The Alternative PBR
With all the focus on the Chancellor's VAT plans, it is worth noting that the CBI has put forward its own recommendations on how to stimulate the UK economy:
The CBI is calling for:
- An improvement in the flow of capital available to the corporate sector
- Measures to prevent trade credit insurance cover being withdrawn from some companies
- Urgent action to change auditor's reports to cut the number of companies being branded with "going concern uncertainty" status
- Modest tax measures to support corporate cash flow
- Measures to support small businesses, including a special low rate of employer NI contributions and abolition of the planned rise in the rate of corporation tax paid by small companies
- Fiscal stimulus focused on employment including a temporary reduction in employer NI contributions
- An acceleration of public capital spending programmes, including the Building Schools for the Future programme;
- Government support for corporate pension provision
- More funding of apprenticeships and training
- More support for UK exports, as companies struggle to access bank finance.
The CBI suggests that this package it is proposing to help businesses cope with the recession would cost the Government around £13 billion. More importantly, it would help companies keep people in jobs. There is little point in cutting VAT if people don't have the money to spend in the shops.
At the very least, I expect Darling to abolish the proposed corporation tax increase for small firms but it mustn't be forgotten that this was instigated by his own Government. Personally, I believe that little else will be done to support businesses in this PBR and, as a result, we will see deepening problems for businesses over the next 12 months.
p.s. taxing the rich doesn't work - cutting taxes for the the rest of us does.