A business leader has used a trip to the North East to urge Chancellor Rachel Reeves not to increase taxes on businesses in this month’s Budget.
CBI chief executive Rain Newton-Smith met a number of businesses in the region to discuss issues including innovation and how companies can benefit the communities in which they operate. But the Budget due in a fortnight’s time was also high on the agenda.
Chancellor Rachel Reeves has been under fire from many firms since last year’s Budget increased employers’ National Insurance Contributions at the same time as a significant rise in the National Living Wage. Those measures are thought to have added £24bn in costs on to Ƶ companies.
Ms Reeves has signalled that income tax is likely to go up in this year’s Budget as she battles to ensure the public finances are on a better footing after a number of challenging years. That move was broadly welcomed by Ms Newton-Smith, who said companies wanted certainty from the Government after a
difficult year.
She said: “The Budget is still looming over everyone’s head at the moment. Everyone is holding their breath because we’re not quite sure what we’re going to see.
“The Chancellor has been clear that we’re going to see increases in overall taxation and the messages we’re still getting is that businesses shouldered a big increase in taxation in the last Budget, they can’t really take on any more if we’re going to deliver the growth, investment and job creation that the Government wants to see.
“What we’re asking the Government to do is to think again around its manifesto promises and where she does have to do tax increases, to do things that are broad-based and really support growth and productivity for the long term.
“There’s been speculation that that will be income tax. As long as its modest and broad-based, and importantly creates sufficient fiscal headroom that we don’t feel like we’re back here in six or 12 months, we want to see this as a Budget that ensures we have stable public finances, that has a tax regime that lasts this Parliament and importantly that really gets hold of delivering the growth mission.
“A really important part of that is to deliver infrastructure spending that’s been promised and to make sure businesses have access to skills and talent.”
Ms Newton-Smith said businesses would also give a broad welcome to indications from Ms Reeves that the Government was likely to scrap the two-child benefit cap as a means of reducing child poverty. She paid tribute to the work done by North East mayor Kim McGuinness in tackling child poverty in this region.
She added: “People here really believe in devolution and actually want to see the pace of devolution, if anything, pick up. That can better match the needs of the local community and what businesses want to see with that local leadership and accountability, but also the ability to spend in areas that match local need.
“Sometimes the North East feels very far from London and feels a bit forgotten. Businesses are here for the long term and it’s our job to deliver the investment in our communities that we need. They’re cracking on and doing that.”
