Business Groups Respond to Pre-Budget Report
Chancellor Alistair Darling's pre-budget report has been met with complaints from various business organisations, but reactions against his proposals have actually been quite muted, indicating that although they aren't popular, they are bearable.
In reaction to the much-trailed windfall tax on bank bonuses, the British Banking Association chief executive Angela Knight warned international banks will view London as a less attractive place to build a business. The one-off supertax of 50 per cent on any bonus over £25,000 is expected to reap the Treasury £500,000. However this levy will be made against the banks, not employees
This is against a rise in National Insurance Contributions (NIC) of 0.5 per cent from 2011, which should provide £3bn a year to government coffers, putting into context how much impact the bonus cap is going to have.
Unsurprisingly, business organisations across the board are against upping NICs. CBI director general Richard Lambert said the move will hold back job creation and business growth. David Frost, director general of the British Chambers of Commerce (BCC) called it a tax on jobs.
Again, private sector industry bodies were keen to shift the Chancellor's focus away from them and on to public sector spending. There were applause all round for measures designed to cap pay and pensions in the public sector. The latest survey from business software company Sage of 2,000 small businesses found over half were in favour of the government tightening up public sector inefficiencies before it started dipping into private sector pay.
So, not a positive reaction to the pre-budget report, but not a riot of protest either. More than outright rejection, there was a note of unease over what the implications could be if Darling has got his sums wrong.
BCC's Frost called government predictions for growth in the next two years too optimistic and a miscalculation would force a u-turn on the NIC increase and longer time-frame in reducing the national debt of 78 per cent of GDP.