By Daniel Hunter
The government should prioritise deficit reduction in the early stages of this parliament, according to the Institute of Directors (IoD).
The survey of more than 1,200 of its members found an overwhelming majority (85%) supported plans to run a budget surplus by the end of the parliament. Business leaders think deficit reduction should be achieved primarily through spending cuts rather than tax rises. Over half of IoD members strongly oppose increases in National Insurance, Income Tax, VAT and business rates.
Infrastructure and education are ranked as the top issues for businesses who want the government to make them an “immediate priority”, with over half strongly opposed to spending cuts in these areas.
Improving the UK’s broadband capability is the most urgent infrastructure project, with 56% prioritising government investment in high-speed internet. More than half of IoD members (55%) also want the government to invest in energy generation and there was strong support for spending on railways (50%), roads (44%) and airports (34%) over the next five years.
Businesses also back plans to clamp down on tax avoidance, with 89% of IoD members — the majority of whom are small and medium-sized companies — saying they supported the Government’s plans to address aggressive tax avoidance. However, there was a large degree of scepticism as to how much money would be raised through the measures, with less than one in six (15%) confident that the government would raise the £5bn it has outlined.
Simon Walker, Director General of the Institute of Directors said: “While cuts are always difficult to make, the simple truth is that every year we run a deficit is another year that the stock of debt increases, and interest payments with it. Interest rates on government debt may be low now, but they will not stay low forever. If we do not even begin to deal with the pile of debt, the situation will only be more dangerous if we encounter another economic shock.
“Britain needs broadband cables, runways, railways and power, and we are looking to the Government to deliver them. Building a modern infrastructure network will help businesses move goods, people, products and services around the world, giving small and medium-sized companies the best chance to succeed, scale up and compete on the global stage."