CBI calls for ‘bold and ambitious Budget’

The Confederation of British Industry (CBI) has called on the Chancellor George Osborne to deliver a ‘bold and ambitious Budget’ which concentrates on reducing Britain’s record deficit.

In a letter to the Chancellor ahead of the emergency Budget on 22 June, the CBI argues that the public finances should be repaired without damaging prospects for growth. It states that there should be £4 in spending cuts for every £1 in tax increases and that the public sector should bear the brunt of the cuts.

‘Tax may sound an easy way out but it is actually very damaging,’ commented CBI chief economic advisor Ian McCafferty. ‘Deficit reduction through adjustments to spending is less damaging in the medium term than an equivalent increase in the tax burden.’

The business lobby group also urged the Chancellor to scrap the 50p top rate of income tax as soon as possible, claiming that it had ‘damaged the UK's reputation as a business location’.

In addition, the CBI wants to see the coalition reverse the previous Government’s plans to restrict tax relief on pensions, which are scheduled to take effect in April 2011. It warns that the changes will ‘act as a deterrent to mobile talent as well as a significant disincentive to long-term saving.’

However, it welcomed the Government’s ambition to reform the corporation tax system and proposals for continuing with a loan guarantee scheme.

The submission has attracted criticism from the Trades Union Congress (TUC), which accused the CBI of ‘social pleading.’ Brendan Barber, the TUC General Secretary, said: ‘Not only do they want the deficit closed quickly, but they’re saying that business should play no part in this. It beggars belief that they are calling for spending cuts when many businesses stand to suffer from cuts in public procurement. There will be many smaller businesses who will not want to pay for tax cuts for the super-rich.’