By Daniel Hunter
The British Chambers of Commerce (BCC) has published its Budget submission, ahead of the Chancellor’s Budget speech on March 20th.
The business group is calling on the Chancellor to take rapid and radical steps to shift government spending from unproductive areas and towards growth measures that can be delivered quickly.
Ahead of the BCC’s Annual Conference on Thursday, John Longworth, BCC’s Director General, urged the government to sign off a Budget that creates an environment of enterprise and investment, and boosts business confidence.
The BCC’s call to reprioritise spending on economic growth was also backed in a major survey of public opinion, commissioned by the BCC from respected polling firm ComRes. 51% of the public backed shifting resource towards growth even if it meant cuts to universal benefits and other social spending, whereas only 28% disagreed.
The BCC Budget Submission includes measures that require ministers to take tough decisions to reprioritise nearly 2% of the country’s GDP over the next three years.
BCC Budget Submission
The government should retain flexibility in its deficit reduction plan. If no economic progress is made this year, other options should be considered
- Although the BCC continues to support deficit reduction, a point may come soon where deficit reduction becomes impossible in the absence of sustained growth.
- The submission warns the government that it may have to consider major cuts in business taxation and other radical measures, such as massive infrastructure pump-priming, if growth does not improve
The government should re-prioritise resources away from unproductive expenditure towards investment in the economy
- More than half of members of the public (51%) agreed that the government should shift spending towards measures that will boost growth, such as investment in road building and house building, even if this requires cuts in social spending.
- The BCC is calling for direct investment in much-needed new housing and for 100,000 additional new homes be built by government or housing associations over and above existing targets by 2015.
- Create a new Road Repair and Renewal Fund to fix Britain’s local roads. Road maintenance is fast, it boosts employment, supports construction and underpins local economies more generally.
- These actions will require abandonment of ring fences around particular areas of spending, as well as potential cuts to universal benefits.
The government must embark on a large-scale effort to deliver promises already made
- Introduce a firm timetable for the launch of a credible British Business Bank (six out of ten businesses told us they would feel more confident in securing finance if Britain had a government-backed business bank).
- The BCC is calling for the government to back the business bank with an additional £9 billion in capital over the next three years. This would provide the necessary capital base to allow the bank to start lending directly to businesses, at a scale that would make a difference.
- Ministers must redouble their efforts to incentivise private-sector investment in infrastructure. Progress on raising private sector finance is slow, and the government is a long way from reaching its target of £20 billion.
- There is a lack of urgency in delivering business-critical projects, and many have been delayed. Once underway, these projects will deliver confidence, orders, jobs and competitiveness. Infrastructure delivery must become a top priority across government.
In addition, the BCC calls on the government to:
Freeze business rates for three years. Relentless business rate increases will continue to aggravate uncertain business cashflow and impose hefty new costs without offering any real improvement in business conditions. Ministers must cancel the 2.6% rise scheduled for April (after 5.6 and 4.6 percent rises in previous years).
Triple the lifetime limit for Entrepreneurs Relief on Capital Gains Tax. A tripling of the lifetime limit from £10m to £30m would encourage businesses who want to expand and reinvest their profits. In addition, an upward movement in the limit would improve the returns on capital for entrepreneurs and boost business investment in the UK rather than abroad.
Expand support for companies exporting to overseas markets. Funding for developing the pipeline of SME exporters and in-market support should be increased by an additional £100m per annum for the next three years.
Introduce a Growth Voucher scheme for SME businesses with ambitions to grow. The scheme would be open to up to 20,000 businesses, capped at £100m and the maximum voucher value would be £5,000.Vouchers could be spent on advice or support around legal and HR issues, access to finance, training and planning matters.
Total cost of recommended measures: £29.59bn over three years
“The Chancellor should seize this opportunity and go all out in the name of growth," John Longworth, Director General of the British Chambers of Commerce, said.
"Our Budget submission is calling for measures that create an environment of enterprise, stimulate exports, kick-start infrastructure projects and create a structure of business finance which supports growing companies.
"Government spending remains far too focused on unproductive programmes, rather than measures that underpin economic growth, wealth creation and prosperity. With our economy teetering on a knife edge, it is not acceptable to protect wasteful current spending at the expense of capital investment and tax cuts that can spur long-term growth.
“The measures outlined in our submission will all contribute to boosting confidence. Our own research shows that firms across Britain believe they can drive growth this year, but they can’t do it alone. Time is running out. Bold action must be taken now to boost confidence so that businesses can create wealth and prosperity. That means both delivering existing promises and taking radical action today, not tomorrow.”
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