Bullish Rachel Reeves today dismissed business anger over the monster Budget tax raid insisting no-one has any better ideas.
The Chancellor acknowledged anxiety about the impact of the measures in her bombshell fiscal package as she was grilled at the CBI conference.
But she swiped: ‘What I haven’t heard are any alternatives.’
Ms Reeves said she was ‘proud’ that she had ‘dealt with the problems’, suggesting that would be the last major tax hike this Parliament – despite fears Labour will need even more cash.
The intervention came after the business group’s conference was dominated by alarm over the £25billion hike to employer National Insurance.
A survey of members has found that half are now looking to cut jobs, while two-thirds are slashing recruitment plans.
Earlier, CBI chief executive Rain Newton-Smith insisted industries such as retail and hospitality have been pushed into ‘crisis containment’, while other sectors are now focusing on ‘damage control’ rather than investment following the hit to their bottom line.
She reminded Ms Reeves that profit is ‘not a dirty word’ and growth is impossible unless business is allowed to prosper.
Rupert Soames, CBI chair, said it was clear that ‘business has been the cash cow and it’s been milked’.
Salman Amin, chief executive of McVitie’s bakery products’ parent company Pladis, cautioned that it is ‘becoming harder to understand’ the case for investing in the UK.
Businesses bore the brunt of £40billion of tax rises unveiled last month. Some firms also face rising costs as a result of an increase in the minimum wage and new employment rights.
In her keynote speech, Ms Newton-Smith welcomed the political stability brought by Labour’s huge majority but warn that the Government’s vision for growth remains ‘in the distance’.
Ms Newton-Smith said business had been ‘caught off guard’ by the scale of the changes to employers’ NI.
‘Profits aren’t just extra money for companies to stuff in a pillowcase,’ she said. ‘Profits are investment. When you hit profits, you hit competitiveness, you hit investment, you hit growth.’
Ms Reeves has declared that economic growth is her ‘top priority’ and insists Labour will meet its manifesto pledge to make the UK the fastest growing economy in the G7.
But the Office for Budget Responsibility downgraded its growth forecasts for the final years of the decade in the wake of the Budget.
Official figures covering the first three months of Labour’s tenure show growth fell to 0.1 per cent, down from 0.5 per cent the previous quarter.
Keir Starmer acknowledged the growth figures were ‘not good enough’ and pledged to redouble efforts to boost investment. Ms Newton-Smith will also warn that the Budget has placed a ‘heavy burden’ on businesses looking to invest.
‘When firms I speak to want to be creating more opportunities, more investment, more training in their local communities…instead so many – especially in retail and hospitality – have gone into crisis containment,’ she is set to say.
‘Even where the risk isn’t critical, firms that have been through really tough years are now in damage control again.
‘They are looking with heavy hearts to cut training and investment, delay decarbonisation projects, or pass on costs to customers.’
The CBI’s warning is the latest to raise concerns about Labour’s stewardship of the economy.
A monthly business survey has suggested that activity across the UK’s private sector contracted in the first weeks of November amid a drop in firms’ confidence.
Retailers including Tesco, Sainsbury’s and Marks & Spencer also say they will face a £7billion hike in their costs due to the Budget policy changes and that job losses are ‘inevitable’.
