Martin Flanagan: CBI has some sensible suggestions for George Osborne
THE CBI has long argued that, while it backs a lower rate of corporation tax, it is not massively fond of the idea of devolving powers to set CT rates to the likes of Scotland and Northern Ireland.
And it returns to this argument in its pre‑Budget submission to Chancellor George Osborne.
The CBI’s argument boils down to the fact that, in Scotland in particular, there is not much demand from business for switching corporation tax raising powers to Holyrood (although the Scottish Government is unsurprisingly keen); if CT rate-setting is devolved, the rate could be increased in future; and devolving powers would fly in the face of the organisation’s long-standing commitment to a unitary tax system.
That unitary tax system is worth fighting for. Its simplicity encourages domestic and foreign investors to invest here. It gives both clarity and confidence.
That is arguably worth more in the big business picture than the flexibility to tailor corporation tax rates to what the Scottish and Northern Irish governments think will best serve their economies.
One approach is about short-term tactics, the other is building solid foundations for a long-term business strategy in the UK.
Elsewhere, the CBI’s Budget submission is the normal mix of calling for effective government investment policies, tax changes to benefit business, a diminution of red tape and ways to ease the flow of finance to small- and medium-sized businesses, in particular. The CBI has repeated its sensible, if vaguely left-field, call for a corporate bond market to provide non-bank finance to Britain’s version of Germany’s Mittelstand.
These are the mid-sized businesses that have neither the capital cushions of the business big boys nor the media megaphone clout of small businesses, but are the unsung backbone of a lot of Britain’s wealth creation.
I agree with the CBI that encouraging infrastructure investment in the UK is vital to secure our medium and long-term health.
It is myopic if the Chancellor focuses solely on debt reduction to the exclusion of what will stand Britain in good stead over the longer international marathon race of business competition rather than what currently seems a gruelling 1,500 metres.
Also worth support is the CBI’s call for early implementation of the UK government’s New-Build Indemnity Scheme. That is very unlikely to be a game-changer in unblocking our sclerotic housing market, but it will make mortgages cheaper and incremental moves to unblock the housing industry are worthwhile.
A ticklish one for the Chancellor will be the organisation’s belief, which I share, that the government has so far has not quite got Air Passenger Duty right.
Yes, it is an easy tax-raiser for the Treasury in desperate times. But whereas the immediate benefit to the nation’s stretched finances is easy to see, the damage to a wider economy that depends overwhelmingly on aviation is more hidden.
Pegging this year’s rise to inflation at 5 per cent, rather than the 8 per cent planned – a CBI recommendation – has it about right.
LSE is getting on trend with the social media
SEARCH-engine Google’s deal with the London Stock Exchange to offer private punters immediate share price information rather than with the customary 15 minutes delay is noteworthy, and will obviously be useful to those buying, selling or shorting stock from suburban box rooms every-where.
Under the deal, Google becomes the first major website to publish up-to-the-minute prices for the last trade of any share on both the LSE and its Borsa Italiana subsidiary.
It seems nothing and nowhere is beyond Google’s relentless march. My guess is Google is paying through the nose for the privilege of getting this licence, as the current 15-minute delay on share prices costs a lot less than so-called real-time prices for obvious reasons.
The deal also shows the fuddy-duddy LSE is up to nearly every social trend and alive to related business possibilities.
I’m not sure, however, that even the get-up-and-go new LSE is at the point where it will consider status updates on Facebook or LOL messages when an insider dealer is caught.
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Weather for Edinburgh
Wednesday 19 June 2013
Temperature: 9 C to 18 C
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