Business groups begin pre-Budget lobbying

The bosses of Britain’s largest industry groups have urged Chancellor John Healey to reduce the cost of business in order to boost growth across the UK economy. Several business chiefs had sent letters to the Treasury with demands for the government to relieve pressures on employers.
Correspondence landing on Whitehall desks came ahead of a deadline for businesses and lobby groups to engage with the Chancellor on the budget.
Most of the industry bodies in the so-called ‘B5’, which are five of the largest business groups in the country, have centred their proposals on reducing costs for firms echoing Healey’s promise to offer “breathing space” to businesses.
But in an unusual step, some representatives have asked the government to be clearer about the costs of some fiscal policy decisions. Industry chiefs and economists have tended to avoid commenting on costs when presenting proposals.
The British Chamber of Commerce became the most notable body to call for the replacement of the triple lock pension, which has aggrieved top economists over its cost to public finances due to how spending on the state pension is projected to rise as a share of GDP. Burnham has committed to keep the triple lock pension, in line with the Labour Party manifesto in 2024.
The Institute of Chartered Accountants in England and Wales, which is not in the B5, urged the government to be clearer about its fiscal rules amid fears that Healey was searching for “flexibility” within the stability rule, which states that day-to-day spending should match tax receipts by 2030.
Top accountants said that a clearer definition of the rule would reduce market surprises amid fears that further borrowing could lead to a jump in debt interest costs, which are already set to total about £137bn in 2030.
One industry chief said that cutting welfare was the main way that the government could deliver on cost reduction for businesses and boost growth prospects. The Office for Budget Responsibility currently believes the UK economy will expand by 1.1 per cent this year and 1.6 per cent in 2027, though more recent analysis from economists in London's financial district is more pessimistic.
Business campaigners at the Institute of Directors, one of Britain’s oldest industry bodies, meanwhile said the government should consider long-term effects to government revenue when considering changes to taxes on investment and capital.
The warning has come against wide expectations that the chancellor could target capital gains tax in order to raise revenue.
Meanwhile, the chief executive of audit giant Baker Tilly has warned the upcoming Budget will likely carry a heavy “pain cost” for UK businesses bracing for tax changes.
“It’s going to be a ride, isn’t it,” Francesca Lagerberg, Baker Tilly International’s chief executive said. “The mood music is that it won’t be a fun day out. I think that is probably where everybody is sitting at the moment”.
Rumoured tax changes for businesses in the upcoming Budget next week, include business rates reform, sector-specific levies, and reduction to the tax gap.
Lagerberg said there were “plenty of businesses who would say that their business would be massively hampered by tax changes.” She added: “Fundamentally, you come back to the fact there are some big-ticket things that probably need to change to enable us to do the things which everybody would like to have happen, but they all come with a pain cost.”
According to the firm’s own survey earlier this year, UK businesses are the “most likely” to move operations to other markets.
“Everybody hates uncertainty, and you do have people who just stop doing stuff and wait until they know what the rules are going to be and that’s never very good for business.” (The writer is our foreign correspondent based in the UK)