CBI attacks Brown over tax and public finances

Gordon Brown must plug the £10bn gap in the public finances and cut the tax
burden on business, the CBI has demanded.

The CBI has calculated that the deficit, which it says is structural, not
cyclical, could be eliminated without cutting services. If pay growth in the
public sector was restricted to 4.5%, the same rate as the private sector, and
the headcount was reduced to reflect levels of absenteeism, £6bn would be saved.

The remaining £4bn could be found by reducing fraud and error in the benefit
system, encouraging incapacity claimants back to work, and leaving unspent the
government’s resource budget reserve.

The employers’ organisation warns that any tax increases to cover the deficit
would harm growth, which is already below Treasury predictions.

‘The workable solution is for the Government to revisit its spending plans
for 2007/08, and ease back on the dramatic rate of growth of public spending,’
said John Cridland, deputy director-general of the CBI.

‘The unworkable alternatives are allowing borrowing to drift even further –
meaning higher interest rates and more public funds diverted into interest
payments – or raising taxes, hitting economic growth and, ultimately, the future
tax receipts available for public spending.’

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