BUSINESS leaders gave a cautious thumbs up to the Liberal-Conservative government’s first Queen’s Speech yesterday, but warned that tax rises and a crackdown on airport expansion would hurt the private sector.
George Osborne’s decision to reverse most of the rise in employers’ National Insurance contributions won him plaudits across the business community.
John Cridland, deputy director-general of employers’ group the CBI, said the chancellor had made “the right move at a time when we want to encourage businesses to create jobs – this is good news for firms of all sizes”.
And the Institute of Directors (IoD) welcomed the government’s focus on deficit reduction, although it said that spending cuts – not tax rises – should be used to balance Britain’s books.
The government has signaled that it will hike capital gains tax in an emergency Budget on 22 June, while it is also expected to announce a rise in VAT.
“It will be important… that ministers stick to the implied commitment in the Conservative manifesto of a 4 to 1 ratio of spending cuts to tax rises. We believe the UK has a problem of too much tax already,” said Miles Templeman, director-general of the IoD.
Templeman also warned plans to introduce a right to demand flexible working could “be very costly” as could new legislation to tackle the gender pay gap. “These are not areas where the state should be intervening,” he said.
Meanwhile, the British Chambers of Commerce (BCC) hit out at the government’s implacable opposition to airport expansion in London, urging it to “reconsider” its position.
“There is a need for more aviation capacity in the South East – and Heathrow, in particular, must have the infrastructure needed to serve as a premier international hub. The government’s decision to rule out any new runway capacity in the Greater South East is disappointing,” said BCC director-general David Frost.