CBI Makes Its Case For Budget Changes: Go For Growth

As Labour presides over the closure of Grangemouth, Port Talbot and commits to spending big on solar panels and wind farms, rather than UK food farming which employs hundreds of thousands of people, the CBI makes a plea for growth in the UK economy.

Nice idea. But the real question for companies and sole traders alike is this; why should anyone invest capital if CGT is raised to over 35% in the Budget and entrepreneurs see a chunk of their long term profits handed to the government, on top of all the NI, workplace pensions, CT, Green Levy on energy, sick pay, holiday pay, car parking space tax, business rates, IPT, VAT admin costs etc racked up during the lifespan of the business?

Is it worth the risk?

Here’s the word from the CBI who are looking at the situation from a large corporate point of view;

The Autumn Budget is a pivotal moment for the newly elected Government to build momentum for its agenda to achieve long-term, sustainable economic growth. The task ahead is not without its challenges given current economic and fiscal constraints. But with private capital in no short supply, key to delivering growth will be how government and industry work together to unlock it. Empowered by the right levers, business can switch gears to accelerate investment with confidence and certainty.

Rain Newton-Smith, CBI Chief Executive, said:

“The Chancellor buoyed investor confidence recently by highlighting the strengths of the UK economy which sent the right signals that the UK is an attractive destination to invest and grow. The Budget can provide a tone setting moment in the government’s growth mission that can demonstrate to markets, investors, and businesses that the UK has a credible plan for boosting its growth trajectory.

“We recognise the Chancellor is walking a fine line with limited fiscal headroom. While we cannot risk the economic stability that is the bedrock of growth, we must be ambitious in our vision with Government laying the foundations for a prosperous future.

“Partnership is the key to solving the complex challenges firms are facing. Budgets are always a prioritisation of choices. For business the choice is clear: choose growth. (wasn’t this the Liz Truss plan? – Ed) By harnessing the innovation and insights of business, we can crowd in the private sector investment needed to scale our economy to new heights and fund our public services.

“This Budget submission builds on our Mission-Led Programme for Government for its first 100 days. It identifies dynamic yet practical solutions that businesses across regions and sectors are calling for the Chancellor to prioritise.”

Key to this includes:

1. Boost productivity and business investment:

• Businesses can only invest and be more productive if they have the support of a reliable workforce, equipped with the right skills. The Government can support them by adding flexibility on which courses can be funded by the Apprenticeship Levy now while setting a timeline to implement the Growth and Skills Levy.
• Expanding the Made Smarter Programme to all corners and sectors of the economy as part of a long-term National Technology Adoption Strategy would allow businesses in low-productivity sectors, especially SMEs, to accelerate their technology adoption journeys, boosting operational resilience and productivity.
• Announcing an ambitious package of non-taxable health support would make it easier for employers to invest in the health of their employees and support the Government’s own target of reducing economic inactivity due to ill health and achieving an 80% employment rate.

2. Build confidence in the transition to net zero:

• Green tax incentives should form part of a comprehensive strategy to promote high-growth green technologies. A new Green Innovation Credit, a 10% Corporation Tax rate for green profits (who decides what a green profit is, XR, King Charles, The Guardian..? – Ed) as well as an enhanced green super-deduction would help unlock private sector R&D and ensure the UK remains internationally competitive as it seizes the prize of green growth.
• The government can accelerate the transition to Net Zero by linking the UK and EU carbon pricing systems, to improve the attractiveness of the emissions trading market and accelerate decarbonisation. A linkage of the two systems would prevent carbon leakage and prevent costly implementation of the Carbon Border Adjustment Mechanism.
• A Net Zero investment plan outlining investment requirements, targets and a delivery plan for reaching net zero emissions by 2025 would crowd-in private investment to maximise growth in sectors receiving public investment.

3. Optimising business taxation to enable growth:

• A Business Tax Roadmap will provide a long-term framework to tax policy, lending businesses the certainty and clarity to invest and plan effectively. The roadmap should cover the main taxes administered by businesses to deliver a simpler, more digitised and proportionate tax system. This should sit alongside reform of the business rates system, with bold action to move to a progressive slice-based system, removing cliff edges and disincentives to invest. In the meantime, the CBI is urging a freeze on both the standard and small business multipliers until the next revaluation and bridging support for sectors most affected by the termination of temporary reliefs.
• Build capacity in the planning system by allowing applicants to pay for independent consultants employed by the Local Planning Authority (LPA) and ringfencing planning fees.
• Unlocking access to capital through pensions review and delivery of the Mansion House reforms, considering the implications for a variety of asset classes, from listed to unlisted equities, as well as infrastructure.

Louise Hellem, CBI Chief Economist, said:

“Growth and productivity in the UK aren’t where they need to be. The UK is underperforming in areas crucial to our long-term prosperity, such as business investment. Until we tackle this challenge, it’s a big handbrake on the UK’s economic ambitions. 

“For the investment needed we know a lot of this needs to come from the private sector. Making our business environment more attractive to firms at home and abroad is essential. With the Budget fast approaching, we really need to avoid further pressures on business costs. Keeping key taxes, including VAT, corporation tax, income tax and NICs, at their current levels is an important first step and would give welcome certainty to business, their staff, and customers.

“On net zero we have a big opportunity; CBI research has found that up to 57 billion pounds of green growth opportunities could be achieved by 2030. But there’s a risk according to the OBR – a hit to UK GDP five times higher if we don’t act, than if we act early in the transition to net zero.

“The UK economy is starting to show signs of recovery, with the latest OECD forecast upgrading UK growth expectations. It is now the second fastest growing in the G7, after the US. But, with the highest inflation forecast in the G7, we cannot risk complacency.

“The Budget must remain laser-focused on delivering growth-targeted investment to unlock higher productivity, raise living standards and make it easier for Government to invest in public services.”