Major business group piles pressure on Burnham over tax cuts

One of the UK’s most prominent business groups has piled pressure on Labour ahead of the Budget this month by backing a Conservative pledge to cut business tax bills.

The British Chambers of Commerce (BCC) said shadow chancellor Andrew Griffith’s pledge to remove one tax a year if his party returned to office – including a focus on allowing businesses to grow and scrapping governing bodies which he said may hinder them – was the right approach to help the economy thrive.

Mr Griffith promised a bonfire of red tape, and to axe arms-length government bodies as a means of freeing up business to grow the economy. He also promised to remove a tax on plastic packaging, which has riled manufacturers and food producers.

“I didn’t come here to raise taxes – I came to lower them,” he said at the Conservative party conference. “No country in history has ever taxed its way to prosperity, so we will cut taxes – but only when we can afford to do so – and always saying clearly how we will fund that within our golden economic rule.”

Kate Shoesmith, director of policy at the BCC, said: “We welcome the shadow chancellor’s pledge to cut taxes and give firms some breathing space on their future bills. This is central to allowing them to plan with confidence and unlock much needed investment in the UK economy.

“The complexity of our current tax system adds cost, absorbs management time and ties up resources, forcing business leaders to take a more cautious approach.

“We are clear that to get Britain back to strong, consistent growth we must cut business costs from energy, to tax, to employment regulation.”

She added that Mr Griffith’s support for a third Heathrow runway was a key issue, showing the “importance of critical national infrastructure” and big investment projects.

However, the BCC stopped short of saying prime minister Andy Burnham’s current approach was entirely damaging, noting that Labour’s deregulation plans could be beneficial – if strong policy and communication led to the right amount of freedom.

“It is also essential that businesses are plugged into the decision-making process at the local and regional level. Care is also needed around the extent of deregulation. Businesses want good regulation, not no regulation. Cutting too much might lead to short-term gain but increase costs in the longer-term due to poor standards and insufficient oversight,” Ms Shoesmith said.

Chief economist at RSM UK, Thomas Pugh, said it was important the government avoided the situation of last year which saw businesses hold off on decision-making, at the expense of economic growth, due to uncertainty around the Budget.

“Aside from the geopolitical risks in the Middle East and energy prices, the big risk to growth is now the Budget,” he said. “Another round of confidence-sapping speculation about tax rises – which now look inevitable given Healey has probably lost about half his fiscal headroom – would weigh on growth.”