Budget 2010: 10 things employment groups want

10 things employment bodies want from the Budget (and how likely they are to get it)
1 Tax-raising alternatives to the planned increase in employers’ national insurance contributions Unlikely
2 Freeze in the public sector wage bill Likely
3 Delay in implementation of new employment laws Unlikely
4 Effective reform of public sector pensions Maybe
5 Clear deficit reduction plan Unlikely
6 An economy less dependent on the financial sector Maybe
7 Assurances about where future tax cuts will hit Maybe
8 Greater certainty around public sector cuts Unlikely
9 Sustained investment in transport, digital, and energy networks Unlikely
10 A better balanced economy Maybe

Next Wednesday, 24 March, is Budget day, and given the looming general election and the state of the economy, employers are especially concerned about what may be in store. Tara Craig asked leading employment bodies what they would like to hear from the chancellor.

British Chambers of Commerce (BCC)

The Budget should provide a clear deficit reduction plan that sets out detailed cuts. This plan must include a freeze in the total public sector wage bill and fundamental reform of public sector pensions. New employment legislation and tax over the next four years will cost business more than £25bn. There should be a three-year moratorium on new employment law.

We’re calling on the government to cancel the 1% hike in employer national insurance contributions, which is, effectively, a tax on jobs. The BCC has suggested that a penny on VAT would largely offset the lost revenue. We want the government to provide more support around export trade finance, where the UK’s exporters continue to be at a disadvantage compared to rivals on the continent and further afield. We’d also like the government to commit to sustained investment in our transport, digital, and energy networks, which will underpin growth and form the foundation of our future competitiveness.

Sam Turvey, head of communications, BCC

Confederation of British Industries (CBI)

The government should aim to balance the books sooner than it currently plans. A target date of 2015-16 for restoring budget balance would send a powerful message to investors about the seriousness with which the UK is tackling the public finances. This medium-term target is much more important for credibility than the exact start date for action.

Fiscal balance should be achieved by curbing spending rather than increasing taxes, and cutting current rather than capital spending. This balance of measures is the most supportive of growth, but will mean grappling with thorny issues such as poor public sector productivity, pay and pensions. The Budget must also create the right conditions for businesses to support employment. So the chancellor should abandon the plan to raise employer national insurance contributions, which is an ill-judged tax on jobs.

Ian McCafferty, chief economic adviser, CBI

Chartered Institute of Personnel and Development (CIPD)

The chancellor is unable to offer employers a give-away Budget but he must avoid a take-away Budget that adds to the tax or regulatory burden on business. It is said that Alastair Darling intends to put the national interest above narrow party politics. If so, he should signal to employers that the aim of the Budget is to promote what our pre-general election manifesto calls ‘a recovery that works’. This means spelling out where the axe will eventually fall on public spending in the coming years, while also identifying tax-raising alternatives to the far-from-job-friendly 1% hike in employers’ national insurance contributions currently pencilled in for April 2011.

John Philpott, chief economic adviser, CIPD

EEF, the manufacturers’ organisation

At a time of economic and political uncertainty, firms need stability in the tax system and business environment. More signs of recovery are emerging, but as demand picks up, many companies will be facing new challenges, such as accessing the finance they need, attracting and developing skills, and planning future investments.

The current debate on when fiscal consolidation should start misses the point. First and foremost, manufacturers will be looking for the forthcoming Budget statement to outline a credible plan on how the public finances will be repaired, not spending on new measures that could have to be clawed back at a later date. Certainty about where the balance of future tax rises and spending cuts will fall will impact where and when companies make their next investment and ultimately the longer-term competitiveness of our economy.

Stephen Radley, director of policy, EEF

Trade Unions Congress (TUC)

The economy is still very fragile and the dangers of a double-dip recession are real. If consumers and business start to feel the recovery slipping away, it would be very damaging for confidence.

The debate about the scale and pace of deficit reduction is therefore slightly unreal. Premature deficit reduction will be counter-productive. Spending cuts or tax rises for ordinary consumers would send the economy into reverse and make the deficit even worse as unemployment rises and the tax take falls again.

This must be a Budget for growth. The focus of the stimulus needs to change so that it helps to build a better-balanced economy that is not so dependent on the finance sector and can help meet the challenge of climate change.

Brendan Barber, general secretary, TUC

See what the same organisations were hoping for this time last year.






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