George Osborne should take proactive steps towards fixing the ‘productivity puzzle’ and also address business rates in his Autumn Statement, according to business leaders.
Businessman and SME champion Ian Baxter argued that the chancellor needs to address the issue of business rates. He has even gone as far to say they should be scrapped completely.
“Almost everyone now agrees that business rates are a pernicious form of tax,” he said. “When I started Baxter Freight I’d had a £40,000 rates bill before I’d sent out the first invoice to a customer.”
“Surely taxes should be levied on businesses when they’re successful not before they’ve started work? Business rates have helped decimate the high street and are a major obstacle for small businesses.”
While conceding that business rates are “very difficult to avoid”, largely due to the £26bn they contribute to the Treasury coffers, Baxter still believes the cost for small business growth is too high.
“They either need scrapping altogether or at least substantially reforming so that new and small businesses get a much fairer deal,” he added.
Cobra Beer founder and chairman Lord Bilimoria called for a focus on productivity. He cited more favourable trading conditions for businesses and workers as the best ways to address this.
“The Budget needs to have a clear strategy for Britain’s long-term competitiveness and productivity growth,” he said. “I hope that the chancellor will take the opportunity to foster strategies that have been proven to boost productivity and enhance UK firms’ competitiveness in the long term, by increasing public expenditure on Higher Education and R&D.
“The Government should also look to foster economic growth with more favourable levies on businesses such as lowering the capital gains tax to its previous long-standing level of 18 per cent.”
The Indian beer tycoon also warned that Osborne “can no longer remain tongue-tied on the issue of working tax credits”.
“The Autumn Statement and Spending Review presents the perfect time to address this issue with a proper understanding of how the poor could be adversely affected by changes to working tax credits, taking into account the full strength of expertise from business leaders, independent advisors, fellow MPs and the House of Lords,” he continued.
Gareth Jones, president of the Society of Motor Manufacturers and Traders (SMMT), wants the chancellor to put in place measures that will spur further growth in the UK’s resurgent automotive industry.
“So much has already been invested successfully and to pull the rug away now would be a devastating waste,” he said. “It’s a stark reminder that while our industry is a net exporter, the export deficit for parts sits at almost £8 billion.
“However, with the right support, re-shoring to the UK is possible – and with £4 billion of potential growth, the benefits are worth it.”