The UK faces challenges that can only be solved through partnership. In its pre-Budget letter to the Chancellor, the CBI proposes ways to unlock enterprise, increase the country’s competitiveness and attract more investors, all aimed at lifting productivity and sharing prosperity. This is particularly important as the UK has the lowest level of business investment as a proportion of GDP in the G7, with the gap widening even further.
To set the UK on the right path, Carolyn Fairbairn, the CBI’s Director-General, urges the Chancellor of the Exchequer to focus on three key areas to unlock growth in her submission ahead of the Budget: reform business rates to ensure firms can invest and grow, build on recent announcements to make the apprenticeship levy work; and improve capital allowances to drive investment particularly in digital and low carbon technologies.
The Budget must also help tackle the immediate impact of Brexit uncertainty. Increasing the annual investment allowance will help lift the fog of uncertainty that is holding back investment, while hundreds of thousands of firms need help planning for the changes ahead. They urgently need a one-stop shop for advice and information as the clock ticks down to March.
“As we near the end of Brexit negotiations, the world’s gaze is fixed on these shores. This Budget is a pivotal moment and chance to showcase the UK as an open, collaborative and confident nation. Entrepreneurs here and around the world need to see a UK committed to harnessing the power of business to innovate and tackle problems, from sustainability to inequality.
Invest in an online one-stop shop of advice and information for businesses about leaving the European Union.
The CBI’s package of proposals costs just over £1.5 billion in 2019/20 and £2 billion in 2020/21. This accounts for less than 0.2% of official forecasts for government spending.
“The single most effective remedy to the structural challenges facing the British economy is a simple one – increased business investment.
“By investing in workers, equipment and crucially, digital and new technologies, the UK can establish itself in pole position for the future. This is also the best way to raise productivity, and prosperity in all corners of the country. A win-win for all.
“UK businesses have been underinvesting for many years, with the country suffering from the lowest level of business investment as a proportion of GDP in the G7. This is not because they don’t want to invest, but because the conditions are so often not conducive to doing so.
“With the right government policy and support – from reforming business rates to ensuring the UK remains globally attractive to the financial services sector – this can change. As the UK leaves the EU, there is no better moment than this Budget to show the Government is committed to real partnership with business.
Commit to review financial services taxation in due course, with a view to establishing a stable and certain tax framework for the future.
“While investing in capital is vital, there will not be an inch of progress in tackling the economy’s underlying challenges unless we invest in people.
“The Chancellor’s recent decision to listen to calls from the CBI to reform the Apprentice Levy is hugely welcome. By raising the limit on apprenticeship levy transfers from 10% to 25%, more firms and apprentices in supply chains will be able to benefit. And firms are also pleased to see the increase in funding for the National Retraining Partnership.
Set out a clear long-term version to introduce a flexible skills levy after 2020, to include life-long learning, ensuring business has ample opportunity to feed in.
“It is fundamental that a Withdrawal Agreement with the EU is agreed. This will provide temporary but essential relief for firms of all sizes. Then attention can turn to the vital task of finalising our future economic and trading relationship with the EU.
Continue to allocate resources to HMRC for the expansion of the Civil Service to deal with post-Brexit government functions.
“The technologies of the future are rapidly driving changes in energy and infrastructure. The UK should be grasping the opportunities presented by the booming green energy sector by incentivising low-carbon products.
“The transition to zero-emissions is not just about ensuring we build the vehicles – that’s only half the story. The other half is about ensuring demand, by making vehicles affordable and investing in infrastructure.
Close the gaps in existing digital infrastructure provision and clearly outline the UK’s path to a 5G future.