The Chancellor should resist the temptation to use his 2016 Budget to introduce new taxes, costs and obligations that could dent business confidence, according to the Chamber.The Chamber is urging the Chancellor to use his fourth fiscal event in 12 months to opt instead for a steady approach that gives business the opportunity to get to grips with the significant additional financial burdens added in recent years.
The Chamber’s 2016 Budget submission is based on three principles:
1) No further taxes on enterprise for the remainder of this Parliament:
Pensions auto enrolment, the National Living Wage, the Apprenticeship Levy, higher dividend taxes and other measures have significantly increased up-front financial burdens for business.
The Chamber is calling on the Chancellor to introduce no new business taxes for the rest of this Parliament, to allow businesses, entrepreneurs and the Government itself, the time needed to work through these existing commitments and reforms.
Chamber Chief Executive Scott Knowles said: “Businesses have been hit hard by measures announced in the most recent Budgets and Spending Reviews, which have seen the introduction of several big-ticket items such as auto enrolment, the National Living Wage, the Apprenticeship Levy and other taxes.
“Businesses understand that these measures are both commendable and vital in terms of helping those on lower incomes, boosting living standards, reducing welfare dependence and alleviating poverty.
“From a business point of view, however, each of these pieces of new legislation is an added burden which adds a huge up-front costs to businesses, which are not seeing equivalent reductions in red tape elsewhere.
“In an increasingly uncertain economic environment, and at a time when many businesses already face higher costs and taxes, the Chancellor must avoid placing any further financial obligations on our firms.”
2) Deliver on the promised reforms to business rates by April 2017:
Government launched a full review of the business rates system in December 2014, with a commitment to publish its findings before this week’s Budget.
The review was launched, according to then Chief Secretary to the Treasury Danny Alexander, to “pave the way for changes” to the current system, which has been in place since 1988.
However, its outcome is expected to be fiscally-neutral, meaning that the total sum collected from businesses will not change.
Scott Knowles said: “Ministers have, for a long time, talked a good game on reforming business rates, but we now need to see some real action.
“The current regime is anti-growth. It does not incentivise or encourage investment or expansion.
“Any new system of business rates needs to be fair and equitable to all businesses, irrespective of their size, location or sector. The focus should be on resetting the valuation, collection, and setting of the rates, rather than changing only who gets to keep and spend the revenue.”
3) Add further fuel to the Midlands Engine:
The Chancellor George Osborne launched the ‘Midlands Engine for Growth’ concept in June 2015, at a business event facilitated by the Chamber.
At the time, he said: “Our plan to rebalance the whole of the UK economy involves making the Midlands an engine of growth. We will support its key strengths in manufacturing, science and energy.
“We will make major investments to improve transport connections and improve skills. By creating jobs and allowing people to keep more of the money they earn, we will ensure the Midlands shares in a truly national recovery.”
However, since then, it has barely been mentioned in Parliament, with major Government announcements such as the Summer Budget, Queen’s Speech, Autumn Statement and Comprehensive Spending Review, focusing more on the ‘Northern Powerhouse’ instead.
Scott Knowles said: “The ‘Midlands Engine’ concept was launched to great fanfare by the Chancellor last summer but it’s been frustrating that since then there has been very little mention of it in ministerial speeches and Government publications. It needs to be placed firmly at the centre of the Government’s growth agenda.
“The Midlands – and the East Midlands in particular – holds the key to creating jobs, generating wealth, unlocking productivity gains and driving balanced and sustainable growth.
“The Northern Powerhouse will thrive only if the Midlands Engine is firing on all cylinders. Businesses here back the Midlands Engine and it’s vital that politicians, policymakers and Parliamentarians always take into account the important role that this region plays in driving economic growth and job creation in the UK