WiredGov Newswire (news from other organisations)
CBI warns Government that next week's Budget must tackle a fundamental inconsistency in its economic strategy
The CBI is today (Friday) warning the Government against new business tax rises in next week’s Budget (and Comprehensive Spending Review) or face dampening the economic recovery and undermining its broader strategy.
- Government’s ambition is to unlock private sector investment, but its tax policies do the opposite
- ‘You cannot will the ends and ignore the means’ to turbocharge the economy
- Business and Government united in ambitions for the country
The CBI Director-General, Tony Danker, spells out the fragility of the recovery and says the Government is ‘betting the shop’ on private sector investment but not doing what it takes to attract it. He states that ‘business shares the Prime Minister’s aims for the economy, but worries next week’s Budget will not do what it takes to realise them.’
On next week’s Budget/CSR, Tony says:
“Next week is a defining moment for the Government. We cannot take the economic recovery for granted. If the UK is to break out of a decade-plus cycle of anaemic growth and zero productivity, then the Government has to get serious about what it will actually take to deliver that.
“There is a fundamental inconsistency where the Government wants to unlock business investment, but its tax policies do the opposite. You cannot will the ends and ignore the means to turbocharge the economy. Every economist and business leader knows it.
“This is the Government’s first Spending Review since the pandemic hit and Brexit kicked in. It must choose: Are we going for growth? Or going back to tax and spend?
“Business and Government is united in its ambitions for the country. But it will take more working hand-in-glove to actually achieve them.
“The Government shouldn’t be complacent about growth. It’s true that we have rapid recovery currently, but everyone knows that will soon flatten out. The bigger question is whether the economic strategy gets us back to solid underlying GDP growth that we saw before the financial crisis, and a clear path to lifting productivity? Or are we going to continue the low growth and flatlining productivity we’ve had since 2008?
“The Prime Minister calls for a high wage, high skill, high investment, high productivity economy. And he’s totally right. But wage growth without productivity growth is a recipe for higher inflation. And tax growth stunts investment.
“UK taxation is already set to reach its highest sustained level in peace time. Corporation Tax will soon jump a stunning six percentage points. National Insurance is set to increase to its highest rate ever. Fundamental reform of business rates has been delayed too long – with property tax levels the highest in the OECD, and four times higher than Germany, as a percentage of GDP. Now there are rumours that Cabinet Ministers want bigger budgets and therefore we may be headed for even higher taxes.
“This week the Government ran a superb global investment summit and set out a holistic net zero strategy and plan. The message from both was very clear: only private sector investment can realise Britain’s ambitions. But lift the bonnet and what we have is a tax regime that penalises investment, a regulatory model that does the same, and little clarity on the new green business models that investors are supposed to be backing.
“Two weeks ago, the private sector was blamed for everything: fuel shortages, labour shortages, immigration, wages, skills and productivity. This week it was wined and dined and asked to multiply its investment.
“Rhetoric aside, the reality is that economic confidence has dipped since the summer and next week has to change that. Rather than more business taxes let’s have investment incentives - building on the excellent but time-bound super-deduction.
“Rather than a levelling up plan that builds more tennis courts, let’s have one that regenerates Britain’s high streets and industrial heartlands.
“Rather than a regulatory ethos that curtails investment, let’s use new post-Brexit freedoms to do the opposite. And on top of a very promising net zero strategy, let’s have the Government now make the bets needed to underwrite the most ambitious green investment in the world.
“Let’s seize the moment, do what it takes and do it in partnership. Let’s go for growth that lasts. And let’s start at next week’s Budget.”
CBI key asks of Government next week include:
- End the repeated increase of business taxes that are stunting investment
- Stimulate longer-term business investment building on the super-deduction by committing to maintain more generous capital allowances beyond 2023
- Fundamental reform of the business rates burden, better reflecting falling property values and removing disincentives preventing green improvements.
- Require all regulators to prioritise investment, net zero and innovation as part of their core remits.
- Focus on delivering a flexible apprenticeship system, turning the apprenticeship levy into a lifelong learning levy.
- Improve people’s life chances by giving them the skills they need to succeed through individual training accounts for unemployed individuals and those with the biggest retraining needs.
- Designate energy efficiency and heat decarbonisation as an infrastructure priority by providing a comprehensive long-term package of funding for the ‘able to pay’ market.
- Develop and invest in the decarbonisation pathways required to reach net zero across transport.
- Deliver on the Plan For Growth and Innovation Strategy, including front-loading the commitment to invest £22bn direct domestic R&D funding by 2024-25.
- Enable business to help level-up across the whole of the UK by commissioning the CBI in the Levelling-up White Paper to write the playbook for successful economic clusters.
Latest News from
WiredGov Newswire (news from other organisations)
NHS Confederation - National bodies rally together to keep the public safe this winter: It’s #NotTooMuchToMask08/12/2021 15:15:00
On the anniversary of the first coronavirus vaccine in the UK, national bodies have joined forces again to relaunch the #NotTooMuchToMask campaign.
LGA responds to latest alcohol-specific deaths statistics08/12/2021 13:15:00
Cllr David Fothergill, Chairman of the Local Government Association’s Community Wellbeing Board, responded to the latest ONS figures on alcohol-specific deaths in the UK, which show there was an 18.6 per cent increase in deaths from alcohol-specific causes in 2020 compared with the previous year and was the highest year-on-year increase since records began
LGA responds to Ofsted annual report08/12/2021 12:15:00
Cllr Anntoinette Bramble, Chair of the Local Government Association’s Children and Young People Board, responded to Ofsted’s annual report
Government and business must work together to accelerate economic recovery amidst fierce battle for investment07/12/2021 16:05:00
Following almost two years of Covid-reduced revenues for many important sectors, staff shortages, cost pressures and disruption to supply chains, business is facing renewed uncertainty over the new Omicron variant of Covid.
647,000 festive workers get no statutory sick pay – TUC analysis07/12/2021 15:20:00
New analysis published yesterday (Monday) by the TUC shows that 647,000 workers in hospitality, retail, and arts and entertainment – key sectors for Christmas festivity – do not qualify for statutory sick pay.
Citizens Advice responds to the Consumer Duty announcement07/12/2021 14:40:00
Matthew Upton, Director of Policy at Citizens Advice, responds to the Consumer Duty announcement
LGA responds to extra drug treatment and recovery funding07/12/2021 13:40:00
Cllr David Fothergill, Chairman of the Local Government Association’s Community Wellbeing Board, responded to the publication of the Government’s ten-year Drugs Strategy, which includes almost £780 million extra funding for drug treatment services
Not another divisive referendum07/12/2021 13:33:00
TUC South West Regional Secretary, Nigel Costley, believes now is not the time for a divisive referendum on abolishing Bristol's mayor.
NHS Confederation - Actions taken to mitigate pressures in health and social care07/12/2021 12:40:00
The Welsh NHS Confederation calls on Welsh Government to provide ring-fenced local authority allocations & sustainable, recurrent social care funding.
Booster for business investment needed to sustain the recovery & unleash UK's potential - CBI Economic Forecast07/12/2021 12:15:00
The foundations for the UK’s economic recovery remain firm despite global supply challenges weighing on growth in the near-term, according to the latest CBI economic forecast.