Britain’s biggest business lobby group has urged John Healey to cut employment taxes and energy bills in his first Budget, warning that further tax rises risk choking off investment and jobs.
The Confederation of British Industry (CBI) called on the Chancellor to give firms “breathing space” at the Budget on 28 October, as businesses grapple with rising costs and uncertainty over the government’s tax plans.
In its Budget submission, published on Thursday, the group called for a £1,000 increase in the threshold at which employers begin paying National Insurance, from £5,000 to £6,000, to encourage businesses to hire more young workers. Healey is considering measures to make it easier for firms to employ people under the age of 25, City AM previously reported.
It also urged the Treasury to remove policy costs from business electricity bills, reform business rates and simplify the tax system.
CBI chief executive Rain Newton-Smith warned that piling further costs onto companies would undermine Andy Burnham’s growth ambitions.
“Business does not need another reason to wait – it needs a reason to invest”, she said. “This Budget should cut the costs holding firms back, simplify the tax system and make it easier to get investment moving”.
The intervention comes just days after executives from Tesco, Marks & Spencer, Sainsbury’s and other major retailers met Healey to press for relief from rising employment costs.
Businesses have blamed the previous government’s decision to lower the employer National Insurance threshold from £9,100 to £5,000 for making entry-level and part-time workers more expensive to hire.
Pressure mounts ahead of first Budget
Healey and Andy Burnham told business chiefs on Tuesday that they would preside over the “most pro-business country” in the world.
The pledge has raised expectations ahead of the Budget despite concerns that extra costs incurred from defence spending and debt interest payments could force the government to raise taxes.
Research by Helm, a community group of start-ups, found that just four per cent of founders believed the Budget would be positive for businesses.
Around nine in ten (88 per cent) respondents to Helm’s survey said a change in taxes on capital or assets was feared the most.
Andreas Adamides, chief executive of Helm, said rumours over capital gains tax increases or other levies on wealth would prevent founders from having the “certainty to plan ahead”.
While it has been reported that Healey is set to reject plans to equalise capital gains and income tax rates, a Labour-linked think tank has added to calls for the levy.
The Institute for Public Policy Research, which has supplied Labour with top advisers and ministers, said capital gains tax reform providing “generous loss relief” and exemption for high-growth start-ups, where company values rise by at least £50m, could raise about £16bn for the Treasury.