The head of Britain's main business lobby has urged Chancellor Rachel Reeves (Labour) to abandon Labour's manifesto pledge not to raise taxes on working people. Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), made the call amid mounting corporate concerns ahead of the autumn Budget.
Writing in the Guardian newspaper, Newton-Smith declared that the "time for tinkering is over" and warned against "slavish adherence" to tax promises made before last year's general election. Speculation continues to build that Reeves will announce further tax increases in the 26th November budget as the UK's economic outlook deteriorates.
The Chancellor faces significant constraints after promising during the election campaign not to increase income tax, national insurance and VAT - the Treasury's three primary revenue sources. This pledge has reportedly left the Government with limited options for raising additional funds.
Business sector concerns
Businesses are still reeling from Reeves' inaugural budget in October, which imposed higher national insurance contributions on employers alongside an increase in the minimum wage. The measures caught many in the corporate sector off guard and have intensified pressure on business finances.
Newton-Smith argued that circumstances have fundamentally changed since Labour drafted its manifesto commitments. She stated: "The fact is that geopolitics and global markets have shifted."
The CBI boss continued: "The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions." She added that the Chancellor "cannot raid corporate coffers again so she must look elsewhere, embracing long-term strategic tax reforms rather than maintaining a slavish adherence to manifesto promises on tax or ideas based on the world as it was 18 months ago."
Reform proposals
Newton-Smith called for comprehensive reforms to business rates, VAT and stamp duty rather than short-term fixes. She warned that Reeves must "avoid short-term solutions that risk us getting stuck in a cycle between fiscal events."
The business leader emphasised structural changes over rate adjustments, arguing: "It is the structure of the system, not just the rates, that holds back growth: business rates penalise investment; the VAT threshold discourages scaling; and stamp duty restricts labour mobility."
In a stark warning against further business taxation, Newton-Smith cautioned that additional enterprise tax rises would contradict promises made in autumn 2024 when businesses "last stomached a tax hit." She concluded: "Further rises would leave us with a growth plan in name only."
Sources used: "Guardian" Note: This article has been edited with the help of Artificial Intelligence.
