what the media shows us (sensationalised for maximum effect, which helps their sales), we hear the predictions, and ultimately, we feel the tension that comes with anything that may impact our business or brand.

Are we not 'working' people according to this government?

What is the point of us going through all the pain of growing a business if the government suddenly swipes all our hard-earned gains?

Why do we even bother? Why not up sticks and head to a country where our efforts as entrepreneurs and business owners will be encouraged and incentivised?

It sounds familiar because it is...

But there's one trick we're falling for time and again.

Anchoring - the classic trick used by retail, brands and douchebag marketers that we can't help falling for

According to Cialdini, the principle of anchoring highlights the power of creating an initial reference point to frame our perception.

As the budget approached, news outlets and analysts suggested CGT could go as high as 39%.

Oh, how the tabloids screamed and mongered much scare...

The fact that the story initially appeared to come from The Guardian suggested that - like the tactics of recent leaking potential bad news early - it was indeed an intentional government leak to set a high 'anchor' in anticipation of a more modest increase.

In normal circumstances, an increase from 10% to 18% and 20% to 24% at the higher rate would lead to all these headlines coming after the budget.

But because the government successfully 'anchored' the startling 39% in advance, the more modest - yet still huge increase - has been met with relief.

Contrast is everything - playing with your emotions

Another principle outlined by Cialdini is also in play - the contrast principles.

And this one is super effective because in this case, it plays with our emotions.

The final number of 18% or 24% - depending on your rate - seems almost palatable when placed in direct contrast to the 'nightmare' scenario of 39%.

Contrasting the horror of a 39% take against what was actually delivered makes it seem like a 'win'.

The pain of worry and anxiety that everyone conspired to make business owners and entrepreneurs feel during this period is met with relief.

We feel we have avoided something TERRIBLE rather than realised the government has taken an even larger chunk of our cash. But we feel good about it, because... it could have been worse.

Of course, this 'win' is something that plenty of LinkedInfluencers can now claim victory for achieving, regardless of the fact that it appears that 39% was never on the cards.

In fact, it seemed to go slightly too far in the direction of hysteria that PM Keir Starmer had to quickly assure everyone it wouldn't be hitting 39%...

... but by then, no one cared.

Everyone was invested in the potential horror that was about to befall business owners.

But there are significant other effects at play.

Notably, the use of urgency.

Urgency – acting before the announcement

Another element that Cialdini discusses throughout Influence is the principle of urgency.

For weeks, headlines created a sense of impending doom, which in turn created a sense of need to take action... quickly.

And this was happening well before the budget, undoubtedly driven in part by the political leanings of the media outlets.

And I doubt many people will feel a huge amount of concern for poor old Charlie Mullins... but note the emotionally weighted idea of 'fleeing' Britain to escape a tax 'raid'.

It is almost irrelevant if these reports proved to be true or not. The fact is this news cycle helped create a sense of urgency that affects others.

Of course, this is exactly the same principle of psychology that will drive sales on one of the biggest shopping days of the year in a few weeks - Black Friday.

But running a government is not a Black Friday sale...

Why we're drawn in... and why we can't help ourselves

The CGT example is proof of how managing perception can have a powerful effect.

As a founder, entrepreneur or marketing lead, it's useful to see how these techniques never seem to lose their power. Even when we see them coming a mile off, the effect still works.

There will be a limit to this.

This has been repeated so many times by government ministers in the last few years that any future leak is going to be met with increasing scepticism. And many commentators felt exactly this way about what just happened.

Any future budget leaks could become the equivalent of a DFS 'sale'. We know what you're up to... yet we still allow ourselves to be drawn in.

Although the CGT 'win' may not feel much, it is a great example of how to influence people en masse – and how nearly everyone in the process, from the government ministers to the media to the anti-business policy commentators, benefitted from the skirmish.

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