The Confederation of British Industry (CBI) is set to issue a stark warning that high taxes are pushing struggling businesses to a 'tipping point', amid deep concerns that Labour is treating them as a 'cash tap'. In a speech today, Rain Newton-Smith, chief executive of the business lobby group, will insist that Britain's private sector, already battered by global effects such as the Iran war, cannot withstand further cost pressures.
CBI chief sounds alarm over Labour's civil war
The head of Britain's largest business group will also sound the alarm over Labour's internal conflict, which is leaving the economy 'holding its breath', damaging confidence and investment, and threatening a 'summer of stagnation'. Speaking at the CBI's national business dinner in London, Ms Newton-Smith will declare: 'Business is not a cash tap that can be turned on without consequence. Adding to the burden now would have serious consequences. You cannot tax your way to growth and we must not try.'
Government files reveal tax squeeze plans
Her warning follows the release of Government files this week, showing MPs are keen to extract more taxes from firms. In messages from the so-called Mandelson Files, senior Cabinet minister Pat McFadden admitted that MPs constantly ask him: 'Who can we tax in order to pay benefits to others?' Meanwhile, businesses are already buckling under the weight of increased employer National Insurance (NI) contributions, a higher minimum wage, new workers' rights, flawed business rates reform, and soaring energy bills.
CBI figures show that taxes paid by businesses reached a record £345 billion last year, including £27 billion from Labour's NI raid. 'That is not free money,' Ms Newton-Smith will say. 'It is not free of consequence. You cannot fix the cost of living without fixing the cost of doing business. And the cost of doing business is reaching a tipping point.'
Leadership turmoil adds to economic uncertainty
On Labour's leadership turmoil, she will add: 'The challenges in our economy won't fix themselves while politicians look inwards. Big decisions need taking. The world is moving fast – it will not wait. We need a government that is getting on with governing. Business cannot afford a summer of stagnation while the politics play out. There is a real, material cost to what's happening in Westminster now.'
The CBI's findings reveal that business taxes grew by 13 per cent in the latest financial year, outpacing the overall tax increase of 9 per cent. This has made UK firms less profitable than at any time since the 2008 financial crisis. 'The business leaders I meet are fighting to keep their firms afloat and deliver for their customers,' Ms Newton-Smith will say. 'They may look calm, but they are paddling furiously beneath the surface – absorbing costs, protecting jobs and trying to keep investing in uncertain times.'
She will also dismiss Left-wing claims of 'profiteering and price-gouging' by businesses as 'wide of the mark' and 'deeply damaging', adding: 'Confidence is the elixir of growth. And right now, it's in short supply. We can't control global events, but governments must not add to the pressure. Either by talking down the UK's capabilities, or pushing up the burden on business.'
