CBI Autumn Statement submission to Chancellor
A reduction in pension tax relief would be an income tax
In its submission ahead of the Autumn Statement, the CBI has called on the Chancellor to stick to the course on deficit reduction, but to do more to drive growth.
It also said that the Government should get the business bank up and running as soon as possible, and warned against a reduction in pension tax relief.
Responding to suggestions that the Government may reduce pension tax relief, CBI Director-General, John Cridland, said:
“Lowering the threshold below £50,000 is not a wealth tax - it’s an income tax which would hit swathes of middle-income earners.
“This would hit small business owners who invested heavily in their companies in the early years so back-load pension contributions to the end of their working lives, particularly hard. It would also be a major blow to professionals saving in defined benefit schemes - like senior nurses, retail store managers or gas engineers - who get a pay rise or a promotion.
“Reducing the tax free limit would fly in the face of the Government’s efforts to encourage more people to save adequately for their retirement, and its drive to position the UK as a world-leading business investment location.”
On the business bank, Mr Cridland said:
“There is a consensus emerging that a Government business bank can help ease the transition to a new normal of business lending.
“The CBI will judge its success on two fronts.
“First, whether it improves the take up of existing products, such as UK Export Finance, the Enterprise Finance Guarantee and the Regional Growth Fund, which it should do by establishing a one-stop-shop.
“Second, the business bank needs to plug the finance gap for growing medium-sized businesses by providing a wholesale funding solution to deliver long-term ‘patient capital’.”
On the deficit reduction plan and growth, Mr Cridland said:
“The CBI fully supports the Government’s deficit reduction plan. This is critical for the UK to keep the confidence of international markets.
“However, the Government does have additional resources available - it underspent by £7.8bn last year and will receive a windfall of up to £4bn from the 4G spectrum auction next year.
“We believe that around £1.5bn of this resource should be targeted on short-term, high-impact measures to support growth. These include: local government spending on road maintenance, incentivising take-up of the Green Deal, capping business rates at 2% in 2013, a new capital allowance incentive for infrastructure investment, and scrapping stamp duty on AIM shares to encourage investment in medium-sized businesses.”