Page last updated at 14:57 GMT, Friday, 28 May 2010 15:57 UK

David Cameron pledges 'dynamic' business decade

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David Cameron: "We have been sleepwalking our way to an unstable, unfair economy"

David Cameron has pledged to make the next decade the "most entrepreneurial and dynamic in our history" in his first major speech as prime minister.

He said he would help firms by cutting red tape, improving trade and transport links and getting banks lending.

The government's ambition was to have the "most competitive corporate tax system in the G20".

He urged critics of plans to raise non-business capital gains tax not to "get ahead of themselves" before the Budget.

Some of his own senior Tory MPs have attacked the planned rise on non-business CGT - which could see taxes on the profits of second home and other asset sales more than double to 40% or 50% - as a tax on the middle classes.

'Modest revenue'

Mr Cameron told GMTV critics of a planned rise in capital gains tax (CGT) should "calm down a bit and wait for the Budget".

But he said there was a problem with the tax system where CGT was taxed at 18% while there were much higher rates for income tax "which is encouraging tax avoidance" and their plans were for a "modest additional revenue raising exercise" to lift some of the poorest people out of income tax.

The decisions we make now will live with us for decades to come. For many years we have been heading in the wrong direction
David Cameron

In a speech in Yorkshire, Mr Cameron said the coalition government would try to "rebalance" the economy, which he said had become "heavily reliant on just a few industries and a few regions - particularly London and the South East".

He said it did not mean "picking winners" but meant supporting growing industries like aerospace, hi-tech engineering and low carbon technology.

He said he wanted to "give manufacturing another chance in this country" by "getting the infrastructure right" - including supporting high speed rail development and improving international trade links.

He said the new government was committed to Crossrail and would not ignore London but would have a plan "to breathe economic life into the towns and cities outside the M25".

'Priority'

Getting on top of the £156bn budget deficit was a priority - but went "hand in hand" with economic growth, he said, following Labour's accusations that cutting public spending this year could jeopardise economic recovery.

He said they had already scrapped Home Information Packs, to make selling homes easier while the housing market was fragile, announced a moratorium on business rates and a new fast-track system for international patents.

But he said the government would do more to make it easier to start businesses, stop excessive regulation, and cutting corporation tax by simplifying reliefs and allowances.

I'm not going to go around the country with a chequebook signing cheques for every company that has a bright idea. We can't operate that way,
Vince Cable

And he said the government's ambition was "to have the most competitive corporate tax system in the G20".

In his speech, Mr Cameron said the country was at a "turning point".

"The decisions we make now will live with us for decades to come. For many years we have been heading in the wrong direction," he said.

'Strong case'

The economy had become too reliant on "a few industries in one corner of the country", "mass worklessness" had been accepted as a fact of life and Britain had become "increasingly hostile to enterprise" and too dependent on the public sector.

Business Secretary Vince Cable stressed: "I don't want to raise unrealistic expectations. I'm not going to go around the country with a chequebook signing cheques for every company that has a bright idea.

"We can't operate that way, the government's budget does not allow it to happen. That kind of behaviour was beginning to happen under the last government and it's not sustainable."

The truth is in its first weeks the government have made a number of announcements that are bad for business and bad for our regional economies
Pat McFadden
Labour

But he said government could help business, through deregulation, helping get more skilled and educated people into firms and making sure banks were lending money.

And he said while Regional Development Agencies faced cuts in the South and South East, where businesses were recovering, where they were working well and "deliver for business, they would "continue pretty much as they are".

In other areas like the North East, North West, Yorkshire and West Midlands, there was a "very strong case for keeping that model", he said.

But he said RDAs, in a tougher financial environment, would be reformed and changed and their functions reviewed.

For Labour, shadow business secretary Pat McFadden said: "How can the prime minister talk about the importance of manufacturing when he is planning to cut investment allowances to support manufacturing in order to give a corporation tax cut to parts of the economy that don't rely on investment?"

He added: "The truth is in its first weeks the government have made a number of announcements that are bad for business and bad for our regional economies."



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