Brown flags tax breaks for business

Brown: no new taxes, just new tax breaks

Gordon Brown, the UK's Chancellor of the Exchequer, has promised new tax breaks to help the hard-hit manufacturing sector.

In a speech to the Institute of Directors, foreshadowing the pre-Budget report due on 27 November, Mr Brown said that the impact of the post-11 September slowdown demanded a response.

We will do more to recognise the vital contribution of modern manufacturing to exports, innovation and our great regions

Gordon Brown
Chancellor of the Exchequer

"I understand people's worries about the effects on their jobs and livelihoods of a global slowdown which will inevitably impact on Britain's economic growth," he told business leaders.

"And in the Pre-Budget Report we will do more to recognise the vital contribution of modern manufacturing to exports, innovation and our great regions."

Recent data has shown manufacturing employment dwindling, and confidence within industry shrinking to new lows.

The trend - now a long-term phenomenon - has been exacerbated by the continuing strength of the pound against the euro, given that Europe is the UK's largest export market.

Cutting back on tax

Mr Brown was at pains to stress the government's appreciation for business, in an attempt to rebuild the relationship with the City strained by the placing of Railtrack in administration.

He confirmed the government's plans to cut capital gains tax beyond the changes made in 1998, from 40% to 20% for investments held for one year and to 10% for investments held for two years.

The Enterprise Management Incentive, which allows growing companies to give out options free of income tax and national insurance, may be expanded, he said.

And he said the government is considering further cuts to small business taxes.

Also on the tax-cutting agenda, he said, were further cuts for research and development "that will give Britain one of the best incentives for innovation anywhere in the industrialised world".

And VAT reforms are coming to make the system simpler for small businesses, he said.

The theme of the pre-Budget report would be supporting enterprise and "building a stronger, more dynamic, enterprise economy".

Moves to stabilise the economy taken by the Labour government such as cutting debt - admittedly by raising some taxes - and making monetary policy independent of government would continue.

But on top of that, efforts will be made to make planning applications and competition policy more straightforward.

"The days of picking winners and uneconomic state subsidies and corporate fixes are over and cannot return - and wherever there are barriers to competition we will tackle them," Mr Brown said.

Additional burdens

Shadow chancellor Michael Howard said Labour had landed business with an additional £10bn a year burden in tax and red tape.

He (Gordon Brown) is very good at talking about the few taxes that he has reduced and not mentioning the many he has increased

Michael Howard, shadow chancellor

"He (Gordon Brown) is very good at talking about the few taxes that he has reduced and not mentioning the many he has increased," Mr Howard told BBC Radio 4's Today programme.

"The net additional burden on business in taxes alone is £5bn.

"Add that to the red tape and that is why our firms are not as competitive as they used to be," he added.

Mr Howard said Britain had slipped from ninth to 19th in the international competitiveness league under Labour.

In the past year, the government has introduced a record 3,865 new regulations affecting business, Mr Howard said.

Terror funding

Mr Brown made his IoD speech on the eve of the meetings of the World Bank, International Monetary Fund and the G20 in Ottawa.

The meetings were postponed from September and shifted from Washington in the wake of the 11 September attacks.

He reminded his audience of the importance of the World Trade Organisation meeting just concluded in Doha, Qatar, and of the importance of concerted action - as demonstrated by the collaboration of central banks on interest rate decisions.

And he promised that the Ottawa meetings would produce a new determination to cut off the sources of terrorist funding.

The UK, he said, will offer to co-ordinate a central register for technical assistance to countries putting measures in place to deal with the financial side of the threat.

"Now that anti-terrorist finance units are being set up in all major financial centres we will offer London as an international clearing house for information exchange on asset tracking," he said.