New leaders must cut red tape or risk the recovery, says British Chamber of Commerce

Published on Sunday 2 May 2010 21:50

THE next government must freeze public sector pay and cancel the planned hike in National Insurance or risk stalling the economic recovery, the British Chambers of Commerce has claimed.

In a 12-step business growth plan published today, the BCC sets out a range of measures it wants implemented within 90 days of the new administration taking charge to give businesses the support needed to drive the recovery. Failure to implement the proposals would mean a slower or even non-existent recovery, it warned.

The 12 proposals include publishing a credible plan for tackling the deficit; repairing public finances by freezing the public sector wage bill; and reforming public sector pensions.

Red tape affecting employers must also be systematically reviewed, said the BCC, which wants the next administration to cancel the 1 per cent National Insurance rise coming in next April for both employers and employees earning more than 20,000, a measure it described as a "tax on jobs". And it called for a moratorium on introducing any "burdensome" new employment laws before 2014.

David Frost, director-general of the BCC, said making business growth a priority in the new administration's thinking was fundamental to restoring economic health. He argued that in the event of a hung parliament the main political parties "must put political horse-trading to one side and show leadership to deal with the serious threats still facing the UK economy".

Frost said: "Sorting out the dismal state of our public finances must be at the very top of the agenda. The phoney war between the parties must end, and, as the Institute for Fiscal Studies has shown, the parties must be crystal clear about where spending cuts will fall."

The new administration should offer a focused vision for a strong export economy, with a scheme established to address market failures in export credit insurance, according to the report. Deep cuts to infrastructure projects that support business growth should be avoided, while businesses need a more stable and de-politicised planning system to give them confidence to invest, it continued.

Frost said: "During the first 90 days after an election, an incoming government must make concrete proposals to reduce red tape and tax burdens on business; review how to move the economy away from an over-reliance on consumption and the public sector; and commit to improving Britain's energy, transport and digital infrastructure."

Other proposals include measures to promote stable access to finance for viable companies.

The BCC's proposals echo plans set out by the Scottish Chambers of Commerce last month in its pre-election report Down to Business.

Liz Cameron, chief executive of the SCC, said: "The BCC statement fits very well with our own plans, in particular special actions to encourage exports and reward successful exporters, such as reducing corporate tax to below 20 per cent for SMEs who export more than 40 per cent of their turnover."

The SCC also backed calls to reverse the planned NI rise: "It seems ridiculous at a time when so many of us are working to keep people in jobs to add to the tax burden for doing so."