Mandelson warns of tax rises in debt-cutting upheaval

Published on Friday 19 March 2010 20:26

LORD Mandelson yesterday warned small businesses to expect targeted tax rises and pain for the public sector.

The Business Secretary said it was "starting to feel like we really are out of the worst of the recession (though] I don't want to minimise how tough it's been here in Scotland and around the UK".

Addressing the Federation of Small Businesses' national conference in Aberdeen, he said that in the medium term debt had to come down. But he accepted that for thousands of businesses "it's only public spending that is keeping people in jobs and businesses in contracts.

"We've committed to halving the deficit in four years. We haven't hidden the fact that this is going to involve the biggest change in the public finances in a generation. It's also meant targeted tax rises.

"I know this is never going to win the government many friends in business. But in tough times it's what a responsible government has to be prepared to do. So I don't have any problem with the coming election being a bit of a referendum on how we back small British businesses to drive the recovery. That's why next week's budget will have small businesses at its heart.

"This is a moment for renewing confidence. We all know there is pain coming, especially for the public sector. But let's talk about the huge opportunities too. This should be an election about what it means to be pro-business."

First Minister Alex Salmond announced the creation of a 5 million East of Scotland Investment Fund which will offer loans to businesses and could create about 1,300 jobs.