Build momentum to avoid economy remaining on standstill until election – CBI Budget Submission

Following an Autumn Statement that delivered a much-needed boost for business confidence with the delivery of permanent Full Expensing, the CBI is calling on the Government to use the forthcoming Budget to continue building momentum in the economy and put the country on the path to sustainable growth.

Against a challenging economic backdrop, firms are clear that political leaders must not get distracted as they prepare for the General Election. The Budget is a crucial opportunity to firm up the foundations of growth to deliver a prosperous future for the country regardless of who forms the next government.

Building on from policies the CBI successfully called for last year around childcare, full expensing and R&D reforms for high-growth industries, this submission identifies a series of high-impact costed interventions that present value for money and can further encourage growth now. Key to this includes:

Tackle acute labour shortages: 

• Expand non-taxable health support for employees by making Employee Assistance Programmes (EAPs) a fully tax-free benefit and making tax relief for employee medical treatment more focused on prevention.
• Deliver the planned expansion of eligibility to 30 hours of funded childcare to help parents increase the hours they work, including support for attracting the expanded workforce needed through a comprehensive Early Years Strategy.
• Scale-up capacity at the Home Office to unblock visa processing delays, reducing labour market pressures.

Create a more attractive and competitive business environment: 

• Extend full expensing to cover leased and rented assets.
• Cap the increase in the England business rate multiplier for another year and work with devolved administrations to deliver the same across the whole of the UK.
• Publish a strategy to deliver the National Infrastructure Commission recommendations in the Second National Infrastructure Assessment, to spur economic growth and levelling up across English regions.

Double down on high-growth industries to crowd in investment:

• Introduce a globally competitive R&D tax credits scheme by bringing capital expenditure within scope, like in Ireland and France.
• Announce plans to establish a Net Zero Investment Plan (with timelines for delivery), identifying green investment gaps and policy with the intention of crowding in private finance.
• Increase the total that can be raised from Enterprise Investment Scheme (EIS) investments for Knowledge Intensive Companies (KICs) from £20m to £30m to help innovative start-ups grow.

Rain Newton-Smith, CBI Chief Executive, said: 

“The Chancellor needs to perform a tricky ‘high wire balancing act’ of giving momentum to the economy without sacrificing hard-earned credibility. With the Autumn Statement signposting us to the right path towards stability and growth, political leaders need to stay the course and not give in to short-term political headwinds.

“Businesses are impatient for the economy to pick up steam. UK PLC needs a budget that prioritises economic momentum over election giveaways, giving firms the confidence to invest and avoiding the economy remaining on standstill until election day.

“With limited headroom available, we also need to be honest with the public about the nation’s finances. Now is the time to face some of the key challenges facing businesses and our economy and build on the foundations for sustainable growth as well as improved living standards.

“To that end, our submission shows smart, targeted, solutions can deliver the competitive business environment we need, tackle stifling skills shortages, and provide a boost to high-growth industries that will power our economy for years to come."