Full CBI reaction to the budget
The CBI today gave its full reaction to the Budget. John Cridland, CBI Director-General, said: "This Budget will help businesses grow and create jobs. The Chancellor has made clear the UK is open for business. The extra 1p cut in corporation tax will help firms increase investment. Meanwhile, significant changes to entrepreneurs' taxation will rightly focus much-needed support on businesses with growth potential."
"Reductions in regulations on businesses and the promise of a faster planning system will provide relief to companies trying to take on staff and invest. Support for manufacturers through the Climate Change Agreements will help them manage energy costs, which is particularly important given that the Government is pushing ahead with a carbon price floor."
"Businesses and consumers will benefit from reduced fuel taxes, but the increased tax on North Sea oil and gas could be counterproductive, and will create uncertainty for future investment."
Commenting further, Mr Cridland added:
On the economy: "The fall in economic activity late last year has forced the Office For Budget Responsibility to moderate short-term growth forecasts, but we agree that the recovery is likely to strengthen into next year. Higher inflation has increased the headline deficit, but the Chancellor's plan to eliminate the structural deficit over the course of this parliament, which businesses support, remains on track."
On business taxes: "The extra 1p cut in corporation tax will help firms increase investment. Meanwhile, significant changes to entrepreneurs' taxation will rightly focus much-needed support on businesses with growth potential. Measures to increase the certainty of the tax treatment of foreign profits increase UK tax competitiveness. The agreed effective rate for overseas group financing will make the UK a more attractive location for multinational businesses."
"Businesses will be encouraged by the confirmation that the 50p top tax rate, which deters internationally-mobile talent, is only temporary. We look forward to further details of when it will be removed. The reduction in excise duty and the postponement of the escalator will be welcome at a time when businesses and consumers are facing such sharp increases in fuel costs. However, the £2bn windfall tax on North Sea oil and gas, which has been levied to pay for this, creates uncertainty for future investment and hits a sector which already pays a significant amount of total tax."
"The banking levy is an additional cost to doing business in the UK, so it is important that international agreements are put in place quickly to avoid banks paying double taxation and to ensure that the UK remains an attractive global financial centre.
"The proposed simplification of National Insurance represents a significant improvement, increasing the transparency of the tax system, removing loopholes and reducing compliance costs."
On business regulation: "The Government's commitment to reducing red tape will increase the amount of time that managers spend growing the business and creating jobs. The moratorium on new legislation will be welcomed by smaller firms. The Government should think small first when it comes to making employment law - if it works for the smallest firms, then it works for businesses of all sizes."
On Housing: "Support for first-time buyers will inject confidence into the housing market and could create thousands of construction jobs. However, this is only a short-term solution as the scheme only runs until the end of next year. We need a longer-term approach to meet our growing housing needs."
On support for growing businesses and smaller firms: "Widening the scope of the Enterprise Investment Scheme will bridge the funding gap for small and medium-sized businesses, and could unleash a new wave of finance for the most entrepreneurial firms. Doubling the lifetime limit on entrepreneurs' relief within Capital Gains Tax will encourage them to keep on innovating and growing their businesses, as well as providing much-needed investment for start-ups. Increasing the SME Research & Development tax rate will make the UK a more attractive place to invest, reducing the cost of doing R&D by a quarter by 2012-13."
On public sector pensions: "The Chancellor is right to say that Lord Hutton's review should be implemented in full. It will secure affordability for taxpayers and good pensions for employees. Changes announced to the discount rate will help to close the yearly gap between both employee and employer contributions and the value of pensions promised by the Government."
On the low carbon economy: "Support for manufacturers through the Climate Change Agreements will help them manage energy costs, which is particularly important given that the Government is pushing ahead with a carbon price floor. "The Green Investment Bank will play an important role in mitigating some of the risks for companies planning major low-carbon investments. The additional £2bn is welcome, but the bank should have powers to borrow from the outset to give investors confidence."
On planning: "The Chancellor is right to make the link between an effective planning regime and economic growth. This sends the right signals to attract the £200bn needed for the UK's national infrastructure upgrade."
On enterprise zones: "The new enterprise zones could provide positive incentives for local authorities to promote development, allowing the Government to carry out a real-time experiment on what actually works as a spur to economic activity."
On Air Passenger Duty: "Freezing air passenger duty is a boost for tourism and business travel. At a time when we are trying to encourage exports, it is good that the Government has avoided changes that could have damaged air freight."
On improving our skills base: "Increased funding for apprenticeships is good news, but employers also need bureaucracy to be cut to encourage take up. More University Technical Colleges will support high-quality learning, boosting the number of science and maths graduates that businesses really need. More work placements will raise employability skills amongst young people."