Growth review receives a welcome
The announcement in his autumn statement by the Chancellor, George Osborne of a review into the measures needed to stimulate business growth won a positive response from business groups.
David Frost, the director general of the British Chambers of Commerce (BCC), described the review as an encouraging focus by the government on returning the UK economy to balanced, sustainable growth.
Mr Frost said: “The review discusses the need to create the right framework for growth, and acknowledges the contribution made by small and medium-sized enterprises. The question remains as to whether government can remove the real barriers that prevent businesses from thriving.
“Long-fought issues such as planning, access to credit, and burdensome employment legislation must be tackled head on. Only then will the business community be able to play its part and drive the recovery forward.”
Terry Scuoler, the chief executive of the EEF, the manufacturers’ group, argued that the UK economy doesn’t simply require growth but growth of a different kind, one based on production rather than debt-fuelled consumption.
He commented: “We need a new approach from government to deliver growth that will last and is driven by innovation, investment and exports. To achieve this, we need a government which acts and thinks differently as a partner with the private sector.
“Industry has shown over the last year that it can deliver this growth but rebalancing our economy is a massive challenge. It is vital that government now works closely with business to put together a plan to meet it.”
The other major announcement in the Chancellor’s autumn statement concerned a reform of the corporate tax system.
John Cridland, the CBI’s director-general designate, said that the Chancellor had gone some way to addressing the worries of large companies on the taxation of foreign-earned profits. The CBI also applauded the decision to introduce a lower 10 per cent corporate tax rate on profits made from new, patented products.
The Institute of Directors (IoD) added the government was absolutely right to treat corporate tax reform as a priority but argued the case for greater ambition in the proposed reforms.
The employers’ group said that reducing the rate of corporation tax is both the simplest way to improve competitiveness and the most effective way. A lower rate will also take pressure off the controlled foreign companies regime, because fewer countries will be lower-tax relative to the UK.
However, Richard Baron, head of taxation at the IoD, urged the government to go further.
Of the government’s corporate tax reform document, he said: “This is a good document overall, and some of the specifics are certainly right. No doubt there will be argument about other details, but the government has set up consultation arrangements to thrash out the difficult questions.
“But what this document lacks is real ambition. Yes, the main corporation tax rate will come down to 24 per cent by 2014. But even that will not place the UK out ahead of the pack. We need a promise to keep the rate coming down in future years, so that the UK is seen to be outstandingly competitive.”