Call off usual budget theatricals this year, says CBI
The CBI today has published an ‘alternative Budget speech’ that it believes the Chancellor should deliver on March 12th, stripped down to the bare necessities to reflect the government’s lack of room for manoeuvre in troubled economic times.
In the six-paragraph alternative speech drafted by the CBI, the Chancellor would say that pronounced economic uncertainty means it is impossible to make “credible judgements based on the near-term outlook”, and that there will anyway be a need to revisit the Government’s three-year spending plans next year, given the continued deterioration in the public finances.
With the UK economy facing leaner and more uncertain times, the draft speech states “This is no time to be imposing tax increases affecting business” and says the Chancellor has therefore decided to postpone controversial Capital Gains and non-doms tax changes for one year. “Nor is it a time to be making other complex changes to the tax system or to constrain consumer demand.”
A minimal 6-page Finance Bill, the Chancellor would say, will be published to meet the minimum legislative requirement to set allowances and other rates. This would compare favourably with the 305-page Bill that marked the end of Gordon Brown’s ten year term as Chancellor.
A further reason not to deliver the traditional Budget report is that “the capacity of HM Treasury has been stretched in recent months by the problems at Northern Rock and by work on essential reforms to the banking system”, creating a risk that any new proposals would not be have been subjected to a thorough impact assessment.
The speech (attached to this press release) concludes: “In these unusual circumstances I have decided to keep this year’s Budget statement to the bare minimum. I commend this approach to the House.”
Richard Lambert, the CBI’s Director-General, said
“Calling on the Chancellor to set aside the normal Budget theatricals in favour of a slimmed down, practical statement may seem fanciful, but our suggestion, made more in hope than expectation, reflects turbulent times both at the Treasury and in the UK and wider world economy.
“The only worthwhile tax changes Mr Darling could make would be to postpone for a year ill-considered and rushed changes to Capital Gains and non-doms tax, to give the many affected individuals a decent period to plan.
“Beyond that slight relaxation of the fiscal position he has virtually no room for manoeuvre, either to raise taxes to repair the gaping hole in the public finances, or to cut them to stimulate the economy as it faces a sharp slowdown.
“Firms have had enough unexpected change to the corporation tax system. Consumers meanwhile are already struggling with significant reductions in their disposable incomes, so further constraints would only make matters worse.
“Faced with these realities and with the Treasury seemingly creaking at the seams as it grapples with nationalising Northern Rock and reforming bank supervision, the sensible decision would be to slim down this year’s Budget to the bare necessities.”
