9 October 2018
News
The Chancellor of the Exchequer must turn warm words for business into action – no ifs, no buts.
The UK faces challenges that can only be solved through partnership. In its pre-Budget letter to the Chancellor, the CBI proposes ways to unlock enterprise, increase the country’s competitiveness and attract more investors, all aimed at lifting productivity and sharing prosperity. This is particularly important as the UK has the lowest level of business investment as a proportion of GDP in the G7, with the gap widening even further.
Read the CBI's Budget Submission
To set the UK on the right path, Carolyn Fairbairn, the CBI’s Director-General, urges the Chancellor of the Exchequer to focus on three key areas to unlock growth in her submission ahead of the Budget: reform business rates to ensure firms can invest and grow, build on recent announcements to make the apprenticeship levy work; and improve capital allowances to drive investment particularly in digital and low carbon technologies.
The Budget must also help tackle the immediate impact of Brexit uncertainty. Increasing the annual investment allowance will help lift the fog of uncertainty that is holding back investment, while hundreds of thousands of firms need help planning for the changes ahead. They urgently need a one-stop shop for advice and information as the clock ticks down to March.
“As we near the end of Brexit negotiations, the world’s gaze is fixed on these shores. This Budget is a pivotal moment and chance to showcase the UK as an open, collaborative and confident nation. Entrepreneurs here and around the world need to see a UK committed to harnessing the power of business to innovate and tackle problems, from sustainability to inequality.
“With skills shortages, uncertainty and the squeeze in incomes on the rise, this couldn’t be a more critical time to plug the drain on the UK’s productivity and deliver prosperity that is shared by workforces and communities across the country.
“The Government must focus its attention on making the UK a shining beacon of enterprise, at the top of every investment league table and known worldwide as a country that attracts, not deters, capital and talent.”
The CBI’s package of proposals costs just over £1.5 billion in 2019/20 and £2 billion in 2020/21. This accounts for less than 0.2% of official forecasts for government spending.
“The single most effective remedy to the structural challenges facing the British economy is a simple one – increased business investment.
“By investing in workers, equipment and crucially, digital and new technologies, the UK can establish itself in pole position for the future. This is also the best way to raise productivity, and prosperity in all corners of the country. A win-win for all.
“UK businesses have been underinvesting for many years, with the country suffering from the lowest level of business investment as a proportion of GDP in the G7. This is not because they don’t want to invest, but because the conditions are so often not conducive to doing so.
“With the right government policy and support – from reforming business rates to ensuring the UK remains globally attractive to the financial services sector – this can change. As the UK leaves the EU, there is no better moment than this Budget to show the Government is committed to real partnership with business.
“Wherever possible, the UK must move in step internationally to address the tax balance in a way that is sustainable and doesn’t damage the UK's global competitive advantage.”
Tax, regulation and investment recommendations for the Government include:
“While investing in capital is vital, there will not be an inch of progress in tackling the economy’s underlying challenges unless we invest in people.
“The Chancellor’s recent decision to listen to calls from the CBI to reform the Apprentice Levy is hugely welcome. By raising the limit on apprenticeship levy transfers from 10% to 25%, more firms and apprentices in supply chains will be able to benefit. And firms are also pleased to see the increase in funding for the National Retraining Partnership.
“But the Apprenticeship Levy is still a heavy part of the cumulative burden weighing on firms and needs ongoing reform.”
“It is fundamental that a Withdrawal Agreement with the EU is agreed. This will provide temporary but essential relief for firms of all sizes. Then attention can turn to the vital task of finalising our future economic and trading relationship with the EU.
“In order for businesses to navigate the challenges and opportunities of Brexit, they badly need advice and information. The Government should ensure that funds allocated to Brexit readiness are used properly and communicate with business effectively.”
“The technologies of the future are rapidly driving changes in energy and infrastructure. The UK should be grasping the opportunities presented by the booming green energy sector by incentivising low-carbon products.
“The transition to zero-emissions is not just about ensuring we build the vehicles – that’s only half the story. The other half is about ensuring demand, by making vehicles affordable and investing in infrastructure.
“And we need to keep up the pace on developing world-beating digital infrastructure. Fast and reliable internet connections are mission critical for firms, particularly across the UK’s regions, so the Government must lay out the steps to 5G.”
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