Summer Budget: government support required
CBI demands Treasury plan to boost productivity
Britain’s bosses are calling on Chancellor George Osborne to use his first Budget of the new Government to stick to his plan to cut the deficit in public finances while introducing new measures that will boost productivity.
The CBI’s submission to the Treasury ahead of the 8 July Summer Budget demands clarity on taxation and how the government will cut the nation’s debt.
In particular it wants the government to encourage investment and innovation and invest in talent and infrastructure.
John Cridland, CBI Director-General, met Mr Osborne to impress on him the CBI’s demands for stability and support.
“As the new Government gets its feet under the table, it’s important to seal in the progress made restoring the public finances in the last five years and maintain a strong focus on growth and investment,” he said.
“Businesses want the Government to chart a clear and stable course on getting the deficit down. And they want to know exactly how this will be done, and when it will be done by.
“Firms of all sizes, especially ambitious, disruptive and growing ones, need to see the Government build on welcome steps in the last Parliament to support investment. It should act now to promote stability and certainty in tax policy through a commitment to introduce a roadmap which covers all business taxes.
“By giving businesses greater opportunities to grow, we have a better chance of tackling the productivity challenge.”
The CBI’s package of proposals costs £520 million in 2015/16, rising to £1.9 billion in 2020/21. This accounts for less than 0.25% of government spending, which can be fully funded through efficiency savings.
It wants the Government to make the Annual Investment Allowance (AIA) permanent at a minimum of £250,000 from January 2016.
It claims this would cost £670m in 2016/17, before rising to £910m in 2020/21, and could add up to £1b to GDP by the end of the Parliament.
Mr Cridland said: “Stability and certainty are key ingredients to fostering investment and ensuring Britain is open for business.
“Continuing to make the UK one of the most competitive tax environments in the G20 by laying out a Comprehensive Business Tax Roadmap will support jobs and investment, and spur our creative entrepreneurs on.
“Making the AIA permanent will help our businesses invest in new equipment to fully unlock their potential, especially when it comes to exporting British goods to high-growth markets. It could also add up to £1 billion to GDP by 2020.”
At the CBI’s Annual Dinner in May, the Chancellor announced that he would introduce a Government plan to boost productivity, the key to locking in a sustainable recovery and improving living standards.
Mr Cridland said: “Productivity is the dynamo to growth, investment and better living standards, and it’s clear we need to step up a gear to build longer-term prosperity. But this can only happen if business and the Government work together.
“Firms need to invest in upskilling their employees, and in IT and machinery, as well as developing cutting-edge innovations.
“For its part, the Government must set the right conditions for growth, like giving our exporters, especially smaller ones, the extra help they need to break into key markets.
“With this approach, we can put the missing piece of the recovery puzzle in place.”