At the end of May, the Prime Minister, whilst visiting Yorkshire, delivered his first major speech since the General Election. He talked of “transforming the British Economy”. He observed that the Economy has become unbalanced “with our fortunes hitched to a few industries in one corner of the Country, whilst we let other sectors like manufacturing slide”. He went on to promise “radical tax reform” and said his Government would provide “modern support for Enterprise to grow”.
I learned a long time ago, in my early days at the CBI, that one should not take heed of what politicians (and especially Prime Ministers !) say… watch what they do !
So the Budget on Tuesday 22nd June is a real chance to do exactly that… let’s watch what they do.
The Spend, Spend, Spend, years of the last lot are over & Messrs Cameron & Osborne (with lots of help from their Coalition friends) are quite right to concentrate on getting that huge deficit down. But the Budget will be an excellent chance for the Government to show that they understand that only Business will generate the tax the Nation needs to plug the hole; only Business will trade our way out of this mess… and so Business is going to need help not hindrance on Tuesday.
The argument for an increase in VAT to at least 20% is unanswerable. But let’s see a speedy advance to the point at which anyone earning £10,000 a year pays no tax at all. This can be done in a way that doesn’t give the benefit to those who earn a lot more (so don’t just increase the tax-free allowance Mr Osborne or it will cost a fortune & big earners will benefit as well) and done now will not only offset the VAT increase hit for low paid people but will also make work worth it… and Business needs people prepared to work in lower-paid jobs rather than sit on the dole.
Changing the rules so that the few (but a significant & totemic few) who treat Capital Gains Tax as Income Tax don’t pay less tax than their cleaners is important (and in a democracy, significant in perception terms as well) but babies must not head the same way as the bathwater. Pensioners with, say, £100,000 saved for that rainy day with expensive care or residential nursing on the horizon need to be encouraged not to be a burden on the State, not watch half the value of their long-held shares go off in tax to pay, in part, for the care for those who never bothered to save… a fair society Mr Cable ?! We want people to invest in Businesses, not keep it all in cash to avoid penal rates of CGT to satisfy anti-private-equity blood lust.
So the Prime Minister wants to see manufacturing develop and grow does he? Presumably then, we can look to Tuesday’s Budget to see the first stirrings of a Manufacturing Strategy! Starting with extra money and better direction so every young person leaves school being able to read, write, count and operate a computer. Yes Mr Cameron… half of them currently don’t! That’s where proper Business support starts… the reservoir of skills for the Nation. Then give small businesses additional fiscal help to create apprenticeships and improve training. By all means make it compulsory… it would no longer be “too expensive for Business” since the Nation would be making all or part of the investment in tomorrow, and, don’t go cutting our world-class University Sector… tomorrow’s ideas and wealth-creation (and overseas money-earning) lie there… show you understand that by your actions on Tuesday.
75% of all our exports are manufactured goods. Earning overseas currencies is key to our economic recovery. So help small businesses export! France does, Japan does, America does… Germany are experts at it! Get behind our small businesses and put our money where your mouth is, Mr Osborne.
Use the Budget to show you “get it” when it comes to Overseas Aid. Why do we give our taxes to countries that have budget surpluses? or which spend more on defence than on health care? Why give our taxes to countries who promptly use it either to look after the powerful elite in that country or create jobs and wealth in our rival nations because we don’t put purchase conditions on our generosity as others do? Do something about it Chancellor!
I applaud the present promise from the Government (much publicised and argued about during the Election Campaign) not only not to increase the Employers’ National Insurance contribution but to abolish it completely on the first ten jobs created by a new business for the first two years. But this is tinkering at the edges. “Radical Tax Reform” is what the Prime Minister promised in Yorkshire just three weeks ago. So why not abolish Employers’ National Insurance Contributions altogether! And pay for it by not delivering the promised reduction in Corporation Tax. Indeed, an increase in the tax on profits could be justified if it bought an abolition of a tax on job-creation. Use the power of Business, Mr Osborne, to create employment! Why tax a job (even if no profit is being earned)… tax Business when it has made money, not before! And to those journalists and left wing politicians who would say that this is allowing “the Bosses” to enjoy a tax-break whilst “the Workers” still pay National Insurance contributions I would say that such a stance shows a total ignorance of what Employers’ NI really is… a tax on jobs, nothing more, nothing less.
Every Prime Minister promises a bonfire of red tape for Business. Excessive regulation (& the previous Government was creating regulations at the rate of ten a day..every day..including Christmas Day!) costs Business dear. So why do small businesses complain,still, of (for example) receiving seven letters from Her Majesty’s Revenue and Customs addressed to the Business asking for them to confirm if their address is correct ?! Or, the Thought Police from Health and Safety or the Environmental Protection Agency being as zealous in enforcing regulatory compliance as their European counterparts are not! Set Business free Mr Cameron and we will deliver!
So Mr Osborne. Your moment has arrived! What is it to be? More of the same? Or the chance to be radical? To invest in our future wealth-creation? To get behind the only part of our Society that can deliver the taxes you need to balance the Nation’s books… Your call Chancellor… don’t let us down!